exv10w21



 




Exhibit
10.21





ETHANOL PURCHASE AND SALE AGREEMENT



BETWEEN




CARDINAL ETHANOL, LLC




AND




MUREX N.A., LTD.




 









 





Table of Contents




	 	 	 	 	 
	 
	 	 	Page	 
	ARTICLE I DEFINITIONS AND INTERPRETATION
	 	 	1	 
	 
	ARTICLE II DATE OF FIRST DELIVERY NOTICE
	 	 	3	 
	 
	Section 2.1 Notice Dates
	 	 	3	 
	 
	Section 2.2 Production Estimates
	 	 	3	 
	 
	ARTICLE III TERM; TERMINATION
	 	 	3	 
	 
	Section 3.1 Initial Term; Renewal
	 	 	3	 
	 
	Section 3.2 Effective During Initial Term
	 	 	4	 
	 
	Section 3.3 Termination During Initial Term
	 	 	4	 
	 
	Section 3.4 Termination By Seller Due To Buyer Insolvency
	 	 	4	 
	 
	Section 3.5 Termination By Buyer Due to Seller Insolvency
	 	 	4	 
	 
	Section 3.6 Termination for Intentional Misconduct
	 	 	4	 
	 
	ARTICLE IV PURCHASE AND DELIVERY OBLIGATIONS
	 	 	4	 
	 
	Section 4.1 Purchase of Ethanol Production
	 	 	4	 
	 
	Section 4.2 Access To Delivery Point
	 	 	4	 
	 
	Section 4.3 Purchase Exclusivity
	 	 	5	 
	 
	ARTICLE V QUANTITY
	 	 	5	 
	 
	Section 5.1 Uniform Weekly Deliveries
	 	 	5	 
	 
	Section 5.2 Quantity Measurement
	 	 	5	 
	 
	ARTICLE VI QUALITY
	 	 	5	 
	 
	Section 6.1 Specification Requirement
	 	 	5	 
	 
	Section 6.2 Insurance
	 	 	5	 
	 
	Section 6.3 Responsibility For Off-Specification Ethanol
	 	 	6	 
	 
	Section 6.4 Maintenance of Samples
	 	 	6	 
	 
	ARTICLE VII PRICE
	 	 	6	 
	 
	Section 7.1 Determination of Price
	 	 	6	 
	 
	Section 7.2 Payment of Taxes
	 	 	7	 
	 
	Section 7.3 Inability to Produce
	 	 	7	 
	 
	Section 7.4 Price Arbitrage Opportunities
	 	 	7	 
	 
	ARTICLE VIII TRANSPORTATION AND INSURANCE CHARGES
	 	 	7	 
	 
	Section 8.1 Transportation of Ethanol; Termination For Breach
	 	 	7	 
	 
	Section 8.2 Rail Shipment
	 	 	7	 
	 






 









 





Table of Contents




(continued)




	 	 	 	 	 
	 
	 	 	Page	 
	ARTICLE IX STORAGE
	 	 	8	 
	 
	Section 9.1 Storage Capacity
	 	 	8	 
	 
	ARTICLE X PAYMENTS
	 	 	8	 
	 
	Section 10.1 Purchase Price
	 	 	8	 
	 
	Section 10.2 Interest
	 	 	8	 
	 
	Section 10.3 Audits
	 	 	8	 
	 
	ARTICLE XI TITLE AND RISK OF LOSS
	 	 	9	 
	 
	Section 11.1 Transfer of Title
	 	 	9	 
	 
	Section 11.2 Liability Allocation
	 	 	9	 
	 
	ARTICLE XII REPRESENTATIONS, COVENANTS AND WARRANTIES
	 	 	9	 
	 
	Section 12.1 Seller’s Representations, Warranties and Covenants
	 	 	9	 
	 
	Section 12.2 Buyer’s Representations, Warranties and Covenants
	 	 	10	 
	 
	ARTICLE XIII FORCE MAJEURE
	 	 	10	 
	 
	Section 13.1 Force Majeure
	 	 	10	 
	 
	Section 13.2 Definition
	 	 	11	 
	 
	Section 13.3 Labor Disputes
	 	 	11	 
	 
	Section 13.4 Sales during Force Majeure
	 	 	11	 
	 
	Section 13.5 Exclusions
	 	 	11	 
	 
	Section 13.6 Claiming Relief
	 	 	11	 
	 
	Section 13.7 Notice
	 	 	12	 
	 
	Section 13.8 Termination for Force Majeure
	 	 	12	 
	 
	ARTICLE XIV LIMITATION OF LIABILITY
	 	 	12	 
	 
	Section 14.1 Limitation of Liability
	 	 	12	 
	 
	ARTICLE XV AUDIT RIGHTS
	 	 	12	 
	 
	Section 15.1 Records
	 	 	12	 
	 
	Section 15.2 Audit
	 	 	12	 
	 
	ARTICLE XVI NOTICES
	 	 	13	 
	 
	Section 16.1 Notices
	 	 	13	 
	 
	ARTICLE XVII CONFIDENTIAL INFORMATION
	 	 	14	 
	 
	Section 17.1 Confidential Information
	 	 	14	 
	 






 









 





Table of Contents




(continued)




	 	 	 	 	 
	 
