EXHIBIT 10.3


	
  STATE OF ALABAMA

  	
  )

  
	
  COLBERT COUNTY

  	
  )

  



 


OPTION
AGREEMENT


THIS OPTION AGREEMENT (the “Agreement”)
is by and between Tommy Pounders and Janie Pounders (the “Optionors”) and Tennessee
Valley Agri-Energy, LLC (“Optionee”) as of the 15th day of June, 2007


WITNESSETH:


WHEREAS, Optionor
is the owner of certain parcels of land situated in Colbert County, State of
Alabama, the general parameters thereof being outlined on Exhibit “A” attached
hereto and made a part hereof by reference, together with the easements,
appurtenances, and rights thereunto belonging (collectively, the “Property”);
and


WHEREAS, Optionee
desires to acquire an option to purchase the Property or a portion thereof (the
“Option”) on the terms and conditions hereinafter set forth, and Optionor is
willing to grant such Option;


NOW THEREFORE, in
consideration of the Property, the payment by Optionee to Optionor of the sum
of five hundred dollars ($500.00) the “Initial Option Fee”) plus legal, filing
and any other related customary fees incurred by Optionor, which Initial Option
Fee shall be applied to the Purchase Price at Closing, the promises and
covenants hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:


1.                                       Option.  Optionor hereby grants, bargains, sells, and
conveys to Optionee the Option to purchase the Property for the Purchase Price
(as hereinafter defined) for the purpose of constructing an ethanol producing
plant thereon and subject to the terms and conditions hereinafter set forth.


2.                                       Initial
Option Period. 
The Initial Option Period shall start on June 15, 2007 and end on
November 30, 2007.


3.                                       Extended
Option Period. If the Optionee is in compliance with
all requirements set forth in this Option Agreement, the Optionee may extend
the option period to the 1st day of May, 2008 (“Extended Option Period”) by
providing a written request to extend the Option period and payment of five
thousand dollars ($5000.00) the “Extended Option Fee”) to the Optionor on or
before November 30, 2007.


4.                                       Purchase
Price.  The purchase price
(“the Purchase Price”) for the Property, which consists of approximately 45
acres, shall equal Eight Thousands Dollars ($8,000.00) per acre as established
by the survey required in Section 8 of this document plus sixty three thousand
two hundred forty dollars ($63,240.00) for all improvements located on
the property.


5.                                       Exercise of
Option.  The Notice of
Exercise, the Request to Extend the Option Period and other relevant written
notices shall be sent to Tommy Pounders at the following address: 1140
East Fourth Street, Cherokee, AL 35616.



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6.                                       Closing:


(a)                                  Upon
exercise of the Option as herein provided, the closing (the “Closing”) of the
purchase and sale of the Property shall be consummated within thirty (30) days
of receipt of the Notice of Exercise, upon such date and at such place as
Optionor and Optionee may reasonably agree. 
If the Closing is delayed as a result of the act or failure to act of
Optionor in which event the date for Closing shall be extended until such time
as Optionor has complied with its obligations hereunder.


(b)                                 Conveyance
of the Property by Optionor shall be by general warranty deed (the “Deed”) in a
form acceptable to Optionee, conveying fee simple, merchantable title to the
Property and subject only to itemized matters acceptable to Optionee,
including, but not limited to covenants, restrictions, and easements of record
as of the date hereof (the “Permitted Exceptions”), matters of survey and taxes
for the current year.   At Optionee’s
election, the legal description used in the Deed shall be a legal description
based upon the Survey (as hereinafter defined). 
Optionee shall be responsible for the cost of preparing the deed.


(c)                                  Real estate
taxes, if any, with respect to the Property shall be prorated between Optionor
and Optionee as of the date of the Closing in accordance with the custom and
practice in Colbert County.


(d)                                 Optionor
shall furnish, at its expense, Optionee with an ALTA Form B Title Insurance
Commitment showing all liens, claims, and encumbrances (including easements,
covenants, and restrictions) affecting title to the real property.  Copies of all underlying title documents
referred to in the title commitment report are to be included.


(e)                                  Conveyance
of the Property by Optionor to Optionee shall include a Right of Refusal and
Repurchase Option to be executed at Closing, including but not limited to, the
terms set forth on Exhibit “B” attached hereto.


(f)                                    Optionee
shall provide Optionor copies of all property reviews, tests, surveys and other
relevant studies conducted during the initial or extended option period.


7.                                       Hazardous
Waste.  This Option
Agreement is contingent on the Property containing no solid waste or materials,
the disposal of which is regulated by any applicable federal, state or local
law, including, without limitation, waste, pollutants or materials deemed to be
“hazardous substances”.  Hazardous
substances shall mean any and all hazardous substances, toxic materials,
pollutants, hazardous or toxic waste defined in any federal, state, county or
municipal law, rule, regulation or ordinance. 
Optionee may, at its expense, conduct Phase I and II environmental
studies on the property during the Option Period.


8.                                       Representations
and Warranties of Seller. 
Optionor hereby warrants and represents to Optionee that:


(a)                                  Optionor
represents that Optionor is the owner or representative of the Property and has
full power and absolute authority to enter into this 



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Agreement
and to grant the Option and thereafter to convey the Property as herein set
forth at the Closing.


