exv10w24



 





Exhibit
10.24



TAX REGULATORY AGREEMENT




AMONG




MITCHELL COUNTY DEVELOPMENT AUTHORITY




FIRST UNITED ETHANOL, LLC




AND




WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee




$29,000,000 VARIABLE RATE DEMAND

SOLID WASTE DISPOSAL REVENUE BONDS

(FIRST UNITED ETHANOL, LLC PROJECT), SERIES 2006




Dated as of November 30, 2006




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DESCRIPTION OF THE PURPOSE OF THE BONDS AND THE PROJECT
	 	 	2	 
	 
	 	 	 	 
	Section 1.1. Purpose of the Bonds
	 	 	2	 
	Section 1.2. Description of Project
	 	 	2	 
	Section 1.3. Acquisition, Construction and Equipping of the Project
	 	 	2	 
	Section 1.4. No Replacement Proceeds, Sinking or Pledged Funds
	 	 	2	 
	Section 1.5. Investment of Bond Proceeds
	 	 	3	 
	Section 1.6. Hedges
	 	 	3	 
	Section 1.7. Reimbursement
	 	 	3	 
	Section 1.8. No Excess Proceeds
	 	 	4	 
	Section 1.9. Representations of the Borrower
	 	 	4	 
	Section 1.10 Representations of the Issuer
	 	 	6	 
	 
	 	 	 	 
	ARTICLE II USE OF PROCEEDS; DESCRIPTION OF FUNDS
	 	 	6	 
	 
	 	 	 	 
	Section 2.1. Use of Proceeds; Funds Established
	 	 	6	 
	Section 2.2. Purpose of Bond Fund
	 	 	7	 
	Section 2.3. Rebate Fund
	 	 	7	 
	 
	 	 	 	 
	ARTICLE III COMPLIANCE WITH SECTION 148(f) OF THE CODE;
	 	 	 	 
	PERMITTED INVESTMENTS
	 	 	7	 
	 
	 	 	 	 
	Section 3.1. Compliance with Section 148(f) of the Code
	 	 	8	 
	Section 3.2. Records
	 	 	8	 
	Section 3.3. Permitted Investments; Certificates of Deposit and Investment Agreements
	 	 	8	 
	Section 3.4. Debt Service under the Loan Agreement
	 	 	9	 
	 
	 	 	 	 
	ARTICLE IV YIELD AND YIELD LIMITATIONS
	 	 	10	 
	 
	 	 	 	 
	Section 4.1. Issue Price
	 	 	10	 
	Section 4.2. Yield Limits
	 	 	10	 
	Section 4.3. Continuing Nature of Yield Limits
	 	 	10	 
	 
	 	 	 	 
	ARTICLE V DEFINITIONS
	 	 	10	 
	 
	 	 	 	 
	ARTICLE VI CERTIFICATE REGARDING THE PROJECT AND
	 	 	 	 
	THE EXPENDITURES OF FUNDS; MISCELLANEOUS
	 	 	14	 
	 
	 	 	 	 
	Section 6.1. Certificate Regarding the Project and the Expenditure of Funds
	 	 	14	 
	Section 6.2. Termination; Interest of Borrower and Issuer in Rebate Fund
	 	 	14	 
	Section 6.3. No Sale of Project
	 	 	14	 
	Section 6.4. No Federal Guarantee
	 	 	14	 
	Section 6.5. Future Events
	 	 	14	 
	Section 6.6. Permitted Changes; Opinion of Bond Counsel
	 	 	14	 






i









 






	 	 	 	 	 
	 	 	Page	 
	Section 6.7. Severability
	 	 	14	 
	Section 6.8. Counterparts
	 	 	15	 
	Section 6.9. Notices
	 	 	15	 
	Section 6.10. Successors and Assigns
	 	 	15	 
	Section 6.11. Headings
	 	 	15	 
	Section 6.12. Governing Law
	 	 	15	 
	Section 6.13. Tax Exempt Status of Bonds
	 	 	15	 
	Section 6.14. No Common Plan of Financing
	 	 	16	 
	Section 6.15. Expectations
	 	 	16	 
	Section 6.16. Form 8038 Information
	 	 	16	 
	 
	 	 	 	 
	EXHIBIT A. Sources of Funds; Expenditures
	 	 	A-1	 
	 
	 	 	 	 
	EXHIBIT B. Certificate of Underwriter
	 	 	B-1	 
	 
	 	 	 	 
	EXHIBIT C. Estimated Drawdown Schedule
	 	 	C-1	 
	 
	 	 	 	 
	EXHIBIT D. Computation of Average Expected Life of
	 	 	D-1	 
	 
	 	 	 	 
	EXHIBIT E. Form 8038 Information
	 	 	E-1	 






ii









 








TAX REGULATORY AGREEMENT




     This Tax Regulatory Agreement, dated November 30, 2006 (this “Agreement”), by and between
FIRST UNITED ETHANOL, LLC, a Georgia limited liability company (the “Borrower”) and the MITCHELL
COUNTY DEVELOPMENT AUTHORITY (the “Issuer”), a nonprofit economic development authority existing
under the Constitution and laws of the State of Georgia, and Wells Fargo Bank, National Association
(the “Trustee”), a national banking association, is being executed and delivered in connection with
the issuance by the Issuer of $29,000,000 Mitchell County Development Authority Variable Rate
Demand Solid Waste Disposal Revenue Bonds (First United Ethanol, LLC Project), Series 2006 (the
“Bonds”). The Bonds are being issued pursuant to the Trust Indenture dated as of October 1, 2006
(the “Indenture”) between the Issuer and the Trustee with respect to the Bonds. The Bonds are
being offered for sale to the public by W.R. Taylor & Company, LLC (the “Underwriter”) in the
amount of $29,000,000 (representing 100% of the principal amount of the Bonds) pursuant to a Bond
Purchase Agreement dated as of the date hereof, among the Issuer, the Underwriter and the Borrower.
The Borrower is paying $277,000 directly to the Underwriter W.R. Taylor & Company, LLC as an
underwriting fee. Certain terms are defined in Article V hereof. Terms used herein and not
defined herein shall have the meanings given to them in the Indenture.



     One purpose of executing this Agreement is to set forth various facts regarding the Bonds and
to establish the reasonable expectations of the Issuer and the Borrower as to future events
regarding the Bonds and the use of Bond proceeds. The facts, estimates and definitions set forth
in this Agreement and the expectations of the Issuer set forth in this Agreement, including, but
not limited to, the use, allocation, investment and yield of proceeds of the Bonds and other moneys
described in this Agreement, the purposes of the Bonds, debt service, tax related matters, use of
the Project and economic life of the Project described in this Agreement, are based upon and made
in reliance upon the following representations and opinions of others: (a) the representations of
the Underwriter contained in the Certificate of Underwriter attached hereto as Exhibit B;
(b) the representations and covenants of the Borrower contained in (i) this Agreement and all
exhibits hereto, (ii) the Loan Agreement (as hereinafter defined), (iii) the Bond Purchase
Agreement, (iv) the Indenture, (v) the Preliminary Offering Memorandum used in connection with the
sale of the Bonds, and (vi) the Borrower’s Closing Certificate dated the date hereof; and (c) the
approving opinion of Bond Counsel dated the date hereof. The Issuer is not aware of any facts or
circumstances that would cause it to question the accuracy of any of the representations, opinions
and warranties made herein and noted above, although the Issuer has made no independent
investigation relating to same. The certifications and representations made herein and
expectations presented herein are intended, and may be relied upon, as a certification of an
officer of the Issuer given in good faith described in Section 1.148-2(b)(2) of the Regulations.



