CONFIRMATION AGREEMENT Dated as of November 1, 2006 by and between SOUTHWEST GEORGIA FARM CREDIT, ACA and WACHOVIA BANK, NATIONAL ASSOCIATION relating to IRREVOCABLE CONFIRMATION OF LETTER OF CREDIT
Exhibit 10.28
Dated as of November 1, 2006
by and between
SOUTHWEST GEORGIA FARM CREDIT, ACA
and
WACHOVIA BANK, NATIONAL ASSOCIATION
relating to
$55,097,671.24
IRREVOCABLE CONFIRMATION
OF LETTER OF CREDIT
TABLE OF CONTENTS
| Page | ||||||
SECTION 1.
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Definitions; Accounting Terms | 2 | ||||
SECTION 2.
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Issuance of the Confirmation | 4 | ||||
SECTION 3.
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Reimbursement and Other Payments | 5 | ||||
SECTION 4.
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Conditions Precedent | 7 | ||||
SECTION 5.
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Reduction and Reinstatement of Amount | 7 | ||||
SECTION 6.
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Reserved | 7 | ||||
SECTION 7.
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Obligations Absolute | 7 | ||||
SECTION 8.
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Extension of the Stated Expiration Date | 8 | ||||
SECTION 9.
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Representations and Warranties | 8 | ||||
SECTION 10.
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Covenants | 9 | ||||
SECTION 11.
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Events of Default | 10 | ||||
SECTION 12.
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Further Assurances | 11 | ||||
SECTION 13.
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Amendments and Waivers | 12 | ||||
SECTION 14.
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Notices | 12 | ||||
SECTION 15.
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No Waiver; Remedies Cumulative | 12 | ||||
SECTION 16.
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Right of Subrogation; Setoff | 13 | ||||
SECTION 17.
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Indemnification | 13 | ||||
SECTION 18.
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Continuing Obligation | 13 | ||||
SECTION 19.
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Transfer of the Confirmation | 13 | ||||
SECTION 20.
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Limited Liability of the Confirming Bank | 14 | ||||
SECTION 21.
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Costs, Expenses and Taxes | 14 | ||||
SECTION 22.
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Severability | 14 | ||||
SECTION 23.
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Governing Law | 14 | ||||
SECTION 24.
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Consent to Jurisdiction, Service of Process, WAIVER OF JURY TRIAL | 15 | ||||
SECTION 25.
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Headings | 15 | ||||
SECTION 26.
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Counterparts | 15 | ||||
SECTION 27.
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Entirety | 15 | ||||
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THIS CONFIRMATION AGREEMENT (the “Agreement” ), dated as of November 1, 2006, is by and between
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (the “
Confirming Bank” ), and
SOUTHWEST GEORGIA FARM CREDIT, ACA, a federally chartered instrumentality organized and existing
under the laws of the United States of America (the “LOC Bank” ).
BACKGROUND
A. In order to finance the construction, acquisition and installation of the solid waste
disposal components of an ethanol refining facility (the “Project” ) owned and operated by First
United Ethanol, LLC, a Georgia limited liability company (the “Borrower” ), caused the Xxxxxxxx
County Development Authority, a county and political subdivision of the State of Georgia (the
“Issuer” ), to issue its Variable Rate Demand Taxable Economic Development Revenue Bonds, Series
2006 (First United Ethanol, LLC Project), in the aggregate original principal amount of Fifty Three
Million Five Hundred Thousand Dollars ($53,500,000) (the “Bonds” ), under the terms and conditions
more fully set forth in that certain Trust Indenture, dated as of October 1, 2006 (as amended,
modified or supplemented from time to time, the “Indenture” ), by and between the Issuer and Xxxxx
Fargo Bank, National Association, as Trustee (the “Trustee” ).
B. The Issuer loaned the proceeds of the Bonds (the “Loan” ) to the Borrower pursuant to the
terms of that certain Loan Agreement entered into as of October 1, 2006, between the Borrower and
the Issuer (the “Loan Agreement” ).
C. To enhance the marketability of the Bonds, the Borrower arranged for the LOC Bank to issue
its Letter of Credit dated November 30, 2006 (as amended, modified or supplemented from time to
time, the “Letter of Credit” ) in favor of the Trustee in the original face amount of Fifty Five
Million Ninety-Seven Thousand Six Hundred Seventy-One Dollars and Twenty Four Cents
($55,097,671.24), to secure the payment of the principal and interest on the Bonds.
D. To secure repayment of any draws made under the Letter of Credit, the LOC Bank and the
Borrower entered into a Reimbursement Agreement, dated as of November 30, 2006 (as amended,
modified or supplemented from time to time, the “Reimbursement Agreement” ).
E. In order to induce the Trustee to accept the Letter of Credit, the LOC Bank has requested
that the Confirming Bank issue its Irrevocable Confirmation of the Letter of Credit to the Trustee
to become operative on November 30, 2006 (as amended, modified or supplemented from time to time,
the “Confirmation” ).
F. The purpose of this Agreement is to set forth, among other things: (a) the Confirming
Bank’s commitment to issue the Confirmation; (b) the LOC Bank’s agreement to reimburse the
Confirming Bank for any and all payments made by the Confirming Bank pursuant to the Confirmation;
and (c) the LOC Bank’s agreement to compensate the Confirming Bank for its commitment to issue the
Confirmation.
NOW THEREFORE, in consideration of the mutual agreements made herein and in order to induce
the Confirming Bank to issue the Confirmation, the parties hereto agree as follows:
SECTION 1. Definitions; Accounting Terms.
