**Exhibit 10.28****CONFIRMATION AGREEMENT****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           PageSECTION 1. **Definitions; Accounting Terms**  2        SECTION 2. **Issuance of the Confirmation**  4        SECTION 3. **Reimbursement and Other Payments**  5        SECTION 4. **Conditions Precedent**  7        SECTION 5. **Reduction and Reinstatement of Amount**  7        SECTION 6. **Reserved**  7        SECTION 7. **Obligations Absolute**  7        SECTION 8. **Extension of the Stated Expiration Date**  8        SECTION 9. **Representations and Warranties**  8        SECTION 10. **Covenants**  9        SECTION 11. **Events of Default**  10        SECTION 12. **Further Assurances**  11        SECTION 13. **Amendments and Waivers**  12        SECTION 14. **Notices**  12        SECTION 15. **No Waiver; Remedies Cumulative**  12        SECTION 16. **Right of Subrogation; Setoff**  13        SECTION 17. **Indemnification**  13        SECTION 18. **Continuing Obligation**  13        SECTION 19. **Transfer of the Confirmation**  13        SECTION 20. **Limited Liability of the Confirming Bank**  14        SECTION 21. **Costs, Expenses and Taxes**  14        SECTION 22. **Severability**  14        SECTION 23. **Governing Law**  14        SECTION 24. **Consent to Jurisdiction, Service of Process,WAIVER OF JURY TRIAL**  15        SECTION 25. **Headings**  15        SECTION 26. **Counterparts**  15        SECTION 27. **Entirety**  15 
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**CONFIRMATION AGREEMENT**          **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 existingunder 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 wastedisposal components of an ethanol refining facility (the ***“Project”***) owned and operated by FirstUnited Ethanol, LLC, a Georgia limited liability company (the ***“Borrower”***), caused the MitchellCounty 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, Series2006 (First United Ethanol, LLC Project), in the aggregate original principal amount of Fifty ThreeMillion Five Hundred Thousand Dollars ($53,500,000) (the ***“Bonds”***), under the terms and conditionsmore 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 WellsFargo Bank, National Association, as Trustee (the ***“Trustee”***).          B. The Issuer loaned the proceeds of the Bonds (the ***“Loan”***) to the Borrower pursuant to theterms of that certain Loan Agreement entered into as of October 1, 2006, between the Borrower andthe Issuer (the ***“Loan Agreement”***).          C. To enhance the marketability of the Bonds, the Borrower arranged for the LOC Bank to issueits Letter of Credit dated November 30, 2006 (as amended, modified or supplemented from time totime, the ***“Letter of Credit”***) in favor of the Trustee in the original face amount of Fifty FiveMillion 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 theBorrower 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 requestedthat the Confirming Bank issue its Irrevocable Confirmation of the Letter of Credit to the Trusteeto 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 ConfirmingBank’s commitment to issue the Confirmation; (b) the LOC Bank’s agreement to reimburse theConfirming 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 theConfirmation.          NOW THEREFORE, in consideration of the mutual agreements made herein and in order to inducethe 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 shallfail to pay its debts generally as they become due; (ii) LOC Bank shall admit in writing itsinability to pay any of its indebtedness; (iii) LOC Bank shall consent to a petition for or applyto any authority for the appointment of a receiver, liquidator, trustee or similar official foritself or any substantial part of its properties or assets; (iv) LOC Bank shall institutebankruptcy, insolvency, reorganization, arrangement or liquidation proceedings for itself; or (v)any receiver, liquidator, trustee or similar official for itself or any substantial part of itsproperties or assets shall otherwise be appointed, or bankruptcy, insolvency, reorganization,arrangement or liquidation proceedings shall be instituted against LOC Bank by a third party andremain undismissed for a period of sixty (60) days.          ***“Act of Governmental Sanction”***means any of the following: any Governmental Authority havingjurisdiction over LOC Bank shall suspend or revoke LOC Bank’s license to conduct banking activitiesin the United States or any political subdivision thereof or in any other jurisdiction where LOCBank 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 thenearest whole multiple of 1/100 of 1%) equal to the greater of (a) the Federal Funds Rate in effecton such day plus 1% or (b) the Prime Rate in effect on such day. If for any reason the ConfirmingBank shall have determined (which determination shall be conclusive absent manifest error) that itis unable after due inquiry to ascertain the Federal Funds Rate for any reason, including theinability or failure of the Confirming Bank to obtain sufficient quotations in accordance with theterms hereof, the Base Rate shall be determined without regard to clause (a) of the first sentenceof this definition until the circumstances giving rise to such inability no longer exist. Anychange in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall beeffective 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 whichcommercial banks in New York, New York, or the city or cities in which the corporate trust officeof the Trustee or the Tender Agent (as defined in the Indenture) or the office of the LOC Bank orthe 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 drawsfunds are authorized or required by law to close or (iii) a day on which the New York StockExchange 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-OneDollars and Twenty Four Cents ($55,097,671.24), as reduced from time to time as provided in theConfirmation.          ***“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 360day year) equal for each day during such period to the average of the rates of interest charged onovernight federal funds transactions, with member banks of the Federal Reserve System only, aspublished for any day which is a Business Day by the Federal Reserve Bank of New York (or, in theabsence of such publication, as reasonably determined by the Confirming Bank).          ***“GAAP”***means generally accepted accounting principles in effect from time to time in theUnited States.          ***“Governmental Authority”***means any nation or government, any state or other politicalsubdivision thereof, and any Person exercising executive, legislative, judicial, regulatory oradministrative 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 FarmCredit 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 theConfirmation 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 ConfirmingBank arising under or in connection with this Agreement and the Confirmation, including, withoutlimitation, the Reimbursement Obligations, interest thereon, fees, finance charges, including, butnot 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, anassociation, a business trust or any other entity or organization, including a government orpolitical subdivision or any agency or instrumentality thereof.          ***“Prime Rate”***means for any period, a fluctuating interest rate per annum as shall be in effectfrom time to time, which rate per annum shall at all times be equal to the rate of interestannounced publicly by the Confirming Bank as its Prime Rate. The Prime Rate is not intended to bethe lowest rate of interest charged by the Confirming Bank in connection with the extension ofcredit.          ***“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) toreimburse 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 otheragreement or instrument delivered pursuant or relating thereto.          ***“Responsible Officer”***means, at any time, any Vice President or Senior Vice President in theLOC Bank.          ***“Subsidiary”***means any corporation or other entity of which capital stock or other ownershipinterests having ordinary voting power to elect a majority of the board of directors or otherpersons 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 otherthan income and franchise taxes imposed upon the Confirming Bank by the government of the States ofGeorgia, South Carolina, North Carolina or the federal government of the United States.          ***“Tax-Exempt Confirmation Agreement”***means that Confirmation Agreement by and between the LOCBank and the Confirming Bank with respect to the $29,000,000 Mitchell County Development AuthorityVariable Rate Demand Solid Waste Disposal Revenue Bonds, Series 2006 (First United Ethanol, LLCProject).          ***“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 bedelivered 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 certifiedpublic accountants) with the most recent consolidated financial statements of LOC Bank delivered tothe Confirming Bank.          (c) All other capitalized terms used herein, but not defined in this Agreement, shall have themeaning 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 LOCBank, and subject to the terms and conditions hereof, the Confirming Bank agrees to issue theConfirmation 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 asprovided in subsection (iii) below) equal to the amount drawn under the Confirmation inreimbursement of the Confirming Bank for such draw; and                    (B) in connection with each drawing on the Confirmation, a drawing fee of $250 for each suchdrawing (and interest thereon as provided in subsection (iii) below);               (ii) immediately after any transfer or amendment of the Confirmation in accordance with itsterms, 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 dayfrom the date such amounts become due until the date on which payment in full is made, after aswell as before judgment, shall be payable on demand, at a