Document:

exv10w26

 

Exhibit 10.26

[Space Above This Line For Recording Data]

CONSTRUCTION LOAN MORTGAGE, SECURITY AGREEMENT,

ASSIGNMENT OF LEASES AND RENTS

AND FIXTURE FINANCING STATEMENT

     THIS CONSTRUCTION LOAN MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND
FIXTURE FINANCING STATEMENT (“Mortgage”) is made as of December 19, 2006, by CARDINAL ETHANOL, LLC,
an Indiana limited liability company (“Mortgagor”), whose address is 2 OMCO Square, Suite 201, P.O.
Box 501, Winchester, Indiana 47394 in favor of FIRST NATIONAL BANK OF OMAHA, a National Banking
Association (“Mortgagee”), whose address is 1620 Dodge Street, Stop 1050, Omaha, Nebraska
68197-1050.

RECITALS

     A. Mortgagor and Mortgagee have entered into that certain Construction Loan Agreement dated of
even date herewith (as the same may be modified, amended or restated from time to time, the “Loan
Agreement”), pursuant to which Mortgagee has extended to Mortgagor (i) a Construction Loan in the
maximum principal amount of $83,000,000.00 evidenced by a Construction Note of even date herewith,
(ii) a revolving line of credit in the maximum principal amount of $10,000,000.00 evidenced by a
Revolving Note of even date herewith, (iii) a promissory note of even date herewith supporting the
issuance, for the account of Mortgagor, of letters of credit up to a maximum amount outstanding of
$3,000,000.00 and (iv) Swap Contracts with an additional exposure to Mortgagee, with the
Construction Note available to be permanently financed by the Fixed Rate Note, Variable Rate Note
and Long Term Revolving Note (as such terms are defined in the Loan Agreement) all as more fully
described in the Loan Agreement. The foregoing financial accommodations and credit facilities
shall be collectively referred to in this Mortgage as the “Loans”. The total principal amount
secured by this Mortgage is $101,602,500.00, or so much thereof as may have been advanced and/or
readvanced now or in the future at variable and/or fixed rates of interest to or for the benefit of
the Mortgagee and

 

 

remains unpaid from time to time, plus the amount of any protective advances made by Mortgagee as
provided for in this Mortgage or any other Loan Document.

     B. The Loans are payable and to be performed in accordance with the terms of the notes
evidencing the same and the Loan Agreement, with the entire unpaid balance of the Loans to mature
and be due and payable in full not later than April 8, 2014 (the “Maturity Date”), unless extended
by Mortgagor and Mortgagee.

     C. Mortgagor has agreed to mortgage the Mortgaged Property (as herein defined) to Mortgagee to
secure the Loans and the Obligations (as defined below).

     D. The obligations secured by this Mortgage (the “Obligations”) are as follows:

     (i) the Loans, including without limitation, future advances made by Mortgagee to
Mortgagor, Mortgagor’s obligations in respect of the due and punctual payment of principal
and interest on the Loans when and as due, whether by acceleration or otherwise and all
fees, expenses, indemnities, reimbursements, guaranties and other obligations of Mortgagor
under the Loans, Loan Agreement and the other Loan Documents, in all cases whether now
existing or hereafter arising or incurred;

     (ii) all other amounts payable by Mortgagor under the Loans, Loan Agreement or other
Loan Documents as the same now exist or may hereafter be amended; and

     (iii) all obligations of Mortgagor under this Mortgage, including, but not limited to,
any protective advances advanced by Mortgagee under this Mortgage to protect and preserve
the Mortgaged Property and the lien and security interest created by this Mortgage.

     Pursuant to I.C. 32-29-1-10, the Obligations include, and this Mortgage secures, future
obligations and advances under the Loans and protective advances made under this Mortgage or the
Loan Documents and future modifications, extensions and renewals of the Loans and Obligations
secured by this Mortgage.

     NOW, THEREFORE, Mortgagor, in consideration of the Mortgagee advancing the Loans and making
such funds available to Mortgagor, and to secure the payment and performance of the Obligations,
hereby irrevocably and unconditionally MORTGAGES AND WARRANTS to Mortgagee, its successors and
assigns, forever, with right of entry and possession, and grants to Mortgagee, its successors and
assigns, a mortgage and security interest in the land and any buildings, plants, facilities or
improvements of any kind (collectively, “Improvements”), now existing or hereafter constructed or
placed thereon, described in Exhibit A attached hereto and all mineral rights,
hereditaments, easements and appurtenances thereto (collectively the “Land”), along with all the
following, all of which together with the Land is called the “Mortgaged Property” in this Mortgage:

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     (a) All and singular the tenements, hereditaments, servitudes, easements,
appurtenances, passages, rights of ingress and egress, licenses, permits, development
rights, rights of use or occupancy, waters, water courses, all of Mortgagor’s rights and
interests under federal, state and local laws to all water and rights, permits or licenses
to use or discharge water, riparian rights, mineral rights, sewer rights, rights in trade
names, licenses, permits and contracts, and all other rights, liberties and privileges of
any kind or character in any way now or hereafter appertaining, relating or applicable to
the Land or any Improvements thereon, including but not limited to, homestead and any other
claim at law or in equity as well as any after-acquired title, franchise or license and the
reversion and reversions and remainder and remainders thereof;

     (b) The land lying within any street, alley, avenue, roadway or right-of-way open or
proposed or hereafter vacated in front of or adjoining the Land; and all right, title and
interest, if any, of Mortgagor in and to any strips and gores adjoining or used in
connection with the Land;

     (c) All agreements, ground leases, grants of easements or rights-of-way, permits,
declarations of easements, conditions or restrictions, disposition and development
agreements, planned unit development agreements, plats, subdivision plans, permits and
approvals, and all other documents affecting the Land and/or Improvements;

     (d) All right, title and interest of Mortgagor in any and all buildings and
improvements of every kind and description now or hereafter erected or placed on the said
Land and all materials intended for construction, reconstruction, alteration and repairs of
such buildings and improvements now or hereafter erected thereon, all of which materials
shall be deemed to be included within the Mortgaged Property immediately upon the delivery
thereof to the Mortgaged Property or upon any earlier acquisition thereof by Mortgagor, and
all fixtures now or hereafter owned by Mortgagor and attached to or contained in and used or
acquired for use in connection with the Mortgaged Property including, but not limited to,
all heating, lighting, refrigerating, ventilating, air-conditioning, air-cooling, fire
extinguishing, plumbing, cleaning, telephone, communications and power equipment, systems
and apparatus; and all elevators, switchboards, motors, pumps, screens, awnings, floor
coverings, cabinets, partitions, conduits, ducts and compressors; and all cranes and
craneways, oil storage, sprinkler/fire protection and water service equipment; and also
including any of such property stored on the Land or Improvements or in warehouses and
intended to be used in connection with or incorporated into the Land or Improvements or for
the pursuit of any other activity in which Mortgagor may be engaged on the Land or
Improvements, and including without limitation all tools, cabinets, awnings, window shades,
venetian blinds, drapes and drapery rods and brackets, screens, carpeting and other window
and floor coverings, decorative fixtures, plants, cleaning apparatus, and cleaning
equipment, refrigeration equipment, generators, cables, telecommunication cables, antennas
and systems, computers, software, books, supplies, kitchen equipment, appliances, tractors,
lawn mowers, ground sweepers and tools, together with all substitutions, accessions,
repairs, additions and replacements to any of the foregoing and all other items of
furniture, furnishings, equipment and personal property owned by Mortgagor used or

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useful in the operation of the Mortgaged Property, including, but not limited to, such
equipment and personal property used in the production of ethanol and the treatment and
storage thereof and in any byproducts; and all renewals or replacements of all of the
aforesaid property owned by Mortgagor or articles in substitution therefor, whether or not
the same are or shall be attached to said buildings or improvements in any manner; it being
mutually agreed, intended and declared that all the aforesaid property owned by Mortgagor
and placed by it on the Land or Improvements or used or acquired for use in connection with
the operation or maintenance of the Mortgaged Property shall, so far as permitted by law, be
deemed to form a part and parcel of the Land and for the purpose of this Mortgage to be Land
and covered by this Mortgage, and as to any of the property aforesaid which does not form a
part and parcel of the Land or does not constitute a “fixture” (as such term is defined in
the UCC, defined below) this Mortgage is hereby deemed to be, as well, a security agreement
under the UCC for the purpose of creating hereby a security interest in such property which
Mortgagor hereby grants to Mortgagee as secured party, and all inventory, office supplies,
machinery, apparatus, systems and equipment used or useful in the production of ethanol at
the Mortgaged Property, all as now owned or hereafter acquired by Mortgagor;