(a) The following terms, as used herein, have the following respective meanings:
“Act of Bankruptcy” means any of the following: (i) LOC Bank shall become bankrupt or shall
fail to pay its debts generally as they become due; (ii) LOC Bank shall admit in writing its
inability to pay any of its indebtedness; (iii) LOC Bank shall consent to a petition for or apply
to any authority for the appointment of a receiver, liquidator, trustee or similar official for
itself or any substantial part of its properties or assets; (iv) LOC Bank shall institute
bankruptcy, insolvency, reorganization, arrangement or liquidation proceedings for itself; or (v)
any receiver, liquidator, trustee or similar official for itself or any substantial part of its
properties or assets shall otherwise be appointed, or bankruptcy, insolvency, reorganization,
arrangement or liquidation proceedings shall be instituted against LOC Bank by a third party and
remain undismissed for a period of sixty (60) days.
“Act of Governmental Sanction” means any of the following: any Governmental Authority having
jurisdiction over LOC Bank shall suspend or revoke LOC Bank’s license to conduct banking activities
in the United States or any political subdivision thereof or in any other jurisdiction where LOC
Bank conducts banking activities, or shall suspend LOC Bank’s payments under the Letter of Credit,
or shall invalidate or repudiate the Letter of Credit or LOC Bank shall no longer be treated as a
“bank” as defined in Section 3(a)(2) of the Securities Act of 1933, as amended.
“Agreement” means this Confirmation Agreement, as it may from time to time be amended,
supplemented or modified.
“Base Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the
nearest whole multiple of 1/100 of 1%) equal to the greater of (a) the Federal Funds Rate in effect
on such day plus 1% or (b) the Prime Rate in effect on such day. If for any reason the Confirming
Bank shall have determined (which determination shall be conclusive absent manifest error) that it
is unable after due inquiry to ascertain the Federal Funds Rate for any reason, including the
inability or failure of the Confirming Bank to obtain sufficient quotations in accordance with the
terms hereof, the Base Rate shall be determined without regard to clause (a) of the first sentence
of this definition until the circumstances giving rise to such inability no longer exist. Any
change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or the Federal Funds Rate,
respectively.
“Bonds” has the meaning set forth in Background hereto.
“Borrower” has the meaning set forth in Background hereto.
“Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which
commercial banks in New York, New York, or the city or cities in which the corporate trust office
of the Trustee or the Tender Agent (as defined in the Indenture) or the office of the LOC Bank or
the Confirming Bank at which demands for payment under the Letter of Credit or Confirmation,
respectively, are to be presented or the depository bank through which the Confirming Bank draws
funds are authorized or required by law to close or (iii) a day on which the New York Stock
Exchange is closed.
“Code” means the United States Internal Revenue Code of 1986, as from time to time amended.
“Confirmation” has the meaning set forth in Background hereto.
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“Confirmation Amount” means Fifty Five Million Ninety-Seven Thousand Six Hundred Seventy-One
Dollars and Twenty Four Cents ($55,097,671.24), as reduced from time to time as provided in the
Confirmation.
“Confirming Bank” has the meaning set forth in the introductory paragraph hereof.
“Default” means any event or condition which, with the lapse of time or the giving of notice,
or both, if required, would constitute an Event of Default.
“Event of Default” has the meaning specified in Section 11 hereof.
“Expiration Date” has the meaning set forth in the Confirmation.
“Federal Funds Rate” means, for any day, a fluctuating interest rate per annum (based on a 360
day year) equal for each day during such period to the average of the rates of interest charged on
overnight federal funds transactions, with member banks of the Federal Reserve System only, as
published for any day which is a Business Day by the Federal Reserve Bank of New York (or, in the
absence of such publication, as reasonably determined by the Confirming Bank).
“GAAP” means generally accepted accounting principles in effect from time to time in the
United States.
“Governmental Authority” means any nation or government, any state or other political
subdivision thereof, and any Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
“Guarantor” means AgFirst Farm Credit Bank, its successors and assigns.
“Guaranty” means that Unconditional Guaranty dated as of November 30, 2006, by AgFirst Farm
Credit Bank, as guarantor, in favor of the Confirming Bank.
“Indenture” has the meaning set forth in the Background hereto.
“Issuance Date” means the day on which all conditions precedent to the issuance of the
Confirmation have been satisfied or waived in accordance with the terms of this Agreement.
“Issuer” has the meaning set forth in Background hereto.
“Letter of Credit” has the meaning set forth in Background hereto.
“Loan” has the meaning set forth in the Background hereto.
“Loan Agreement” has the meaning set forth in the Background hereto.
“LOC Bank” has the meaning set forth in the introductory paragraph hereof.
“Obligations” means all obligations (monetary or otherwise) of the LOC Bank to the Confirming
Bank arising under or in connection with this Agreement and the Confirmation, including, without
limitation, the Reimbursement Obligations, interest thereon, fees, finance charges, including, but
not limited to, costs of court and reasonable attorney fees of the Confirming Bank.
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“Person” means an individual, a corporation, a limited liability company, a partnership, an
association, a business trust or any other entity or organization, including a government or
political subdivision or any agency or instrumentality thereof.
“Prime Rate” means for any period, a fluctuating interest rate per annum as shall be in effect
from time to time, which rate per annum shall at all times be equal to the rate of interest
announced publicly by the Confirming Bank as its Prime Rate. The Prime Rate is not intended to be
the lowest rate of interest charged by the Confirming Bank in connection with the extension of
credit.