fluctuating interest rate per annumcalculated on the basis of the actual number of days elapsed over a year of 360 days, equal to theBase Rate plus three percent (3.0%); *provided*that such fluctuating interest rate shall in no eventbe higher (with respect to each amount due and payable hereunder, from the date such amount is dueand payable until the date such amount is paid in full) than the maximum rate permitted byapplicable 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, andincluding, the Expiration Date) and (B) thereafter on each Expiration Date (for the extensionperiod from, but not including, the existing Expiration Date to, and including, the new ExpirationDate), which fee shall be calculated by multiplying the Confirmation Amount on the date of such feeis due, by a rate of 18 basis points (0.18%) *per annum*(the***“Fee Percentage”***), calculated on thebasis of the actual number of days elapsed over a year of three hundred sixty (360) days for thenumber of days in the applicable period; *provided, however*, in the event that the rating on theFederal Farm Credit Banks Consolidated Systemwide Bonds is downgraded to a rating below “A” byStandard & Poor’s Ratings Group (or any comparable rating, if, at such time, Federal Farm CreditBanks Consolidated Systemwide Bonds are not rated by Standard & Poor’s Ratings Group), theConfirming Bank may, at its sole discretion, trigger an increase in the Fee Percentage as a resultof such downgrade.               (vi) if any change in any law or regulation or in the interpretation thereof by anyGovernmental Authority charged with the administration thereof shall either (A) impose, modify ordeem applicable any reserve, special deposit or similar requirement against letters of creditissued or confirmed by, or assets held by, or deposits in or for the account of, the ConfirmingBank or (B) impose on the Confirming Bank any other condition regarding this Agreement or theConfirmation, and the result of any event referred to in clause (A) or (B) of this subsection shallbe to increase the cost to the Confirming Bank of issuing or maintaining the Confirmation by anamount deemed by the ConfirmingBank to be material (which increase in cost may be the result of the Confirming Bank’sreasonable 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 necessaryto compensate the Confirming Bank for such increased cost incurred by the Confirming Bank. Allpayments of increased
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costs pursuant to this subsection shall bear interest thereon if not paidwithin 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 resultof any event mentioned in clause (A) or (B) of this subsection (vi) and setting forth theadditional amount or amounts to be paid to it hereunder and setting forth in reasonable detail thebasis therefor and the method of calculation thereof shall be prepared in good faith and submittedby the Confirming Bank to LOC Bank and shall be conclusive (absent manifest error) as to the amountthereof. The Confirming Bank shall determine the applicability of, and the amount due under, thissection consistent with the manner in which they apply similar provisions and calculate similaramounts payable to them by other borrowers having in their credit agreements provisions comparableto this section; and               (vii) if after the date hereof the Confirming Bank shall have determined that the adoption ofany applicable law, rule or regulation regarding capital adequacy or any change therein, or anychange in the interpretation or administration thereof by any Governmental Authority, central bankor comparable agency charged with the interpretation or administration thereof, or compliance bythe Confirming Bank or any corporation controlling the ConfirmingBank (a ***“Bank Parent”***) with anyrequest or directive regarding capital adequacy (whether or not having the force of law) of anysuch Governmental Authority, central bank or comparable agency, has or would have the effect ofreducing the rate of return on the Confirming Bank’s or Bank Parent’s capital, by an amount deemedby the Confirming Bank or the Bank Parent to be material, as a consequence of its obligations underthe Confirmation to a level below that which the Confirming Bank or Bank Parent could have achievedbut for such adoption, change or compliance (taking into consideration the Confirming Bank’s orBank Parent’s policies with respect to capital adequacy) then, upon notice of such change by theConfirming 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 ConfirmingBank for such reduction. All payments pursuant to this subsection (vii) shall bear interestthereon if not paid within ten days of such notice until payment in full at the rate provided insubsection (iii) above. A certificate of the Confirming Bank claiming compensation under thissubsection (vii) and setting forth the additional amount or amounts to be paid to it hereunder andsetting forth in reasonable detail the basis therefor and the manner of calculation thereof shallbe 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 amountdue under, this section consistent with the manner in which they apply similar provisions andcalculate similar amounts payable to them by other borrowers having in their credit agreementsprovisions comparable to this section.          (b) All payments by LOC Bank to the Confirming Bank hereunder shall be made in lawful currencyof the United States of America and in immediately available funds at the Confirming Bank’s officeat Wachovia Bank, National Association, 401 Linden Street, 1st Floor, Winston-Salem, North Carolina27101, Attention: Standby Letter of Credit Department or at such other address as the ConfirmingBank shall notify the LOC Bank in writing. Whenever any payment hereunder shall be due on a daywhich is not a Business Day, the date for payment thereof shall be extended to the next succeedingBusiness Day, and any interest payable thereon shall be payable for such extended time at thespecified rate.          (c) LOC Bank will pay all amounts payable hereunder without setoff or counterclaim and freeand clear of any Taxes. If any Taxes are levied or imposed on the amounts payable hereunder, LOCBank will pay the full amount of such Taxes, and such additional amounts as may be necessary sothat every net payment of amounts due hereunder, after withholding or deduction for or onaccount of any such Taxes, will not be less than the amounts stated to be due hereunder. Inaddition, LOC Bank will, on demand, indemnify and hold harmless the Confirming Bank against, andreimburse the Confirming Bank
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upon demand for, the amount of any Taxes so levied or imposed, otherthan by deduction or withholding, and paid by the Confirming Bank.             SECTION 4. **Conditions Precedent**. The obligation of the Confirming Bank to issue theConfirmation is subject to the following conditions precedent having been complied with or waivedby the Confirming Bank on or prior to the date requested for the issuance of the Confirmationpursuant to Section 2:          (a) the Confirming Bank shall have received an opinion of counsel to LOC Bank, in form andsubstance satisfactory to the Confirming Bank and its counsel;          (b) the LOC Bank shall have issued the Letter of Credit and the Confirming Bank shall havereceived the original Letter of Credit, for delivery to the Trustee with the Confirmation (or acopy of the fully executed Letter of Credit), and all copies of all documents, certificates andopinions delivered in satisfaction of such conditions precedent and shall have been named anaddressee on all opinions delivered in connection therewith;          (c) the Confirming Bank shall have received an authentic copy of LOC Bank’s delegation ofauthority and incumbency certificate relating to the execution, delivery and performance of thisAgreement and the Letter of Credit;          (d) the Related Documents shall (A) have been duly authorized, executed and delivered by therespective parties thereto, (B) be in full force and effect on the Issuance Date, and (C) besatisfactory in form and substance to the Confirming Bank, and an executed copy of each RelatedDocument shall have been delivered to the Confirming Bank;          (e) the Confirming Bank shall have received all opinions delivered in connection with theissuance of the Letter of Credit and the entering into of the Related Documents, addressed to theConfirming Bank or delivered with a reliance letter permitting the Confirming Bank to rely on suchopinions;          (f) all matters relating to the issuance of the Letter of Credit and the entering into of theRelated 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 opinionsas the Confirming Bank may reasonably request.             SECTION 5. **Reduction and Reinstatement of Amount**. The Confirmation Amount shall bereduced and reinstated to the extent specified in the Confirmation.             SECTION 6. **Reserved.**             SECTION 7. **Obligations Absolute**. The Obligations shall be absolute, unconditional andirrevocable, and shall be performed strictly in accordance with the terms hereof; under allcircumstances 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 ofCredit, 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, theConfirmation, 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 mayhave at any time against any Person (including, without limitation, against the Borrower, theTrustee, the Issuer, the holder of any Bond or any transferee of the Confirmation (or any Personfor whom the Trustee, the Issuer, any such holder or any such transferee may be acting), theConfirming Bank), whether in connection with this Agreement, the Indenture, any other RelatedDocument, the transactions contemplated hereby or thereby or any unrelated transaction;          (d) any statement, certificate or any other document presented under the Confirmation provingto be forged, fraudulent or invalid or insufficient in any respect or any statement therein beinguntrue or inaccurate in any respect whatsoever absent gross negligence or willful misconduct on thepart of the Confirming Bank;          (e) any misapplication by the beneficiary of the Confirmation of the proceeds of any drawthereunder; and          (f) any other circumstance or happening whatsoever, whether or not similar to any of theforegoing, absent gross negligence or willful misconduct on the part of the Confirming Bank.             