Document:

EXHIBIT 4.3

 

ESCROW AGREEMENT

 

THIS ESCROW AGREEMENT,
dated effective as of February 19, 2008, (this “Agreement”), is entered
into by and between Tennessee Valley
Agri-Energy, LLC, a Delaware limited liability company (the “Company”),
and First Farmers & Merchants Bank,
located in Columbia, Tennessee (the “Escrow Agent”). 

 

RECITALS

 

A.            The Company is raising equity capital to construct and
operate an ethanol production plant near Cherokee, Alabama or at such other
location as may be determined by the Company.

 

B.            The Company is
offering up to an aggregate of 70,000,000 Capital Units (“Units”), at a
purchase price of $2.00 per Unit, to investors pursuant an offering registered
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended (the “Offering”). 

 

C.            Each investor who subscribes to purchase Units (a “Subscriber”)
will execute a Subscription Agreement, a Promissory Note and a signature page to
the Company’s Limited Liability Company Agreement, and will supply a check or
other funds as part or all of the purchase price for the Units (the foregoing
documents and funds, a “Subscription”). 
The terms of the Offering provide that Subscriptions will be held in
escrow until certain conditions for release from escrow are satisfied and the
Subscriptions and Offering proceeds are released to the Company or until such
Subscriptions are required to be returned to Subscribers.

 

D.            The minimum
investment by each Subscriber in the Offering is $20,000 (10,000 Units), with a
payment equal to at least ten percent (10%) of the total purchase price due at
the time the Subscription is made (an “Initial Payment”) and with payment for
the remaining balance of the total purchase price due upon thirty (30) days
written notice from the Company pursuant to the terms of a promissory note (a “Promissory
Note”) to be executed and delivered as part of each Subscriber’s
Subscription.  Initial Payments and
payments received on Promissory Notes are herein referred to as “Payments.” 

 

E.             The Company and the Escrow Agent desire to enter into an
agreement with respect to said escrow of Subscriptions in an escrow account to
be established with the Escrow Agent (the “Escrow Account”) in accordance with
the terms and conditions of this Agreement.

 

NOW THEREFORE,
in consideration of the premises and covenants set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, for themselves, their successors and
assigns, hereby agree as follows:

 

1.             Definitions.  The
following terms shall have the following meanings when used herein:

 

 

“Escrow Funds” shall mean the funds
deposited with the Escrow Agent pursuant to this Agreement, together with any
interest and other income thereon.

 

“Escrow Closing Date” shall mean                             ,
           [one year and nine months following the effective date
of the registration statement filed with the Securities and Exchange
Commission], unless prior to such date, the Company provides written
notice to the Escrow Agent of the extension of the Escrow Closing Date in
accordance with applicable federal and state laws, in which case the Escrow
Closing Date shall mean the extended date established by such extension.

 

“Final Offering Closing Date” shall mean                             ,
           [one year following the effective date of the
registration statement filed with the Securities and Exchange Commission],
unless prior to such date, the Company provides written notice to the Escrow
Agent of the extension of the Final Offering Closing Date in accordance with
applicable federal and state laws, in which case the Final Offering Closing
Date shall mean the extended date established by such extension.

 

“Notice of Escrow Closing” shall mean a written
certificate that is signed on behalf of the Company by a duly authorized
officer thereof stating that the following conditions to the release of
Subscriptions and Escrow Funds from escrow have been satisfied:

 

(i)            The Company has received, approved
and deposited or caused to be deposited in escrow Subscriptions and cash
Payments on such Subscriptions (including the cash amount of Initial Payments
and cash payments on Promissory Notes) in the amount of $60,000,000 or more,
exclusive of interest; 

 

(ii)           The Company has received written
commitments from lending sources to provide senior and subordinated debt which,
combined with the offering proceeds and funds received or receivable from the
Company’s previous equity offering, grants and other resources, the Board of
Managers of the Company determines would be sufficient to construct the Company’s
ethanol plant and commence start-up operations with a reasonable amount of
working capital; and

 

(iii)          The Company has executed a definitive
design-build agreement with a
construction contractor to plan, design, engineer and construct the
Company’s proposed plant. 

 

“Payment Instrument”
shall mean a check, money order, promissory note, or similar instrument
received by the Company as a Payment for the Units subscribed for by any
Subscriber in the Offering.

 

“Subscription Accounting”
shall mean an accounting prepared by the Company of all Subscriptions for Units
received by the Company as of the date of such accounting for which Payment(s) has
been deposited into the Escrow Account, indicating for each Subscription (i) the
Subscriber’s name, address and federal taxpayer identification number, (ii) the
amount of the

 

 

Payment(s) received for the subscribed Units, (iii) the date
of deposit by the Company of the Payment Instrument relating thereto and
notations of any nonpayment of the Payment Instrument submitted with any such
Subscription, and (iv) any rejection of any such Subscription in whole or
in part by the Company, or any other termination, for whatever reason, of any
such Subscription.

 

2.             Appointment of and
Acceptance by Escrow Agent.  The Company hereby appoints the
Escrow Agent to serve as escrow agent hereunder, and the Escrow Agent hereby
accepts such appointment and agrees to act as Escrow Agent in accordance with
the terms of this Agreement.