	 	 	Page	 
	Section 17.2 Confidential Treatment
	 	 	14	 
	 
	Section 17.3 Return of Confidential Information
	 	 	14	 
	 
	Section 17.4 Reasonableness; Injunctive Relief
	 	 	14	 
	 
	Section 17.5 Disclosure in SEC Filings
	 	 	15	 
	 
	ARTICLE XVIII INDEMINIFICATION
	 	 	15	 
	 
	Section 18.1 Indemnification
	 	 	15	 
	 
	ARTICLE XIX ADDITIONAL PROVISIONS
	 	 	15	 
	 
	Section 19.1 Default
	 	 	15	 
	 
	Section 19.2 Non-Waiver of Future Default
	 	 	16	 
	 
	Section 19.3 Assignment
	 	 	16	 
	 
	Section 19.4 Documents
	 	 	16	 
	 
	Section 19.5 Time
	 	 	16	 
	 
	Section 19.6 Arbitration
	 	 	16	 
	 
	Section 19.7 Inurement
	 	 	16	 
	 
	Section 19.8 Entire Agreement
	 	 	16	 
	 
	Section 19.9 Modification
	 	 	16	 
	 
	Section 19.10 Governing Law
	 	 	16	 
	 
	Section 19.11 Compliance with Laws
	 	 	17	 
	 
	Section 19.12 Severability
	 	 	17	 
	 
	Section 19.13 Headings
	 	 	17	 
	 
	Section 19.14 Furnishing of Information
	 	 	17	 
	 
	Section 19.15 Cumulative Remedies
	 	 	17	 
	 
	Section 19.16 Faithful Performance
	 	 	17	 
	 
	Section 19.17 No Partnership
	 	 	17	 
	 
	Section 19.18 Costs Borne By Each Party
	 	 	17	 
	 
	Section 19.19 Counterparts
	 	 	17	 






 









 






ETHANOL PURCHASE AND SALE AGREEMENT




BETWEEN




CARDINAL ETHANOL, LLC




AND




MUREX N.A., LTD.




     This
Agreement is made effective as of December 20, 2006, by and between Cardinal
Ethanol LLC, an Indiana limited liability corporation, having its offices in Winchester, Indiana
(“Seller”), and Murex N.A., Ltd., a Texas limited partnership with its principal offices of
business in Addison, Texas (“Buyer”).



RECITALS:




     WHEREAS, Seller intends to build an ethanol production facility in Randolph County,
Indiana, which will be owned and operated by Seller.



     WHEREAS, Seller has agreed to sell to Buyer, and Buyer has agreed to buy from Seller all
(100%) of the Ethanol to be produced from the Randolph County, Indiana facility on the terms and
conditions in this Agreement.



     NOW THEREFORE this Agreement, in consideration of the promises and mutual covenants and
conditions contained herein, Seller and Buyer agree as follows:



ARTICLE I




DEFINITIONS AND INTERPRETATION




     “Applicability”. The definitions in this Article apply to this Agreement. Any word, phrase or
expression that is not defined in this Agreement and that has a generally accepted meaning in the
custom and usage in the ethanol industry in the United States shall have that meaning in this
Agreement.



     “Assignment of Contract” means an assignment of contract related to this Agreement executed by
Seller for the benefit of certain of its Funders.



     “ASTM D-4806” shall be defined on Schedule A.



     “Buyer” means Murex, N.A. Ltd.; a Texas limited partnership, with the address of 5057 Keller
Springs Road, Suite 150, Addison, TX 75001.



     “Commission” means for each net gallon that Buyer takes under this Agreement; Buyer shall
receive 0.90% of the net purchase price as defined in Section 7.1.



     “Date of First Delivery” means the date when Ethanol produced at the Plant is available for
Delivery to Buyer under this Agreement.



1









 





     “Delivery” means the transfer of Ethanol from Seller to the transportation vehicle (rail car
or truck) contracted by Buyer at the Delivery Point.



     “Delivery Point” means the loading of Ethanol at the outlet flange transferring the Ethanol
into rail cars or trucks.



     “Dollars”. All references to “dollars” in this Agreement shall be references to amounts
expressed in United States currency. All calculations of monetary sums to be hereunder shall
be made in US currency.



     “Effective Date” means the date set forth in the introductory paragraph of this Agreement.



     “Ethanol” means the clear odorless liquid produced for use as a motor fuel additive made from
fermented grain being approximately 200 proof alcohol produced by Seller at the Plant.



     “Force Majeure” has the meaning given in Section 13.2.



     “Forward Contracted Gallons” means any gallons of Ethanol produced from the Plant for which
Buyer has agreed to resell to third parties pursuant to binding forward delivery contracts.



     “Gallon” means one U.S. gallon of ethanol ~ 60 degrees F.



     “Initial Term” has the meaning given in Section 3.1.



     “Plant” means the Ethanol production plant to be constructed by Seller for the production of
approximately 100 million Gallons per annum and to be located at Randolph County, Indiana.



     “Prime Commercial Lending Rate” means the rate of interest most recently published
in the Money Rate Table of the Wall Street Journal as the prime annual rate of interest.



     “Purchase Price” has the meaning given in Section 7.1.



     “Renewal Terms” has the meaning given in Section 3.1.



     “Resale Costs” means all reasonable and customary costs and charges incurred by Buyer in
handling Gallons received from the Plant (including the cost of any Gallons properly obtained by
Buyer pursuant to Section 7.3 herein), without mark-up by Buyer, and without charge for Buyer’s
administrative costs.



     “Sale Price” has the meaning given in Section 7.1.



     “Schedule” means Schedule A attached to this Agreement, as it may be amended and
revised from time to time, which shall constitute part of, and shall be included in this
Agreement.



2









 





     “Seller” means Cardinal Ethanol, LLC an Indiana limited liability company, with the address
of; 2 OMCO Square, Suite 201 Winchester, IN 47394.



     “Taxes” has the meaning given in Section 7.2.



     “Total Annual Plant Production” means the entire production of Ethanol from the Plant, within
a 12-month period, which production is estimated but not warranted to be approximately 100 million
Gallons and any additional capacity expansion of Ethanol from the Plant in each 12-month period;
provided that for the 12-month period beginning on the Date of First Delivery, such production may
be less.



     “Transportation Costs” means reasonable and customary costs charged by a third party for
transportation from Plant to a buyer’s point of delivery together with insurance and all other
costs and charges incurred to third parties other than Resale Costs in connection with such
transportation, without mark-up by Buyer, and without charge for Buyer’s administrative costs.



ARTICLE II




DATE OF FIRST DELIVERY NOTICE




     Section 2.1 Notice Dates. Seller shall provide Buyer notice one hundred
eighty (180) days prior to the projected Date of First Delivery of Seller’s best estimate of the
range of potential dates for Date of First Delivery covering a forty-five (45) day period. Ninety
(90) days prior to the anticipated Date of First Delivery, Seller shall provide Buyer with a best
estimate of a projected Date of First Delivery covering a range of thirty (30) days. Forty-five
(45) days prior to the projected Date of First Delivery, Seller shall provide Buyer with a best
estimate of a projected Date of First Delivery covering a range of seven (7) days.