     (e) All leases of the Land or Improvements or any part thereof, whether now existing or
hereafter entered into (the “Leases”), and all right, title and interest of Mortgagor
thereunder, including rents, cash and security deposits under any such Leases and all
guaranties of any Tenant’s obligations under any such Leases or other similar supports of a
Tenant’s obligations under a Lease;

     (f) Any and all awards, payments or insurance proceeds, including interest and unearned
premiums thereon, and the right to receive the same, which may be paid or payable with
respect to the Land or Improvements or other properties described above as a result of: (1)
the exercise of the right of eminent domain or action in lieu thereof; or (2) the alteration
of the grade of any street; or (3) any fire, casualty, accident, damage or other injury to
or decrease in the value of the Land or Improvements or other properties described above, to
the extent of all amounts which may be secured by this Mortgage at the date of receipt of
any such award or payment by Mortgagor or Mortgagee, and of the reasonable counsel fees,
costs and disbursements incurred by Mortgagor or Mortgagee in connection with the collection
of such award, payment or proceeds. Mortgagor agrees to execute and deliver, from time to
time, such further instruments as may be requested by Mortgagee to confirm such assignment
to Mortgagee of any such award, payment or proceeds;

     (g) All licenses, permits (including, but not limited to, building permits),
authorizations, certificates, variances, consents, approvals and other permits or licenses
now or hereafter acquired pertaining to the Land or any Improvements thereon or which relate
to the construction of the Improvements and/or the use, occupancy, development, leasing,
operation or servicing of the Land, including, but not limited to air and water discharge
permits, environmental permits and licenses required for the production, storage and/or
transport of ethanol and its byproducts, above ground storage tank licenses and permits, and
all estate, right, title and interest of Mortgagor in, to, under or derived

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from all present or future development, construction, operation or use of the Land or any
improvements thereon;

     (h) All intangible personal property relating to the Land and/or Improvements, business
records, trade names, trademarks, service marks, logos, claims for refunds or rebates of
taxes, tax abatements, tax credits, money, deposit accounts, accounts and general and
payment intangibles;

     (i) Any and all water and water rights, minerals, oil, gas, or any rights thereto;

     (j) Together with all plans, drawings and specifications relating to the Mortgaged
Property and the construction of the Improvements, all permits, consents, approvals,
licenses, authorizations and other rights granted by, given by or obtained from any
governmental entity with respect to the Mortgaged Property; and all other interests of every
kind and character that Mortgagor now has or at any time hereafter acquires in and to the
Mortgaged Property;

     (k) All studies, tests, investigations, and reports of any kind relating to the soils
or conditions of the soils of the Land and the suitability of the soils for the construction
of the Improvements, all mechanical or structural studies, grading plans, drainage studies,
and plans and other similar studies, plans, drawings, or reports of any nature relating to
the construction of the Improvements;

     (l) All management contracts, service contracts, operating agreements, variances and
permits relating to the Land and/or Improvements;

     (m) All after-acquired title to or remainder or reversion of any of the foregoing, all
and any proceeds of any of the foregoing, all and any additions, accessions and extensions
to, improvements of and substitutions and replacements of any of the foregoing and all
additional lands, estates, interests, rights, or other property acquired by Mortgagor after
the date of this Mortgage, all without need for any additional mortgage, assignment, pledge,
or conveyance to Mortgagee but Mortgagor will execute and deliver to Mortgagee upon
Mortgagee’s request any documents or instruments to further effect or evidence the
foregoing; and

     (n) Together with the right in the case of foreclosure hereunder of the encumbered
property for Mortgagee to take and use the name by which the buildings and all other
improvements situated on the Land are commonly known and the right to manage and operate the
said buildings under any such name and variants thereof;

Subject only to the Permitted Encumbrances (as herein defined) and to secure payment of the
Obligations.

     The parties intend the definition of Mortgaged Property to be broadly construed and in the
case of doubt as to whether a particular item is to be included in the definition of Mortgaged
Property, the doubt shall be resolved in favor of inclusion.

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     TO HAVE AND TO HOLD the same, and all estate therein, together with all the rights, privileges
and appurtenances thereunto belonging, to the use and benefit of Mortgagee, its successors and
assigns, forever.

     PROVIDED NEVERTHELESS, should the Obligations be paid and performed, then these presents will
be of no further force and effect, and this Mortgage shall be satisfied by Mortgagee, at the
expense of Mortgagor.

     This Mortgage also constitutes a security agreement within the meaning of the Uniform
Commercial Code as in effect in the State of Indiana (the “UCC”), with respect to all property
described herein as to which a security interest may be granted and/or perfected pursuant to the
UCC, and is intended to afford Mortgagee, to the fullest extent allowed by law, the rights and
remedies of a secured party under the UCC.

     MORTGAGOR FURTHER agree as follows:

ARTICLE 1.

AGREEMENTS

     Section 1.1 Performance of Obligations; Incorporation by Reference. Mortgagor shall
pay and perform the Obligations when due. Time is of the essence hereof. All of the covenants,
obligations, agreements, warranties and representations of Mortgagor contained in this Agreement,
the Loan Agreement and the other Loan Documents and all of the terms and provisions thereof, are
hereby incorporated herein and made a part hereof by reference as if fully set forth herein.

     Section 1.2 Further Assurances. If Mortgagee requests, Mortgagor shall sign and
deliver and cause to be recorded as Mortgagee shall direct any further mortgages, amendments of or
supplements to this Mortgage, instruments of further assurance, certificates and other documents as
Mortgagee reasonably may consider necessary or desirable, and shall do such acts reasonably
required by Mortgagee, in order to attach, perfect, continue and preserve the Obligations and
Mortgagee’s rights, title, estate, liens and interests under the Loan Documents. Mortgagor further
agrees to pay to Mortgagee, upon demand, all costs and expenses incurred by Mortgagee in connection
with the preparation, execution, recording, filing and refiling of any such documents, including
reasonable attorneys’ fees.

     Section 1.3 Sale, Transfer, Encumbrance. If Mortgagor sells, conveys, transfers or
otherwise disposes of, or encumbers, any part of its interest (legal or beneficial) in the
Mortgaged Property, whether directly or indirectly, voluntarily, involuntarily or by operation of
law (except for Permitted Encumbrances) except as permitted by the Loan Agreement, without the
prior written consent of Mortgagee, Mortgagee shall have the option to declare the Obligations
immediately due and payable immediately upon notice. Included within the foregoing actions
requiring prior written consent of Mortgagee are: (a) sale by deed or contract for deed; (b)
mortgaging or granting a lien on the Mortgaged Property; and (c) a change of control in 50% or more
of the equity interest or voting power or control of Mortgagor.

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Mortgagor shall give notice of any proposed action effecting any of the foregoing to Mortgagee
for Mortgagee’s consent at least thirty (30) days prior to taking such action. Mortgagor shall pay
all reasonable costs and expenses incurred by Mortgagee in evaluating any such action. Mortgagee
may condition its consent upon reasonable modification of the Loan Documents or payment of
reasonable fees. No such action shall relieve Mortgagor from liability for the Obligations as set
forth herein. The consent by Mortgagee to any action shall not constitute a waiver of the
necessity of such consent to any subsequent action.

     Section 1.4 Insurance. Mortgagor shall obtain, maintain and keep in full force and
effect and shall furnish to Mortgagee copies of policies of insurance as described in, and meeting
the requirements set forth in, the Loan Agreement. At least ten (10) days prior to the termination
of any such coverage, Mortgagor shall provide Mortgagee with evidence satisfactory to Mortgagee
that such coverage will be renewed or replaced upon termination with insurance that complies with
the provisions of this Section and the Loan Agreement. Mortgagor, at its sole cost and expense,
from time to time when Mortgagee shall so request, will provide Mortgagee with evidence, in a form
acceptable to Mortgagee, of the full insurable replacement cost of the Mortgaged Property. All
property and liability insurance policies maintained by Mortgagor pursuant to this Section and the
Loan Agreement shall (i) include effective waivers by the insurer of all claims for insurance
premiums against Mortgagee, and (ii) provide that any losses shall be payable notwithstanding (a)
any act of negligence by Mortgagor or Mortgagee, (b) any foreclosure or other proceedings or notice
of foreclosure sale relating to the Mortgaged Property, or (c) any release from liability or waiver
of subrogation rights granted by the insured. In addition, all policies of casualty insurance
shall contain standard noncontributory mortgagee loss payable clauses to Mortgagee, and the
comprehensive general liability and other liability policies required in the Loan Agreement,
including environmental or pollution policies, shall name Mortgagee as an additional insured.