 

3.             Deposits
into Escrow.

 

a.             Delivery of Subscriptions.  All Subscriptions received by the Company or
its agents prior to the termination of this Agreement shall, as soon as
practicable after such receipt, be forwarded to the Escrow Agent for deposit
into the Escrow Account.  All Payment
Instruments shall be delivered to the Escrow Agent within five (5) business
days from the date of the receipt thereof, endorsed (if appropriate) to the
Escrow Agent, together with a list of the applicable Subscribers, showing, with
respect to each such Subscriber, the Subscriber’s name and address,
subscription date, amount of subscription and amount paid.  From time to time and upon request by the
Escrow Agent, the Company shall provide a Subscription Accounting to the Escrow
Agent.

 

ALL ESCROW FUNDS SHALL REMAIN THE PROPERTY OF THE SUBSCRIBERS ACCORDING
TO THEIR RESPECTIVE INTERESTS, SHALL NOT BE OR BECOME THE PROPERTY OR ASSETS OF
THE COMPANY, AND SHALL NOT BE SUBJECT TO ANY LIEN OR CHARGE BY THE ESCROW
AGENT, ANY LIEN OR CLAIM BY THE COMPANY OR BY JUDGMENT OR CREDITORS CLAIMS
AGAINST THE COMPANY, UNTIL RELEASED TO THE COMPANY IN ACCORDANCE WITH SECTION 4
HEREOF. OTHER THAN IN THE ESCROW AGENT’S NORMAL COURSE OF BUSINESS IN
FACILITATING THE COLLECTION AND INVESTMENT OF ESCROW FUNDS, IN NO EVENT SHALL
ANY OF THE ESCROW FUNDS BE COMMINGLED WITH DEPOSIT ACCOUNTS OF THE ESCROW AGENT
OR OTHERWISE TREATED AS A DEPOSIT ACCOUNT OF THE ESCROW AGENT OR REFLECTED ON
THE FINANCIAL STATEMENTS OF THE ESCROW AGENT. 
THE ESCROW AGENT SHALL KEEP ADEQUATE RECORDS TO IDENTIFY THE OWNERSHIP
OF THE ESCROW FUNDS.

 

b.             Availability of Funds.  Notwithstanding anything to the contrary
contained in this Agreement, the Company understands and agrees that all Payment
Instruments received by the Escrow Agent hereunder are subject to collection
requirements of presentment and final payment, and that the funds represented
thereby cannot be drawn upon or disbursed until such time as final payment in
collected funds has been made and is no longer subject to dishonor.  Upon receipt, the Escrow Agent shall process
each Payment Instrument it receives for collection, and the proceeds thereof
shall be held as part of the Escrow Funds and disbursed in accordance with
Sections 4 and 5 hereof.  If, upon
presentment for payment, any Payment Instrument is dishonored, the Escrow Agent
shall notify the Company of such dishonor and return such Payment Instrument to
the Company to take whatever action it deems necessary.  The Escrow

 

 

Agent shall have no duty or responsibility to establish whether any
Payment Instrument is valid and enforceable or represents collectible funds and
shall have no duty or responsibility to take any action for the collection
(other than deposit for payment) or enforcement of any Payment Instrument.

 

4.             Release of
Subscriptions and Escrow Funds to the Company.

 

a.             Escrow Closing.  Promptly upon receipt of the following
documents from or at the direction of the Company, the Escrow Agent shall
release the Subscriptions and Escrow Funds to the Company.

 

1.             A Notice of Escrow
Closing in the form attached hereto as Exhibit A;
and

 

2.             Subscription
Accounting as of the date of the Notice of Escrow Closing.

 

Escrow
Funds shall be remitted to the Company by wire transfer or such other means as
may be requested by the Company.

 

The Escrow Agent shall have no duty or responsibility to review or seek
to determine the truth, accuracy or sufficiency of documents contemplated or
referred to in the Notice of Escrow Closing. 
The Escrow Agent shall have no duty to review any Subscription
Accounting, it being the understanding and agreement of the parties hereto that
the Escrow Agent shall release the Subscriptions and disburse the Escrow Funds
upon receipt of documents the Escrow Agent believes, without any duty of
further inquiry, to conform to the requirements set forth in this Section 4(a).

 

b.             Issuance and Registration of Units.  Until the terms of this Agreement have been
met and the Subscriptions have been released and Escrow Funds have been
disbursed to the Company, the Company shall not issue any Units to Subscribers
or register any Units in the names of any Subscribers, or issue any
certificates or other evidences of ownership of Units, and Subscribers shall
have no ownership interest in any Units until the Units are so issued and
registered.