     Section 2.2 Production Estimates. With each notification in Section 2.1,
Seller shall provide a best estimate of the amount of Ethanol production on a daily basis for the
six (6) month period following the estimated Date of First Delivery to Buyer. After the Date of
First Delivery, Seller shall provide monthly notices to Buyer, by the 20th of each month,
estimating the daily production for the next six (6) month period beginning the first month
following the date of the last estimate. Seller shall promptly notify Buyer of any adjustments to
the Ethanol production schedule that has been most recently given to Seller.



ARTICLE III




TERM; TERMINATION




     Section 3.1 Initial Term; Renewal. The initial term of the Agreement shall be
for a five (5) year period, beginning on the Date of First Delivery (the “Initial Term”). The
Initial Term shall be followed by renewal terms (the “Renewal Terms”) of one (1) year that renew
automatically unless notice is given by either party at least ninety (90) days prior to the end of
the current term.



3









 





     Section 3.2 Effective During Initial Term. Subject to the conditions of this
Agreement, this Agreement shall be effective for the Initial Term and shall continue after the
Initial Term, if renewed as provided in Section 3.1.



     Section 3.3 Termination During Initial Term. This Agreement may not be
terminated during the Initial Term unless pursuant to the provisions of this Agreement and shall
otherwise continue after the Initial Term unless (i) terminated pursuant to this Agreement, or (ii)
not renewed pursuant to Section 3.1.



     Section 3.4 Termination By Seller Due To Buyer Insolvency. If Buyer becomes
insolvent or suffers the filing of a petition of bankruptcy, executes an assignment for the benefit
of creditors, or becomes the subject of any insolvency proceeding of any nature, then, in addition
to any other rights and remedies Seller may have, Seller shall have the right to immediately
terminate this Agreement by written notice.



     Section 3.5 Termination By Buyer Due to Seller Insolvency. If Seller (i)
becomes insolvent or suffers the filing of a petition of bankruptcy, executes an assignment for the
benefit of creditors, or becomes the subject of any insolvency proceeding of any nature, then, in
addition to any other rights and remedies it may have, shall have the right to immediately
terminate this Agreement by written notice.



     Section 3.6 Termination for Intentional Misconduct. If either party engages
in intentional misconduct reasonably likely to result in significant adverse consequences to the
other party, the party harmed or likely to be harmed by the intentional misconduct may terminate
this Agreement immediately, upon written notice to the party engaging in the intentional
misconduct.



ARTICLE IV




PURCHASE AND DELIVERY OBLIGATIONS




     Section 4.1 Purchase of Ethanol Production. Subject to the provisions of this
Agreement, Seller shall sell and make available for Delivery and Buyer shall purchase and take
Delivery in accordance with Section 5.1 of one hundred percent (100%) of the Ethanol produced by
the Plant on a daily basis. Notwithstanding the foregoing, if Seller chooses, in its sole
discretion, to market and sell Ethanol at a retail fueling station owned by Seller or one of its
affiliates then Seller shall not be required to make available for Delivery to Buyer any Ethanol
sold in that manner.



     Section 4.2 Access To Delivery Point. Buyer shall be given reasonable access
to the Delivery Point(s) at the Plant during normal business hours upon reasonable prior notice;
provided that Buyer’s access shall be without disruption to Seller’s business operations at the
Plant. Buyer will provide Seller with delivery schedules and, at the sole cost of Buyer, make
arrangements for transportation of the Ethanol. Seller shall handle and supervise the loading and
Delivery of Ethanol, prepare Delivery documentation and generally be responsible for all
documentation and paperwork ancillary to such activities. All equipment necessary to load rail
cars or trucks at the Delivery Point shall be supplied by Seller without charge to Buyer.



4









 





     Section 4.3 Purchase Exclusivity. Subject to Section 4.1, Buyer is obligated,
and shall have the exclusive right, to purchase from Seller all Ethanol produced at the Plant. If
Buyer does not purchase and take Delivery of all Ethanol produced at the Plant or does not resell
all of the Ethanol produced at the Plant, Buyer shall purchase the Ethanol for its own account.
When Buyer’s purchase is for its own account based on the conditions above, such sales shall be at
market prices agreed upon by Seller and Buyer. For purchases of Ethanol by Buyer for its own
account Buyer will be responsible for all storage and other charges (including transportation)
after the purchase and Buyer will be entitled to all proceeds obtained from the resale of the
Ethanol.



ARTICLE V




QUANTITY




     Section 5.1 Uniform Weekly Deliveries. Seller shall deliver the Ethanol and
Buyer shall take Delivery of Ethanol at the Delivery Point(s) at uniform weekly rates, as nearly as
practicable such that the Ethanol delivered in any one month shall approximately equal one twelfth
(1/12th) of Seller’s estimated annual Ethanol production. Buyer shall be obligated to take
Delivery of, and to pay for in accordance with Article 4, all quantities of Ethanol tendered for
Delivery by Seller.



     Section 5.2 Quantity Measurement. The quantity of Ethanol Delivered to Buyer
by Seller from the Plant shall be established by outbound meter tickets expressed in net
temperature-corrected Gallons in accordance with standards commonly used within the industry in the
United States of America. The meter tickets shall be obtained from meters which are certified as
of the time of loading and which comply with all applicable laws,
rules and regulations.
The outbound meter tickets shall be determinative in the absence of manifest error (greater than
0.5% variation) of the quantity of Ethanol for which Buyer is obligated to pay pursuant to Section
10.1.



ARTICLE VI




QUALITY




     Section 6.1 Specification Requirement. Seller shall deliver Ethanol to Buyer
under this Agreement that meets the specifications set forth in “Schedule A”. If any government
entity requires a change in the specifications set forth in Schedule A, Buyer shall notify Seller
of the change in specifications. Seller and Buyer agree to change the specifications of Ethanol in
this Agreement within a reasonable time as agreed to by Buyer and Seller, accordingly, subject to
Article 13.