     The certifications, representations and covenants contained herein are made on behalf of the
Issuer, the Trustee and the Borrower, as applicable, for the benefit of the owners from time to
time of the Bonds. The Issuer and the Borrower do hereby certify and represent, based on their
knowledge, information and belief, and covenant the following on behalf of the Issuer and the
Borrower, respectively, and the Trustee, in connection with Sections 2.1(e), 2.3, 3.2 and 3.3,
covenants as follows:



1









 





ARTICLE I




DESCRIPTION OF THE PURPOSE OF THE

BONDS AND THE PROJECT




     Section 1.1. Purpose of the Bonds. The proceeds of the Bonds will be loaned by the Issuer to
the Borrower and used by the Borrower to (i) pay or reimburse the Borrower for payment of the cost
of acquiring, constructing and equipping certain solid waste disposal components of its ethanol
refining facility (the “Project”), and (ii) pay certain expenses incurred in connection with the
issuance of the Bonds. Such loan will be made to the Borrower pursuant to a Loan Agreement dated
as of October 1, 2006 (the “Loan Agreement”) between the Borrower and the Issuer. A breakdown of
sources and uses of funds is attached hereto as Exhibit A.



     Section 1.2. Description of the Project. The Project consists of the acquisition,
construction and equipping of certain solid waste disposal components to the Borrower’s hog raising
facility.



     Section 1.3. Acquisition, Construction and Equipping of the Project. The Borrower reasonably
expects that it will, within six months of the Closing, incur one or more substantial binding
obligations (not subject to contingencies within the control of the Issuer, any agency, department
or division of the Issuer, the Borrower or any related person to the Borrower within the meaning of
Section 144(a)(3) of the Code (a “Related Person”)) to other persons or entities to expend, for the
acquisition, construction or equipping of the Project, amounts which in the aggregate are not less
than Five Percent (5%) of the Sale Proceeds of the Bonds. The Borrower further reasonably expects
that the work of acquiring, constructing and equipping the Project and the expenditure of Bond
proceeds will continue to proceed with due diligence through no later than October 1, 2009, at
which time it is anticipated that all original proceeds of the Bonds and investment earnings
thereon will have been spent.



     It is expected that the Bond proceeds deposited into the Project Fund created pursuant to the
Indenture (herein the “Project Fund”), including Investment Proceeds earned from investment of the
Project Fund, will be spent to pay costs of the Project and a portion of the costs of issuing the
Bonds in accordance with the estimated drawdown schedule contained in Exhibit C.



     Section 1.4. No Replacement Proceeds, Sinking or Pledged Funds. (a) Except as otherwise
provided in Sections 2.1 and 2.2 hereof, and except for the Loan Agreement, after the issuance of
the Bonds on this date, neither the Issuer, the Borrower nor any Related Person to the Issuer or
the Borrower has on hand any property, including cash and securities (“Property”) that is legally
required or otherwise restricted (no matter where held or the source thereof) to be used, directly
or indirectly, for the purposes for which the Bonds are being issued.



     (b) Except as otherwise provided in Sections 2.1 and 2.2 hereof, neither the Issuer, the
Borrower nor any Related Person to the Issuer or the Borrower has established or expects to
establish any Replacement Proceeds. The Borrower acknowledges that Gross Proceeds includes any
Sale Proceeds and Investment Proceeds of the Bonds and that the investment of such amounts are
subject to certain yield limitations as described in Section 4.2 hereof.



     (c) Except as otherwise provided in Sections 2.1 and 2.2 hereof, no Property has been or is
expected to be pledged or otherwise restricted (no matter where held or the source thereof) to
provide reasonable assurance, in the event the Issuer, the Borrower or any Related Person to the
Issuer or the Borrower encounters financial difficulty, of its availability to be used, directly or
indirectly, for the payment of



2









 







amounts due or to become due on the Bonds, the Loan Agreement or any credit enhancement or
liquidity device relating to the foregoing, and no compensating balance, liquidity account,
negative pledge or similar arrangement exists with respect to, in any way, the Bonds, the Loan
Agreement or any credit enhancement or liquidity device relating to the foregoing.



     (d) The term of the Bonds is not longer than is reasonably necessary for the governmental
purposes of the Bonds, in that the weighted average maturity of the Bonds does not exceed one
hundred twenty percent (120%) of the average reasonably expected life of the Project financed by
the Bonds.



     Section 1.5. Investment of Bond Proceeds. Except as permitted with respect to temporary
investments, no portion of the Bonds is being issued for the purpose of investing the proceeds
thereof at a yield higher than the Yield on the Bonds. No more than 50% of the proceeds of the
Bonds are or will be invested in investments having a yield that is substantially guaranteed for
four years or more.



     Section 1.6. Hedges. Neither the Issuer, the Borrower nor any Related Person to the Issuer or
the Borrower has entered into or, without first obtaining an opinion of Bond Counsel that such
hedge will not adversely effect the tax exempt status of the Bonds, will enter into any hedge
entered into to reduce the risk of interest rate changes with respect to the Bonds or the Loan
Agreement. The Issuer and the Borrower acknowledge that any such swap agreement could affect the
calculation of Bond Yield under the Regulations.



     Section 1.7. Reimbursement. Except as identified below, none of the proceeds of the Bonds
will be allocated to expenditures paid prior to the date of Closing.



     The Issuer and the Borrower are allocating a portion of the Bond proceeds to expenditures paid
by the Borrower prior to Closing (the “Reimbursed Expenditures”) in connection with the
acquisition, construction and equipping of the Project in the amounts indicated on the requisition
for disbursement of moneys in the Project Fund to be submitted by the Borrower to the Trustee
within 30 days from the date hereof (the “Requisition”), and will, after such allocation, treat
such proceeds as being spent. In support of such allocation, the Borrower represents and covenants
and the Issuer (as to subparagraph (d) only) represents and covenants as follows:



          (a) Certain Reimbursed Expenditures (the “Preliminary Expenditures”) relate to
architectural, engineering, surveying, soil testing, Bond issuance and similar costs
that were incurred prior to commencement of the acquisition, construction,
installation or equipping of the Project and do not include any costs related to
land acquisition, site preparation and similar costs incident to commencement of
construction.




          (b) The amount of Preliminary Expenditures does not exceed 20% of the proceeds
received from the sale of the Bonds (not including any investment earnings thereon)
being used to finance the Project with respect to which the Preliminary Expenditures
were incurred.




          (c) Except as described in (i) below, in the case of Reimbursed Expenditures
other than the Preliminary Expenditures, the Issuer declared an official intent to
reimburse such Expenditures not later than 60 days after the date such Reimbursed
Expenditures were paid.




          (d) At the time the official intent described in (c) above was declared, the
Borrower and the Issuer reasonably expected (based on information supplied by the
Borrower, upon which the Issuer believed it was reasonable and prudent to rely) to


reimburse the Reimbursed Expenditures related thereto with the proceeds of a future
borrowing.