     Section 1.5 Taxes, Liens and Claims, Utilities. Mortgagor shall pay and discharge
when due, or cause to be paid and discharged when due, all taxes, assessments and governmental
charges and levies (collectively “Impositions”) imposed upon or against the Mortgaged Property or
the Rents, or upon or against the Obligations, or upon or against the interest of Mortgagee in the
Mortgaged Property or the Obligations, except Impositions measured by the income of Mortgagee.
Mortgagor shall provide evidence of such payment at Mortgagee’s request. Mortgagor shall keep the
Mortgaged Property free and clear of all liens (including, but not limited to, mechanics’ liens),
encumbrances, easements, covenants, conditions, restrictions and reservations (collectively
“Liens”) except those set forth in Exhibit B attached hereto and made a part hereof (the
“Permitted Encumbrances”). Mortgagor shall pay or cause to be paid when due all charges or fees
for utilities and services supplied to the Mortgaged Property. Notwithstanding anything to the
contrary contained in this Section, Mortgagor shall not be required to pay or discharge any
Imposition or Lien other than a mechanics’ lien so long as Mortgagor shall in good faith, and after
giving notice to Mortgagee, contest the same by appropriate legal proceedings. If Mortgagor
contests any Imposition or Lien against the Mortgaged Property, Mortgagor shall provide such
security to Mortgagee as Mortgagee shall reasonably require against loss or impairment of
Mortgagor’s ownership of or Mortgagee’s lien on the Mortgaged Property and shall in any event pay
such Imposition or Lien before loss or impairment occurs.

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     Section 1.6 Escrow Payments. If requested by Mortgagee after the occurrence of an
Event of Default, Mortgagor shall deposit with Mortgagee monthly on the first day of each month the
amount reasonably estimated by Mortgagee to be necessary to enable Mortgagee to pay, at least five
(5) days before they become due, all Impositions against the Mortgaged Property and the premiums
upon all insurance required hereby to be maintained with respect to the Mortgaged Property. All
funds so deposited shall secure the Obligations. Any such deposits shall be held by Mortgagee, or
its nominee, in a non-interest bearing account and may be commingled with other funds. Such
deposits shall be used to pay such Impositions and insurance premiums when due. Any excess sums so
deposited shall be retained by Mortgagee and shall be applied to pay said items in the future,
unless the Obligations have been paid and performed in full, in which case all excess sums so paid
shall be refunded to Mortgagor. Upon the occurrence of an Event of Default, Mortgagee may apply
any funds in said account against the Obligations in such order as Mortgagee may determine in
Mortgagee’s sole discretion.

     Section 1.7 Maintenance and Repair; Compliance with Laws. Mortgagor shall cause the
Mortgaged Property to be operated, maintained and repaired in safe and good repair, working order
and condition, reasonable wear and tear excepted; shall not commit or permit waste thereof; except
as provided in any Loan Document, shall not remove, demolish or substantially alter the design or
structural character of any Improvements without the prior written consent of Mortgagee; shall
complete or cause to be completed forthwith any Improvements which are now or may hereafter be
under construction upon the Land; shall materially comply or cause material compliance with all
laws, statutes, ordinances and codes, and governmental rules, regulations, requirements and permits
and licenses, applicable to the Mortgaged Property or the manner of using or operating the same,
and with any covenants, conditions, restrictions and reservations affecting the title to the
Mortgaged Property, and with the terms of all insurance policies relating to the Mortgaged
Property; and shall obtain and maintain in full force and effect all consents, permits and licenses
necessary for the use and operation of the Mortgaged Property in Mortgagor’s business. Mortgagor
shall obtain and maintain in full force and effect all certificates, licenses, permits and
approvals that are required by law or necessary for the construction of the Improvements or the
use, occupancy or operation of the Project. Mortgagor shall promptly notify Mortgagee in writing of
the receipt by Mortgagor of any notice relating to the violation or allegation or claim of
violation of any applicable laws, licenses or permits and of the commencement or threatened
commencement of any proceedings or investigations which relate to compliance with applicable laws,
permits or licenses. Subject to the provisions of this Mortgage with respect to insurance proceeds
and condemnation awards, Mortgagor shall promptly repair, restore and rebuild any Improvements now
or hereafter on the Mortgaged Property which may become damaged or destroyed, such Improvements to
be of at least equal value and quality and of substantially the same character as prior to such
damage or destruction.

     Section 1.8 Leases.

          (a) Notwithstanding anything to the contrary herein, Mortgagor shall not enter into any Lease
without Mortgagee’s prior written consent, and shall furnish to Mortgagee, upon execution, a
complete and fully executed copy of each Lease. Mortgagor shall provide Mortgagee with a copy of
each proposed Lease requiring the consent of Mortgagee and with any

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information requested by Mortgagee regarding the proposed Tenant thereunder. Mortgagee may
declare each Lease to be prior or subordinate to this Mortgage, at Mortgagee’s option.

          (b) Mortgagor shall, at its cost and expense, perform each obligation to be performed by the
landlord under each Lease; not borrow against, pledge or further assign any rents or other payments
due thereunder; not permit the prepayment of any rents or other payments due for more than one (1)
month in advance; and not permit any Tenant to assign its Lease or sublet the premises covered by
its Lease, unless required to do so by the terms thereof and then only if such assignment does not
work to relieve the Tenant of any liability for performance of its obligations thereunder.

          (c) If any Tenant shall default under its Lease, Mortgagor shall, in the ordinary course of
business, exercise sound business judgment with respect to such default, but may not discount,
compromise, forgive or waive claims or discharge the Tenant from its obligations under the Lease or
terminate or accept a surrender of the Lease without the prior written consent of Mortgagee.

          (d) If Mortgagor fails to perform any obligations of Mortgagor under any Lease or if Mortgagee
becomes aware of or is notified by any Tenant of a failure on the part of Mortgagor to so perform,
Mortgagee may, but shall not be obligated to, without waiving or releasing Mortgagor from any
Obligation, remedy such failure, and Mortgagor agrees to repay upon demand all sums incurred by
Mortgagee in remedying any such failure, together with interest thereon from the date incurred at
an annual rate equal to nine percent (9%) in excess of the one month LIBOR Rate (as set forth and
defined in the Loan Agreement).

          (e) For purposes of this Mortgage, the following terms shall have the following meanings:

               (i) “Lease”: Any lease, occupancy agreement or other document or agreement, written
or oral, permitting any Person to use or occupy any part of the Mortgaged Property.

               (ii) “Person”: Any natural person, corporation, partnership, limited partnership,
limited liability company, joint venture, firm, association, trust, unincorporated organization,
government or governmental agency or political subdivision or any other entity, whether acting in
an individual, fiduciary or other capacity.

               (iii) “Tenant”: Any person or party using or occupying any part of the Mortgaged
Property pursuant to a Lease.

     Section 1.9 Indemnity. Mortgagor shall reimburse, indemnify and defend Mortgagee and
its participants and their respective directors, officers, attorneys, agents and employees
(collectively the “Indemnified Parties”) against, and hold the Indemnified Parties harmless from,
all losses, damages, suits, claims, judgments, penalties, fines, liabilities, costs and expenses by
reason of, or on account of, or in connection with the construction, reconstruction or alteration
of the Mortgaged Property during Mortgagor’s ownership thereof, the use and operation of

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Mortgagor’s business on the Land, Mortgagor’s failure to operate Mortgagor’s business on the
Mortgaged Property in compliance with all applicable laws and permits and licenses, Mortgagor’s
breach of Mortgagor’s obligations under this Mortgage, the Loan Agreement or any other Loan
Document, or any accident, injury, death or damage to any person or property occurring in, on or
about the Mortgaged Property during Mortgagor’s ownership thereof, or any street, drive, sidewalk,
curb or passageway adjacent thereto, except to the extent that the same results from the willful
misconduct or gross negligence of the person or party seeking indemnification. The indemnity
contained in this Section shall include costs of defense of any such claim asserted against an
Indemnified Party, including reasonable attorneys’ fees. The indemnity contained in this Section
shall survive payment and performance of the Obligations and satisfaction and release of this
Mortgage and any foreclosure thereof or acquisition of title by deed in lieu of foreclosure.
Notwithstanding the foregoing, Mortgagor’s liability hereunder shall terminate at such time as a
private or governmental plaintiff is barred by the applicable statute of limitations from bringing
a claim for the actions giving rise to Mortgagee’s claim for indemnification hereunder.

     Section 1.10 Assignment of Leases and Rents.

          (a) As additional security for the indebtedness secured by this Mortgage, Mortgagor does
hereby bargain, sell, assign, transfer and set over unto Mortgagee all Leases and all the rents,
fees, issues, profits, revenues, royalties and other income of any kind (“Rents”) which, whether
before or after foreclosure, or during the full statutory period of redemption, if any, shall
accrue and be owing for the use or occupation of the Mortgaged Property or any part thereof. So
long as no Event of Default exists under this Mortgage, Mortgagor shall have a revocable license to
collect, but not more than one (1) month in advance under any Lease, all Rents earned prior to
default. This Mortgage constitutes an absolute, irrevocable, currently effective assignment of
Rents and profits. Mortgagor hereby appoints Mortgagee Mortgagor’s true and lawful
attorney-in-fact with full power of substitution to demand, collect and receive any and all Rents
which may be or become due and payable by Tenants after the occurrence of any Event of Default,
which appointment is coupled with an interest and is irrevocable. Mortgagee may, at its
discretion, file any claim or take any action to collect and enforce the payment of Rents, either
in Mortgagee’s name or Mortgagor’s name or otherwise. Tenants are hereby expressly authorized and
directed by Mortgagor to pay to Mortgagee all Rents upon Mortgagee’s demand, and such Tenants are
hereby expressly relieved of any and all duty, obligation or liability to Mortgagor in respect of
any Rents so paid to Mortgagee.

