exv10w16



 





Exhibit 10.16




PROMISSORY NOTE




			
	 	 	 
	$29,000,000
	 	November 30, 2006
	 
	 	Pelham, Georgia






     FOR VALUE RECEIVED, the undersigned borrower, FIRST UNITED ETHANOL, LLC (the “Borrower”),
promises to pay to the order of the Mitchell County Development Authority (the “Lender”) the
principal sum of TWENTY NINE MILLION AND 00/100THS DOLLARS ($29,000,000) and to pay interest on the
unpaid balance of such principal sum, as hereinafter provided, until the payment of such principal
sum has been made or provided for.



     The Note has been executed and delivered by the Borrower to the Lender and assigned to Wells
Fargo Bank, National Association, as Trustee (the “Trustee”) pursuant to the Loan Agreement (the
“Agreement”), dated as of October 1, 2006, between the Lender and the Borrower. Under the
Agreement, the Lender has loaned to the Borrower the proceeds received from the sale of the
Lender’s $29,000,000 Variable Rate Demand Solid Waste Disposal Revenue Bonds (First United Ethanol,
LLC Project), Series 2006, initially dated the date of their authentication and delivery (the
“Bonds”), to assist the Borrower in the financing of the Project (as defined in the Agreement),
which Project is to be owned and operated by the Borrower, or its successors or assigns. The
Borrower has agreed (i) to repay the loan of the proceeds of the Bonds by making payments (the
“Loan Payments”) and (ii) to make the Additional Payments (as defined in the Indenture) at the
times and in the amounts set forth in this Note. The Bonds have been issued, concurrently with the
execution and delivery of this Note, pursuant to, and are secured by, the Trust Indenture (as
amended and supplemented from time to time, the “Indenture”), dated as of October 1, 2006, between
the Lender and the Trustee. The Bonds bear interest from their date at the Applicable Rate, as
defined in Appendix A to this Note, payable on each Interest Payment Date (as defined in the
Indenture), and mature on October 1, 2026.



     To provide funds to pay the interest on the Bonds as and when due, the Borrower hereby agrees
to and shall make payments of interest on this Note to the Trustee on the first Business Day prior
to the first day of each January, April, July and October commencing on the first Business Day
prior to the first day of January 2007, in an amount equal to the amount payable as interest on the
Bonds on the next Interest Payment Date; provided, however, that with respect to such first
interest payment, the Borrower shall receive a credit against such interest payment equal to the
amount, if any, of money in the Bond Fund (as defined in the Indenture) representing the Bond Fund
Payment (as defined in the Indenture).



     If payment or provision for payment in accordance with the Indenture is made in respect of the
principal of and redemption premium, if any, and interest on the Bonds, this Note shall be deemed
paid to the extent of such payment or provision for payment of Bonds. The Borrower shall receive a
credit against its obligation to make Loan Payments hereunder to the extent that there are amounts
already on deposit in the Bond Fund created by the Indenture (except for moneys drawn on the Letter
of Credit or the Confirming Letter of Credit), and available to pay principal or purchase price of
and premium, if any, and interest on the Bonds pursuant to the Indenture, and to the extent that
Loan Payments are made by the Borrower directly to the Bank pursuant to the Agreement. Subject to
the foregoing, all Loan Payments and Additional Payments shall be in the full amount required
hereunder and under the terms of the Agreement.



     All Loan Payments shall be payable in lawful money of the United States of America and shall
be made to the Trustee at its principal corporate trust office for the account of the Lender and
deposited in the Bond Fund created by the Indenture. Except as otherwise provided in the Indenture,
the Loan Payments shall be used by the Trustee to pay the principal of and redemption premium, if
any, and



1









 







interest on the Bonds as and when due or to reimburse the Bank for unreimbursed draws under
the Letter of Credit (as such terms are defined in the Indenture).



     The obligation of the Borrower to make the payments required hereunder shall be absolute and
unconditional and the Borrower shall make such payments without abatement, diminution or deduction
regardless of any cause or circumstances whatsoever including, without limitation, any defense,
set-off, recoupment or counterclaim which the Borrower may have or assert against the Lender, the
Trustee, the Bank or the Remarketing Agent (as defined in the Indenture) or any other person.



     This Note is subject to optional, extraordinary optional and mandatory prepayment upon
the same terms and conditions, on the same date or dates and at the same prepayment prices, as the
Bonds are subject to optional, extraordinary optional and mandatory redemption, and the Borrower
hereby agrees that it will make Loan Payments hereunder in an amount equal to the principal of and
premium, if any, and interest on the Bonds due and payable on any such redemption date. All
optional prepayments of amounts due under this Note are subject to the requirement that the
Borrower deposit sufficient moneys with the Bank in accordance with 2.1 of the Agreement prior to
the Borrower giving notice of its intention to so prepay pursuant to Section 8.4 of the Agreement.
Any such redemption prior to stated maturity is subject to the obligation of the Borrower to give
the Lender and the Trustee sufficient notice of such redemption as shall enable the Lender and the
Trustee to take all action necessary under the Indenture to redeem on the date specified for
prepayment a like principal amount of Bonds at the same redemption price.



2









 





     IN WITNESS WHEREOF, the Borrower has caused this Note to be executed in its name by its duly
authorized representative as of the date first written above.