3









 







          (e) The Issuer and the Borrower hereby allocate Bond proceeds in the amount
indicated on the Requisition to reimburse the Reimbursed Expenditures (the
“Reimbursement Allocation”). Except as described in (i) below, and except in the
case of Preliminary Expenditures, this Reimbursement Allocation is being made within
18 months after the later of (i) the date on which the Reimbursed Expenditure was
paid, or (ii) the date on which the property relating to the Reimbursed Expenditure
was placed in service or abandoned, but in no event more than three years after the
Reimbursed Expenditure was paid. “Placed in service” for purposes of this
subsection (e) means the date on which, based on all the facts and circumstances,
(i) a facility has reached a degree of completion which would permit its operation
at substantially its design level, and (ii) the facility is, in fact, in operation
at such level.




          (f) All Reimbursed Expenditures represent (i) costs of a type that are
properly chargeable to a capital account under the Code (or would be so chargeable
with a proper election) under general federal income tax principles or (ii) costs of
issuance of the Bonds.




          (g) Funds corresponding to Gross Proceeds used to reimburse a Reimbursed
Expenditure will not be used within one year after making any Reimbursement
Allocation in a manner that results in the creation of Replacement Proceeds of the
Bonds or any other issue. The preceding sentence does not apply to amounts
deposited in a bona fide debt service fund.




          (h) No Reimbursement Allocation will employ any action that (A)(i) enables the
Issuer, the Borrower or any Related Person to either of them to exploit the
difference between tax-exempt and taxable interest rates to obtain a material
financial advantage, and (ii) overburdens the tax-exempt bond market to avoid
arbitrage restrictions, or (B) avoids the restrictions under Section 142 through 147
of the Code.




          (i) The restrictions in (c) and (e) above do not apply to (i) costs of
issuance of the Bonds and (ii) an amount not in excess of the lesser of $100,000 or
5% of the proceeds of the Bonds.




     Section 1.8. No Excess Proceeds. Proceeds of the Bonds are not reasonably expected to exceed
the amount required for the governmental purposes of the Bonds set forth in Section 1.1 hereof.



     Section 1.9. Representations of the Borrower. The Borrower makes the following
representations, understanding, after such consultation with such legal counsel as deemed
appropriate, that the exclusion from gross income of interest on the Bonds for federal income tax
purposes is dependent on the accuracy and truthfulness of such representations:




          (a) At least ninety-five percent (95%) of the net proceeds of the Bonds will
be used to pay the costs of acquiring, constructing or equipping the Project.




          (b) The Borrower is not a principal user or a Related Person with respect to
any facilities located in the State of Georgia which were financed with the proceeds
of Tax-Exempt Obligations other than the Bonds.



4









 






          (c) As determined by the Underwriter and certified by the Underwriter in
Exhibit B attached hereto, the average weighted maturity of the Bonds is not
greater than 19.8328 years. The Borrower represents that the average reasonably
expected economic life (determined as of the date hereof) of those portions of the
Project financed with proceeds of the Bonds is not less than 18.737 years. Thus,
the average maturity of the Bonds does not exceed one hundred twenty percent (120%)
of the average reasonably expected life (determined as provided on Exhibit D
attached hereto as of the date hereof) of the facilities financed with proceeds of
such obligations within the meaning of Section 147(b) of the Code.




          (d) Within the meaning of Section 147(c) of the Code, no portion of the
proceeds of the Bonds will be used (directly or indirectly) for the acquisition of
land (or an interest therein) to be used for farming purposes and not more than
twenty-five percent (25%) of the net proceeds of such obligations will be used
(directly or indirectly) for the acquisition of any other land (or interest
therein).




          (e) Within the meaning of Section 147(d) of the Code, to the extent any
portion of the proceeds of the Bonds will be used for costs of the acquisition of
any property (or an interest therein) and the first use of such property was not
pursuant to such acquisition, within two years following the date of issuance of the
Bonds rehabilitation expenditures will be incurred with respect to such property in
an amount not less than fifteen percent (15%) (one hundred percent (100%) in the
case of property not constituting a building (and equipment therefor)) of the
portion of such costs financed with proceeds of the Bonds. (The term
“rehabilitation expenditures” means any amount properly chargeable to the capital
account which is incurred by the person acquiring the building or property (or
additions or improvements to property) in connection with the rehabilitation of the
building. In the case of an integrated operation contained in a building before its
acquisition, such terms include rehabilitating existing equipment in such building
or replacing it with equipment having substantially the same function.)




          (f) No portion of the Bond proceeds will be used to provide any airplane, sky
box or other private luxury box, health club facility, facility primarily used for
gambling, or store the principal business of which is the sale of alcoholic
beverages for consumption off premises, all within the meaning of Section 147(e) of
the Code.




          (g) No more than two percent (2%) of the proceeds of the Bonds will be used
to finance costs of issuance of the Bonds within the meaning of Section 147(g) of
the Code.




          (h) The Borrower will not use the proceeds of the Bonds in such a manner as to
cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the
Code.




          (i) The Borrower shall cooperate with the Issuer in filing all informational
returns required by Section 149(e) of the Code.




          (j) No portion of the Bond proceeds will be used to provide the following: any
private or commercial golf course, country club, massage parlor, tennis club,
skating facility (including roller skating, skateboard and ice-skating), racquet
sport facility (including handball or racquetball court), hot tub facility, suntan
facility or racetrack, and no more than 25% of the Bond proceeds will be used to
provide a facility the primary purpose of which is one of the following: retail food
and beverage services, automobile



5









 







sales or service, or the provision of recreation or entertainment, within the
meaning of Section 144(a)(8) of the Code.




          (k) No portion of the proceeds of the Bonds will be used to provide residential real
property for family units. In addition, no portion of the proceeds of the Bonds will be
used to finance a single building, an enclosed shopping mall, or a strip of offices, stores,
or warehouses using substantial common facilities that is financed by another tax exempt
issue.




          (l) Notwithstanding any other provisions of this Agreement to the contrary,
the Borrower shall not otherwise use any of the Bond proceeds or take or fail to
take any action the effect of which would cause interest on the Bonds to be included
in gross income of the holders thereof for federal income tax purposes.



     Section 1.10. Representations of the Issuer. The Issuer makes the following representations,
understanding, after such consultation with such legal counsel as deemed appropriate, that the
exclusion from gross income of interest on the Bonds for federal income tax purposes is dependent
on the accuracy and truthfulness of such representations:




          (a) On April 28, 2006, the Issuer duly adopted an inducement resolution (the “Inducement
Resolution”) relative to the issuance of Bonds for the Project.




          (b) In connection with the issuance of the Bonds, the Issuer held a public hearing as
required under Code §147(f) regarding the proposed issuance of the Bonds, on July 11, 2006, after
publishing notice of the hearing in the Camilla Enterprise on June 21, 2006. The notice advised
the public that a public hearing would be held on July 11, 2006, to discuss the proposed issuance
of the Bonds and that interested parties would have an opportunity to express their views at that
hearing. The hearing was open to the public, and those present were invited to express their views
relating to the issuance of the Bonds and the proposed use of the Bond proceeds. An affidavit of
publication of the notices of the hearing, minutes of the public hearing, and a copy of the Bond
Resolution are contained in the Transcript.




          (c) On August 1, 2006, after the public hearing, the Issuer duly adopted a resolution
authorizing and approving the issuance of the Bonds.




          (d) On August 8, 2006, after the public hearing and after the Issuer adopted its resolution
authorizing and approving the issuance of the Bonds, the Mitchell County Board of Commissioners
adopted its resolution authorizing and approving the issuance of the Bonds.