          (b) If, at any time after an Event of Default hereunder, in the sole discretion of Mortgagee,
a receivership may be necessary to protect the Mortgaged Property or its Rents, whether before or
after maturity of any Loan and whether before or at the time of or after the institution of suit to
collect such indebtedness, or to enforce this Mortgage, Mortgagee, as a matter of strict right and
regardless of the value of the Mortgaged Property or the amounts due hereunder or secured hereby,
or of the solvency of any party bound for the payment of such indebtedness, shall have the right to
the appointment of a receiver to take charge of, manage, preserve, protect, rent and operate the
Mortgaged Property, to collect the Rents thereof, to make all necessary and needful repairs, and to
pay all Impositions against the Mortgaged Property and all premiums for insurance thereon, and to
do such other acts as may by such court be

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authorized and directed, and after payment of the expenses of the receivership and the
management of the Mortgaged Property, to apply the net proceeds of such receivership in reduction
of the Obligations and indebtedness secured hereby or in such other manner as the said court shall
direct notwithstanding the fact that the amount owing thereon may not then be due and payable or
the said Obligations and indebtedness is otherwise adequately secured. Such receivership shall, at
the option of Mortgagee, continue until full payment of all sums hereby secured or until title to
the Mortgaged Property shall have passed by sale under this Mortgage.

          (c) The reasonable costs and expenses (including any receiver’s fees and reasonable attorneys’
fees) incurred by Mortgagee pursuant to the powers herein contained shall be reimbursed by
Mortgagor to Mortgagee on demand as promptly as practicable, shall be secured hereby and shall bear
interest from the date incurred at an annual rate equal to nine percent (9%) in excess of the one
month LIBOR Rate (as set forth in the Loan Agreement). Mortgagee shall not be liable to account to
Mortgagor for any action taken pursuant hereto, other than to account for any Rents, fees, issues,
revenues, profits or proceeds actually received by Mortgagee.

ARTICLE 2.

REPRESENTATIONS AND WARRANTIES

     Mortgagor represents and warrants to Mortgagor and covenants with Mortgagor as follows:

     Section 2.1 Ownership, Liens, Compliance with Laws. Mortgagor owns the Mortgaged
Property free from all Liens, except the Permitted Encumbrances and has good and marketable fee
simple title to the Mortgaged Property. To the best of Mortgagor’s knowledge, all applicable
zoning, environmental, land use, subdivision, building, fire, safety and health laws, statutes,
ordinances, codes, rules, regulations and requirements affecting the Mortgaged Property permit the
current use and occupancy thereof and Mortgagor’s intended use and occupancy of the Mortgaged
Property upon substantial completion of the Project, and Mortgagor has obtained all consents,
permits and licenses required for such use and intended use. Mortgagor has examined and is
familiar with all applicable covenants, conditions, restrictions and reservations, and with all
applicable laws, statutes, ordinances, codes and governmental rules, regulations and requirements
affecting the Mortgaged Property, and to the best of Mortgagor’s knowledge, the Mortgaged Property
complies in all material respects with all of the foregoing.

     Section 2.2 Use. The Mortgaged Property is not homestead property, a single or two
family dwelling, nor is it agricultural property or in agricultural use. The construction, use and
occupancy of the Project complies and will comply with all requirements of law and any Permitted
Encumbrance. No portion of any Improvements will be/are constructed over areas subject to
easements. Neither the zoning nor any of the right to construct or to use any Improvements will
be/is to any extent dependent upon or related to any real estate other than the Land; and all
approvals, licenses, permits, certifications, filings and other actions required by law with
respect to the construction, use, occupancy and operation of the Mortgaged Property, have been or
will be received.

11

 

     Section 2.3 Utilities; Services. The Mortgaged Property is serviced by all necessary
public utilities, including, but not limited to, water, electricity, natural gas, telephone, storm
sewer and sanitary sewer, and all such utilities are operational and have sufficient capacity.
There is no contract or agreement providing for services to or maintenance of the Mortgaged
Property which cannot be cancelled upon 30 days’ or less notice. The Mortgaged Property has access
to all public streets and railroad spurs and tracks, and is benefited by all necessary easements,
to allow the operation of the Mortgaged Property by Mortgagor as an ethanol plant in the ordinary
course of business and in a prudent manner.

     Section 2.4 Construction of the Improvements. Mortgagor has, or prior to commencement
of construction of any Improvements will have, received all requisite building permits and
approvals, all approvals and consents to the Plans and without limiting the generality of the
foregoing, complied with all requirements of law applicable to the construction of the Project.
Mortgagor shall promptly complete all Improvements in a good and workmanlike manner in accordance
with the Plans approved by Mortgagee and Mortgagor shall promptly pay when due all bills and costs
for labor, services, utilities and materials, and Mortgagor shall keep the Mortgaged Property free
from any liens or encumbrances of any nature except for this Mortgage and the Permitted Exceptions.

ARTICLE 3.

CASUALTY; CONDEMNATION

     Section 3.1 Casualty, Repair, Proof of Loss. If any portion of the Mortgaged Property
shall be damaged or destroyed by any cause (a “Casualty”), Mortgagor shall, subject to Section 3.2
below:

          (a) give notice to the Mortgagee as promptly as practicable; and

          (b) unless the Mortgagee has withheld Casualty proceeds during the twelve (12) months prior to
the latest maturity date of the Loans and insurance proceeds and other funds are not available to
Mortgagor, promptly commence and diligently pursue to completion (in accordance with plans and
specifications approved by Mortgagee) the restoration, repair and rebuilding of the Mortgaged
Property at least as nearly as possible to its value, condition and character immediately prior to
the Casualty; and

          (c) if the Casualty is covered by insurance, immediately make proof of loss and to the extent
permitted by this Mortgage, collect all insurance proceeds, all such proceeds to be payable to
Mortgagee or as Mortgagee shall direct. If an Event of Default shall be in existence, or if
Mortgagor shall fail to provide notice to Mortgagee of filing proof of loss, or if Mortgagor shall
not be diligently proceeding, in Mortgagee’s reasonable opinion, to collect such insurance
proceeds, then Mortgagee may, but is not obligated to, make proof of loss, and is authorized, but
is not obligated, to settle any claim with respect thereto, and to collect the proceeds thereof.

     Section 3.2 Use of Insurance Proceeds. Mortgagee shall make the net insurance
proceeds received by it (after reimbursement of Mortgagee’s reasonable out-of pocket costs of

12

 

collecting and disbursing the same) available to Mortgagor to pay the cost of restoration,
repair and rebuilding of the Mortgaged Property, subject to all of the following conditions
precedent:

          (a) There shall be no Event of Default in existence at the time of any disbursement of the
insurance proceeds;

          (b) Mortgagee shall have determined, in its reasonable discretion, that the cost of
restoration, repair and rebuilding is and will be equal to or less than the amount of insurance
proceeds and other funds deposited by Mortgagor with Mortgagee for restoration and repair of the
Mortgaged Property;

          (c) Mortgagee shall have determined, in its reasonable discretion, that the restoration,
repair and rebuilding can be completed in accordance with plans and specifications approved by
Mortgagee (such approval not to be unreasonably withheld), and in accordance with applicable laws,
codes, regulations and ordinances;

          (d) All funds shall be disbursed, at Mortgagee’s option, in accordance with Mortgagee’s
customary disbursement procedures for construction loans;

          (e) The Casualty results in damage of $1,000,000.00 or less; and

          (f) The restoration, repair and rebuilding of the Mortgaged Property can be completed within
nine (9) months following the date of the Casualty, or such additional period of time as Mortgagee,
in its reasonable discretion, shall permit.

If any of these conditions shall not be satisfied, then Mortgagee shall have the right to either
use the insurance proceeds to prepay the Obligations or make such proceeds available for
restoration, repair and rebuilding of the Mortgaged Property. If any insurance proceeds shall
remain after completion of the restoration, repair and rebuilding of the Mortgaged Property, they
shall be disbursed to Mortgagor, or the Person legally entitled thereto, or at the Mortgagee’s
discretion, used to prepay the Obligations.