     Section 6.2 Insurance. Seller shall arrange and maintain a minimum of
US$5,000,000 product and commercial general liability insurance and cause Buyer to be designated as
loss payee or additional insured as their interests may appear, with waiver of subrogation by the
insurer against Buyer. Seller shall further arrange and maintain employer’s liability insurance
meeting all statutory requirements. In each ease Seller shall provide to Buyer a copy of the
certificate(s) of insurance evidencing the existence of the required insurance. Likewise, Buyer



5









 




shall arrange and maintain a minimum of US $5,000,000 product and commercial general liability
insurance and cause Seller to be designated as loss payee or additional insured as their interests
may appear, with waiver of subrogation by the insurer against Seller. Buyer shall further arrange
and maintain employer’s liability insurance meeting all statutory requirements. In each ease Buyer
shall provide to Seller a copy of the certificate(s) of insurance evidencing the existence of the
required insurance.




     Section 6.3 Responsibility For Off-Specification Ethanol. If the Ethanol
Delivered by Seller does not meet the specifications set forth in Schedule “A” when Delivered by
Seller to the transportation vehicles and quality claims arise as a result thereof, such quality
claims will be administered by Buyer with prior consent of Seller. Such claims shall be solely for
Seller’s account and Buyer shall not be responsible in any manner whatsoever for such claims.



     Section 6.4 Maintenance of Samples. Seller agrees to maintain original sealed
numbered samples of all Ethanol after Delivery into transportation vehicles before it leaves the
Delivery Point premises. Seller will label these samples to indicate date of shipment and the
truck or rail car number will be included. Seller will retain these samples for three (3) months
and shall send one such sample to Buyer immediately upon Buyer’s request.



ARTICLE VII




PRICE




     Section 7.1 Determination of Price.



     (a) For all sales of Ethanol by Buyer, where Buyer has agreed to sell Ethanol to third
party customers, Buyer agrees to pay to Seller for each Gallon of Ethanol Delivered determined
in accordance with Section 5.2 (the “Purchase Price”). The Purchase Price shall be equal to the
actual sale price invoiced by Buyer for such Ethanol re-sold by Buyer to such third party customers
for the most recent week (the “Sale Price”) less: (i) all Resale Costs, (ii) Taxes (as defined in
Section 7.2) paid by Buyer and (iii) the Commission calculated as 0.90% of the “net” purchase price
which is defined as the purchase price after deduction of the amounts set forth in clauses (i) and
(ii) of this Section 7.1(a).



     (b) Buyer covenants to use its best efforts to obtain for Seller the best Purchase Price then
available for Ethanol sales taking into consideration the deduction of all Resale Costs incurred by
Buyer for such Ethanol. It will be the responsibility of Buyer to perform all billing in regard to
the sale of Ethanol to third parties, to collect all receivables, to undertake legal collection
procedures as necessary, and to bear the risk and be responsible for any bad accounts. Buyer shall
in no circumstances be obligated to sell Ethanol to any buyer whose creditworthiness is
unacceptable to Buyer, provided that if Buyer determines that there are no buyers willing to
purchase Ethanol of creditworthiness acceptable to Buyer, then Buyer shall purchase such Ethanol
for its own account in accordance with this Agreement. Seller agrees that its remedies for Buyer’s
breach of its obligation in this paragraph (b) shall include without limitation, the right to
specific performance and the right to terminate this Agreement.



6









 





     Section 7.2  Payment of Taxes. Seller shall pay or cause to be paid all valid
levies, assessments, duties, rates and taxes (together “Taxes”) assessed on Ethanol prior to the
Delivery of the assessed Ethanol at the Delivery Point. Buyer shall pay or cause to be paid all
Taxes imposed on the Ethanol or sale of Ethanol after the Delivery of the Ethanol at the Delivery
Point. If any Taxes are imposed and paid by Buyer, the Purchase Price shall be reduced by the
amount of such Taxes actually paid by Buyer, provided however, if taxes are assessed on a transfer
made by Buyer prior to transfer and sale to a third party end-user of the Ethanol, the Purchase
Price shall not be reduced by the Taxes assessed on such prior transfer made by Buyer.



     Section 7.3 Inability to Produce. In the event Seller’s Plant is unable to
produce sufficient Ethanol quantities to meet Buyer’s sales commitments, which sales commitments
shall have been previously disclosed to Seller, and such inability to produce is not the result of
Force Majeure, then in such case Buyer may purchase ethanol in the market place at such reasonable
price and in such reasonable quantity as is required to meet its delivery obligations; provided,
however, that prior to making such purchases, Buyer shall communicate the terms and conditions of
such purchases to Seller and shall obtain the consent of Seller to such purchases which consent
shall not be unreasonably withheld. If Buyer does so, and as a result thereof incurs a financial
loss, Seller will reimburse Buyer for any such loss. Under such circumstances, if Buyer realizes a
financial gain, it will pay such gain to Seller. Buyer will provide Seller written substantiation
of such costs reasonably satisfactory to Seller as soon as practicable.



     Section 7.4 Price Arbitrage Opportunities. Buyer agrees to promptly notify
Seller of any and all price arbitrage opportunities where Seller may benefit from exchanging third
party customers with another Ethanol supplier. Notice of the price arbitrage opportunity must
reasonably describe the opportunity to Seller and indicate to Seller the time within which the
opportunity must be accepted based on the circumstances of each opportunity. If Seller does not
accept the opportunity within such time as set out by Buyer, the opportunity will be deemed
rejected by Seller. If Seller accepts the price arbitrage opportunity and it results in proceeds
remaining after all related and unrelated parties have received the agreed upon amounts necessary
to affect the exchange (the “Gain”), the Gain will be shared equally by Buyer and Seller. Buyer
shall provide Seller with documentation substantiating the calculation of the Gain reasonably
satisfactory to the Seller as soon as practical.