“Reimbursement Agreement” has the meaning set forth in the Background hereto.
“Reimbursement Obligation” means the obligation of the LOC Bank under Section 3(a)(i) to
reimburse the Confirming Bank for each demand for payment under the Confirmation.
“Related Documents” means the Reimbursement Agreement, the Letter of Credit, the Guaranty,
this Agreement, the Confirmation, the Loan Agreement, the Indenture, the Bonds, and any other
agreement or instrument delivered pursuant or relating thereto.
“Responsible Officer” means, at any time, any Vice President or Senior Vice President in the
LOC Bank.
“Subsidiary” means any corporation or other entity of which capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions is at the time directly or indirectly owned by LOC Bank.
“Taxes” means any federal or state tax, assessment or other governmental charge or levy
(including any withholding tax) upon a Person or upon its assets, revenues, income or profits other
than income and franchise taxes imposed upon the Confirming Bank by the government of the States of
Georgia, South Carolina, North Carolina or the federal government of the United States.
“Tax-Exempt Confirmation Agreement” means that Confirmation Agreement by and between the LOC
Bank and the Confirming Bank with respect to the $29,000,000 Xxxxxxxx County Development Authority
Variable Rate Demand Solid Waste Disposal Revenue Bonds, Series 2006 (First United Ethanol, LLC
Project).
“Trustee” has the meaning set forth in the Background hereto.
(b) Unless otherwise specified herein, all accounting terms used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with GAAP, as in effect from time to time,
applied on a basis consistent (except for changes approved by LOC Bank’s independent certified
public accountants) with the most recent consolidated financial statements of LOC Bank delivered to
the Confirming Bank.
(c) All other capitalized terms used herein, but not defined in this Agreement, shall have the
meaning ascribed to them in the Indenture, the Letter of Credit or the Confirmation.
SECTION 2. Issuance of the Confirmation. On or prior to November 30, 2006, upon twenty-four (24) hours written notice from the LOC
Bank, and subject to the terms and conditions hereof, the Confirming Bank agrees to issue the
Confirmation for the Trustee.
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SECTION 3. Reimbursement and Other Payments.
(a) The LOC Bank hereby agrees to pay to the Confirming Bank the following amounts:
(i) when a draw is made under the Confirmation:
(A) immediately after such drawing under the Confirmation, a sum (and interest thereon as
provided in subsection (iii) below) equal to the amount drawn under the Confirmation in
reimbursement of the Confirming Bank for such draw; and
(B) in connection with each drawing on the Confirmation, a drawing fee of $250 for each such
drawing (and interest thereon as provided in subsection (iii) below);
(ii) immediately after any transfer or amendment of the Confirmation in accordance with its
terms, a fee equal to $1,500 (and interest thereon as provided in subsection (iii) below);
(iii) on the date hereof, an origination fee of $100;
(iv) interest on any and all amounts not paid by LOC Bank when due hereunder, for each day
from the date such amounts become due until the date on which payment in full is made, after as
well as before judgment, shall be payable on demand, at a fluctuating interest rate per annum
calculated on the basis of the actual number of days elapsed over a year of 360 days, equal to the
Base Rate plus three percent (3.0%); provided that such fluctuating interest rate shall in no event
be higher (with respect to each amount due and payable hereunder, from the date such amount is due
and payable until the date such amount is paid in full) than the maximum rate permitted by
applicable law;
(v) a nonrefundable letter of credit fee with respect to the Confirmation payable in advance
(A) on the Issuance Date (for the period from, but not including, the Issuance Date to, and
including, the Expiration Date) and (B) thereafter on each Expiration Date (for the extension
period from, but not including, the existing Expiration Date to, and including, the new Expiration
Date), which fee shall be calculated by multiplying the Confirmation Amount on the date of such fee
is due, by a rate of 18 basis points (0.18%) per annum (the
“Fee Percentage”), calculated on the
basis of the actual number of days elapsed over a year of three hundred sixty (360) days for the
number of days in the applicable period; provided, however, in the event that the rating on the
Federal Farm Credit Banks Consolidated Systemwide Bonds is downgraded to a rating below “A” by
Standard & Poor’s Ratings Group (or any comparable rating, if, at such time, Federal Farm Credit
Banks Consolidated Systemwide Bonds are not rated by Standard & Poor’s Ratings Group), the
Confirming Bank may, at its sole discretion, trigger an increase in the Fee Percentage as a result
of such downgrade.