     In the event such insurance proceeds are made available for restoration and repair by the
Mortgagee, Mortgagor shall pay all costs incurred by Mortgagee in connection with the application
of such insurance proceeds (including but not limited to reasonable costs incurred by Mortgagee,
and a title company or agent approved by Mortgagee in overseeing the disbursement of such insurance
proceeds), and the Improvements shall be restored or rebuilt so as to be of at least equal value
and substantially the same character as prior to such damage or destruction.

     Section 3.3 Condemnation. If any portion of the Mortgaged Property shall be taken,
condemned or acquired pursuant to exercise of the power of eminent domain or threat thereof (a
“Condemnation”), Mortgagor shall:

          (a) give notice thereof to Mortgagee as promptly as practicable, and send a copy of each
document received by Mortgagor in connection with the Condemnation to Mortgagee promptly after
receipt; and

13

 

          (b) diligently pursue any negotiation and prosecute any proceeding in connection with the
Condemnation at Mortgagor’s expense. If an Event of Default shall be in existence, or if
Mortgagor, in Mortgagee’s reasonable opinion, shall not be diligently negotiating or prosecuting
the claim, Mortgagee is authorized, but not required, to negotiate and prosecute the claim and
appear at any hearing for itself and on behalf of Mortgagor and to compromise or settle all
compensation for the Condemnation. Mortgagee shall not be liable to Mortgagor for any failure by
Mortgagee to collect or to exercise diligence in collecting any such compensation. Mortgagor shall
not compromise or settle any claim resulting from the Condemnation if such settlement shall result
in payment of more than $10,000 less than Mortgagee’s reasonable estimate of the damages therefrom.
All awards shall be paid to Mortgagee.

     Section 3.4 Use of Condemnation Proceeds. Mortgagee shall make the net proceeds of
any Condemnation received by it (after reimbursement of Mortgagee’s out-of-pocket costs of
collecting and disbursing the same) available to Mortgagor for restoration, repair and rebuilding
of the Mortgaged Property, subject to all of the following conditions precedent:

          (a) There shall be no Event of Default in existence at the time of any disbursement of the
condemnation proceeds;

          (b) Mortgagee shall have determined, in its reasonable discretion, that the cost of
restoration, repair and rebuilding is and will be equal to or less than the amount of condemnation
proceeds and other funds deposited by Mortgagor with Mortgagee;

          (c) Mortgagee shall have determined, in its reasonable discretion, that the restoration,
repair and rebuilding can be completed in accordance with plans and specifications approved by
Mortgagee (such approval not to be unreasonably withheld), in accordance with applicable laws,
codes, regulations and ordinances and in accordance with the terms, and within the time
requirements in order to prevent termination of any Lease;

          (d) All funds shall be disbursed, at Mortgagee’s option, in accordance with Mortgagee’s
customary disbursement procedures for construction loans; and

          (e) The condemnation or taking causes damage of $500,000.00 or less or requires restoration
which costs less than $500,000.00; and

          (f) The restoration, repair and rebuilding of the Mortgaged Property can be completed within
nine (9) months of the date of the taking, or such additional period of time as Mortgagee, in its
reasonable discretion, shall permit.

If any of these conditions shall not be satisfied, then Mortgagee shall have the right to either
use the condemnation award proceeds to prepay the Obligations or make such proceeds available for
restoration, repair and rebuilding of the Mortgaged Property. If any condemnation proceeds shall
remain after completion of the restoration, repair and rebuilding of the Mortgaged Property, they
shall be disbursed to Mortgagor, or to the Person legally entitled thereto, or at Mortgagee’s
discretion, used to prepay the Obligations.

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ARTICLE 4.

DEFAULTS AND REMEDIES

     Section 4.1 Events of Default. An Event of Default, as defined in the Loan Agreement
or any other Loan Document, shall constitute an Event of Default hereunder. In addition,
Mortgagor’s failure to perform, observe or comply with its obligations in this Mortgage shall be an
Event of Default.

     Section 4.2 Remedies. Subject to any applicable notice and cure and/or grace periods
in the Loan Agreement after an Event of Default, Mortgagee shall be entitled to invoke any and all
of the rights and remedies described below, in addition to all other rights and remedies available
to Mortgagee under any Loan Document or available at law or in equity. All of such rights and
remedies shall be cumulative, and the exercise of any one or more of them shall not constitute an
election of remedies.

          (a) Acceleration. Mortgagee may declare any or all of the Obligations to be due and
payable immediately. In addition, Mortgagee shall have no further obligation to make any Advances
under any Loan. If, while any insurance proceeds or condemnation awards are being held by
Mortgagee to reimburse Mortgagor for the cost of rebuilding or restoration of buildings or
improvements on the Mortgaged Property, Mortgagee shall accelerate the Obligations, then and in
such event, Mortgagee shall be entitled to apply all such insurance proceeds and condemnation
awards then held by it in reduction of the Obligations and any excess held by it over the amount of
Obligations then due hereunder shall be returned to Mortgagor or the Persons legally entitled
thereto without interest.

          (b) Receiver. Mortgagee shall have the right to obtain a receiver in accordance with
applicable law at any time after an Event of Default which is continuing, whether or not an action
for foreclosure has been commenced. Any court having jurisdiction shall, at the request of
Mortgagee following an Event of Default which is continuing, appoint a receiver to take immediate
possession of the Mortgaged Property and to rent or operate the same as he may deem best for the
interest of all parties concerned, and such receiver shall be liable to account to the Mortgagor
only for the net profits, after application of rents, issues and profits upon the costs and
expenses of the receivership and upon the Obligations.

     Mortgagee shall have the right, at any time to advance money to the receiver to pay any part
or all of the items which the receiver should otherwise pay if cash were available from the
Mortgaged Property and sums so advanced, with interest at an annual rate equal to nine percent (9%)
in excess of the one month LIBOR Rate shall be secured hereby, or if advanced during the period of
redemption shall be a part of the sum required to be paid to redeem from the sale.

          (c) Entry. Mortgagee, in person, by agent or by court-appointed receiver, may enter,
take possession of, manage and operate all or any part of the Mortgaged Property, and may also do
any and all other things in connection with those actions that Mortgagee may in its sole discretion
consider necessary and appropriate to protect the security of this Mortgage. Such

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other things may include: taking and possessing all of Mortgagor’s or the then owner’s books
and records; entering into, enforcing, modifying or canceling leases on such terms and conditions
as Mortgagee may consider proper; obtaining and evicting tenants; fixing or modifying Rents;
collection and receiving any payment of money owing to Mortgagee; terminating management
agreements, contracts or agents/managers responsible for the operation and/or property management
of the Mortgaged Property; completing any unfinished construction; and/or contracting for and
making repairs and alterations. If Mortgagee so requests, Mortgagor shall assemble all of the
Mortgaged Property that has been removed from the Land and make all of it available to Mortgagee at
the site of the Land. Mortgagor hereby irrevocably constitutes and appoints Mortgagee as
Mortgagor’s attorney-in-fact to perform such acts and execute such documents as Mortgagee in its
sole discretion may consider to be appropriate in connection with taking these measures, including
endorsement of Mortgagor’s name on any instruments, such appointment being coupled with an interest
and irrevocable.

          (d) Cure; Protection of Security. Mortgagee may cure any breach or default of
Mortgagor, and if it chooses to do so in connection with any such cure, Mortgagee may also enter
the Mortgaged Property and/or do any and all other things which it may in its sole reasonable
discretion consider necessary and appropriate to protect the security of this Mortgage. Any
reasonable amounts expended by Mortgagee under this Section 4.2(d) shall be secured by this
Mortgage and shall be payable upon demand and shall accrue interest at a variable per annum rate
equal to nine percent (9%) in excess of the one month LIBOR Rate until paid in full.

          (e) Uniform Commercial Code Remedies. Mortgagee may exercise any or all of the
remedies granted to a secured party under the UCC.

          (f) Foreclosure; Lawsuits. Mortgagee or its nominee may institute such mortgage
foreclosure actions provided for by Indiana law in accordance with applicable law and may bid and
become the purchaser of all or any part of the Mortgaged Property at any foreclosure or other sale
hereunder, and the amount of Mortgagee’s successful bid shall be credited on the Obligations.
Without limiting the foregoing, Mortgagee may proceed by a suit or suits in law or equity, whether
for specific performance of any covenant or agreement herein contained or contained in any of the
other Loan Documents, or in aid of the execution of any power herein or therein granted, or for any
foreclosure under the judgment or decree of any court of competent jurisdiction, or for damages, or
to collect the indebtedness secured hereby, or for the enforcement of any other appropriate legal,
equitable, statutory or contractual remedy.