ARTICLE II




USE OF PROCEEDS;

DESCRIPTION OF FUNDS




     Section 2.1. Use of Proceeds; Funds Established. (a) The Bond proceeds will be used as
follows:







	 	 	 
	Original Proceeds of	 	 
	        the Bonds	 	Application
	 
	Sale Proceeds:

	 	$29,000,000 (representing the Sale Proceeds of the
Bonds) to the Trustee to be deposited in the Project
Fund.






6









 





     (b) The Bond Fund created pursuant to the Indenture (herein the “Bond Fund”), the Project Fund
created pursuant to the Indenture, and the Rebate Fund created pursuant to the Indenture (herein
the “Rebate Fund”), are the only funds or accounts created under the Indenture.



     (c) No more than $580,000 (representing two percent (2%) of the proceeds of the Bonds) of
issuance costs will be paid from the Project Fund, which is comprised of Bond proceeds. All
issuance costs, if any, with respect to the Bonds in excess of such amount will be paid by the
Borrower from a source other than tax-exempt financing.



     (d) Loan Payments by the Borrower under the Loan Agreement will be paid either directly by the
Borrower to the financial institution issuing either the Letter of Credit to reimburse such
financial institution for amounts deposited in the Bond Fund pursuant to the Letter of Credit, or
may be paid directly by the Borrower to the Trustee for deposit into the Reimbursement Account in
the Bond Fund.



     (e) The Borrower’s obligations to reimburse the financial institution for amounts deposited in
the Bond Fund pursuant to the Letter of Credit will be governed by the terms and conditions of the
Reimbursement Agreement and Loan Agreement and will be secured by collateral described in the
Reimbursement Agreement.



     Section 2.2. Purpose of Bond Fund. The Bond Fund will be used primarily to achieve a proper
matching of revenues and earnings with debt service in each year ending December 31. Other than
any amounts being held to pay principal of matured Bonds that have not been presented for payment,
it is reasonably expected that any moneys deposited in the Bond Fund will be spent within the
12-month period beginning on the date of deposit therein (or in any other fund under the Indenture,
if earlier). Other than any amounts being held to pay principal of matured Bonds that have not
been presented for payment, it is reasonably expected that the Bond Fund will be depleted at least
once a year, except for a reasonable carry over amount not to exceed the greater of (i) the
earnings on the investment of moneys in the Bond Fund for the immediately preceding bond year, or
(ii) one-twelfth (1/12th) of the principal and interest payments on the Bonds for the immediately
preceding bond year. Any earnings from the investment of amounts in the Bond Fund retained therein
will be spent within a one-year period beginning on the date of receipt of such investment
earnings.



     Section 2.3. Rebate Fund. The Trustee agrees to establish the Rebate Fund and will hold
amounts in the Rebate Fund, if any, in trust as provided herein and as directed by the Issuer and
the Borrower pursuant hereto. Moneys in the Rebate Fund shall not be considered moneys held under
the Indenture and shall not constitute a part of the “trust estate” held for the benefit of the
Bondholders, or, except as provided in Section 6.2 hereof, for the benefit of the Issuer or the
Borrower. Moneys in the Rebate Fund (including earnings and deposits therein) shall be held in
trust by the Trustee and held for future payment to the United States Government as required by
Section 148(f) of the Code and by the Regulations and as contemplated under the provisions of this
Agreement and shall be paid out by the Trustee to such persons, in such amounts and at such times
as shall be set forth in written instructions delivered to the Trustee by an Authorized Borrower
Representative.



ARTICLE III




COMPLIANCE WITH SECTION 148(f)

OF THE CODE; PERMITTED INVESTMENTS




7









 





     Section 3.1. Compliance with Section 148(f) of the Code.



     (a) The Issuer and the Borrower covenant and agree to take such actions and make, or cause to
be made, all calculations, transfers and payments that may be necessary to comply with the rebate
requirements contained in Section 148(f) of the Code with respect to the Bonds. The Issuer and the
Borrower will make, or cause to be made, rebate payments in accordance with law with respect to the
Bonds.



     (b) Based in part upon representations made by the Underwriter in the Certificate of
Underwriter attached hereto as Exhibit B, the Issuer and the Borrower have determined that,
for purposes of computing any rebate payments required to be made with respect to the Bonds, the
Letter of Credit is a Qualified Guarantee.



     Section 3.2. Records. The Trustee (to the extent required by the Indenture and except as
herein-below limited) and/or the Borrower shall keep and retain or cause to be kept and retained,
until the date six years after the date of retirement of the Bonds, the following records with
respect to the investment of all Gross Proceeds and amounts in the Rebate Fund, if any. Such
records shall include (i) purchase price, (ii) purchase date, (iii) type of investment, (iv)
accrued interest paid, (v) interest rate (if applicable), (vi) principal amount, (vii) maturity
date, (viii) interest payment date (if applicable), (ix) date of liquidation, and (x) receipt upon
liquidation. If any investment becomes Gross Proceeds of the Bonds on a date other than the date
such investment is purchased, the records required to be kept by the Trustee shall include the fair
market value of such investment on the date it becomes Gross Proceeds, and the Trustee shall
maintain such records as to fair market value. If any investment is retained after the date the
last Bond is retired, the records required to be kept by the Trustee shall include the fair market
value of such investment on the date the last Bond is retired. Amounts will be segregated wherever
held in order to maintain these records. Any provisions of the Indenture or this Agreement to the
contrary notwithstanding, the obligations of the Trustee with respect to the keeping of records
shall extend only to amounts which are on deposit with it under the Indenture or in the Rebate
Fund. Upon request by the Issuer, the Borrower and the Trustee, as appropriate, shall provide the
Issuer with a copy of such records.



     Section 3.3. Permitted Investments; Certificates of Deposit and Investment Agreements. Except
as provided in the next sentence, all amounts that constitute Gross Proceeds shall be invested at
all times to the greatest extent practicable, and no amounts may be invested in zero yield
investments other than obligations of the United States purchased directly from the United States.
In the event moneys cannot be invested, other than as provided in this sentence, due to the
denomination, price or availability of investments, the Borrower may invest or direct the
investment of all such amounts in an interest bearing deposit of a bank with a yield not less than
that paid to the general public or such amounts shall be held uninvested as cash to the minimum
extent necessary.



     If the Borrower shall direct the investment (and the Trustee shall not be obligated to invest
moneys until directed by an Authorized Borrower Representative) of Gross Proceeds in the following
investments, it shall do so only in accordance with the following provisions:



     (a) Investments in certificates of deposit of banks or savings and loan associations that have
a fixed interest rate, fixed payment schedules and substantial penalties for early withdrawal shall
be made only if (A) the yield on the certificate of deposit (i) is not less than the yield on
reasonably comparable direct obligations of the United States, and (ii) is not less than the
highest yield that is published or posted by the provider to be currently available from the
provider on comparable certificates of deposit offered to the public, or (B) the investment is an
investment in a Guaranteed Investment Contract and qualifies under (b) below.



8









 





     (b) Investments in Guaranteed Investment Contracts shall be made only if (i) a bona fide
solicitation is made for a specified Guaranteed Investment Contract and at least three bona fide
written bids from different providers that have no material financial interest in the Bonds (e.g.,
as Underwriters or brokers) are received, (ii) the highest-yielding Guaranteed Investment Contract
for which a qualifying bid is made (determined net of broker’s fees) is purchased, (iii) the yield
on the Guaranteed Investment Contract (determined net of broker’s fees) is not less than the yield
then available from the provider on reasonably comparable Guaranteed Investment Contracts, if any,
offered to other persons from a source of funds other than gross proceeds of tax-exempt bonds, (iv)
the determination of the terms of the Guaranteed Investment Contract takes into account as a
significant factor the Borrower’s reasonably expected drawdown schedule for the amounts to be
invested, exclusive of amounts deposited in debt service funds and reasonably required reserve or
replacement funds, (v) the terms of the Guaranteed Investment Contract, including collateral
security requirements, are reasonable, and (vi) the obligor on the investment contract certifies
those administrative costs (as defined in Section 1.148-5(e) of the Regulations) that it is paying
or expects to pay to third parties in connection with the Guaranteed Investment Contract.