 

5.             Return of
Subscriptions and Escrow Funds to Subscribers.

 

a.             Failure to Obtain
Minimum Offering Proceeds.  If,
by the date that is five (5) business days after the Final Offering Closing
Date, the Escrow Agent is not in receipt of Subscriptions, including Payments
and Promissory Notes, but exclusive of interest, which total $60,000,000 or
more, then the Escrow Agent shall (i) notify the Company in writing that
the minimum Subscriptions required for the Offering have not been received, (ii) as
soon as practicable but no later than thirty (30) days following the Final
Offering Closing Date, return the Subscriptions and Escrow Funds then held by
the Escrow Agent directly to the Subscribers by certified mail, including a
check in the amount of the Payments received in respect of such Subscriptions
and on deposit in the Escrow Account, together with interest earned on the
amount of such Payments and without deduction except as stated in Sections 7
and 13 of and Exhibit B 

 

 

to this Agreement
(interest earned will be calculated at the end of the month of account
termination and may be disbursed through a separate payment following
calculation) and (iii) notify the Company in writing of such return. 

 

b.             Failure to Reach Escrow Closing.  If, by the date that is five (5) business
days after the Escrow Closing Date, the Escrow Agent is not in receipt of the
documents described in Section 4(a), then the Escrow Agent shall (i) notify
the Company in writing that the conditions set forth in Section 4(a) have
not been satisfied, (ii) as soon as practicable but no later than thirty
(30) days following the Escrow Closing Date, return the Subscriptions and
Escrow Funds then held by the Escrow Agent directly to the Subscribers by
certified mail, including a check in the amount of the Payments received in
respect of such Subscriptions and on deposit in the Escrow Account, together
with interest earned on the amount of such Payments and without deduction except
as stated in Sections 7 and 13 of and Exhibit Bto this Agreement (interest
earned will be calculated at the end of the month of account termination and
may be disbursed through a separate payment following calculation) and (iii) notify
the Company in writing of such return.

 

c.             Rejection of Any Subscription.  As soon as practicable but no later than
thirty (30) days after receipt by the Escrow Agent of written notice from the
Company that the Company intends to reject a Subscriber’s Subscription in whole
or in part, the Escrow Agent shall return directly to the applicable
Subscriber, by certified mail, the Subscriber’s Subscription, including funds
equal to the Payment(s) made by or on behalf of such Subscriber, together
with interest earned on the amount of such Payments and without deduction
except as stated in Section Sections 7 and 13 of and Exhibit B to
this Agreement (interest earned will be calculated at the end of the month of
account termination and may be disbursed through a separate payment following
calculation).

 

d.             Abandonment of Offering; Insolvency or Bankruptcy.  As soon as practicable but no later than
thirty (30) days after receipt by the Escrow Agent of (i) written notice
from the Company that it is abandoning the Offering, together with a copy of a
resolution of the Company’s Board of Managers so abandoning the Offering, duly
attested to by the Secretary of the Company, or (ii) written notice from
the Company of the Company’s insolvency or bankruptcy, or the institution of
bankruptcy, reorganization, insolvency, or liquidation proceedings by or
against the Company and, if against the Company, such proceedings have
continued without termination for at least one hundred twenty (120) days; the
Escrow Agent shall return directly to the Subscribers by certified mail the
Subscribers’ Subscriptions, including funds equal to the Payments made by or on
behalf of each such Subscriber, together with interest earned on the amount of
such Payments and without deduction except as stated in Sections 7 and 13 of
and Exhibit B to this Agreement (interest earned will be calculated at the
end of the month of account termination and may be disbursed through a separate
payment following calculation).

 

e.             Accounting.  In connection with a return of funds to Subscribers
pursuant to this Section 5, the Company shall provide the Escrow Agent
with a Subscription Accounting.  Under no
circumstances may a Subscriber receive less than the principal amount of all
Payments made by the Subscriber in connection with a return of funds to
Subscribers pursuant to this Section 5.

 

 

6.             Suspension
of Performance or Disbursement Into Court.  If, at any time, there shall exist any
dispute between the Company, the Escrow Agent, any Subscriber or any other
person with respect to the holding or disposition of any portion of any
Subscription or Escrow Funds or any other obligations of the Escrow Agent
hereunder, or if at any time the Escrow Agent is unable to determine, to the
Escrow Agent’s reasonable satisfaction, the proper disposition of any portion
of the Subscriptions or the Escrow Funds or the Escrow Agent’s proper actions
with respect to its obligations hereunder, or if the Company has not within
thirty (30) days of the furnishing by the Escrow Agent of a notice of resignation
pursuant to Section 9 hereof appointed a successor Escrow Agent to act
hereunder, then the Escrow Agent may, in its sole discretion, consult legal
counsel selected by it and take either or both of the following actions:

 

a.             Suspend the
performance of any of its obligations under this Agreement until such dispute
or uncertainty shall be resolved to the reasonable satisfaction of the Escrow
Agent or until a successor Escrow Agent shall have been appointed (as the case
may be); provided, however, that
the Escrow Agent shall continue to hold the Subscriptions and to invest the
Escrow Funds in accordance with Section 7 hereof; and/or

 

b.             Petition (by means
of an interpleader action or any other appropriate method) any court of
competent jurisdiction of the state of Tennessee, for instructions with respect
to such dispute or uncertainty, and pay into such court all Subscriptions and
Escrow Funds for holding and disposition in accordance with the instructions of
such court, and the Escrow Agent shall thereupon be discharged from all further
duties under this Escrow Agreement.