	 	 	 	 	 
	 	FIRST UNITED ETHANOL, LLC,

a Georgia limited liability company

 	 
	 	By:  	/s/ Murray Campbell
 	 
	 	 	Murray Campbell 	 
	 	 	Chairman of the Board 	 



3









 






	 	 	 	 	 




     The above Promissory Note is hereby pledged and assigned to Wells Fargo Bank, National
Association, as Trustee, without recourse, pursuant to the Trust Indenture dated as of October 1,
2006 between the Mitchell County Development Authority and the Trustee.



	 	 	 	 	 
	 	MITCHELL COUNTY DEVELOPMENT


AUTHORITY

 	 
	 	By:  	/s/ Charles Rooks
 	 
	 	 	Charles Rooks 	 
	 	 	Acting Chairman 	 



4









 






	 	 	 	 	 




     The Borrower hereby acknowledges and agrees to the aforesaid assignment of this Promissory
Note to the Trustee.



	 	 	 	 	 
	 	FIRST UNITED ETHANOL, LLC

a Georgia limited liability company

 	 
	 	By:  	/s Murray Campbell
 	 
	 	 	Murray Campbell 	 
	 	 	Chairman of the Board 	 



5









 






	 	 	 	 	 



APPENDIX A





     As used in this Note, “Applicable Rate” shall mean at any time the then applicable interest
rate per annum on the Bonds as described below. The capitalized terms not defined in the Note shall
have the meanings ascribed to them in the Indenture.



     The Bonds will initially bear interest during the Accrual Period (herein defined) beginning on
the date of initial authentication and delivery of the Bonds. The Bonds will thereafter bear
interest at a Variable Rate per annum, which shall be the lesser of (i) the Maximum Interest Rate
or (ii) a fluctuating per annum rate equal to the per annum rate for the one-week period commencing
on a Thursday and ending on the Wednesday succeeding such Thursday (the “Accrual Period”)
determined by the Remarketing Agent (herein defined) by 12:00 noon, Portland, Oregon time, on the
Wednesday preceding the day on which the Accrual Period commences or, if such day of determination
is not a Business Day for the Remarketing Agent, on the first succeeding day which is a Business
Day (the “Determination Date”), to be equal to (but not more than) the rate required to be borne by
the Bonds for such Accrual Period to produce a bid for the purchase of all the Bonds on such
Determination Date at a price equal to the principal amount thereof plus accrued interest, if any,
thereon from the most recent Interest Payment Date. Notwithstanding the foregoing, the Accrual
Period beginning on the date of initial authentication and delivery of the Bonds shall commence on
such date and end on Wednesday, December 6, 2006. If for any reason the Variable Rate is not
determined as set forth above on any Determination Date, the interest rate announced on the
preceding Determination Date shall continue in effect. If for any reason the Variable Rate is not
so determined for a second succeeding week or thereafter, the Variable Rate shall thereafter be
determined by the Trustee and shall be a rate per annum (not to exceed the Maximum Interest Rate)
equal to twenty-five basis points in excess of the then current municipal swap index as quoted by
the Bond Market Association. Interest at the Variable Rate will be computed on the basis of a year
of 365 or 366 days, as appropriate, for the actual number of days elapsed, and will be payable on
the first Thursday of each January, April, July and October (each an “Interest Payment Date”), or,
if such day is not a Business Day, on the next succeeding Business Day, with such interest being
initially paid on January 4, 2007.



     With the prior written consent of the Bank, and upon receipt by the Trustee of an amendment to
the Letter of Credit increasing the amount available to be drawn for the payment of accrued
interest on the Bonds to two hundred (200) days of accrued interest on the then existing principal
balance of the Bonds at the Fixed Interest Rate, and upon receipt of an opinion of Bond Counsel
that such conversion will not adversely affect the excludability of interest on the Bonds from
gross income for Federal income tax purposes, on any Interest Payment Date (if such date is
designated by the Borrower as the Conversion Date), the Borrower may elect to convert the rate on
the Bonds to a fixed rate (the “Fixed Interest Rate”). The Borrower may exercise its conversion
option by giving the Trustee, the Bank, the Confirming Bank, the Paying Agent, the Tender Agent and
the Remarketing Agent written notice of its intention to convert the rate to the Fixed Interest
Rate, at least 50 days prior to the proposed Conversion Date.



     Subject to the provisions of the Indenture, on any Interest Payment Date (if such date is
designated by the Borrower as the Conversion Date), the Borrower may elect to convert the rate on
some or all of the Bonds to a fixed rate.



     On a day which is a Business Day at least fifteen (15) days prior to the Conversion Date, the
Remarketing Agent will determine the minimum rate of interest which will be applicable to the Bonds
on the ensuing Conversion Date, and at least twelve (12) days prior to such Conversion



A-1









 




Date the Paying Agent will notify all of the Bondholders by Mail of the aforesaid minimum rate
of interest. Bondholders shall deliver such Bonds to the Tender Agent on or before the Conversion
Date. On a day which is a Business Day at least seven (7) days prior to the Conversion Date (the
“Rate Determination Date”) the Remarketing Agent shall determine the Fixed Interest Rate. The
Remarketing Agent shall determine the Fixed Interest Rate on the Rate Determination Date to be that
rate per annum which, if borne by all of the outstanding Bonds through the Maturity Date, would, in
the judgment of the Remarketing Agent (taking into consideration current transactions and
comparable securities in which the Remarketing Agent is involved or of which it is aware and
prevailing financial market conditions), be the interest rate necessary (but which would not exceed
the interest rate necessary) to produce as nearly as practical a par bid for each outstanding Bond
on the Rate Determination Date.





A-2