(vi) if any change in any law or regulation or in the interpretation thereof by any
Governmental Authority charged with the administration thereof shall either (A) impose, modify or
deem applicable any reserve, special deposit or similar requirement against letters of credit
issued or confirmed by, or assets held by, or deposits in or for the account of, the Confirming
Bank or (B) impose on the Confirming Bank any other condition regarding this Agreement or the
Confirmation, and the result of any event referred to in clause (A) or (B) of this subsection shall
be to increase the cost to the Confirming Bank of issuing or maintaining the Confirmation by an
amount deemed by the Confirming
Bank to be material (which increase in cost may be the result of the Confirming Bank’s
reasonable allocation of the aggregate of such cost increases resulting from such events), then,
within ten (10) days of demand by the Confirming Bank, all additional amounts which are necessary
to compensate the Confirming Bank for such increased cost incurred by the Confirming Bank. All
payments of increased
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costs pursuant to this subsection shall bear interest thereon if not paid
within ten (10) days of such demand payment in full thereof at the rate provided in subsection
(iii) above. A certificate as to such increased cost incurred by the Confirming Bank as a result
of any event mentioned in clause (A) or (B) of this subsection (vi) and setting forth the
additional amount or amounts to be paid to it hereunder and setting forth in reasonable detail the
basis therefor and the method of calculation thereof shall be prepared in good faith and submitted
by the Confirming Bank to LOC Bank and shall be conclusive (absent manifest error) as to the amount
thereof. The Confirming Bank shall determine the applicability of, and the amount due under, this
section consistent with the manner in which they apply similar provisions and calculate similar
amounts payable to them by other borrowers having in their credit agreements provisions comparable
to this section; and
(vii) if after the date hereof the Confirming Bank shall have determined that the adoption of
any applicable law, rule or regulation regarding capital adequacy or any change therein, or any
change in the interpretation or administration thereof by any Governmental Authority, central bank
or comparable agency charged with the interpretation or administration thereof, or compliance by
the Confirming Bank or any corporation controlling the Confirming
Bank (a “Bank Parent”) with any
request or directive regarding capital adequacy (whether or not having the force of law) of any
such Governmental Authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Confirming Bank’s or Bank Parent’s capital, by an amount deemed
by the Confirming Bank or the Bank Parent to be material, as a consequence of its obligations under
the Confirmation to a level below that which the Confirming Bank or Bank Parent could have achieved
but for such adoption, change or compliance (taking into consideration the Confirming Bank’s or
Bank Parent’s policies with respect to capital adequacy) then, upon notice of such change by the
Confirming Bank by submission to LOC Bank of the certificate hereinafter described, within ten (10)
days of receipt of such notice, such additional amount or amounts as will compensate the Confirming
Bank for such reduction. All payments pursuant to this subsection (vii) shall bear interest
thereon if not paid within ten days of such notice until payment in full at the rate provided in
subsection (iii) above. A certificate of the Confirming Bank claiming compensation under this
subsection (vii) and setting forth the additional amount or amounts to be paid to it hereunder and
setting forth in reasonable detail the basis therefor and the manner of calculation thereof shall
be prepared in good faith and submitted by the Confirming Bank to LOC Bank and shall be conclusive
(absent manifest error). The Confirming Bank shall determine the applicability of, and the amount
due under, this section consistent with the manner in which they apply similar provisions and
calculate similar amounts payable to them by other borrowers having in their credit agreements
provisions comparable to this section.
(b) All payments by LOC Bank to the Confirming Bank hereunder shall be made in lawful currency
of the United States of America and in immediately available funds at the Confirming Bank’s office
at Wachovia Bank, National Association, 000 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx
00000, Attention: Standby Letter of Credit Department or at such other address as the Confirming
Bank shall notify the LOC Bank in writing. Whenever any payment hereunder shall be due on a day
which is not a Business Day, the date for payment thereof shall be extended to the next succeeding
Business Day, and any interest payable thereon shall be payable for such extended time at the
specified rate.
(c) LOC Bank will pay all amounts payable hereunder without setoff or counterclaim and free
and clear of any Taxes. If any Taxes are levied or imposed on the amounts payable hereunder, LOC
Bank will pay the full amount of such Taxes, and such additional amounts as may be necessary so
that every net payment of amounts due hereunder, after withholding or deduction for or on
account of any such Taxes, will not be less than the amounts stated to be due hereunder. In
addition, LOC Bank will, on demand, indemnify and hold harmless the Confirming Bank against, and
reimburse the Confirming Bank
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upon demand for, the amount of any Taxes so levied or imposed, other
than by deduction or withholding, and paid by the Confirming Bank.
SECTION 4. Conditions Precedent. The obligation of the Confirming Bank to issue the
Confirmation is subject to the following conditions precedent having been complied with or waived
by the Confirming Bank on or prior to the date requested for the issuance of the Confirmation
pursuant to Section 2:
(a) the Confirming Bank shall have received an opinion of counsel to LOC Bank, in form and
substance satisfactory to the Confirming Bank and its counsel;
(b) the LOC Bank shall have issued the Letter of Credit and the Confirming Bank shall have
received the original Letter of Credit, for delivery to the Trustee with the Confirmation (or a
copy of the fully executed Letter of Credit), and all copies of all documents, certificates and
opinions delivered in satisfaction of such conditions precedent and shall have been named an
addressee on all opinions delivered in connection therewith;
(c) the Confirming Bank shall have received an authentic copy of LOC Bank’s delegation of
authority and incumbency certificate relating to the execution, delivery and performance of this
Agreement and the Letter of Credit;
(d) the Related Documents shall (A) have been duly authorized, executed and delivered by the
respective parties thereto, (B) be in full force and effect on the Issuance Date, and (C) be
satisfactory in form and substance to the Confirming Bank, and an executed copy of each Related
Document shall have been delivered to the Confirming Bank;
(e) the Confirming Bank shall have received all opinions delivered in connection with the
issuance of the Letter of Credit and the entering into of the Related Documents, addressed to the
Confirming Bank or delivered with a reliance letter permitting the Confirming Bank to rely on such
opinions;
(f) all matters relating to the issuance of the Letter of Credit and the entering into of the
Related Documents shall be in form and substance satisfactory to the Confirming Bank; and
(g) the Confirming Bank shall have received such other documents, instruments, approvals (and,
if requested by the Confirming Bank, certified duplicates of executed copies thereof) or opinions
as the Confirming Bank may reasonably request.