          (g) Other Remedies. Mortgagee may exercise all rights and remedies contained in any
other instrument, document, agreement or other writing heretofore, concurrently or in the future
executed by Mortgagor or any other Person or entity in favor of Mortgagee in connection with the
Obligations or any part thereof, without prejudice to the right of Mortgagee thereafter to enforce
any appropriate remedy against Mortgagor. Mortgagee shall have the right to pursue all remedies
afforded to a Mortgagee under applicable law, and shall have the benefit of all of the provisions
of such applicable law, including all amendments thereto which may become effective from time to
time after the date hereof. In the event any provision of such statutes which is specifically
referred to herein may be repealed, Mortgagee shall have the

16

 

benefit of such provision as most recently existing prior to such repeal, as though the same
were incorporated herein by express reference.

          (h) Power of Sale for Personal Mortgaged Property. Under this power of sale,
Mortgagee shall have the discretionary right to cause some or all of the Mortgaged Property, which
constitutes personal property, to be sold or otherwise disposed of in any combination and in any
manner permitted by applicable law.

          (i) For purposes of this power of sale, Mortgagee may elect to treat as personal property any
Mortgaged Property which is intangible or which can be severed from the Land or Improvements
without causing structural damage. If it chooses to do so, Mortgagee may dispose of any personal
property, in any manner permitted by Article 9 of the UCC, including any public or private sale, or
in any manner permitted by any other applicable law.

          (j) Single or Multiple Foreclosure Sales. If the Mortgaged Property consists of more
than one lot, parcel or item of Mortgaged Property, Mortgagee may, in accordance with applicable
law:

               (i) designate the order in which the lots, parcels and/or items shall be sold or disposed of
or offered for sale or disposition; and

               (ii) elect to dispose of the lots, parcels and/or items through a single consolidated sale or
disposition to be held or made under or in connection with judicial proceedings, or by virtue of a
judgment and decree of foreclosure and sale, or pursuant to the power of sale contained herein; or
through two or more such sales or dispositions; or in any other manner Mortgagee may deem to be in
its best interests (any foreclosure sale or disposition as permitted by the terms hereof is
sometimes referred to herein as a “Foreclosure Sale;” and any two or more such sales,
“Foreclosure Sales”).

If it chooses to have more than one Foreclosure Sale, Mortgagee at its option may cause the
Foreclosure Sales to be held simultaneously or successively, on the same day, or on such different
days and at such different times and in such order as it may deem to be in its best interests. No
Foreclosure Sale shall terminate or affect the liens of this Mortgage on any part of the Mortgaged
Property which has not been sold, until the Obligations have been paid in full.

     Section 4.3 Expenses of Exercising Rights Powers and Remedies. The reasonable
expenses (including any receiver’s fees, reasonable attorneys’ fees, appraisers’ fees,
environmental engineers’ and/or consultants’ fees, auctioneer’s fees and costs, costs incurred for
documentary and expert evidence, stenographers’ charges, publication costs, costs (which may be
estimated as to items to be expended after entry of the decree of foreclosure) of procuring all
abstracts of title, continuations of abstracts of title, title searches and examinations, UCC and
chattel lien searches, and similar data and assurances with respect to title as Mortgagee may deem
reasonably necessary either to prosecute any foreclosure action or to evidence to bidders at any
sale which may be had pursuant to any foreclosure decree the true condition of the title to or the
value of the Mortgaged Property) incurred by Mortgagee after the occurrence of any Event of Default
and/or in pursuing the rights, powers and remedies contained in this Mortgage shall be

17

 

immediately due and payable by Mortgagor, with interest thereon from the date incurred at an
annual rate equal to nine percent (9%) in excess of the one month LIBOR Rate and shall be added to
the indebtedness secured by this Mortgage.

     Section 4.4 Restoration of Position. In case Mortgagee shall have proceeded to
enforce any right under this Mortgage by foreclosure, sale, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason or shall have been determined
adversely, then, and in every such case, Mortgagor and Mortgagee shall be restored to their former
positions and rights hereunder with respect to the Mortgaged Property subject to the lien hereof,
except as might otherwise be determined by a final order of a court of competent jurisdiction.

     Section 4.5 Marshalling. Mortgagor, for itself and on behalf of all Persons which may
claim under Mortgagor, hereby waives all requirements of law relating to the marshalling of assets,
if any, which would be applicable in connection with the enforcement by Mortgagee of its remedies
for an Event of Default hereunder, absent this waiver. Mortgagee shall not be required to sell or
realize upon any portion of the Mortgaged Property before selling or realizing upon any other
portion thereof.

     Section 4.6 Waivers. No waiver of any provision hereof shall be implied from the
conduct of the parties. Any such waiver must be in writing and must be signed by the party against
which such waiver is sought to be enforced. The waiver or release of any breach of the provisions
set forth herein to be kept and performed shall not be a waiver or release of any preceding or
subsequent breach of the same or any other provision. No receipt of partial payment after
acceleration of the Obligations shall waive the acceleration. No payment by Mortgagor or receipt
by Mortgagee of a lesser amount than the full amount secured hereby shall be deemed to be other
than on account of the sums due and payable hereunder, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment be deemed an accord and satisfaction, and
Mortgagee may accept any check or payment without prejudice to Mortgagee’s right to recover the
balance of such sums or to pursue any other remedy provided in this Mortgage. The consent by
Mortgagee to any matter or event requiring such consent shall not constitute a waiver of the
necessity for such consent to any subsequent matter or event.

     Section 4.7 Mortgagee’s Right to Cure Defaults. If Mortgagor shall fail to comply
with any of the terms of this Mortgage with respect to the procuring of insurance, the payment of
taxes, assessments and other charges, the keeping of the Mortgaged Property in repair, or any other
term contained herein and such failure shall continue for a period of ten (10) days after notice of
such failure from Mortgagee, Mortgagee may make advances to perform the same without releasing any
of the Obligations. Mortgagor agrees to repay upon demand all sums so advanced and all sums
expended by Mortgagee in connection with such performance, including without limitation reasonable
attorneys’ fees, with interest at an annual rate equal to nine percent (9%) in excess of the one
month LIBOR Rate from the dates such advances are made until paid in full, and all sums so advanced
and/or expenses incurred, with interest, shall be secured hereby, but no such advance and/or
incurring of expense by Mortgagee, shall be deemed to relieve Mortgagor from any default hereunder,
or to release any of the Obligations.

18

 

     Section 4.8 Suits and Proceedings. Mortgagee shall have the power and authority, upon
prior notice to Mortgagor, to institute and maintain any suits and proceedings as Mortgagee may
deem advisable to (i) prevent any impairment of the Mortgaged Property by any act which may be
unlawful or by any violation of this Mortgage, (ii) preserve or protect its interest in the
Mortgaged Property, or (iii) restrain the enforcement of or compliance with any legislation or
other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if,
in the sole opinion of Mortgagee, the enforcement of or compliance with such enactment, rule or
order might impair the security hereunder or be prejudicial to Mortgagee’s interest.

ARTICLE 5.

MISCELLANEOUS

     Section 5.1 Binding Effect; Survival; Number; Gender. This Mortgage shall be binding
on and inure to the benefit of the parties hereto, and their respective heirs, legal
representatives, successors and assigns. All agreements, representations and warranties contained
herein or otherwise heretofore made by Mortgagor to Mortgagee shall survive the execution and
delivery hereof. The singular of all terms used herein shall include the plural, the plural shall
include the singular, and the use of any gender herein shall include all other genders, where the
context so requires or permits.

     Section 5.2 Severability. The unenforceability or invalidity of any provision of this
Mortgage as to any person or circumstance shall not render that provision unenforceable or invalid
as to any other person or circumstance.

     Section 5.3 Notices. Any notice or other communication to any party in connection
with this Mortgage shall be in writing and shall be sent by manual delivery, facsimile
transmission, overnight courier or United States mail (postage prepaid) addressed to such party at
the address specified below, or at such other address as such party shall have specified to the
other party hereto in writing. All periods of notice shall be measured from the date of delivery
thereof if manually delivered, from the date of sending thereof if sent by facsimile transmission,
from the first business day after the date of sending if sent by overnight courier, or from four
(4) days after the date of mailing if mailed. Notices shall be given to or made upon the
respective parties hereto at their respective addresses set forth below:

	 	 	 	 	 
	 

	 	If to Mortgagee:
	 	First National Bank of Omaha
	 

	 	 	 	1620 Dodge Street, Stop 1050
	 

	 	 	 	Omaha, Nebraska 68197-1050
	 

	 	 	 	Attn: Fallon Savage
	 

	 	 	 	Fax No.: (402) 633-3519
	 
	 	 	 	 
	 

	 	If to Mortgagor:
	 	Cardinal Ethanol, LLC
	 

	 	 	 	2 OMCO, Suite201
	 

	 	 	 	P.O. Box 47934

19

 

	 	 	 	 	 
	 

	 	 	 	Winchester, Indiana 47934
	 

	 	 	 	Attn: Troy Prescott, President

	 

	 	 	 	Fax No.: (765) 584-2224

Either party may change its address for notices by a notice given pursuant to this Section.