ARTICLE VIII




TRANSPORTATION AND INSURANCE CHARGES




     Section 8.1 Transportation of Ethanol; Termination For Breach. Buyer agrees
to diligently pursue, secure and maintain all necessary agreements to receive and transport the
Ethanol from the Delivery Point. Buyer shall be solely responsible for the arrangement of
transportation. Buyer covenants to use its best efforts to obtain the best commercially reasonable
prices after considering the price of transportation such that Seller achieves the highest net
price possible after payment for Transportation Costs. Seller agrees that its only remedy for
Buyer’s breach of its obligation in the preceding sentence shall be to terminate this Agreement.



     Section 8.2 Rail Shipment. If the Ethanol is being transported by rail, the
cost of rail transportation will include, but not be limited to, all tank car lease agreements,
freight from



7









 




Delivery Point to destination, accessorial charges, fuel surcharges and excess empty mileage
charges.




ARTICLE IX




STORAGE




     Section 9.1 Storage Capacity. Seller shall at all times provide storage at
the Plant for Ethanol, in an amount not less than ten (10) days of the Seller’s estimated Ethanol
production, which is estimated to be 2.7 million gallons.



ARTICLE X




PAYMENTS




     Section 10.1 Purchase Price. Buyer shall pay to Seller the net Purchase Price
for each Gallon of Ethanol Delivered under this Agreement as provided in Section 7.1(a) by direct
wire transfer or electronic transfer to Seller’s designated bank account. The direct wire transfer
or electronic transfer to Seller’s designated bank account (“Payment”) shall be made no later than
the twentieth (20th) day after the Friday of the week in which Seller issues the bill of
lading for such Gallons sold and delivered during said week. At the time of each Payment Buyer
shall forward a statement to Seller setting forth in reasonable detail all third party buyer
purchase terms including without limitation, the quantity of Ethanol sold, the purchase prices, and
all Resale Costs, Transportation Costs and commissions directly relating to such third party sale
and purchase terms, and the quantity and price of Ethanol purchased by Buyer for its own account
(if any). During the first sixty days of the start up of the Plant, the Buyer agrees to pay the
Seller as follows: From days 1 to 60, the direct wire transfer or electronic transfer to Seller’s
designated bank account (“Payment”) shall be made no later than the seventh
(7th) day after the Friday of the week in which Seller issues the bill of lading for
such Gallons sold and delivered during said week. From days 61 to 90, the direct wire transfer or
electronic transfer to Seller’s designated bank account (“Payment”) shall be made no later than the
fourteenth (14th) day after the Friday of the week in which Seller issues the
bill of lading for such Gallons sold and delivered during said week.



     Section 10.2 Interest. Subject to Article 13, if any party to this Agreement
fails to pay all or any portion of the amount owing by that party when due, such unpaid amount will
bear interest at a rate equal to one per cent (1%) per annum above the Prime Commercial Lending
Rate as reported in the Wall Street Journal calculated daily from the date such amount is due
hereunder until the date it is actually paid. Upon failure of a party to pay the unpaid amount
including interest thereon within ten (10) days after the due date set out in this Agreement, the
party to whom sums are due may upon giving seven (7) days’ notice suspend in whole or in part its
delivery or acceptance of Ethanol (as the case may be) hereunder until such outstanding amount has
been paid in full.



     Section 10.3 Audits. Any payment made pursuant to this Article will not
preclude a party from subsequently auditing the accounts of the other on a once per year basis or
at any



8









 




time upon the occurrence of a default by such other party hereunder, as permitted in this
Agreement.




ARTICLE XI




TITLE AND RISK OF LOSS




     Section 11.1 Transfer of Title. Delivery occurs when the Ethanol is
transferred to the transportation vehicle contracted by Buyer to take Delivery. Title and risk of
loss or damage shall only pass from Seller to Buyer upon Delivery. Until Delivery occurs, Seller
shall be deemed to be in control of and in possession of and shall have title to and risk of loss
of the Ethanol.



     Section 11.2 Liability Allocation. Buyer will have no responsibility, or
liability with respect to any Ethanol deliverable under this Agreement until Delivery to Buyer as
described in Section 11.1.



ARTICLE XII




REPRESENTATIONS, COVENANTS AND WARRANTIES




     Section 12.1 Seller’s Representations, Warranties and Covenants. Seller
represents and warrants to Buyer, as of the Effective Date hereof and covenants to Buyer at all
times during the term of this Agreement, as follows and acknowledges that Buyer is relying upon
such representations, warranties and covenants in connection with the purchase of Ethanol under
this Agreement:



     (a) Subject to any security interest held by Seller’s senior secured lender, Seller has title
to all Ethanol delivered hereunder, it has the right to sell the same to Buyer, and the Ethanol is
free from any liens or encumbrances;


EXCEPT AS PROVIDED IN SECTION 12.1(a), AND AS

PROVIDED 1N ARTICLE 6 WITH RESPECT TO THE QUALITY OF

ETHANOL TO BE DELIVERED, THERE ARE NO WARRANTIES

EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION,

WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A

PARTICULAR PURPOSE, AND SELLER HEREBY DISCLAIMS ALL

WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A

PARTICULAR PURPOSE.




     (b) Seller covenants that it shall procure and maintain in force all licenses,
consents and approvals required for its operation of the Plant and manufacture and sale
to Buyer of the Ethanol under this Agreement and shall be solely responsible for and indemnify
Buyer against any costs, liabilities or fines arising out of Seller’s failure to comply with any
applicable requirements of such licenses, consents and approvals.



9









 





     (c) Seller covenants that it will maintain accurate and complete production and
delivery records in a prudent and businesslike manner in accordance with sound commercial
practices in respect of Ethanol produced by Seller at the Plant.



     (d) Seller covenants that it will promptly notify Buyer of any actual or anticipated
production downtime or disruption to Ethanol availability.



     (e) Seller is a U.S. entity for purposes of state and federal income and excise taxes.



     Section 12.2 Buyer’s Representations, Warranties and Covenants. Buyer
represents and warrants to Seller, as of the Effective Date hereof and covenants to Seller at all
times during the term of this Agreement, as follows and acknowledges that Seller is relying upon
such representations, warranties and covenants in connection with the sale of Ethanol under this
Agreement.