(b)                                 To the best
of Optionor’s knowledge and information, Optionor hereby represents and
warrants to Optionee that there are no environmentally hazardous materials on
or affecting the Property, and further, that the Property, to the best of
Optionor’s knowledge and information, is in compliance with all applicable
federal and state and local environmental laws, rules and regulations including,
but not limited to, CERCLA, RCRA and all judicial and administrative
interpretations thereof, including any judicial or administrative orders,
directives and judgments.


(c)                                  No broker’s
commission is due and owing to any broker for services rendered to Seller in
connection with the transaction contemplated herein.  Optionor hereby agrees to indemnify and hold
Optionee harmless from and against any claim of any broker for any such fees or
commissions resulting from any such services allegedly rendered to Optionor.


9.                                       Survey.  Optionee shall, at its expense, have a
boundary survey (the “Survey”) of the Property prepared by a Registered Land
Surveyor during the Option Period, a copy of which shall be provided to the
Optionor.


10.                                 Failure to
Exercise/Close.


(a)                                  In the event
Optionee fails to exercise its Option to purchase the Property or, in the event
Optionee exercises the Option and then fails or refuses to purchase the
Property, Optionor shall have the right to cancel this Agreement and retain the
Option Fee.  Notwithstanding the
foregoing, if Optionee elects not to purchase the property due to a breach of
Optionor’s representations and warranties contained herein, the Option Fee
shall be returned to Optionee.


(b)                                 In the event
Optionor fails or refuses to comply with this Agreement, Optionee shall have
the right to cancel this Agreement and recover the Option Fee or to pursue
other remedies, including the remedy of specific performance.  Optionor shall be liable for and shall pay
all costs and expenses incurred by Optionee arising out of or in connection
with or resulting from the failure or refusal of Optionor to close the purchase
of the Property as set forth herein, including, but not limited to, legal fees
and costs incurred in connection with Optionee’s efforts to purchase the
property.


11.                                 Notices.  Any notice provided pursuant to this
Agreement shall not be deemed to have been duly given or served unless in
writing and forwarded by hand delivery, by certified U.S. Mail, postage
prepaid, addressed to a party at its principal business address.  Notices shall be deemed effective upon
receipt if delivered by hand and upon the deposit thereof in the U.S. Mail.


12.                                 General.  This Agreement shall be binding and inure to
the benefit of the parties hereto, their successors and assigns.  The laws of the State of Alabama shall govern
this Agreement.



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IN WITNESS WHEREOF, the
parties shall be deemed to have entered into this Agreement on June 22, 2007 or
the date of the change last initialed by the parties, whichever is later (the “Effective
Date”).


	
  OPTIONEE:

  	
   

  	
  OPTIONORS:

  
	
  Tennessee Valley
  Agri-Energy, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Dennis Bragg

  	
   

  	
   

  	
  By:

  	
  /s/ Tommy Pounders

  	
   

  
	
   

  	
   

  	
   Its: Vice
  President

  	
   

  	
   

  	
   

  	
    Tommy
  Pounders

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Charles Robertson

  	
   

  	
   

  	
  By:

  	
  /s/ Janie Pounders

  	
   

  
	
   

  	
   

  	
   Its: Secretary/Treasurer

  	
   

  	
   

  	
   

  	
    Janie
  Pounders

  
												



 


STATE OF ALABAMA


COUNTY OF COLBERT


I, the undersigned, a
Notary Public in and for said County in said State, hereby certify that Dennis
Bragg, Vice President/Charles Robertson, as the Vice President and
Secretary/Treasurer of Tennessee Valley Agri-Energy, a limited Liability
corporation, and whose name is signed to the foregoing and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
agreement, he has, as such officer and with full authority, executed the same
voluntarily as of the day the same bears date.


Given under my hand and
official seal this the 22nd day of June, 2007.


	
  

  	
   /s/ Shirley McClure

  	
   

  
	
   

  	
  NOTARY PUBLIC

  	
   

  
	
  My commission expires:  4-7-08

  	
  (SEAL)           

  	
   

  



 


	
  STATE OF ALABAMA

  	
  )

  
	
  COLBERT COUNTY

  	
  )

  



 


I, the undersigned, a
Notary Public in and for said County in said State, hereby certify that Tommy
Pounders, whose name is signed to the foregoing and who is known to me,
acknowledged before me on this day that, being informed of the contents of the
agreement, he has, as such officer and with full authority, executed the same
voluntarily as of the day the same bears date.


Given
under my hand and official seal this the 15th
day
of June, 2007.


	
  

  	
   /s/ Debra J. Johnson

  	
   

  
	
   

  	
  NOTARY PUBLIC

  	
   

  
	
  My commission expires:  03/16/11

  	
  (SEAL)

  	
   

  



 


	
  STATE OF ALABAMA

  	
  )

  
	
  COLBERT COUNTY

  	
  )

  



 


I, the undersigned, a
Notary Public in and for said County in said State, hereby certify that Janie
Pounders, whose name is signed to the foregoing and who is known to me,
acknowledged before me on this day that, being informed of the contents of the agreement,
he has, as such officer and with full authority, executed the same voluntarily
as of the day the same bears date.


Given under my hand and
official seal this the 15th day of June, 2007.


	
  

  	
   /s/ Debra J. Johnson

  	
   

  
	
   

  	
  NOTARY PUBLIC

  	
   

  
	
  My commission expires:  03/16/11

  	
  (SEAL)           

  	
   

  



 



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