SECTION 8. **Extension of the Stated Expiration Date****.**The Confirmation shall beautomatically renewed without amendment in accordance with the terms of the Confirmation.             SECTION 9. **Representations and Warranties****.**LOC Bank represents and warrantsto the Confirming Bank that:          (a) ***Financial Statements***. The annual financial statements of the LOC Bank and itsSubsidiaries dated December 31, 2005, and the related statements of income and retained earningsfor the fiscal year ended on such date, audited by independent certified public accountantsreasonably acceptable to Confirming Bank, copies of which have been delivered to the ConfirmingBank, fairly present in conformity with GAAP, the financial position of the LOC Bank and itsSubsidiaries 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 LOCBank, there has been no material adverse change in the business, operations, property or financialcondition of the LOC Bank and its Subsidiaries taken as a whole or the ability of LOC Bank to enterinto and perform its obligations under this Agreement or any other Related Document.          (c) ***Existence***. The LOC Bank is a federally chartered instrumentality duly organized andvalidly existing under the laws of the United States of America with the requisite power andauthority to own its properties and assets and to transact the business and to carry on theoperations in which it currently engages.          (d) ***Authority***. The execution, delivery and performance of this Agreement and the Letter ofCredit are within the powers of LOC Bank and do not contravene in any material way any law or anyobligation by which LOC Bank is bound. LOC Bank has received all approvals required by law orregulation 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 knowledgeof any Responsible Officer, threatened against or affecting LOC Bank or any of its
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Subsidiariesbefore any court, administrative office, agency or authority which would either individually orcollectively have a material adverse effect on LOC Bank’s business, operations or property orfinancial or other condition of LOC Bank and its Subsidiaries taken as a whole or the ability ofLOC Bank to enter into and perform its obligations under this Agreement or any other RelatedDocument.          (f) ***Enforceability***. This Agreement when duly executed and delivered will be legal, valid andbinding 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 “investmentcompany” 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 theConfirming Bank within such time frame, LOC Bank will furnish to the Confirming Bank as soon asavailable, upon request of the Confirming Bank, but in any event within ninety (90) days after theend of each fiscal year and fiscal quarter of LOC Bank, the consolidated financial statements ofthe LOC Bank and its Subsidiaries for such period, together with the related statements of incomeand retained earnings, audited by such independent certified public accountants as then reasonablyacceptable 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 whetherto his or her knowledge there exists on the date of such certificate any Default or Event ofDefault and, if any Default or Event of Default exists, setting forth the details thereof and theaction 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 Defaultor Event of Default, a certificate of a Responsible Officer setting forth the details thereof andthe 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, writtennotice of each reduction, reinstatement or termination of any portion thereof other than inconnection with any reduction of an interest drawing thereunder which is reinstated within one dayof such interest drawing;               (iv) promptly following the occurrence thereof, written notice of any event, happening orcircumstance which has resulted or would likely result in an Act of Governmental Sanction, andpromptly upon receipt thereof, a copy of each notice or other communication received by LOC Bankfrom 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 fromtime to time reasonably request.          (c) ***Maintenance of Existence***. LOC Bank will preserve and maintain its existence and all ofits rights, privileges, permits and franchises required by law in the normal conduct of itsbusiness.          (d) ***Amendment to Certain Documents***. LOC Bank shall not amend, waive or otherwise modify, andshall not consent to any amendment, waiver or other modification, of any provision of theReimbursement Agreement, including, without limitation, any “event of default” thereunder, theLetter of Credit or any Related Document, without the prior written consent of the Confirming Bankif any such amendment, waiver or other modification would have a material adverse effect on therights of the Confirming Bank under this Agreement or would diminish or limit LOC Bank’s rightsunder 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 ofany event of default known to any Responsible Officer to have occurred under the Indenture, theReimbursement Agreement or any other Related Document which default constitutes an “event ofdefault” and LOC Bank shall from time to time at the reasonable request of the Confirming Bank keepthe Confirming Bank informed of what actions LOC Bank intends to take or is taking with respect tosuch default.          (f) ***Downgrading***. Upon the downgrading of the rating on Federal Farm Credit Banks ConsolidatedSystemwide Bonds to a rating below “BBB” by Standard & Poor’s Ratings Group (or any comparablerating, if, at such time, Federal Farm Credit Banks Consolidated Systemwide Bonds are not rated byStandard & Poor’s Ratings Group), LOC Bank shall cooperate fully with the Issuer and the ConfirmingBank in finding a Substitute Credit to replace the Letter of Credit. Any issuer of any suchSubstitute 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, theTax-Exempt Confirmation Agreement;               (iii) LOC Bank shall fail to observe or perform any covenant contained in this Agreement whichfailure, 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 andadditional time is needed to provide such cure, an additional sixty (60) days shall be granted tocure such default;               (iv) any representation, warranty, certificate or statement made by LOC Bank in thisAgreement, or in any certificate, financial statement or other document delivered pursuant to thisAgreement shall prove to have been false or incorrect in any material respect when made or deemedmade;               (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 thestated maturity thereof, by acceleration or otherwise, of any amount in respect of any indebtednessfor borrowed money (other than indebtedness referred to in clause (i)) owed to the Confirming Bankor any of its affiliates beyond the period of grace, if any, provided in the instrument oragreement under which such indebtedness was created; or (B) default in the observance orperformance of any other agreement or condition relating to any such indebtedness for borrowedmoney or contained in any instrument or agreement evidencing, securing or relating thereto, or anyother event shall occur or condition exist, beyond the period of grace, the effect of which defaultor other event or condition is to cause or to permit such indebtedness to become due prior to itsstated maturity or to permit the holder of such indebtedness to realize upon any collateral givenas 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 havingjurisdiction over the LOC Bank; or               (ix) the downgrading of the rating on Federal Farm Credit Banks Consolidated Systemwide Bondsto a rating below “BBB” by Standard & Poor’s Ratings Group (or any comparable rating, if, at suchtime, Federal Farm Credit Banks Consolidated Systemwide Bonds are not rated by Standard & Poor’sRatings Group).          (b) ***Remedies***. Upon the occurrence and continuation of an Event of Default; the ConfirmingBank may, without limiting any other rights and remedies available at law or in equity, exerciseone or all of the remedies set forth below. It is expressly understood that no single remedy setforth 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 madepursuant to Section 8 hereof to extend the Stated Expiration Date of, the Confirmation if it hasnot yet been issued or the Stated Expiration Date has not been extended in accordance with theterms 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 theConfirmation, all reimbursement payments received by the LOC Bank under or in connection with theIndenture, the Reimbursement Agreement or otherwise in respect of the Letter of Credit or the otherRelated Documents shall be received in trust for the benefit of the Confirming Bank, shall besegregated from other funds of the LOC Bank and shall be forthwith paid over to the ConfirmingBank in the same form as received (with any necessary endorsement) if the Confirming Bank haspaid draws on the Confirmation to the extent of such payments; and               (iv) proceed against the Guarantor for payment in full of all Obligations outstandinghereunder pursuant to the Guaranty.             SECTION 12. **Further Assurances****.**Upon the occurrence and during the continuation of aDefault 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 toenable the Confirming Bank to exercise and enforce its rights and remedies hereunder and under theIndenture, the Reimbursement Agreement and the other Related Documents.