     (a) Buyer covenants that it will maintain or cause to be maintained accurate and
complete records in a prudent and businesslike manner in accordance with sound commercial
practices, of the selling prices described in Article 7 and the associated Transportation, Resale
and other costs in respect of Ethanol purchased by Buyer from Seller.



     (b) Buyer has not incurred and is not responsible to pay any commission or any
finder’s fee in respect of any of the transactions contemplated herein which commissions or
finder’s fees could in any manner be or become the responsibility of Seller.



     (c) Buyer is a US entity for purposes of state and federal income and excise taxes.



     (d) Buyer covenants that it shall procure and maintain in force all licenses, consents
and approvals required for its purchase from Seller and resale of Ethanol hereunder and all
its other obligations under this Agreement except for those licenses for which Seller is
responsible under Section 12.1 (b), and shall be solely responsible for and indemnify Seller
against any costs, liabilities or fines arising out of Buyer’s failure to comply with the
applicable requirements of such licenses, comments and approvals.



     This indemnification shall survive the expiration or termination of this Agreement.



ARTICLE XIII




FORCE MAJEURE




     Section 13.1 Force Majeure. Subject to the other provisions of this Section,
if either party is unable by reason of Force Majeure, as hereinafter described, to perform in whole
or in part any obligation or covenant set forth hereunder, the obligations of both parties under
this Agreement will be suspended or curtailed to the extent necessary for the period such
Force Majeure condition continues. Where the Agreement is suspended or curtailed to the extent
necessary the amount of time the Force Majeure is in effect will be added on to the Initial Term.



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     Section 13.2 Definition. For the purposes of this Agreement, Force Majeure
will include any event or circumstance arising or occurring beyond the reasonable control of Seller
or Buyer, including without limiting the generality of the foregoing:



     (a) Any acts of God, including, but without restricting the generality thereof,
lightning, earthquakes, storms, epidemics, landslides, floods, fires, explosions or washouts.



     (b) Any strikes, lockouts or other industrial disturbances of a regional or national
character.



     (c) Any acts of the enemies of the state, sabotage, wars, blockades, insurrections,
riots, civil disturbances, arrests or restraints.



     (d) Any freezing, explosions, craterings, breakage of equipment, forced maintenance
shutdown, inability to obtain materials or equipment.



     (e) Any orders of any court or government authority, which physically limit the
production, transportation or sale of Ethanol or alter the specifications of Ethanol from that
described in Schedule “A”.



     (f) Any acts or omissions (including failure to take Ethanol) of a transporter or carrier of
Ethanol, which are caused by any event or occurrence of the nature described in this Section 13.2.



     (g) Any other reasonable causes, whether of the kind herein enumerated or otherwise
not within the reasonable control of the party claiming suspension and which, by the exercise
of due diligence, such party could not have prevented or is unable to overcome.



     Section 13.3 Labor Disputes. Notwithstanding anything to the contrary in this
Article expressed or implied, the settlement of strikes, lockouts and other industrial disturbances
will be entirely within the discretion of the party involved therein and such party may
make settlement thereof at such time and on such terms and conditions as it may deem advisable and
no delay in making such settlement will deprive such party of the benefit of Section 13.1.



     Section 13.4 Sales during Force Majeure. During the period when Buyer
declares Force Majeure, Seller shall have the right to sell and Deliver Ethanol to third parties on
any terms and conditions Seller determines in its sole discretion.



     Section 13.5 Exclusions. Force Majeure shall not include failure caused by
lack of funds or lack of market for Ethanol deliverable hereunder by Seller to Buyer.



     Section 13.6 Claiming Relief. A party claiming relief under this Article will
not be entitled to the benefit of the provisions of this Article 13 hereof unless, as soon as
reasonably possible after the happening of the occurrence relied upon, or as soon as possible after
determining that the occurrence was in the nature of Force Majeure and would affect the claiming
party’s ability to observe or perform any of its covenants or obligations hereunder, the
party claiming suspension gives to the other party notice to the effect that such party is
unable, by reason of Force Majeure, to perform the particular covenants or obligations.



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     Section 13.7 Notice. The party claiming suspension will give notice as soon
as reasonably possible when the Force Majeure condition has been or will be remedied to the effect
that the same has been remedied and that such party has resumed, or is then in a position to
resume, the performance of the suspended covenants or obligations.



     Section 13.8 Termination for Force Majeure. In the event that Force Majeure
shall continue for a period of twelve (12) months from the date the party claiming relief under
this Article gives the other party notice, either party hereto shall have the right to terminate
this Agreement by furnishing written notice to the other, with termination effective upon the
expiration date of such twelve (12) month period. Upon such termination, each party shall be
relieved from its respective obligations, except for obligations for payment of monetary sums which
arose prior to the event of Force Majeure.



ARTICLE XIV




LIMITATION OF LIABILITY




     Section 14.1 Limitation of Liability. In no event shall Buyer or Seller be
liable to any party for any indirect, consequential, punitive or special damages, loss of business
expectations,
business interruptions or any damage to third parties arising in any way out of this Agreement
or any breach thereof.



ARTICLE XV




AUDIT RIGHTS




     Section 15.1 Records. Seller and Buyer will establish and maintain at all
times, true and accurate books, records and accounts in accordance with generally accepted
accounting principles applied consistently from year to year consistent with good industry
practices, distinguishable from all other books and records, in respect of all transactions
undertaken by such party pursuant to this Agreement.



     Section 15.2 Audit.



     (a) During normal business hours, each party shall have the right to audit such books,
records and accounts of the other party once per year or at any time upon the occurrence of a
default by such other party.



     (b) Subject to paragraph (a) of this Section, through to the expiration of one (1) year
following the expiration or termination of this Agreement, each party shall have the right to have
a third party auditor, who will, be a member of a national U.S. chartered accounting firm, audit on
such party’s behalf the relevant accounts, books and records of the other party to the extent
necessary in order to verify the accuracy of any statement, charge, computation or demand made
under or pursuant to any of the provisions of this Agreement.