     The Borrower shall direct the Trustee to buy and sell all investments of Gross Proceeds at
fair market value. The fair market value of an investment is the price at which a willing buyer
would purchase the investment from a willing seller in a bona fide, arm’s length transaction.
Except as described in (a) or (b) above and except for United States Treasury obligations that are
purchased directly from the United States Treasury, no investment of a type that is not traded on
an established securities market, within the meaning of Section 1273 of the Code, will be purchased
with Gross Proceeds. In general, an “established securities market” includes: (i) property that is
listed on a national securities exchange, an interdealer quotation system or certain foreign
exchanges, (ii) property that is traded on a Commodities Futures Trading Commission designated
board of trade or an interbank market, (iii) property that appears on a quotation medium, and (iv)
property for which price quotations are readily available from dealers and brokers. A debt
instrument is not treated as traded on an established market solely because it is convertible into
property which is so traded.



     An investment of Gross Proceeds in an External Commingled Fund shall be made only to the
extent that such investment is made without an intent to reduce the amount to be rebated to the
United States Government or to create a smaller profit or a larger loss than would have resulted if
the transaction had been at arm’s length and had the rebate or Yield restriction requirements not
been relevant. An investment of Gross Proceeds shall be made in a Commingled Fund other than an
External Commingled Fund only if the investments made by such Commingled Fund satisfy the
provisions of this Section 3.3.



     Section 3.4. Debt Service under the Loan Agreement. Loan Payments under the Loan Agreement
exactly equal debt service payments on the Bonds. The earnings and profits of any temporary
investment of proceeds of the Bonds held under the Indenture will accrue to the Borrower and not to
the Issuer. It is not expected that the Borrower will make any deposits sooner than necessary
under the Indenture.



     Except for (a) the receipt of payments under the Loan Agreement as described above, (b) the
payment of the costs of issuance relating to the Bonds, (c) the payment of fees and expenses of the
Trustee, (d) the payment of the fees of the Issuer, and (e) the payment of remarketing fees, no
consideration, in cash or in kind, is being or will be paid by any person to any person in
connection with or relating to issuing, carrying or redeeming the Bonds or issuing, carrying or
repaying the amounts owing under the Loan Agreement.



9









 





ARTICLE IV




YIELD AND YIELD LIMITATIONS




     Section 4.1. Issue Price. The Underwriter has certified in Exhibit B, among other
things, that the first offering price at which it sold at least ten percent of each maturity of the
Bonds is 100% of the principal amount thereof, plus accrued interest, if any.



     Section 4.2. Yield Limits. (a) All Gross Proceeds, to the extent not exempted in (b) below,
shall be invested at market prices and at a yield (after taking into account any yield reduction
payments to the extent permitted by and made pursuant to Section 1.148-5(c) of the Regulations) not
in excess of the Yield on the Bonds.



     (b) Subject to Section 4.2(c), any and all of the following may be invested without yield
restriction:




          (i) amounts invested in Tax Exempt Obligations (to the extent permitted by the
Indenture);




          (ii) amounts held in the Bond Fund (including any investment earnings derived from such
amounts) that have not been on deposit under the Indenture for more than 13 months, so long
as the Bond Fund continues to qualify as a bona fide debt service fund as described in
Section 2.2 hereof;




          (iii) amounts in the Project Fund prior to the earlier of payment of all expenses to be
paid from that fund or three years from the Closing;




          (iv) all amounts derived from the investment of Gross Proceeds held in the Bond Fund,
other than amounts derived from investment of proceeds held in the Bond Fund and the Project
Fund during the periods described in (ii) and (iii) above, for a period of one year after
the date received;




          (v) all other amounts not described in (i) through (iv) above for the first 30 days
after they become Gross Proceeds; and




          (vi) an amount not to exceed the lesser of 5% of the proceeds of the Bonds or $100,000.



     (c) At no time during any bond year may the amount of Gross Proceeds (except for amounts
described in Sections 4.2(b)(i), (ii) and (iii) of this Agreement) invested with a yield higher
than the yield on the Bonds exceed 150 percent of the debt service of the Bonds for the bond year.
The aggregate amount of Gross Proceeds (except for amounts described in Section 4.2(b)(i), (ii) and
(iii) of this Agreement) invested at a yield higher than the yield on the Bonds must be promptly
and appropriately reduced (as described in the Regulations) as the amount of outstanding Bonds is
reduced.



     Section 4.3. Continuing Nature of Yield Limits. Subject to Section 6.5, once moneys are
subject to the yield limits of Section 4.2, they remain yield restricted until they cease to be
Gross Proceeds.



ARTICLE V




DEFINITIONS




     “Agreement” means this Tax Regulatory Agreement.



10









 





     “Bond Counsel” means Kasson & Associates, LLC, or any other nationally recognized firm of
attorneys experienced in the field of municipal bonds whose opinions are generally accepted by
purchasers of municipal bonds which is acceptable to the Issuer, the Borrower and the Trustee.



     “Closing” means the date of this Agreement, which is the date on which the Issuer is receiving
the purchase price for the Bonds and is not earlier than the date on which interest is beginning to
accrue on the Bonds for federal income tax purposes.



     “Code” means the Internal Revenue Code of 1986, as amended.



     “Commingled Fund” means any fund or account containing both Gross Proceeds and an amount in
excess of $25,000 that are not Gross Proceeds if the amounts in the fund or account are invested
and accounted for, collectively, without regard to the source of funds deposited in the fund or
account. An open-ended regulated investment company under Section 851 of the Code is not a
Commingled Fund.



     “Control” means the possession, directly or indirectly through others, of either of the
following discretionary and non-ministerial rights or powers over another entity:




          (a) to approve and to remove without cause a controlling portion of the
governing body of a Controlled Entity; or




          (b) to require the use of funds or assets of a Controlled Entity for any
purpose.



     “Controlled Entity” means any entity or one of a group of entities that is subject to Control
by a Controlling Entity or group of Controlling Entities.



     “Controlled Group” means a group of entities directly or indirectly subject to Control by the
same entity or group of entities, including the entity that has the Control of the other entities.



     “Controlling Entity” means any entity or one of a group of entities directly or indirectly
having Control of any entities or group of entities.



     “External Commingled Fund” means a Commingled Fund in which the Issuer, the Borrower and all
Related Persons to the Issuer and the Borrower own, in the aggregate, not more than ten percent of
the beneficial interests.



     “Gross Proceeds” means (a) amounts actually or constructively received from the sale of the
Bonds, including amounts used to pay Underwriters’ discount or compensation and accrued interest
(other than accrued interest for a period not greater than one year before Closing and paid within
one year after the Closing), (b) all amounts in the Bond Fund and the Project Fund, (c) any amounts
derived from the sale of any right that is part of the terms of a Bond or is otherwise associated
with a Bond, (d) any other Replacement Proceeds, and (e) amounts actually or constructively
received from the investment and reinvestment of amounts described above.