     Section 5.4 Applicable Law. This Mortgage shall be construed and enforceable in
accordance with, and be governed by, the laws of the State of Indiana, without giving effect to
conflict of laws or principles thereof.

     Section 5.5 Waiver of Jury Trial. Mortgagor and Mortgagee each irrevocably waives any
and all right to trial by jury in any legal proceeding arising out of or relating to this Mortgage
or the transactions contemplated hereby.

     Section 5.6 Effect. This Mortgage is in addition and not in substitution for any
other guarantees, covenants, obligations or other rights now or hereafter held by Mortgagee from
any other person or entity in connection with the Obligations.

     Section 5.7 Assignability. Mortgagee shall have the right to assign this Mortgage, in
whole or in part, or sell participation interests herein, to any Person obtaining an interest in
the Loans.

     Section 5.8 Headings. Headings of the Sections of this Mortgage are inserted for
convenience only and shall not be deemed to constitute a part hereof.

     Section 5.9 Fixture Filing. This instrument shall be deemed to be a Fixture Filing
within the meaning of the UCC, and for such purpose, the following information is given:

	 	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Name and address of Debtor:
	 	Cardinal Ethanol, LLC

	 

	 	 	 	 	 	2 OMCO Square, Suite 201	 
	 

	 	 	 	 	 	P.O. Box 501

	 

	 	 	 	 	 	Winchester, Indiana 47394

	 

	 	 	 	 	 	USA

	 
	 	 	 	 	 	 	 	 
	 

	 	(b)
	 	Type of Organization:
	 	Limited liability company

	 
	 	 	 	 	 	 	 	 
	 

	 	(c)
	 	Jurisdiction of Organization:
	 	Indiana

	 
	 	 	 	 	 	 	 	 
	 

	 	(d)
	 	Organizational I.D. No.:
	 	2005021100241	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(e)
	 	Name and address of Secured
	 	First National Bank of Omaha

	 

	 	 	 	Party:
	 	1620 Dodge Street, Stop 1050	 
	 

	 	 	 	 	 	Omaha, Nebraska 68197-1050

	 

	 	 	 	 	 	USA

20

 

	 	 	 	 	 	 	 	 	 
	 

	 	(f)
	 	Description of the collateral:
	 	See granting clause above

	 
	 	 	 	 	 	 	 	 
	 

	 	(g)
	 	Description of real estate to
	 	See Exhibit A hereto.

	 

	 	 	 	which the collateral is	 	 	 	 
	 

	 	 	 	attached or upon which it is	 	 	 	 
	 

	 	 	 	or will be located:	 	 	 	 

Some of the above-described collateral is or is to become fixtures upon the above-described real
estate, and this Fixture Filing is to be filed for record in the public real estate records.
Mortgagor is the owner of the Land and Improvements.

     Section 5.10 Estoppel Certificate. At any time and from time to time, within three
(3) Business Days after receipt from Mortgagee of a written request therefor, Mortgagor shall
prepare, execute and deliver to Mortgagee, and/or any other party which Mortgagee may designate, an
estoppel certificate stating: (a) the amount of the unpaid principal balance and accrued interest
secured by this Mortgage on the date thereof; (b) the date upon which the last payment secured by
this Mortgage was made and the date the next payment secured by this Mortgage is due; and (c) that
the provisions of the Loan Agreement, this Mortgage and the other Loan Documents described in said
request have not been materially amended or changed in any manner, that there are no material
defaults or Events of Default then existing under the terms of the Loan Agreement, this Mortgage or
the other Loan Documents described in said request, and that Mortgagor has no defenses, claims or
offsets against full enforcement hereof and thereof according to the terms hereof and thereof, or
listing and describing any such amendments, changes, defaults, events of default, defenses, claims
or offsets which do exist.

     Section 5.11 Definitions. Capitalized terms not otherwise defined in this Mortgage
shall have the meaning given to such terms in the Loan Agreement.

ARTICLE 6.

ENVIRONMENTAL

     Section 6.1 Environmental Matters; Notice; Indemnity. Mortgagor covenants and agrees
as follows:

          (a) For purposes of this Mortgage, the following definitions shall apply:

               (i) The term “Environmental Law” means and includes any federal, state or local law, statute,
regulation or ordinance pertaining to health, industrial hygiene or the environmental or ecological
conditions on, under or about the Mortgaged Property, including without limitation each of the
following (and their respective successor provisions): the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. sections 9601 et seq.
(“CERCLA”); the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. sections 6901
et seq. (“RCRA”); the Federal Hazardous Materials Transportation Act, as amended, 49 U.S.C.
sections 1801 et seq.; the Toxic Substance Control Act, as amended, 15 U.S.C. sections 2601
et seq.; the Clean Air Act, as amended, 42 U.S.C.

21

 

sections 1857 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
sections 1251 et seq.; and the rules, regulations and ordinances of the U.S. Environmental
Protection Agency and of all other federal, state, county and municipal agencies, boards,
commissions and other governmental bodies and officers having jurisdiction over the Mortgaged
Property or the use or operation of the Mortgaged Property.

               (ii) The term “Hazardous Substance” means and includes: (1) those substances included within
the definitions of “hazardous substances”, “hazardous materials, hazardous waste”, “pollutants”,
“toxic substances” or “solid waste” in any Environmental Law; (2) those substances listed in the
U.S. Department of Transportation Table or amendments thereto (49 CFR 172.101) or by the U.S.
Environmental Protection Agency (or any successor agency) as hazardous substances (40 CFR Part 302
and any amendments thereto); (3) those other substances, materials and wastes which are or become,
regulated under any applicable federal, state or local law, regulation or ordinance or by any
federal, state or local governmental agency, board, commission or other governmental body, or which
are or become classified as hazardous or toxic by any such law, regulation or ordinance; and (4)
any material, waste or substance which is any of the following: (A) asbestos; (B) polychlorinated
biphenyl; (C) designated or listed as a “hazardous substance” pursuant to section 311 or section
307 of the Clean Water Act (33 U.S.C. sections 1251 et ); (D) explosive; (E) radioactive;
(F) a petroleum product; or (G) infectious waste. Notwithstanding anything to the contrary herein,
the term “Hazardous Substance” shall not include commercially sold products otherwise within the
definition of the term “Hazardous Substance”, but (X) which are used or disposed of by Mortgagor or
used or sold by tenants of the Mortgaged Property in the ordinary course of their respective
businesses, (Y) the presence of which product is not prohibited by applicable Environmental Law,
and (Z) the use and disposal of which are in all respects in accordance with applicable
Environmental Law.

               (iii) The term “Enforcement or Remedial Action” means and includes any action taken by any
person or entity in an attempt or asserted attempt to enforce, to achieve compliance with, or to
collect or impose assessments, penalties, fines, or other sanctions provided by, any Environmental
Law.

               (iv) The term “Environmental Liability” means and includes any claim, demand, obligation,
cause of action, accusation, allegation, order, violation, damage (including consequential damage),
injury, judgment, assessment, penalty, fine, cost of Enforcement or Remedial Action, or any other
cost or expense whatsoever, including actual, reasonable attorneys’ fees and disbursements,
resulting from or arising out of the violation or alleged violation of any Environmental Law, any
Enforcement or Remedial Action, or any alleged exposure of any person or property to any Hazardous
Substance.

          (b) Mortgagor, its successors and assigns, after reasonable inquiry, covenants, warrants and
represents that, except as disclosed in the environmental studies identified in Exhibit “C”
attached hereto and incorporated herein by reference:

               (i) No Hazardous Substances have been or shall be discharged, disbursed, released, stored,
treated, generated, disposed of, or allowed to escape or migrate, or

22

 

shall threaten to be injected, emptied, poured, leached, or spilled on or from the Mortgaged
Property.

               (ii) No asbestos or asbestos-containing materials have been or will be installed, used,
incorporated into, placed on, or disposed of on the Mortgaged Property.

               (iii) No polychlorinated biphenyls (“PCBs”) are or will be located on or in the Mortgaged
Property, in the form of electrical transformers, fluorescent light fixtures with ballasts, cooling
oils, or any other device.

               (iv) No investigation, administrative order, consent order and agreement, litigation,
settlement, lien or encumbrance with respect to Hazardous Substances is proposed, threatened,
anticipated or in existence with respect to the Mortgaged Property.

               (v) The Mortgaged Property and Mortgagor’s operations at the Mortgaged Property are in
compliance with all applicable Environmental Laws including without limitation any, state and local
statutes, laws and regulations and all permits and licenses issued for the operation of the
Mortgaged Property. No notice has been served on Mortgagor, or any subsidiary of Mortgagor, from
any entity, government body, or individual claiming any violation of any law, regulation, ordinance
or code, or requiring compliance with any law, regulation, ordinance or code, or demanding payment
or contribution for environmental damage or injury to natural resources. Copies of any such notices
received subsequent to the date hereof shall be forwarded to Mortgagee within three (3) days of
their receipt.