     (c) If any error is discovered in any statement rendered hereunder, such error will be
adjusted within seven (7) days from the date of discovery, but no adjustment will be made for
any error discovered more than one year after delivery and receipt of such statements.



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     (d) If a material difference from a statement rendered under this Agreement by any party is
discovered by any audit, the party which rendered such statement will pay the costs of such audit.
If no such material difference appears, the party requesting the audit of such statement will pay
such costs.



ARTICLE XVI




NOTICES




     Section 16.1 Notices. Except as herein otherwise provided, each notice,
request, demand, statement, report and bill which must or may be given pursuant hereto will be in
writing and may be mailed by prepaid first class mail (or equivalent), delivered by hand or sent by
fax to the address or number indicated below:



     (1) if to Seller:


Cardinal Ethanol, LLC.

2 OMCO Square, Suite 201

Winchester, IN 47394

Attention: Troy Prescott

Fax number: 765-584-2209




          With a copy to:



BrownWinick

666 Grand Avenue, Suite 2000

Des Moines, IA 50309

Attention: Miranda Hughes

Fax Number: 515-283-0231




     (2) if to Buyer:


Murex N.A., Ltd.

5057 Keller Springs Road, Suite 150

Addison, TX 75001

Attention: Robert C. Wright

Fax number: 972-960-2135




     (a) Copies shall be provided to such other person or address as shall be indicated by
written notice in the case of a notice of default of termination.



     (b) The date of receipt of each such notice, demand or other communication will be
the date of delivery thereof if hand delivered, or, if given by mail as provided herein, will
be deemed conclusively to be the fifth (5th) clear day after the same is so mailed,
except in the event of disruption of the postal service in which event the notice, demand or other
communication will be deemed to be received only when actually received and, if sent by telecopier,
be deemed to have been given or received on the first (1st) business day after it was so
sent. Either party



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hereto may at any time and from time to time notify the other party in writing as to the
change of address and the new address to which notice will be given to it thereafter until further
changed.




ARTICLE XVII




Confidential Information




     Section 17.1 Confidential Information. The parties hereto acknowledge and
agree that the parties may, in connection with the transactions contemplated by this Agreement, be
provided with and/or have access to certain confidential and proprietary sensitive business
information, and/or trade secrets of or relating to the other party, including, without limitation
the following types of information (whether or not in writing or designated as confidential):
current and proposed business arrangements and dealings with third parties, its business
operations, financial information, markets, research, development, customer lists, process
technology, formulas or compilations, equipment, procedures, purchasing, accounting, marketing,
merchandising, selling, leasing, servicing, finances and business systems and techniques (hereafter
collectively referred to as “Confidential Information”). Notwithstanding the foregoing, the
following types of information shall not be included within the definition of Confidential
Information hereunder: (a) information which, at the time of disclosure, is or was in the public
domain; (b) information which, at the time of disclosure, is or was already in the other party’s
possession as substantiated in writing; and (c) information which, subsequent to the time of
disclosure, enters the public domain without breach of this Agreement.



     Section 17.2 Confidential Treatment. Each party hereby acknowledges and agrees that
all such Confidential Information shall be and remain at all times throughout the term of this
Agreement and thereafter, the other party’s sole and exclusive property. Each party further
covenants and agrees to, at all times during the term hereof and thereafter: (i) utilize such
Confidential Information solely in connection with this Agreement, and not for the purpose of,
directly or indirectly, soliciting customers, suppliers or employees, or in any way competing; (ii)
treat, and cause such other party’s officers, directors, agents, employees and representatives to
treat, all such Confidential Information as confidential and proprietary sensitive business
information, and as trade secrets; (iii) maintain policies and procedures designed to ensure the
confidentiality and safekeeping of such Confidential Information; (iv) not, unless compelled by
legal process, except with the other party’s prior written consent, divulge, disclose or otherwise
make any Confidential Information available to third parties.



     Section 17.3 Return of Confidential Information. Upon the expiration or termination
of this Agreement, for any reason whatsoever, each party shall promptly return to the other party
all Confidential Information, including all copies thereof.



     Section 17.4. Reasonableness; Injunctive Relief. The parties acknowledge and agree
that the terms and provisions of this Section 17 relating to the treatment of Confidential
Information, are reasonable in all respects, including, without limitation, geographic scope and
duration and, if breached by either party, would cause irreparable harm to the other party hereto,
for which damages would be difficult or impossible to calculate and, therefore, shall be
enforceable by injunction or other equitable relief.



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     Section 17.5 Disclosure in SEC Filings. Notwithstanding any other provision
contained in this agreement, Buyer acknowledges and agrees that the disclosure of this Agreement
and the transactions contemplated hereby by Seller on a Form 8-K or other report filed with the
Securities and Exchange Commission at any time after the date hereof will not be violation of this
Section 17.



     This Section 17 shall survive the expiration or termination of this Agreement.



ARTICLE XVIII




     Section 18.1 Indemnification. Buyer shall indemnify, hold harmless and defend
Seller and its affiliates, subsidiaries, parents and their respective directors, officers,
shareholders, members, employees and agents against expenses actually and reasonably incurred in
connection with the defense of any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative (a “Proceeding”), in which
Seller and/or its employees, members, managers, officers or agents are made a party by reason of
Buyer’s services for Seller or acting in any manner pursuant to this Agreement, except that Buyer
shall have no obligation to indemnify and defend Seller and/or its employees, members or agents for
its and/or their act or omission that involve negligence, intentional misconduct or a violation of
the law. Seller shall indemnify and defend Buyer and its employees, members, directors, officers
and agents against expenses actually and reasonably incurred in connection with the defense of any
Proceeding in which Buyer and/or its employees, managers, members, directors, officers or agents
are made a party by reason of Seller and/or its employees’, members’, managers’, officers’ or
agents’ commission of an act or omission that involves negligence, intentional misconduct or a
violation of the law. This section shall survive the termination of this Agreement.



     This Section 18 shall survive the expiration or termination of this Agreement.