SECTION 5. Reduction and Reinstatement of Amount. The Confirmation Amount shall be
reduced and reinstated to the extent specified in the Confirmation.
SECTION 6. Reserved.
SECTION 7. Obligations Absolute. The Obligations shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms hereof; under all
circumstances whatsoever, and, without limiting the generality of the foregoing, irrespective of;
(a) any lack of validity or enforceability of this Agreement, the Confirmation, the Letter of
Credit, the Bonds or any other Related Document;
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(b) any amendment or waiver of or any consent to departure from this Agreement, the
Confirmation, the Letter of Credit or any other Related Document;
(c) the existence of any claim, setoff, defense to payment or other rights which LOC Bank may
have at any time against any Person (including, without limitation, against the Borrower, the
Trustee, the Issuer, the holder of any Bond or any transferee of the Confirmation (or any Person
for whom the Trustee, the Issuer, any such holder or any such transferee may be acting), the
Confirming Bank), whether in connection with this Agreement, the Indenture, any other Related
Document, the transactions contemplated hereby or thereby or any unrelated transaction;
(d) any statement, certificate or any other document presented under the Confirmation proving
to be forged, fraudulent or invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever absent gross negligence or willful misconduct on the
part of the Confirming Bank;
(e) any misapplication by the beneficiary of the Confirmation of the proceeds of any draw
thereunder; and
(f) any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing, absent gross negligence or willful misconduct on the part of the Confirming Bank.
SECTION 8. Extension of the Stated Expiration Date. The Confirmation shall be
automatically renewed without amendment in accordance with the terms of the Confirmation.
SECTION 9. Representations and Warranties . LOC Bank represents and warrants
to the Confirming Bank that:
(a) Financial Statements. The annual financial statements of the LOC Bank and its
Subsidiaries dated December 31, 2005, and the related statements of income and retained earnings
for the fiscal year ended on such date, audited by independent certified public accountants
reasonably acceptable to Confirming Bank, copies of which have been delivered to the Confirming
Bank, fairly present in conformity with GAAP, the financial position of the LOC Bank and its
Subsidiaries as at such date and its results of operations for the fiscal year then ended.
(b) No Change. Since the date of the most recently prepared financial statements of the LOC
Bank, there has been no material adverse change in the business, operations, property or financial
condition of the LOC Bank and its Subsidiaries taken as a whole or the ability of LOC Bank to enter
into and perform its obligations under this Agreement or any other Related Document.
(c) Existence. The LOC Bank is a federally chartered instrumentality duly organized and
validly existing under the laws of the United States of America with the requisite power and
authority to own its properties and assets and to transact the business and to carry on the
operations in which it currently engages.
(d) Authority. The execution, delivery and performance of this Agreement and the Letter of
Credit are within the powers of LOC Bank and do not contravene in any material way any law or any
obligation by which LOC Bank is bound. LOC Bank has received all approvals required by law or
regulation to enter into, deliver and perform this Agreement and the Letter of Credit.
(e) Litigation. There are no actions, suits or proceedings pending or, to the best knowledge
of any Responsible Officer, threatened against or affecting LOC Bank or any of its
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Subsidiaries
before any court, administrative office, agency or authority which would either individually or
collectively have a material adverse effect on LOC Bank’s business, operations or property or
financial or other condition of LOC Bank and its Subsidiaries taken as a whole or the ability of
LOC Bank to enter into and perform its obligations under this Agreement or any other Related
Document.
(f) Enforceability. This Agreement when duly executed and delivered will be legal, valid and
binding obligation of the LOC Bank enforceable against the LOC Bank in accordance with its terms,
except as such enforceability may be limited by equitable principles or by applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors’ rights generally.
(g) Default. No Event of Default or Default has occurred and is continuing.
(h) Not an Investment Company. LOC Bank is not, and is not controlled by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.
SECTION 10. Covenants. LOC Bank agrees that during the term of this Agreement:
(a) Financial Statements. To the extent not made publicly available and accessible to the
Confirming Bank within such time frame, LOC Bank will furnish to the Confirming Bank as soon as
available, upon request of the Confirming Bank, but in any event within ninety (90) days after the
end of each fiscal year and fiscal quarter of LOC Bank, the consolidated financial statements of
the LOC Bank and its Subsidiaries for such period, together with the related statements of income
and retained earnings, audited by such independent certified public accountants as then reasonably
acceptable to Confirming Bank.
(b) Certificates; Other Information. LOC Bank will furnish to the Confirming Bank annually,
upon request made on or about the date that the financial statements referred to in Section 10(a)
hereof are delivered to the Confirming Bank, a certificate of a Responsible Officer stating whether
to his or her knowledge there exists on the date of such certificate any Default or Event of
Default and, if any Default or Event of Default exists, setting forth the details thereof and the
action that LOC Bank is taking or proposes to take with respect thereto;
(i) immediately after any Responsible Officer becomes aware of the occurrence of any Default
or Event of Default, a certificate of a Responsible Officer setting forth the details thereof and
the action which LOC Bank is taking or proposes to take with respect thereto;
(ii) promptly following any refusal thereof, a copy of each draw request refused by LOC Bank;
(iii) promptly following the occurrence thereof, with respect to the Letter of Credit, written
notice of each reduction, reinstatement or termination of any portion thereof other than in
connection with any reduction of an interest drawing thereunder which is reinstated within one day
of such interest drawing;
(iv) promptly following the occurrence thereof, written notice of any event, happening or
circumstance which has resulted or would likely result in an Act of Governmental Sanction, and
promptly upon receipt thereof, a copy of each notice or other communication received by LOC Bank
from any Governmental Authority relating to any such event, happening or circumstance; and
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(v) promptly, such additional financial and other information as the Confirming Bank may from
time to time reasonably request.