 

The Escrow Agent shall have no liability to the Company, any Subscriber
or any other person with respect to any such suspension of performance or
disbursement into court, specifically including any liability or claimed
liability that may arise, or be alleged to have arisen, out of or as a result
of any delay in the disbursement of Escrow Funds or any delay in or with
respect to any other action required or requested of the Escrow Agent, except
in instances of the Escrow Agent’s bad faith, gross negligence or willful
misconduct.

 

7.             Investment
of Funds.  The Escrow Agent
shall invest and reinvest the Escrow Funds as the Company shall direct (subject
to applicable minimum investment requirements) in writing; provided,
however, that no
investment or reinvestment may be made except in the following:

 

a.             Direct obligations of the United
States of America or obligations the principal of and the interest on which are
unconditionally guaranteed by the United States of America;

 

b.             Federal
Agency Securities which carry the explicit or implied guarantee of the U.S.
Government; 

 

c.             Commerical
paper rated A-1/P-1 or better; 

 

d.             Savings
accounts, certificates of deposit or repurchase agreements of any bank, trust
company or national banking association (including the Escrow Agent and its
affiliates); or 

 

 

e.             U.S.
domiciled money market mutual funds (money market funds investing exclusively
in items a. through d. having a AAA rating by Moody’s Investor Service of
Standard and Poors Corporation. 

 

Notwithstanding
anything to the contrary herein, in no event may Escrow Funds be held in any
deposit account of the Escrow Agent in an amount that exceeds $100,000, except
as may be held pending clearing or investment which will be accomplished in an
expeditious manner.

 

If the Escrow
Agent has not received written instructions from the Company when an investment
decision needs to be made, the Escrow Agent shall invest the Escrow Funds, or
such portion thereof as to which no written instructions have been received, in
any of the investments described in clause (a) or clause (c) as it
deems appropriate.  Each of the foregoing
investments shall be made in the name of the Escrow Agent in its stated
capacity hereunder.  No investment shall
be made in any instrument or security that has a maturity of greater than three
(3) months or would mature after the Escrow Closing Date, and any and all
investments hereunder shall be made in investments that are currently
marketable or may be liquidated within five (5) business days without
penalty or charge with the exception of a money market mutual fund as provided
in this Section 7.  Notwithstanding
anything to the contrary contained herein, the Escrow Agent may, without notice
to the Company, sell or liquidate any of the foregoing investments at any time
if the proceeds thereof are required for any release of funds permitted or
required hereunder.  The Escrow Agent
shall have no liability for any loss or diminution in the Escrow Account
resulting from investments made in accordance with the provisions of this
Agreement.  The Escrow Agent shall have
no duty by reason of this Agreement to prepare or file any federal or state tax
report or return with respect to the Escrow Account or any income earned
thereon, except that the Escrow Agent may be required to prepare and issue IRS
Forms 1099 to the appropriate party(ies) in the event that an IRS Form 1099
filing requirement arises with respect to interest or other income earned on
the Escrow Funds.

 

Transaction costs
associated with the investment of the Escrow Funds, such as commissions,
brokerage fees and the like, shall be paid out of the Escrow Funds, but in no
event shall such costs exceed the amount of interest earned on the Escrow Funds.

 

8.             Inspection
of Records.  The Company may,
at any time upon reasonable notice, inspect and copy the records of the Escrow
Agent, insofar as they relate to this Agreement, for the purpose of determining
compliance with and conformance to the provisions of this Agreement and the
Subscriptions.

 

9.             Resignation and Removal of
Escrow Agent.  The Escrow
Agent may resign from the performance of its duties hereunder at any time by
giving thirty (30) days’ prior notice to the Company and upon providing an accounting
of all Subscriptions and Escrow Funds accepted, held and disbursed by the
Escrow Agent hereunder.  The Escrow Agent
may be removed, with or without cause, by the Company, at any time upon thirty
(30) days’ prior written notice to the Escrow Agent.  Such resignation or removal shall take effect
upon the appointment of a successor Escrow Agent, as provided herein below, and
upon receipt by the Company and a successor Escrow Agent of an accounting of
all Subscriptions and Escrow Funds accepted, held

 

 

and disbursed by the Escrow Agent
hereunder.  Upon any such notice of
resignation or removal, the Company shall appoint a successor Escrow Agent
hereunder.  Upon the acceptance in
writing of any appointment as Escrow Agent hereunder by a successor Escrow
Agent, and upon receipt of the full accounting referred to above, such
successor Escrow Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Escrow Agent, and the
retiring Escrow Agent shall be discharged from its duties and obligations under
this Agreement, but shall not be discharged from any liability hereunder for
actions taken as the Escrow Agent prior to such succession.  Notwithstanding anything to the contrary
herein provided, in the event the Escrow Agent resigns as Escrow Agent
hereunder and no successor Escrow Agent has been designated and accepted
appointment as successor Escrow Agent within forty-five (45) days following the
date of the Escrow Agent’s notice of resignation, the Escrow Agent shall have
the right to deposit all property held pursuant to this Agreement into the
registry of any court of competent jurisdiction of the state of Tennessee and
notify the parties hereto of such deposit, and thereupon the Escrow Agent shall
be discharged from all further duties and responsibilities as Escrow Agent
under this Agreement.  After any Escrow
Agent’s resignation or removal, the provisions of this Agreement shall continue
to apply as to any actions taken or omitted to be taken by it while it was
Escrow Agent under this Agreement.