     “Guaranteed Investment Contract” means (i) any investment that has specifically negotiated
withdrawal or reinvestment provisions and a specifically negotiated interest rate, and (ii) any
agreement to supply investments on two or more future dates (e.g., a forward supply contract).



11









 





     “Investment Proceeds” means any amounts actually or constructively received from investing any
proceeds of the Bonds.



     “Letter of Credit” means the letter of credit issued by Southeast Georgia Farm Credit, ACA on
the date of Closing guaranteeing the payment of principal and interest on the Bonds.



     “Loan Agreement” means the Loan Agreement, dated as of October 1, 2006, between the Issuer and
the Borrower with respect to the loan of the proceeds of the Bonds.



     “Permitted Proceeds” means all payments pursuant to the Loan Agreement to pay principal of and
premium, if any, and interest on the Bonds.



     “Principal User” means (a) a principal owner, defined as a person who holds more than a 10%
ownership interest (by value) in the Project, or, if no person owns more than 10%, then the person
who holds the largest ownership interest in the Project; (b) a principal lessee, defined as a
person who leases more than 10% of the Project (disregarding portions used under a short-term lease
of one year or less), determined by reference to the fair rental value of the Project; or (c) any
other principal user, such as a principal customer, or any person who enjoys a use of the Project
(other than short-term use) in a degree comparable to the enjoyment of a principal owner or
principal lessee. Regarding the fair rental value in clause (b) above, fair rental value may be
measured in terms of leased area.



     “Project Certificate” means the Project Certificate, dated the date hereof, executed by the
Borrower in connection with the Bonds.



     “Qualified Guarantee” means a guarantee of the payment of principal and interest payable on
the Bonds with respect to which all of the following requirements are satisfied:



          (a) As of the date the guarantee is obtained, it is reasonably expected that the present
value of the fees to be paid for the guarantee is less than the present value of the expected
interest savings on the Bonds resulting from the guarantee. For this purpose, present value is
computed using the yield on the Bonds, determined with regard to guarantee payments, as the
discount rate.




          (b) The guarantee is a guarantee in substance, and imposes a secondary liability that
unconditionally shifts to the guarantor substantially all of the credit risk for all or part of the
payments on the Bonds. For this purpose, a guarantee is not treated as being conditional if (i)
the guarantee is subject to reasonable procedural or administrative requirements or (ii) in the
case of a guarantee against failure to remarket a qualified tender bond, such guarantee is subject
to commercially reasonable limitations based on credit risk, such as limitations on payment in the
event of default by the primary obligor or the bankruptcy of a long-term credit guarantor.




          (c) The guarantor (i) is not a co-obligor on the Bonds and (ii) does not expect to make any
payments pursuant to the guarantee other than under a direct-pay letter of credit or similar
arrangement for which the guarantor will be reimbursed immediately.




          (d) Neither the guarantor nor any Related Person to the guarantor will use more than ten
percent (10%) of the Project.




          (e) The guarantee fees constitute a reasonable, arm’s-length charge for the transfer of
credit risk.




12









 








          (f) Any fees paid to the guarantor for services other than the transfer of credit risk must
be separately stated, reasonable and excluded from the guarantee fee.




     “Rebate Fund” means the fund, if any, created in order to ensure compliance with Section
148(f) of the Code.



     “Regulations” means United States Treasury Regulations dealing with the tax-exempt bond
provisions of the Code.



     “Related Person” means (i) in the case of the Issuer, a member of the same Controlled Group as
the Issuer, and (ii) in the case of the Borrower, a related person to the Borrower within the
meaning of Section 144(a)(3) of the Code.



     “Replacement Proceeds” means (a) amounts in debt service funds, redemption funds, reserve
funds, replacement funds or any similar funds, to the extent reasonably expected to be used
directly or indirectly to pay principal or interest on the Bonds, (b) any amounts for which there
is provided, directly or indirectly, a reasonable assurance, in substance, that the amount will be
available to pay principal or interest on the Bonds or the obligations under any credit enhancement
or liquidity device with respect to the Bonds or the Loan Agreement, even if the Issuer or the
Borrower encounters financial difficulties, including any liquidity device or negative pledge to
the extent described in Section 1.148-1(c)(3)(ii) of the Regulations, and (c) any other amounts
treated as replacement proceeds under Section 1.148-1(c) of the Regulations.



     “Sale Proceeds” means any amounts actually or constructively received from the sale of the
Bonds, other than pre-issuance accrued interest.



     “Tax Exempt Obligations” means (i) obligations described in Section 103(a) of the Code, the
interest on which is not includable in the gross income of any owner thereof for federal income tax
purposes, (ii) interests in regulated investment companies to the extent that at least 95 percent
of the income to the holder of the interest is interest which is not includable in the gross income
of any owner thereof for federal income tax purposes, and (iii) certificates of indebtedness issued
by the United States Treasury pursuant to the Demand Deposit States and Local Government Series
described in 31 C.F.R. part 344.



     “Test-Period Beneficiary” means any person who at any time during the “test period” is a
Principal User of the Project, including a person who is a Related Person to such Principal User;
provided, that a person is treated as a Related Person only if that person is related to the
Principal User at any time during the test period, and such Principal User has not ceased to use
the Project before the persons became related. A Test-Period Beneficiary does not cease to be a
Test-Period Beneficiary if he ceased to use the facility; the portion of the issue allocated to the
Test-Period Beneficiary continues to be so allocated until the issue is no longer outstanding. The
“test period” for the Bond is the three-year period beginning on the later of the date the Project
is placed in service or the Issue Date.



     “Yield” or “yield” means that discount rate which when used in computing the present value of
all payments of principal and interest paid and to be paid on an obligation (using semi-annual
compounding on the basis of a 360-day year or a 365-day year; provided, however, the same
convention must be used in computing Yield on the Bonds and yield on all investments) produces an
amount equal to its purchase price, including accrued interest. For purposes of computing yield on
the Bonds, fees paid and reasonably expected to be paid for any Qualified Guarantee on the Bonds
shall be taken into account in the same manner as payments of principal and interest on the Bonds,
as set forth in Section 1.148-4(b)(1) of the Regulations. For purposes of computing yield on an
investment, administrative costs may be taken into



13









 







account to the extent permitted by Section 1.148-5(e) of the Regulations, and yield reduction
payments may be taken into account to the extent permitted by Section 1.148-5(c) of the
Regulations.



ARTICLE VI




CERTIFICATE REGARDING THE PROJECT AND

THE EXPENDITURES OF FUNDS; MISCELLANEOUS




     Section 6.1. Certificate Regarding the Project and the Expenditure of Funds. The Borrower
covenants that it will take all actions that may be necessary to cause all representations and
covenants made by Borrower herein and in the Project Certificate with respect to future events to
be true.



     Section 6.2. Termination; Interest of Borrower and Issuer in Rebate Fund. This Agreement
shall terminate if (a) the Issuer shall have filed with the Trustee and the Borrower a written
notice of termination of this Agreement, which notice shall contain a certification that the Bonds
have been fully paid and retired, and (b) all amounts remaining on deposit in the Rebate Fund, if
any, and any other amounts required to be paid to satisfy the requirements of Section 148(f) of the
Code shall have been paid to or upon the order of the United States; provided, however, that if the
amount then on deposit in the Rebate Fund exceeds the amount required to be paid therefrom to the
United States, such excess amount shall be paid over and distributed to the Borrower.
Notwithstanding the foregoing, the provisions of Section 3.2 hereof shall not terminate until the
sixth anniversary of the date the Bonds are fully paid and retired.