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             SECTION 13. **Amendments and Waivers****.**No amendment or waiver of any provision of thisAgreement or consent to any departure by LOC Bank therefrom shall in any event be effective unlessthe 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 forwhich given.             SECTION 14. **Notices****.**All notices, requests and other communications to any partyhereunder shall be in writing (including SWIFT, telecopier, e-mail or similar writing) and shall begiven to such party at its address or telecopier number set forth below or such other address ortelecopier 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 appropriateconfirmation is received, (b) if given by mail, three (3) Business Days after such communication isdeposited in the mails with first class postage prepaid, addressed as aforesaid, (c) if timelydelivered 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 Section 14.   LOC Bank Southwest Georgia Farm Credit, ACA  411 West Broughton Street  Bainbridge, Georgia 39818  Attn: Richard Monson  Telephone: (229) 246-8032 x.112  Facsimile: (229) 246-2711   Confirming Bank Wachovia Bank, National Association  Mail Code SC-3295  1426 Main Street, 18th Floor  Columbia, South Carolina 29201  Attention: Tammy J. Mitten  Telephone: (803)765-3600  Facsimile: (803)765-3023     With a copy:     Wachovia Bank, National Association  401 Linden Street, 1st Floor  Winston-Salem, North Carolina 27101  Attention: Standby Letter of Credit Department  Telephone: (800) 776-3862  Facsimile: (336) 735-0950             SECTION 15. **No Waiver; Remedies Cumulative****.**No failure on the part of the ConfirmingBank to exercise, and no delay in exercising, any right hereunder shall operate as a waiverthereof, nor shall any single or partial exercise of any right hereunder preclude any other orfurther exercise thereof or the exercise of any other right. The remedies herein provided arecumulative and not exclusive of any remedies provided by law or otherwise.
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             SECTION 16. **Right of Subrogation; Setoff****.**          (a) Without limiting any rights of subrogation which the Confirming Bank may have or becomeentitled to (and without limiting any other rights or remedies of the Confirming Bank), to theextent LOC Bank does not satisfy any of the Obligations hereunder as and when stated to be due, theConfirming Bank shall be fully subrogated to the rights of LOC Bank under the Indenture, theReimbursement Agreement and the Related Documents.          (b) Without limiting any other right of the Confirming Bank, the Confirming Bank at its soleelection 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 theConfirming Bank to or for the credit or account of LOC Bank, whether or not due, against any andall amounts due the Confirming Bank hereunder, and the Confirming Bank shall be deemed to haveexercised the right of setoff immediately at the time of such election.             SECTION 17. **Indemnification****.**LOC Bank hereby indemnifies and holds harmless theConfirming Bank from and against any and all claims, damages, losses, liabilities, costs orexpenses whatsoever which the Confirming Bank may incur (or which may be claimed against theConfirming Bank by any Person or entity whatsoever) (a) by reason of any untrue statement oralleged untrue statement of any material fact contained or incorporated by reference in anydisclosure 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 DisclosureMaterials a material fact necessary to make such statements, in the light of the circumstancesunder which they are or were made, not misleading; or (b) by reason of or in connection with theexecution and delivery or transfer of or payment, timely payment or failure to pay under, theConfirmation; provided that LOC Bank shall not be required to indemnify the Confirming Bank for anysuch claims, damages, losses, liabilities, costs or expenses in the case of indemnificationpursuant to clause (b) above, to the extent, but only to the extent a court of competentjurisdiction shall have determined that such claim, damage, loss, liability, cost or expense wascaused by the willful misconduct or gross negligence of the Confirming Bank. Nothing in thisSection 17 is intended to limit the LOC Bank’s Reimbursement Obligation. The LOC Bank agrees thatthe Confirming Bank has no obligation to confirm or investigate the accuracy or completeness of thestatements made in any Disclosure Materials or any Related Documents as a condition to theindemnities set forth in this Section 17 or for any other purpose.             SECTION 18. **Continuing Obligation****.**The obligations of LOC Bank under this Agreementshall continue until the later of (a) the Expiration Date or (b) the date upon which all amountsdue or to become due to the Confirming Bank hereunder shall have been paid in full and shall (i) bebinding upon LOC Bank and its successors and assigns and (ii) inure to the benefit of and beenforceable 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 Agreementwithout the prior written consent of the Confirming Bank and (B) the indemnification obligations ofLOC Bank shall survive the termination of this Agreement.             SECTION 19. **Transfer of the Confirmation****.**The Confirmation may be transferred inaccordance with the provisions set forth therein.