 

10.          Duty and
Liability of Escrow Agent.  The
sole duty of the Escrow Agent, other than as herein specified, shall be to
receive the Subscriptions and Escrow Funds and hold them subject to release, in
accordance herewith, and the Escrow Agent shall be under no duty to determine
whether the Company is complying with the requirements of this Agreement or any
applicable laws or regulations, including but not limited to federal or state
securities laws, in tendering to the Escrow Agent said proceeds from the sale
of the Units. The Escrow Agent may conclusively rely upon and shall be
protected in acting upon any statement, certificate, notice, request, approval,
consent, order or other document believed by it to be genuine and to have been
signed or presented by the proper party or parties.  The Escrow Agent shall have no duty or
liability to verify any such statement, certificate, notice, request, consent,
order or other document, and its sole responsibility shall be to act only as
expressly set forth in this Agreement. 
The Escrow Agent shall be under no obligation to institute or defend any
action, suit or proceeding in connection with this Agreement unless first
indemnified to its satisfaction.  The
Escrow Agent may consult counsel with respect to any question arising under
this Agreement and the Escrow Agent shall not be liable for any action taken or
omitted in good faith upon advice of such counsel. The Escrow Agent shall not
be required to act upon or take notice of any direction, demand, notice,
communication or instructions provided to the Escrow Agent by any Subscriber,
but shall act upon and take notice solely of notices, communications and
instructions provided to the Escrow Agent by the Company or as otherwise set
forth in this Agreement.  The Escrow
Agent shall have no implied duties or obligations and shall not be charged with
knowledge or notice of any fact or circumstance not specifically set forth
herein or in any notices given to it in accordance with the notice provisions
of this Agreement.  The Escrow Agent
shall have no liability with respect to the transfer or distribution of any
funds effected by the Escrow Agent pursuant to wiring or transfer instructions
provided to the Escrow Agent by any party to this Agreement.  The Escrow Agent shall not be obligated to
take any legal action or to commence any proceedings in connection with the
Escrow Account or this Agreement, or to appear in, prosecute or defend in any
such legal action or proceedings.  In
performing its duties under this

 

 

Agreement, or upon the claimed failure to
perform its duties, the Escrow Agent shall have no liability except for the
Escrow Agent’s bad faith, willful misconduct or gross negligence.  In no event shall the Escrow Agent be liable
for incidental, indirect, special, consequential or punitive damages.

 

11.          Indemnification.  The Company shall indemnify and hold harmless
the Escrow Agent and each director, officer, employee and agent of the Escrow
Agent (collectively, the “Indemnified Parties”) from and against any and all
claims, demands, suits, actions or proceedings (including any inquiry or
investigation) arising directly or indirectly from or in connection with the
negotiation, preparation, execution, performance or failure of performance of
this Agreement or any transactions contemplated herein, whether or not any such
Indemnified Party is a party to any such action, proceeding, suit or the target
of any such inquiry or investigation. 
This indemnity and hold harmless agreement shall include indemnity
against all costs, expenses, damages and liabilities, including reasonable
attorneys’ fees, incurred by or asserted against any of the Indemnified Parties
in connection with any such claims, demands, suits, actions or proceedings,
except for any consequential damages suffered by the Indemnified Parties as a
result of any such claims, demands, suits, actions or proceedings, which
consequential damages are expressly excluded from the foregoing indemnity.  Provided, further, that the foregoing
indemnity shall not apply to any claims, demands, suits, actions or proceedings
arising from the bad faith, gross negligence or willful misconduct of any
Indemnified Parties.  The provisions of
this Section 11 shall survive the termination of this Agreement, any
release, return or distribution of Subscriptions and Escrow Funds hereunder,
and any resignation or removal of the Escrow Agent.

 

12.          Securities Law
Matters.  The Escrow Agent shall have no duty or
responsibility for determining whether the Units or the offer and sale thereof
conform to the requirements of applicable Federal or state securities laws,
including but not limited to the Securities Act of 1933 and the Securities
Exchange Act of 1934.  The Escrow Agent
has not participated in the preparation or review of any sales or offering
material relating to the Units described in this Agreement.  In addition to any other indemnities provided
for in this Agreement, the Company shall indemnify and hold harmless the Escrow
Agent and each of its officers, directors, agents and employees from and
against all claims, liabilities, losses and damages (including attorneys’ fees)
incurred by the Escrow Agent or such persons and which directly or indirectly
result from any violation or alleged violation of Federal or state securities
laws.  The name of the Escrow Agent or
any similar words shall not be used by the Company or reproduced in any
prospectus or offering, sales or similar material utilized by the Company or
anyone acting on the Company’s behalf in connection with the offering or sale
of the Units, other than to state that Subscriptions will be deposited in an
escrow account that it has established with the Escrow Agent and describing the
terms and conditions on which the Subscriptions will be held and released.  The Escrow Agent understands and agrees that
this Agreement shall be filed as an exhibit to the registration statement filed
with the Securities and Exchange Commission relating to the Offering and with
state securities authorities.  The Escrow
Agent shall cooperate with the Company with respect to any special requirements
of the Securities and Exchange Commission and state securities authorities
regarding this Agreement and the terms of escrow provided herein.  In connection therewith, the securities
authorities of any state in which the offering is made may,

 

 

at
any time upon reasonable notice, inspect and copy the records of the Escrow
Agent, insofar as they relate to this Agreement, for the purpose of determining
compliance with the securities laws and regulations of such state.