     The parties hereto recognize that amounts, if any, on deposit in the Rebate Fund are held for
payment to the United States Treasury. The foregoing notwithstanding, the Borrower and the Issuer
shall be deemed to have an interest in such amounts to the extent such amounts represent amounts
available to satisfy the obligation of the Issuer and the Borrower to rebate certain amounts to the
United States Treasury.



     Section 6.3. No Sale of Project. No portion of the Project is expected to be sold or
otherwise disposed of prior to maturity of the Bonds, except as otherwise contemplated or permitted
by the Loan Agreement.



     Section 6.4. No Federal Guarantee. Except as permitted by Section 149(b) of the Code, the
Bonds will not be federally guaranteed within the meaning of Section 149(b) of the Code.



     Section 6.5. Future Events. The Issuer and the Borrower acknowledge that any changes in facts
or expectations from those set forth herein may result in different yield restrictions or rebate
requirements and agree that Bond Counsel will be contacted if such changes do occur.



     Section 6.6. Permitted Changes; Opinion of Bond Counsel. The yield restrictions contained in
Section 4.2 or any other restriction or covenant contained herein need not be observed or may be
changed if the Issuer, the Trustee and the Borrower receive an opinion of Bond Counsel to the
effect that such nonobservance or change will not adversely affect the exclusion of interest on the
Bonds from gross income for federal income tax purposes.



     Section 6.7. Severability. If any clause, provision or section of this Agreement is ruled
invalid by any court of competent jurisdiction, the invalidity of such clause, provision or section
shall not affect any of the remaining clauses, sections or provisions hereof.



14









 





     Section 6.8. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the same instrument.



     Section 6.9. Notices. All notices, demands, communications and requests which may or are
required to be given hereunder or by any party hereto shall be deemed given on the date on which
the same shall have been mailed by registered or certified mail, postage prepaid, addressed as
follows:



	 	 	 
	If to the Issuer:

	 	Mitchell County Development Authority
	 

	 	186 East Broad Street
	 

	 	Camilla, Georgia 31730
	 

	 	Attention: Executive Director
	 

	 	Fax: (229) 336-2063
	 
	 	 
	If to the Borrower:

	 	First United Ethanol, LLC
	 

	 	2 West Broad Street
	 

	 	Camilla, Georgia 31730
	 

	 	Attention: Mr. Tommy Hilliard
	 

	 	Fax: (229) 522-2824
	 
	 	 
	If to the Trustee:

	 	Wells Fargo Bank, National Association
	 

	 	Corporate Trust Department
	 

	 	1300 SW Fifth Avenue, 11th Floor
	 

	 	MAC P6101-114
	 

	 	Portland, Oregon 97201
	 

	 	Attention: Ms. Doreen Rowe
	 

	 	Fax: (503) 886-3300






     Notice given by facsimile will be effective immediately. Notice given by regular U.S. mail
will be effective 2 days from the date of posting.



     The Issuer and the Borrower may, by notice given to the other, designate any different
addresses to which subsequent notices, demands, requests or communications shall be sent.



     Section 6.10. Successors and Assigns. The terms, provisions, covenants and conditions of this
Agreement shall bind and inure to the benefit of the respective successors and assigns of the
Issuer, the Borrower and the Trustee.



     Section 6.11. Headings. The headings of this Agreement are inserted for convenience only and
shall not be deemed to constitute a part of this Agreement.



     Section 6.12. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Georgia.



     Section 6.13. Tax Exempt Status of Bonds. The Issuer and the Borrower shall take all steps
necessary to comply with the requirements hereunder in order to ensure that interest on the Bonds
is not includable in the gross income of owners thereof for federal income tax purposes under the
Code; provided, however, compliance with any such requirement shall not be required in the event
the Issuer and the Borrower and the Trustee receive an opinion of Bond Counsel to the effect that
either (i) compliance with such requirement is not required to maintain the exclusion from gross
income of interest on the Bonds, or (ii) compliance with some other requirement will meet the
requirements of the Code. In the event the Issuer



15









 







and the Borrower receive such opinion of Bond Counsel, the Issuer and the Borrower agree to take
such actions necessary to comply with the requirements set forth in such opinion.



     Section 6.14. No Common Plan of Financing. Except for the Bonds, no bonds or other
obligations issued by or on behalf of a state or political subdivision which are reasonably
expected to be paid out of substantially the same source of funds as the Bonds or will be paid
directly or indirectly from the proceeds of the Bonds were or will be sold (within the meaning of
Section 1.150T-1(c) of the Regulations) during the period commencing fifteen days prior to November
30, 2006 and ending fifteen days after that date.



     Section 6.15. Expectations. The facts, estimates and circumstances presented by the Borrower
and other persons, together with the expectations of the Borrower as to future events, as set forth
in this Agreement, are true and are not incomplete in any material respect. On the basis of the
facts and estimates contained herein, the undersigned have adopted the expectations contained
herein. On the basis of such facts, estimates, circumstances and expectations, and based on the
knowledge, information and belief of the undersigned, it is not expected that the proceeds from the
sale of the Bonds or any other moneys or property will be used in a manner that will cause the
Bonds to be arbitrage bonds within the meaning of Section 148 of the Code and the Regulations.
Such expectations are reasonable and there are no other facts, estimates and circumstances that
would materially change such expectations. The representations set forth in this Section 6.15 are
representations of the Borrower only and not of the Issuer or the Trustee. Furthermore, the
representations, covenants and agreements elsewhere herein are not representations, covenants or
agreements of the Issuer or the Trustee unless specifically so stated. Neither the Issuer nor the
Trustee shall be bound to make any investigation into the facts of matters stated in any such
documents referred in this Agreement, and shall perform only such duties and take only such actions
as are expressly set forth herein.



     Section 6.16. Form 8038 Information. The Borrower understands that the tax-exempt status of
the Bonds is maintained only if the Issuer files the Information Return for Private Activity Note
Issues (Form 8038) with the Internal Revenue Service with respect to the Bonds. The information
requested on Exhibit E attached hereto is needed for the purpose of making such filing.
The Borrower confirms that the information on Exhibit E is true and correct.



16









 





     IN WITNESS WHEREOF, the parties hereto have caused this Tax Regulatory Agreement to be
executed in their respective names by their duly authorized officers, all as of the day first above
written.