(c) Maintenance of Existence. LOC Bank will preserve and maintain its existence and all of
its rights, privileges, permits and franchises required by law in the normal conduct of its
business.
(d) Amendment to Certain Documents. LOC Bank shall not amend, waive or otherwise modify, and
shall not consent to any amendment, waiver or other modification, of any provision of the
Reimbursement Agreement, including, without limitation, any “event of default” thereunder, the
Letter of Credit or any Related Document, without the prior written consent of the Confirming Bank
if any such amendment, waiver or other modification would have a material adverse effect on the
rights of the Confirming Bank under this Agreement or would diminish or limit LOC Bank’s rights
under the Reimbursement Agreement, the Letter of Credit or any other Related Document.
(e) Default Notices. LOC Bank shall promptly notify the Confirming Bank and the Trustee of
any event of default known to any Responsible Officer to have occurred under the Indenture, the
Reimbursement Agreement or any other Related Document which default constitutes an “event of
default” and LOC Bank shall from time to time at the reasonable request of the Confirming Bank keep
the Confirming Bank informed of what actions LOC Bank intends to take or is taking with respect to
such default.
(f) Downgrading. Upon the downgrading of the rating on Federal Farm Credit Banks Consolidated
Systemwide Bonds to a rating below “BBB” by Standard & Poor’s Ratings Group (or any comparable
rating, if, at such time, Federal Farm Credit Banks Consolidated Systemwide Bonds are not rated by
Standard & Poor’s Ratings Group), LOC Bank shall cooperate fully with the Issuer and the Confirming
Bank in finding a Substitute Credit to replace the Letter of Credit. Any issuer of any such
Substitute Credit shall be acceptable to the Confirming Bank.
SECTION 11. Events of Default.
(a) Events of Default. Each of the following events shall be an “Event of Default” hereunder:
(i) LOC Bank shall fail to pay any amount due hereunder when and as the same shall become due;
(ii) an Event of Default shall occur and be continuing under, and as defined in, the
Tax-Exempt Confirmation Agreement;
(iii) LOC Bank shall fail to observe or perform any covenant contained in this Agreement which
failure, to the extent reasonably susceptible to cure, continues for a period of thirty (30) days,
unless LOC Bank is making reasonable attempts to cure such default with all diligence and
additional time is needed to provide such cure, an additional sixty (60) days shall be granted to
cure such default;
(iv) any representation, warranty, certificate or statement made by LOC Bank in this
Agreement, or in any certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been false or incorrect in any material respect when made or deemed
made;
(v) a default under the Guaranty;
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(vi) LOC Bank or any of its Subsidiaries shall (A) default in any payment when due, at the
stated maturity thereof, by acceleration or otherwise, of any amount in respect of any indebtedness
for borrowed money (other than indebtedness referred to in clause (i)) owed to the Confirming Bank
or any of its affiliates beyond the period of grace, if any, provided in the instrument or
agreement under which such indebtedness was created; or (B) default in the observance or
performance of any other agreement or condition relating to any such indebtedness for borrowed
money or contained in any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, beyond the period of grace, the effect of which default
or other event or condition is to cause or to permit such indebtedness to become due prior to its
stated maturity or to permit the holder of such indebtedness to realize upon any collateral given
as security therefore,
(vii) an Act of Bankruptcy or an Act of Governmental Sanction shall occur;
(viii) the Letter of Credit is repudiated by the LOC Bank or any Governmental Authority having
jurisdiction over the LOC Bank; or
(ix) the downgrading of the rating on Federal Farm Credit Banks Consolidated Systemwide Bonds
to a rating below “BBB” by Standard & Poor’s Ratings Group (or any comparable rating, if, at such
time, Federal Farm Credit Banks Consolidated Systemwide Bonds are not rated by Standard & Poor’s
Ratings Group).
(b) Remedies. Upon the occurrence and continuation of an Event of Default; the Confirming
Bank may, without limiting any other rights and remedies available at law or in equity, exercise
one or all of the remedies set forth below. It is expressly understood that no single remedy set
forth below is intended to be exclusive of any other remedy or remedies:
(i) the Confirming Bank shall be relieved of its agreement to issue, or any agreement made
pursuant to Section 8 hereof to extend the Stated Expiration Date of, the Confirmation if it has
not yet been issued or the Stated Expiration Date has not been extended in accordance with the
terms hereof and thereof;
(ii) notify the Trustee of such Event of Default;
(iii) until the Confirming Bank has been reimbursed in full for any and all drawings under the
Confirmation, all reimbursement payments received by the LOC Bank under or in connection with the
Indenture, the Reimbursement Agreement or otherwise in respect of the Letter of Credit or the other
Related Documents shall be received in trust for the benefit of the Confirming Bank, shall be
segregated from other funds of the LOC Bank and shall be forthwith paid over to the Confirming
Bank in the same form as received (with any necessary endorsement) if the Confirming Bank has
paid draws on the Confirmation to the extent of such payments; and
(iv) proceed against the Guarantor for payment in full of all Obligations outstanding
hereunder pursuant to the Guaranty.