 

13.          Fees and Expenses of
Escrow Agent.  The Escrow
Agent shall be entitled to compensation as described in Exhibit B attached hereto, promptly
paid by the Company at such time or times as set forth therein, for the
services provided by Escrow Agent hereunder. 
The provisions of this Section 13 shall survive any termination of
this Agreement or the resignation or removal of the Escrow Agent.  The fees agreed upon for services rendered
hereunder are intended as full compensation for the Escrow Agent’s services as
contemplated by this Agreement; provided, however, that in the event the Escrow
Agent renders any material service not contemplated in this Agreement, or there
is any assignment of any interest in the subject matter of this Agreement, or
any material modification hereof, or if any material controversy arises
hereunder, or the Escrow Agent is made a party to any litigation pertaining to
this Agreement or the subject matter hereof, then the Escrow Agent shall be
reasonably compensated for such extraordinary services and reimbursed for all
costs and expenses, including reasonable attorney’s fees, occasioned by any
delay, controversy, litigation or event, and the same shall be recoverable from
the Company, but not from the Escrow Account.

 

14.          Representations and
Warranties.

 

a.             The Company makes the
following representations and warranties to the Escrow Agent, as of the date
hereof:

 

1.             The Company is a limited liability company duly
organized, validly existing, and in good standing under the laws of the state
of Delaware and has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;

 

2.             This Agreement has been duly approved by all necessary
action of the Company, has been executed by duly authorized persons of the
Company, and constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms;

 

3.             The execution, delivery, and performance by the Company
of this Agreement will not violate, conflict with, or cause a default under the
Company’s governing instruments, any applicable law or regulation, any court
order or administrative ruling or decree to which the Company is a party or any
of its property is subject, or any agreement, contract, indenture or other
binding arrangement to which the Company is a party or any of its property is
subject; and

 

4.             The Company hereby acknowledges that the status of the
Escrow Agent is that of agent only for the limited purposes set forth herein,
and hereby represents and covenants that no representations or implications
shall be made that the Escrow Agent has investigated the desirability or
advisability of an investment in the Units or has approved, endorsed or passed
upon the merits of the investments therein and that the

 

 

name of the Escrow Agent has not and shall not be used
in any manner in connection with the offer or sale of the Units other than to
state that the Escrow Agent has agreed to serve as agent for the limited
purposes set forth herein.

 

b.             The Escrow Agent
represents and warrants to the Company, as of the date hereof, that the Escrow
Agent has all necessary powers and authority to act as an escrow agent as set
forth in this Agreement.

 

15.          Consent to Jurisdiction
and Venue.  In the event that
any party hereto commences a lawsuit or other proceeding relating to or arising
from this Agreement, the parties hereto agree that the courts of the state of
Tennessee shall have sole and exclusive jurisdiction and shall be proper venue
for any such lawsuit or judicial proceeding and the parties hereto waive any
objection to such venue.  The parties
hereto consent to and agree to submit to the jurisdiction of the courts
specified herein and agree to accept service or process to vest personal
jurisdiction over them in any of these courts.

 

16.          Notice.  Any notice and other communications hereunder
shall be in writing and shall be deemed to have been validly served, given or
delivered five (5) days after deposit in the United States mail, by
certified or registered mail with return receipt requested and postage prepaid,
at the time of delivery when delivered personally, one (1) day after
delivery to any overnight courier, or when transmitted by facsimile
transmission facilities, and addressed to the party to be notified as follows,
provided, however, that the Escrow Agent shall not be deemed to have received
any notice or communication prior to its actual receipt thereof:

 

	
   

  	
  If to the Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tennessee Valley Agri-Energy, LLC

  
	
   

  	
   

  	
  Attention: Bartt McCormack

  
	
   

  	
   

  	
  540 Little Dry Creek Road

  
	
   

  	
   

  	
  Pulaski, Tennessee 38478

  
	
   

  	
   

  	
  (931) 424-0653

  
	
   

  	
   

  	
   

  
	
   

  	
  If to the Escrow Agent:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  First Farmers & Merchants Bank

  
	
   

  	
   

  	
  Attention: John Tomlinson

  
	
   

  	
   

  	
  P.O. Box 1148

  
	
   

  	
   

  	
  Columbia, Tennessee 38402

  
	
   

  	
   

  	
  (931) 380-8234

  

 

or to such other address as each party may designate for itself by like
notice.