ARTICLE XIX




ADDITIONAL PROVISIONS




     Section 19.1 Default. Subject to Article 13, if either party defaults in the
performance of any term, covenant or condition under this Agreement, the other party may provide
written notice to the defaulting party stating the nature of the default. If such default is not
remedied within thirty (30) days after receipt of such notice except in the case of payment
defaults or failure by Buyer to market and distribute Ethanol (which must be remedied within ten
(10) days) the non-defaulting party shall have the remedies available under applicable law, and may
terminate this Agreement. Notwithstanding any other provision of this Agreement, neither Seller nor
Buyer may offset payments owing to them under this Agreement against payments owing by them. This
Section shall not limit the ability of the parties to terminate this Agreement pursuant to other
provisions of this Agreement to the extent permitted by such provisions. Further, if a party
defaults in any material provision of this Agreement, unless and until such party cures such
default in accordance with this Agreement, such defaulting party shall not be entitled to the



15









 




benefits accorded it under this Agreement, and the non-defaulting party’s obligations shall be
suspended, during the pendency of such material default.



Section 19.2 Non-Waiver of Future Default. No waiver by either party of any
default by the other party, in the performance of any of the provisions of this Agreement will
operate or be construed as a waiver of any other or future default or defaults, whether of a like
or of a different character.



Section 19.3 Assignment. Buyer may not assign this Agreement or any of its rights
hereunder without the prior written consent of the other. Seller may assign this Agreement to any
affiliate or related party. Provided however, Buyer hereby consents to the collateral assignment
of the Agreement by Seller to a lender in connection with debt financing.



Section 19.4  Documents. Each party to this Agreement shall perform any and all
acts and execute and deliver any and all documents as may be necessary and proper under the
circumstances in order to accomplish the intents and purposes of this Agreement and to carry out
its provisions.



Section 19.5 Time. Time is of the essence with respect to the performance of each
of the covenants and agreements herein set forth.



Section 19.6 Arbitration. Any dispute arising out of or in connection
with this Agreement shall be submitted to arbitration. The arbitration shall be conducted
according to the Commercial Arbitration Rules of the American Arbitration Association. The place
of arbitration shall be in Indianapolis, IN or such other place as may be agreed upon by the
Parties. Both Parties shall attempt to agree upon one arbitrator, but if they are unable to agree,
each shall appoint an arbitrator and these two shall appoint a third arbitrator. Expenses of the
arbitrator(s) shall be divided equally between the Parties. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof, and shall be enforceable
against the Parties in accordance with the 1958 Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, as amended.



Section 19.7 Inurement. This Agreement will inure to the benefit of and be binding
upon the respective successors and permitted assigns of the parties.



Section 19.8 Entire Agreement. This Agreement together with the Assignment of
Contract and together with Buyer’s acknowledgment and consent to such assignment to the financing
sources constitutes the entire Agreement between the parties with respect to the subject
matter contained herein and any and all previous agreements, written or oral, express or
implied, between the parties or on their behalf relating to the matters contained herein are
hereby terminated and canceled.



Section 19.9 Modification. There will be no modification of the term and
provisions hereof except by the mutual agreement in writing signed by the parties.



Section 19.10 Governing Law. The Agreement will be interpreted, construed and
enforced in accordance with the procedural, substantive and other laws of the State of Indiana
without giving





16









 







effect to principles and provisions thereof relating to conflict or choice of law even though one
or more of the parties is now or may do business in or become a resident of a different state.



Section 19.11 Compliance with Laws. This Agreement and the respective obligations
of the parties hereunder are subject to present and future valid laws and valid orders, roles and
regulations of duly constituted authorities having jurisdiction.



Section 19.12 Severability. If any provisions of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or enforceable any other provision
of this Agreement or render the provision unenforceable in any other jurisdiction.



Section 19.13 Headings. The division of this Agreement into Articles, Sections,
Subsections and Paragraphs or any other divisions and the inclusion of the various headings, is for
convenience of reference only and shall not affect the interpretation or construction of this
Agreement.



Section 19.14 Furnishing of Information. The parties will, upon request, provide
such additional information as may be reasonably required to allow the parties to efficiently and
effectively carry out their respective obligations hereunder and to determine and enforce
individual or collective rights under this Agreement.



Section 19.15 Cumulative Remedies. Unless otherwise specifically provided herein,
the rights, powers, and remedies of each of the parties provided herein are cumulative and the
exercise of any right, power or remedy hereunder do not affect any other right, power or remedy
that may be available to either party hereunder or otherwise at law or in equity.



Section 19.16 Faithful Performance. The parties shall faithfully perform and
discharge their respective obligations in this Agreement and endeavor in good faith to negotiate
and settle all matters arising during the performance of this Agreement not specifically provided
for.



Section 19.17 No Partnership or Agency; Independent Contractor. This Agreement
shall not create or be construed to create in any respect a partnership between the parties.
Nothing contained in this agreement will make Buyer the agent of Seller for any purpose
whatsoever. Buyer and its employees shall be deemed to be independent contractors, with full
control over the manner and method of performance of the services they will be providing on behalf
of Seller under this Agreement.



Section 19.18 Costs Borne By Each Party. Each of the parties to this Agreement
shall pay its own costs and expenses incurred in the negotiation preparation and execution of this
Agreement and of all documents referred to in it and in carrying out the transactions contemplated
by this Agreement.



Section 19.19 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all parties to this Agreement had signed the same document
and all counterparts will be construed together and constituted one and the same instrument.




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     IN WITNESS WHEREOF the parties have executed this Agreement by their respective proper signing
officers as of the date first above written.



	 	 	 	 	 	 	 
	 	 	CARDINAL ETHANOL, LLC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:  /s/ Troy Prescott
 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Troy Prescott	 	 
	 

	 	Title:
	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	MUREX N.A., LTD.	 	 
	 	 	By: MUREX MANAGEMENT, INC.,	 	 
	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:  /s/ Robert C. Wright
 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Robert C. Wright	 	 
	 

	 	Title:
	 	President 	 	 







18