SECTION 12. Further Assurances. Upon the occurrence and during the continuation of a
Default or Event of Default hereunder, LOC Bank shall, from time to time, at its own expense,
promptly execute and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Confirming Bank may reasonably request, in order to
enable the Confirming Bank to exercise and enforce its rights and remedies hereunder and under the
Indenture, the Reimbursement Agreement and the other Related Documents.
-11-
SECTION 13. Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or consent to any departure by LOC Bank therefrom shall in any event be effective unless
the same shall be in writing and signed by the Confirming Bank and LOC Bank. Any such amendment,
waiver or consent shall be effective only in the specific instance and for the specific purpose for
which given.
SECTION 14. Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including SWIFT, telecopier, e-mail or similar writing) and shall be
given to such party at its address or telecopier number set forth below or such other address or
telecopier number as such party may hereafter specify for the purpose by notice to the other party.
Each such notice, request or other communication shall be effective (a) if given by telecopier,
when such telecopy is transmitted to the telecopier number specified below and an appropriate
confirmation is received, (b) if given by mail, three (3) Business Days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid, (c) if timely
delivered to a recognized overnight courier service for next day delivery, on the next Business,
Day or (d) if given by any other means, when delivered at the address specified in this Xxxxxxx 00.
XXX Xxxx
|
Xxxxxxxxx Xxxxxxx Farm Credit, ACA | |
| 000 Xxxx Xxxxxxxxx Xxxxxx | ||
| Xxxxxxxxxx, Xxxxxxx 00000 | ||
| Attn: Xxxxxxx Xxxxxx | ||
| Telephone: (000) 000-0000 x.000 | ||
| Facsimile: (000) 000-0000 | ||
Confirming Bank
|
Wachovia Bank, National Association | |
| Mail Code SC-3295 | ||
| 0000 Xxxx Xxxxxx, 00xx Xxxxx | ||
| Xxxxxxxx, Xxxxx Xxxxxxxx 00000 | ||
| Attention: Xxxxx X. Xxxxxx | ||
| Telephone: (000)000-0000 | ||
| Facsimile: (000)000-0000 | ||
| With a copy: | ||
| Wachovia Bank, National Association | ||
| 000 Xxxxxx Xxxxxx, 0xx Xxxxx | ||
| Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx 00000 | ||
| Attention: Standby Letter of Credit Department | ||
| Telephone: (000) 000-0000 | ||
| Facsimile: (000) 000-0000 |
SECTION 15. No Waiver; Remedies Cumulative. No failure on the part of the Confirming
Bank to exercise, and no delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law or otherwise.
-12-
SECTION 16. Right of Subrogation; Setoff.
(a) Without limiting any rights of subrogation which the Confirming Bank may have or become
entitled to (and without limiting any other rights or remedies of the Confirming Bank), to the
extent LOC Bank does not satisfy any of the Obligations hereunder as and when stated to be due, the
Confirming Bank shall be fully subrogated to the rights of LOC Bank under the Indenture, the
Reimbursement Agreement and the Related Documents.
(b) Without limiting any other right of the Confirming Bank, the Confirming Bank at its sole
election may set off against and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held, and other indebtedness or moneys at any time owing, by the
Confirming Bank to or for the credit or account of LOC Bank, whether or not due, against any and
all amounts due the Confirming Bank hereunder, and the Confirming Bank shall be deemed to have
exercised the right of setoff immediately at the time of such election.
SECTION 17. Indemnification. LOC Bank hereby indemnifies and holds harmless the
Confirming Bank from and against any and all claims, damages, losses, liabilities, costs or
expenses whatsoever which the Confirming Bank may incur (or which may be claimed against the
Confirming Bank by any Person or entity whatsoever) (a) by reason of any untrue statement or
alleged untrue statement of any material fact contained or incorporated by reference in any
disclosure document relating to the LOC Bank, the Reimbursement Agreement and the Letter of Credit,
or any other materials distributed, or representation made, in connection with the issuance,
offering or reoffering of the Bonds, or in any supplement or amendment to any thereto
(collectively, the “Disclosure Materials”), or the omission to state in any such Disclosure
Materials a material fact necessary to make such statements, in the light of the circumstances
under which they are or were made, not misleading; or (b) by reason of or in connection with the
execution and delivery or transfer of or payment, timely payment or failure to pay under, the
Confirmation; provided that LOC Bank shall not be required to indemnify the Confirming Bank for any
such claims, damages, losses, liabilities, costs or expenses in the case of indemnification
pursuant to clause (b) above, to the extent, but only to the extent a court of competent
jurisdiction shall have determined that such claim, damage, loss, liability, cost or expense was
caused by the willful misconduct or gross negligence of the Confirming Bank. Nothing in this
Section 17 is intended to limit the LOC Bank’s Reimbursement Obligation. The LOC Bank agrees that
the Confirming Bank has no obligation to confirm or investigate the accuracy or completeness of the
statements made in any Disclosure Materials or any Related Documents as a condition to the
indemnities set forth in this Section 17 or for any other purpose.
SECTION 18. Continuing Obligation. The obligations of LOC Bank under this Agreement
shall continue until the later of (a) the Expiration Date or (b) the date upon which all amounts
due or to become due to the Confirming Bank hereunder shall have been paid in full and shall (i) be
binding upon LOC Bank and its successors and assigns and (ii) inure to the benefit of and be
enforceable by the Confirming Bank and its successors, transferees and assigns; provided, however,
that (A) LOC Bank may not assign all or any part of its rights or obligations under this Agreement
without the prior written consent of the Confirming Bank and (B) the indemnification obligations of
LOC Bank shall survive the termination of this Agreement.