 

17.          Amendment or Waiver.  This Agreement and any provision hereof may
be amended, changed, waived, discharged, superseded, cancelled or terminated
only by a writing signed by the Company and the Escrow Agent.  No delay or omission by any party in
exercising any right with

 

 

respect
hereto shall operate as a waiver.  A
waiver on any one occasion shall not be construed as a bar to, or wavier of,
any right or remedy on any future occasion.

 

18.          Severability.  To the extent any provision of this Agreement
is prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

 

19.          Governing Law.  This Agreement shall be construed and
interpreted in accordance with the internal laws of the state of Tennessee
without giving effect to the conflict of laws principles thereof.

 

20.          Entire Agreement.  This Agreement constitutes the entire
agreement between the parties relating to the acceptance, collection, holding,
investment, release, return and disbursement of the Subscriptions and Escrow
Funds and sets forth in their entirety the obligations and duties of the Escrow
Agent with respect to the Subscriptions and Escrow Funds.

 

21.          Binding Effect.  All of the terms of this Agreement, as
amended from time to time, shall be binding upon, inure to the benefit of and
be enforceable by the respective successors and assigns of the Company and the
Escrow Agent; provided, however, that neither this Agreement nor any rights or
obligations hereunder may be assigned by any party hereto without the express
written consent of each of the other party hereto.

 

22.          Execution in Counterparts.  This Agreement may be executed in any number
of counterparts, which, when so executed, shall constitute one and the same
agreement.

 

23.          Termination.  Upon the
first to occur of the release of all Subscriptions and disbursement of all
amounts in the Escrow Account pursuant to Section 4 or 5 hereof or deposit
of all Subscriptions and all amounts in the Escrow Account into court pursuant
to Section 6 hereof, this Agreement shall terminate and the Escrow Agent
shall have no further responsibilities whatsoever with respect to this
Agreement or the Subscriptions or the Escrow Funds, except that the Escrow
Agent shall be required to prepare and issue IRS Forms 1099 to the appropriate
party(ies) in the event that an IRS Form 1099 filing requirement arises
with respect to interest or other income earned on the Escrow Funds.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and
effective as of the date first above written.

 

 

	
   

  	
  TENNESSEE VALLEY
  AGRI-ENERGY, LLC 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
            Bartt
  R. McCormack

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
       Bartt R. McCormack

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
            Chairman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Federal
  Taxpayer I.D. number:

  	
  83-0459427

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FIRST
  FARMERS & MERCHANTS BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
            Stephen
  K. Hughes

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
       Stephen K. Hughes

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
            Vice
  President and Trust Officer

  	
   

  
													

 

 

EXHIBIT A

 

Form of
Notice of Escrow Closing

 

(To be on
Company letterhead)

 

(Date)

 

	
  First
  Farmers & Merchants Bank

  
	
  Attention: John Tomlinson

  
	
  P.O. Box 1148

  
	
  Columbia, Tennessee 38402

  

 

Re: Tennessee Valley Agri-Energy,
LLC - Notice of Escrow Closing

 

Dear Sir/Madam:

 

You are hereby notified that the following conditions to release of
Subscriptions and Escrow Funds being held in the Escrow Account for Tennessee
Valley Agri-Energy, LLC (the “Company”) have been satisfied:

 

(i)            The Company has received, approved
and deposited or caused to be deposited in escrow Subscriptions and cash
Payments on such Subscriptions (including the cash amount of Initial Payments
and cash payments on Promissory Notes) in the amount of $60,000,000 or more,
exclusive of interest; 

 

(ii)           The Company has received written
commitments from lending sources to provide senior and subordinated debt which,
combined with the offering proceeds and funds received or receivable from the
Company’s previous equity offering, grants and other resources, the Board of
Managers of the Company determines would be sufficient to construct the Company’s
ethanol plant and commence start-up operations with a reasonable amount of
working capital; and

 

(iii)          The Company has executed a definitive
design-build agreement with a
construction contractor to plan, design, engineer and construct the
Company’s proposed plant. 

 

IN WITNESS WHEREOF, the undersigned
hereby certifies he is duly authorized to execute this notice on behalf of
Tennessee Valley Agri-Energy, LLC.

 

	
   

  	
  TENNESSEE VALLEY AGRI-ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
					

 

 

EXHIBIT B

 

Compensation
of Escrow Agent

 

0.15% annual fee based on month-end market
value of the Escrow Funds, to be invoiced monthly and paid by the Company
within 10 days of receipt

 

B-1EXHIBIT 10.24

 

Note: The appearance of “[***]”
in this exhibit indicates material which has been omitted pursuant to a
request for confidential treatment under Rule 406 under the Securities
Act. The omitted material has been filed separately with the Securities and
Exchange Commission.

 

TERMINATION OF

PROJECT DEVELOPMENT AGREEMENT

BETWEEN

TENNESSEE VALLEY AGRI-ENERGY, LLC

AND

DELTA-T CORPORATION

 

This Termination of Project Development Agreement (“Termination”)
is entered into this 8th day of January, 2008, by and between Tennessee Valley
Agri-Energy, LLC (“TVAE”) and Delta-T Corporation (“Delta-T”), which parties may be
referred to individually as a “Party” or jointly as the “Parties.”