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             SECTION 20. **Limited Liability of the Confirming Bank****.**Neither the Confirming Bank norany 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 suchdocuments 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 theConfirmation, except only that LOC Bank shall have a claim against the Confirming Bank, and theConfirming 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 proveswere caused by (i) the Confirming Bank’s willful misconduct or gross negligence in determiningwhether documents presented under the Confirmation comply with the terms thereof or (ii) theConfirming Bank’s negligent or willful failure to pay under the Confirmation after the presentationto it by the Trustee (or a successor under the Indenture to whom any the Confirmation has beentransferred in accordance with its terms) of a draft and certificate strictly complying with theterms 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, withoutresponsibility 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 ConfirmingBank’s determination not to honor a draft on the Confirmation in the event LOC Bank shall havewaived 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-pocketexpenses of the Confirming Bank, in connection with: (a) the negotiation and preparation of thisAgreement 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 thecontinuation of a Default or Event of Default, the enforcement of this Agreement, the Confirmationand the Related Documents and any other documents which may be delivered in connection herewith ortherewith. In addition, and if applicable, LOC Bank agrees to pay any and all stamp and othertaxes 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 ConfirmingBank harmless from and against any and all liabilities with respect to or resulting from any delayin 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 ineffectiveto the extent of such prohibition, unenforceability or nonauthorization without invalidating theremaining provisions hereof or affecting the validity, enforceability or legality of such provisionin any other jurisdiction.             SECTION 23. **Governing Law****.**This Agreement and the Confirmation (to the extent inconsistent with the ISP98, as definedin the Confirmation) shall be governed by, and construed and interpreted in accordance with, thelaws of the State of North Carolina, without reference to conflict or choice of laws.
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             SECTION 24. **Consent to Jurisdiction, Service of Process, WAIVER OF JURY TRIAL**.          (a) ***Consent to Jurisdiction***. Each of the parties hereto irrevocably submits to thenonexclusive jurisdiction of any North Carolina court sitting in the City of Winston-Salem or theUnited States federal court for the Western District of North Carolina over any suit action orproceeding arising out of or relating to this Agreement. Each of the parties hereto irrevocablywaives, to the fullest extent permitted by law, any objection which it may now have or hereafteracquire to the laying of venue of any such suit, action or proceeding brought in any such court andany claim that any such suit, action or proceeding has been brought in an inconvenient forum. Theforegoing shall not limit the rights of the Confirming Bank to bring proceedings against LOC Bankin the competent courts of any jurisdiction or jurisdictions. Each of the parties hereto agreesthat a final judgment in any such suit, action or proceeding brought in such a court shall beconclusive and binding upon it.          (b) ***Service of Process***. Each of the parties hereto hereby consents to process being served inany suit, action or proceeding of the nature referred to in Section 24(a) hereof at its address setforth in Section 14 hereof. Each of the parties hereto irrevocably waives, to the fullest extentpermitted 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 orproceeding and (ii) shall, to the fullest extent permitted by law, be taken and held to be validpersonal service upon it.          (c) ***WAIVER OF JURY TRIAL***. TO THE EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBYKNOWINGLY, 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 DOCUMENTOR ANY OTHER DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTIONHEREWITH OR THEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THISAGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED BEFORE ACOURT AND NOT BEFORE A JURY; THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTOTHIS AGREEMENT.             SECTION 25. **Headings****.**Section headings in this Agreement are included herein forconvenience of reference only and shall not constitute a part of this Agreement for any otherpurpose.             SECTION 26. **Counterparts****.**This Agreement may be executed in any number ofcounterparts, each of which shall be an original, with the same effect as if the signatures theretoand hereto were upon the same instrument.             SECTION 27. **Entirety****.**This Agreement, together with the form of Confirmation attachedhereto, represent the entire agreement of the parties hereto, and supersede all prior agreementsand understandings, oral orwritten, if any, including any commitment letters or correspondence relating to this Agreementor the transactions contemplated hereby.
 

 
     IN WITNESS WHEREOF, the parties hereto have caused this Confirmation Agreement to be dulyexecuted and delivered as of the date first above written.      **Southwest Georgia Farm Credit, ACA**