SECTION 19. Transfer of the Confirmation. The Confirmation may be transferred in
accordance with the provisions set forth therein.
-13-
SECTION 20. Limited Liability of the Confirming Bank. Neither the Confirming Bank nor
any of its employees, agents, officers or directors shall be liable or responsible for:
(a) the use which may be made of the Confirmation or for any acts or omissions of the Trustee,
the Issuer, the holder of any Bond or any transferee in connection therewith;
(b) the validity, or genuineness of documents, or of any endorsement(s) thereon, even if such
documents should in fact prove to be in any or all respects invalid, fraudulent or forged; or
(c) any other circumstances whatsoever in making or failing to make payment under the
Confirmation, except only that LOC Bank shall have a claim against the Confirming Bank, and the
Confirming Bank shall be liable to LOC Bank, to the extent, but only to the extent, of any direct,
as opposed to punitive or any consequential, damages suffered by LOC Bank which LOC Bank proves
were caused by (i) the Confirming Bank’s willful misconduct or gross negligence in determining
whether documents presented under the Confirmation comply with the terms thereof or (ii) the
Confirming Bank’s negligent or willful failure to pay under the Confirmation after the presentation
to it by the Trustee (or a successor under the Indenture to whom any the Confirmation has been
transferred in accordance with its terms) of a draft and certificate strictly complying with the
terms and conditions of the Confirmation. In furtherance and not in limitation of the foregoing,
the Confirming Bank may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or information to the contrary.
In addition, “willful failure to pay” by the Confirming Bank shall not include the Confirming
Bank’s determination not to honor a draft on the Confirmation in the event LOC Bank shall have
waived any discrepancies in presentation of a draft under the Letter of Credit.
SECTION 21. Costs, Expenses and Taxes. LOC Bank agrees to pay on demand all out-of-pocket
expenses of the Confirming Bank, in connection with: (a) the negotiation and preparation of this
Agreement and the Confirmation and review of the Related Documents, (b) any amendments,
supplements, consents or waivers hereto or thereto, and (c) upon the occurrence and during the
continuation of a Default or Event of Default, the enforcement of this Agreement, the Confirmation
and the Related Documents and any other documents which may be delivered in connection herewith or
therewith. In addition, and if applicable, LOC Bank agrees to pay any and all stamp and other
taxes and fees payable or determined to be payable in connection with the execution, delivery,
filing and recording of this Agreement and the Related Documents and agrees to save the Confirming
Bank harmless from and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes and fees.
SECTION 22. Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall as to such jurisdiction, be ineffective
to the extent of such prohibition, unenforceability or nonauthorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or legality of such provision
in any other jurisdiction.
SECTION 23. Governing Law. This Agreement and the Confirmation (to the extent inconsistent with the ISP98, as defined
in the Confirmation) shall be governed by, and construed and interpreted in accordance with, the
laws of the State of North Carolina, without reference to conflict or choice of laws.
-14-
SECTION 24. Consent to Jurisdiction, Service of Process, WAIVER OF JURY TRIAL.
(a) Consent to Jurisdiction. Each of the parties hereto irrevocably submits to the
nonexclusive jurisdiction of any North Carolina court sitting in the City of Winston-Salem or the
United States federal court for the Western District of North Carolina over any suit action or
proceeding arising out of or relating to this Agreement. Each of the parties hereto irrevocably
waives, to the fullest extent permitted by law, any objection which it may now have or hereafter
acquire to the laying of venue of any such suit, action or proceeding brought in any such court and
any claim that any such suit, action or proceeding has been brought in an inconvenient forum. The
foregoing shall not limit the rights of the Confirming Bank to bring proceedings against LOC Bank
in the competent courts of any jurisdiction or jurisdictions. Each of the parties hereto agrees
that a final judgment in any such suit, action or proceeding brought in such a court shall be
conclusive and binding upon it.
(b) Service of Process. Each of the parties hereto hereby consents to process being served in
any suit, action or proceeding of the nature referred to in Section 24(a) hereof at its address set
forth in Section 14 hereof. Each of the parties hereto irrevocably waives, to the fullest extent
permitted by law, all claim of error by reason of such service and agrees that such service (i)
shall be deemed in every respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be valid
personal service upon it.
(c) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER RELATED DOCUMENT
OR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
THIS AGREEMENT.
SECTION 25. Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement for any other
purpose.
SECTION 26. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
SECTION 27. Entirety. This Agreement, together with the form of Confirmation attached
hereto, represent the entire agreement of the parties hereto, and supersede all prior agreements
and understandings, oral or
written, if any, including any commitment letters or correspondence relating to this Agreement
or the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Confirmation Agreement to be duly
executed and delivered as of the date first above written.
| Southwest Georgia Farm Credit, ACA |
||||
| By: | /s/ Xxx X. Xxxxxxxxx | |||
| Name: | Xxx X. Xxxxxxxxx | |||
| Title: | Capital Markets Administrator | |||
| Wachovia Bank, National Association |
||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Xxxxx X. Xxxxxx, Senior Vice President | ||||
| Acknowledged and Agreed: First United Ethanol, LLC |
||||
| By: | /s/ Xxxxxx Xxxxxxxx | |||
| Name: | Xxxxxx Xxxxxxxx | |||
| Title: | Chairman | |||