 

WITNESSETH

 

WHEREAS, Delta-T and TVAE executed a Project Development Agreement
(“Agreement”) on July 28, 2006; and

 

WHEREAS, the Parties amended the Agreement on June 5,
2007, in accordance with Article 12.6 thereof, said Agreement as amended
hereinafter referred to as the “Agreement”; and

 

WHEREAS, the Parties wish to terminate the Agreement (including
all amendments), and sever their relationship with respect to TVAE’s Project or
Plant.

 

NOW, THEREFORE, in consideration of the mutual terms and conditions
of this Termination, the Parties agree as follows:

 

1.                                       The Parties agree that capitalized terms
used in this Termination that are not otherwise defined herein shall have the
meaning ascribed to such terms in the Agreement.

 

2.                                       Upon receipt by Delta-T from TVAE of the
full amount set forth below in Article 5, the Parties mutually agree to
terminate the Agreement, including but not limited to the termination of the
limited license granted in Article 4 to Client, effective as of January 8,
2008 (“Effective Date”). As of the Effective Date, the Parties agree that all
rights and obligations of the Parties under the Agreement shall be and are
terminated without any further liability of any Party to the other Party,
provided that the Parties’ obligations expressly set forth in Article 2, Article 9,
Article 10, and Article 11 shall survive such termination (“Post-Termination
Obligations”). Except for claims relating to the Post-Termination Obligations
of the Parties arising on or after the Effective Date, the Parties hereby
release and forever discharge all claims or actions against the other Party
arising under or related to or in connection with the Agreement, TVAE’s Project
or Plant, or otherwise, whether arising at law or in equity or otherwise.

 

1

 

3.                                       Survival of Confidentiality Provision. Pursuant to Article 2 of the Agreement
the Parties agreed to be bound by certain terms regarding confidentiality. This
Termination Agreement shall not affect the respective obligations of the Parties
under Article 2 which shall remain in full force and effect. Client also
agrees that upon execution of this Termination Agreement, it will: a)
immediately cease use of DELTA-T’s Confidential Information (as defined in the Agreement);
b) return to DELTA-T all Confidential Information, if any, provided to Client
and destroy all materials developed that were based upon such Confidential
Information; and c) promptly advise all actual and potential investors and
lenders for the project and all regulatory authorities to which Confidential
Information of DELTA-T has been provided of the termination of the Agreement
and withdraw any applications for financing or permits that were based on the
use of DELTA-T’s Confidential Information.

 

4.                                       Except for the Post-Termination
Obligations, Delta-T agrees that TVAE is released from all other obligations
under the Agreement, including any exclusivity, right of first refusal,
entering into technology or EPT agreements for construction of the Plant, or any
other obligations. Without limiting the foregoing, Delta-T expressly agrees
that TVAE’s Post-Termination Obligations do not prevent TVAE from contracting
with any other party to provide process design, technology or other any other
services to TVAE’s Project or Plant without any liability, obligation or
indebtedness to Delta-T, and that TVAE is free to contract with any party it
wishes in connection with its Project or Plant, including competitors of
Delta-T identified in the Agreement or otherwise, without any liability,
obligation or indebtedness to Delta-T.

 

5.                                       TVAE agrees to pay Delta-T the amount of $[***] as full and final payment under the Agreement in
satisfaction of all obligations, debts and liabilities of TVAE to Delta-T under
the Agreement, within one business day of the effective date of this
Termination, by wire transfer.

 

6.                                       The Parties agree to limit their public
statements regarding the termination to “the Parties have mutually agreed to
end their development relationship on TVAE’s ethanol project and plant and
Delta-T will no longer be involved with the TVAE’s ethanol project or plant” or
similar statements or words to that effect. Notwithstanding the foregoing or
the confidentiality provisions of Article 2 or Article 9 of the
Agreement, Delta-T agrees that this Termination may be filed with SEC and
other regulatory authorities as necessary or appropriate to comply with federal
and state securities laws, provided that the Parties agree that TVAE will apply
to the SEC for confidential treatment of the amount set forth in Section 5
above, provided further that TVAE’s financial statements may make such
disclosure of this Termination as is necessary under applicable accounting rules and
principles, and provided further that Delta-T be notified 7 days in advance of
such actions and allowed the opportunity to review prior to release.

 

2

 

7.                                       Counterparts. This Termination may be executed
in one or more counterparts, all of which shall together constitute one and the
same instrument and shall become effective when one or more counterparts have
been signed by Delta-T and delivered to TVAE and one or more counterparts have
been signed by TVAE and delivered to Delta-T. Each individual signing this
Termination Agreement certifies that he or she is authorized to sign the
Termination on behalf of the Party he or she represents and to bind that Party
to the terms and conditions herein stated.

 

	
   

  	
  TENNESSEE
  VALLEY AGRI-ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/
  Bartt R. McCormack

  
	
   

  	
  Its

  	
    Chairman/President

  
	
   

  	
   

  
	
   

  	
  DELTA-T
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/
  Mark A. Shmorhun

  
	
   

  	
  Its

  	
    VP
  Business Development

  

 

3

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