	 	 	 	 	 
	 	FIRST UNITED ETHANOL, LLC,

a Georgia limited liability company	 
	 	 	 
	 	By:  	                              /s/ Murray Campbell
 	 
	 	 	     Murray Campbell 	 
	 	 	     Chairman of the Board 	 
	 




17









 







	 	 	 	 	 
	 	MITCHELL COUNTY DEVELOPMENT AUTHORITY	 
	 
	 	By:  	                                /s/ Charles Rooks
 	 
	 	 	     Charles Rooks 	 
	 	 	     Acting Chairman 	 
	 




18









 








	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as Trustee	 
	 
	 	By:  	                                 /s/ Doreen Rowe
 	 
	 	 	     Doreen Rowe 	 
	 	 	     Vice President 	 
	 




19









 





EXHIBIT A




SOURCES OF FUNDS; EXPENDITURES




	 	 	 	 	 
	SOURCES:
	 	 	 	 
	 
	 	 	 	 
	Principal of Bonds
	 	$	29,000,000	 
	 
	 	 	 
	 
	 	 	 	 
	TOTAL
	 	$	29,000,000	 
	 
	 	 	 
	 
	 	 	 	 
	EXPENDITURES:
	 	 	 	 
	 
	 	 	 	 
	Construction Costs of Project
	 	$	27,970,000	 
	Costs of Issuance
	 	$	580,000	 
	Non-Qualifying Assets
	 	$	450,000	 
	 
	 	 	 	 
	TOTAL
	 	$	29,000,000	 
	 
	 	 	 






A-1









 





EXHIBIT B
(to the Tax Regulatory Agreement)




CERTIFICATE OF UNDERWRITER




     The undersigned, on behalf of and for W.R. Taylor & Company, LLC (the “Underwriter”), does
hereby certify as follows:



     1. The Underwriter, Mitchell County Development Authority (the “Issuer”) and First United
Ethanol, LLC, a Georgia limited liability company (the “Borrower”), have executed a bond purchase
agreement (the “Bond Purchase Agreement”) on the date hereof (the “Sale Date”), concerning the sale
by the Issuer of its $29,000,000 Mitchell County Development Authority Variable Rate Demand Solid
Waste Disposal Revenue Bonds, Series 2006 (First United Ethanol, LLC Project) (the “Bonds”).



     2. The Underwriter hereby confirms that the initial price at which more than ten percent of
each maturity of the Bonds have been sold to the public (not including bond houses and brokers or
similar persons or organizations acting in the capacity of Underwriters or wholesalers) is equal to
100% of the principal amount thereof.



     3. All of the Bonds have been the subject of an initial bona fide offering to the public
(excluding bond houses, brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers) at 100% of the principal amount thereof. The sale
price of the Bonds, i.e. 100% of the principal amount thereof, is not greater than the fair market
value of the Bonds as of the Sale Date.



     4. The Underwriter will receive an underwriting fee of $277,000 with respect to or related to
the issuance of the Bonds.



     5. The present value of the fees to be paid for the transfer of credit risk to Southeast
Georgia Farm Credit, ACA and Wachovia Bank, N.A. (collectively, the “Bank”), as providers of an
irrevocable direct-pay letter of credit which guarantee the payment of principal and interest on
the Bonds, or to any successor guarantor, is less than the present value of the interest savings on
the Bonds resulting from such guarantee, using the yield on the Bonds (determined with regard to
such guarantee fee payments) as the discount rate for purposes of determining such present values.



     6. In the experience of the Underwriter, the fees to be paid to the Bank represent a
reasonable, arm’s-length charge for the transfer of credit risk with respect to the Bonds.



     7. The weighted average maturity (determined in accordance with Section 147(b) of the Code)
of the Bonds is 19.8328 years.



     Dated: November 30, 2006



W.R. TAYLOR & COMPANY, LLC




	 	 	 	 	 	 	 
	 

	 	By
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	      Robbins Taylor	 	 
	 

	 	 	 	     President	 	 






B-1









 





EXHIBIT C




ESTIMATED DRAWDOWN SCHEDULE




	 	 	 	 	 
	        Quarter/Year	 	Costs
	Fourth Quarter, 2006

	 	$	[___]	 
	 
	First Quarter, 2007

	 	$	[___]	 
	 
	TOTAL

	 	$	29,000,000	 






C-1









 





EXHIBIT D




COSTS OF QUALIFYING ASSETS

USE OF BOND PROCEEDS

COMPUTATION OF AVERAGE REASONABLY EXPECTED LIFE OF PROJECT




	 	 	 	 	 	 	 
	Asset	 	Qualifying Cost	 	Useful Life (Years)	 
	Centrifuge System
	 	$3,200,000	 	 	20	 
	 
	 	 	 	 	 	 
	Evaporator System
	 	$12,500,000	 	 	20	 
	 
	 	 	 	 	 	 
	Methanator System
	 	$950,000	 	 	20	 
	 
	 	 	 	 	 	 
	Dryer System
	 	$8,020,000	 	 	20	 
	 
	 	 	 	 	 	 
	DDGS Storage System
	 	$2,500,000	 	 	20	 
	 
	 	 	 	 	 	 
	First Year Letter of Credit Fee
	 	$800,000	 	 	  0	 
	 
	 	 	 	 	 	 
	Total Qualifying Solid Waste Disposal Assets
	 	$27,970,000	 	 	 	 
	 
	 	 	 	 	 	 
	Costs of Issuance (2% Maximum)
	 	$580,000	 	 	  0	 
	Non-Qualifying Costs (3% Maximum)
	 	$450,000	 	 	  0	 
	 
	 	 	 	 	 	 
	Bond Issue Amount
	 	$29,000,000	 	 	 	 
	 
	 	 	 	 	 	 
	Maximum Bond Size Calculation
	 	 	 	 	 	 
	 
	$27,970,000 Divided by .95 = $29,442,105
	 	 	 	 	 	 






Useful Life Calculation




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	20 Year Property

	 	$	27,170,000	 	 	x
	 	 	20	 	 	=
	 	$	543,400,000	 
	0 Year Property

	 	$	1,830,000	 	 	x
	 	 	0	 	 	=	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	$	29,000,000	 	 	 	 	 	 	 	 	 	 	$	543,400,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$543,400,000 (Total) Divided by $29,000,000 (Bond Size) = 18.737 (Average Weighted Useful Life)






D-1









 





EXHIBIT E



1. The total cost of all property financed by the Bond proceeds is expected to be classified as:




	 	 	 	 	 	 	 
	a.

	 	Land
	 	$	- 0 -	 
	 
	b.

	 	Building and Structures
	 	$	-0-	 
	 
	c.

	 	Equipment with a recovery period of more than 5 years
	 	$	27,170,000	 
	 
	d.

	 	Equipment with a recovery period of 5 years or less
	 	$	-0-	 
	 
	e.

	 	Other (Equipment)
	 	$	- 0 -	 





For recovery period for equipment, use the Accelerated Cost Recovery System of Section 168 of the
Code.



2. State the North American Industrial Classification System (NAICS) code and corresponding face
amount of the Project to be financed with the Bonds:




	 	 	 	 	 
	NAICS Code	 	Amount
	[___]

	 	$	29,000,000	 





3. Are any of the proceeds of the Bonds being used to refund a prior issue?




	 	 	 
	Yes

	 	No      X






     (If Yes, state the amount of Bond proceeds being used to refund a prior issue)


4. Miscellaneous:





	 	a.	 	Name of governmental units approving issue: TEFRA Notice published June 21, 2006; TEFRA
Hearing July 9, 2006; Issuer approval August 1, 2006; Mitchell County Board of Commissioners
approval August 8, 2006
	 
	 	b.	 	Name and EIN of the primary private user:




Name: First United Ethanol, LLC

EIN: [__]



5. State the following amounts:




	 	 	 	 	 	 	 
	a.

	 	Issue Price of Bonds
	 	$	29,000,000	 
	 
	b.

	 	Bond Issuance Costs (being paid from Bond Proceeds)
	 	$	580,000	 
	 
	c.

	 	Proceeds Used for Credit Enhancement
	 	$	800,000	 
	 
	d.

	 	Amounts Allocated to Reserve
	 	$	- 0 -	 
	 
	e.

	 	Proceeds Used to Refund Prior Issue
	 	$	- 0 -	 
	 
	f.

	 	Lendable Proceeds (Net Amount Available to the
Borrower)
	 	$	27,620,000	 









E-1