Form S-1 For Hometown Community Bancshares, Inc. - Option Agreement BY And Between Hometown Community Bancshares And Dunhill Developers, LLC, Dated September 2, 2004

OPTION AGREEMENT


THIS OPTION AGREEMENT ("Agreement") is made and entered into this 2nd day
--------- of September, 2004, by and between Dunhill Developers, LLC ("Owner"), a Georgia
----- limited liability company, and Hometown Community Bancshares, Inc. ("HCBI"), a
---- Georgia corporation.


W I T N E S S E T H:
- - - - - - - - - -


IN CONSIDERATION of $10.00 in hand paid, the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, Owner does hereby grant unto HCBI an exclusive option (hereinafter called "Option") to
------ purchase all of Owner's right, title and interest in and to all of that tract or parcel of land (hereinafter called "Property") described on Exhibit "A" hereto
-------- ----------- attached. Owner is granting this Option to HCBI upon the following terms and conditions:


1. Term. The term of this Option (the "Term") shall be for a period
---- ---- commencing on the date hereof and continuing through and including January 31, 2005; provided, that if this Option is not exercised as hereinafter provided, prior to 12:00 midnight (Eastern Time), January 31, 2005, the Option shall terminate.


2. Exercise of Option. The exercise of the Option shall be accomplished
------------------ by HCBI giving written notice of its election to exercise the Option (the "Exercise Notice") to Owner prior to expiration of the Term. Upon the Exercise --------------- Notice being given, this Agreement shall become a contract of purchase and sale of the Property. The Exercise Notice shall set forth the date and time of the Closing.


3. Survey. Owner shall have an accurate survey (the "Survey") of the
------ ------ Property made, at the expense of Owner, by a registered land surveyor of the State of Georgia and have the acreage of the Property computed on the basis of the Survey by acceptable standards of the Georgia Association of Registered Land Surveyors to one-hundredths of an acre. Owner, upon receipt of the survey, shall deliver two copies thereof to HCBI. The legal description of the Property contained in the limited warranty deed to be delivered to HCBI in accordance with the terms hereof shall be the same as shown on the Survey.


4. Purchase Price. The Purchase Price for the Property shall be Two
-------------- Hundred Fifty Thousand and No/100 Dollars ($250,000) per acre. Owner and HCBI acknowledge that HCBI may not be able to exercise the Option and acquire the Property unless the Property is appraised by two independent appraisers, one of which is MAI qualified, at a value of at least $250,000 per acre. The Purchase Price, as adjusted by the Closing prorations described herein, shall be payable at the closing of the transaction contemplated by this Agreement (the act of closing being hereinafter referred to as "Closing" and the date on which closing occurs being hereinafter referred to as the "Closing Date") by cashier's check
------------ or wire transfer, pursuant to instructions provided to HCBI prior to Closing.


5. Closing. In the event the Option is timely exercised, the Closing
------- shall be held at the offices of Morris, Manning & Martin, 3343 Peachtree Road, N.E., 16th Floor, Atlanta, Georgia 30326. If the Exercise Notice does not set forth a date and time for Closing, then the Closing shall be held on January 31, 2005 at 10:00 a.m. (Eastern Time). Possession of the Property shall be granted and delivered by Owner to HCBI at the time of Closing.


At the Closing, Owner shall convey to HCBI good, marketable and insurable fee simple title to the Property subject only to the lien of real property ad valorem taxes for the current year, not yet due and payable, those matters listed on Exhibit "B" attached hereto, and any matters that would be shown on a
----------- current and accurate survey of the Property (collectively, the "Permitted Title
--------------- Exceptions"). Such conveyance shall be made by execution and delivery to HCBI - ---------- by Owner of a limited warranty deed together with all other documents required herein, including such documentation, if any, as reasonable necessary to evidence the authority and power of Owner to consummate the transaction. Owner shall take all actions expressly required by this Agreement to be performed by Owner at the Closing including but not limited to satisfying and/or discharging out of Owner's closing proceeds or otherwise at Owner's cost or expense at Closing all mortgages, deeds to secure debt and other encumbrances necessary to deliver title to the Property as required hereby. At Closing, in addition to the foregoing requirements, Owner shall deliver to HCBI (i) an owner's affidavit in customary form as required by HCBI's title insurance company in order to remove standard exceptions to HCBI's title insurance policy, (ii) a customary non-foreign affidavit, and (iii) an affidavit sufficient to satisfy the requirements of O.C.G.A. Section 48-7-128.


In addition to the above documents, at Closing, Owner shall execute and deliver to HCBI (and to the extent HCBI's signature is required, HCBI shall execute and deliver) the following documents; each of which shall be in a form acceptable to Owner and HCBI:


(a) A non-exclusive assignment to HCBI (with Owner continuing as an additional beneficiary) of the benefits of all assignable certificates, permits, licenses, authorizations and approvals, if any, to the extent they relate to the Property;


(b) To the extent that as of the Closing Date the roads servicing the Property are not dedicated to the public, an access easement agreement;


(c) To the extent that easements in favor of the applicable utility providers for the utilities serving the Property are not recorded in the public records as of the Closing Date, an utility easement agreement; and


(d) An agreement setting forth Owner's and HCBI's obligations subsequent to the Closing, which shall include without limitation the following:


(i) Construction by Owner of a deceleration lane along Georgia Highway 53 to allow access into the Property in accordance with all standards and requirements of the Georgia Department of Transportation, Jackson County, and the City of Braselton (as applicable) and any other applicable standards and requirements within ...