               (vi) Mortgagor has no knowledge of the release or threat of release of any Hazardous
Substances from any property adjoining or in the immediate vicinity of the Mortgaged Property.

               (vii) No portion of the Mortgaged Property is a wetland or other water of the United States
subject to jurisdiction under Section 404 of the Clean Water Act (33 U.S.C. § 1344) or any
comparable state statute or local ordinance or regulation defining or protecting wetlands or other
special aquatic areas.

               (viii) There are no concentrations of radon or other radioactive gases or materials in any
buildings or structures on the Mortgaged Property that exceed background ambient air levels.

               (ix) To the best of Mortgagor’s knowledge, there have been no complaints of illness or
sickness alleged to result from conditions inside any buildings or structures on the Mortgaged
Property.

          (c) Mortgagor will give prompt written notice to Mortgagee of:

               (i) any proceeding, known investigation or inquiry commenced by any governmental authority
with respect to the presence of any Hazardous Substance on, under or about the Mortgaged Property
or the migration thereof to or from adjoining property;

23

 

               (ii) all claims made or threatened by any individual or entity against Mortgagor or the
Mortgaged Property relating to any loss or injury allegedly resulting from any Hazardous Substance;

               (iii) the discovery by Mortgagor of any occurrence or condition on any real property adjoining
or in the vicinity of the Mortgaged Property which might cause the Mortgaged Property or any part
thereof to be subject to any restriction on the ownership, occupancy, transferability or use of the
Mortgaged Property under any Environmental Law; and

               (iv) any notice from any governmental authority alleging or claiming the violation of or
non-compliance with any permit or license relating to Mortgagor’s operations on the Mortgaged
Property, or the revocation, or threatened revocation, of any such permit or license relating or
necessary to the operation of the Mortgagor’s business on the Mortgaged Property.

          (d) Mortgagee shall have the right and privilege to: (i) join in and participate in, as a
party if it so elects, any one or more legal proceedings or actions initiated with respect to the
Mortgaged Property; and to (ii) have all costs and expenses thereof (including without limitation
Mortgagee’s reasonable attorneys’ fees and costs) paid by Mortgagor. In addition, Mortgagee and any
other Person designated by Mortgagee, shall have the right, but not the obligation, to enter upon
the Mortgaged Property at any reasonable time to assess any and all aspects of the environmental
condition of the Mortgaged Property and its use, including, but not limited to, conducting any
environmental assessment or audit (the scope of which shall be determined by Mortgagee in its sole
discretion) and taking samples of air, soil, groundwater or other water, building materials, and
conducting invasive testing. Mortgagor shall cooperate with and provide access to Mortgagee or any
Person designated by Mortgagee.

          (e) Mortgagor agrees to protect, defend, reimburse, indemnify and hold harmless Mortgagee, its
directors, officers, employees, agents, contractors, sub-contractors, licensees, invitees,
participants, successors and assigns, from and against any Environmental Liability and any and all
claims, demands, judgments, settlements, damages, actions, causes of action, injuries,
administrative orders, consent agreements and orders, liabilities, losses, penalties, costs,
including but not limited to any cleanup costs, remediation costs and response costs, and all
expenses of any kind whatsoever including reasonable attorneys’ fees and expenses, including but
not limited to those arising out of loss of life, injury to persons, property or business or damage
to natural resources in connection with the activities of Mortgagor, or parties in a contractual
relationship with Mortgagor, and any of them, the foregoing being collectively referred to as
“Claims”, which:

               (i) arise out of the actual, alleged or threatened migration, spill, leaching, pouring,
emptying, injection, discharge, dispersal, release, storage, treatment, generation, disposal or
escape of any Hazardous Substances onto or from the Mortgaged Property; or

24

 

               (ii) actually or allegedly arise out of, in connection with the Mortgaged Property, the use,
specification or inclusion of any product, material or process containing Hazardous Substances, the
failure to detect the existence or proportion of Hazardous Substances in the soil, air, surface
water or ground water, or the performance of or failure to perform the abatement of any Hazardous
Substances source or the replacement or removal of any soil, water, surface water or ground water
containing any Hazardous Substances; or

               (iii) arise out of the breach of any covenant, warranty or representation contained in any
statement or other information given by Mortgagor to Mortgagee relating to environmental matters;
or

               (iv) arise out of any Enforcement or Remedial Action or any judicial or administrative action
brought pursuant to any Environmental Law; or

               (v) The violation of or non-compliance with any permits or licenses required in connection
with the operation of the Project.

          Mortgagor, its successors and assigns, shall bear, pay and discharge when and as the same
become due and payable, any and all such judgments or claims for damages, penalties or otherwise
against Mortgagee described in this subparagraph (e), shall hold Mortgagee harmless for those
judgments or claims, and shall assume the burden and expense of defending all suits, administrative
proceedings, and negotiations of any description with any and all persons, political subdivisions
or government agencies arising out of any of the occurrences set forth in this subparagraph (e).

          Mortgagor’s indemnifications and representations made herein shall survive any termination or
expiration of the documents evidencing or securing the Loans and/or the repayment of the
indebtedness evidenced by the Loans, including, but not limited to, any foreclosure on this
Mortgage or acceptance of a deed in lieu of foreclosure. Without limiting the generality of the
foregoing, Mortgagor’s indemnifications and representations shall extend to Hazardous Substances
which first originate on the Mortgaged Property subsequent to Mortgagee’s succession to title by
virtue of a foreclosure or acceptance of a deed in lieu of foreclosure, excepting only such Claims
which arise out of actions taken by Mortgagee, or by those contracting with Mortgagee, its
successors or assigns, subsequent to Mortgagee, its successors or assigns, becoming owner of the
Mortgaged Property. Notwithstanding the foregoing, Mortgagor’s liability hereunder shall terminate
at such time as a private or governmental plaintiff is barred by the applicable statute of
limitations from bringing a claim for the actions giving rise to Mortgagee’s claim for
indemnification hereunder.

     (f) If any investigation, site monitoring, containment, cleanup, removal, restoration or other
remedial work of any kind or nature (the “Remedial Work”) is reasonably desirable (in the case of
an operation and maintenance program or similar monitoring or preventative programs) or necessary,
both as determined by an independent environmental consultant selected by Mortgagee under any
applicable federal, state or local law, regulation or ordinance, or under any judicial or
administrative order or judgment, or by any governmental person, board, commission or agency,
because of or in connection with the current or future

25

 

presence, suspected presence, release or suspected release of a Hazardous Substance into the
air, soil, groundwater, or surface water at, on, about, under or within the Mortgaged Property or
any portion thereof, Mortgagor shall within thirty (30) days after written demand by Mortgagee for
the performance (or within such shorter time as may be required under applicable law, regulation,
ordinance, order or agreement), commence and thereafter diligently prosecute to completion all such
Remedial Work to the extent required by law. All Remedial Work shall be performed by contractors
approved in advance by Mortgagee (which approval in each case shall not be unreasonably withheld or
delayed) and under the supervision of a consulting engineer approved in advance by Mortgagee. All
costs and expenses of such Remedial Work (including without limitation the reasonable fees and
expenses of Mortgagee’s counsel) incurred in connection with monitoring or review of the Remedial
Work shall be paid by Mortgagor. If Mortgagor shall fail or neglect to timely commence or cause to
be commenced, or shall fail to diligently prosecute to completion, such Remedial Work, Mortgagee
may (but shall not be required to) cause such Remedial Work to be performed; and all costs and
expenses thereof, or incurred in connection therewith (including, without limitation, the
reasonable fees and expenses of Mortgagee’s counsel), shall be paid by Mortgagor to Mortgagee
forthwith after demand and shall be a part of the Indebtedness.

     IN WITNESS WHEREOF, Mortgagor has executed and delivered this Mortgage as of the date first
written above.

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY
THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS
WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY
ANOTHER WRITTEN AGREEMENT.

	 	 	 	 	 	 	 
	 	 	MORTGAGOR:	 	 
	 
	 	 	 	 	 	 
	 	 	CARDINAL ETHANOL, LLC, an Indiana limited

liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Troy Prescott
 

Troy Prescott, President
	 	 

Prepared by and Return to:

James M. Pfeffer

Stinson Morrison Hecker LLP

1299 Farnam St., Suite 1500

Omaha, Nebraska 68102

26

 

I affirm under the penalties of perjury, that I have taken responsible care to redact each Social
Security Number in this document, unless required by law.

	 	 	 	 	 
	 

	 	/s/ James M. Pfeffer
 

James M. Pfeffer
	 	 

27

 

CERTIFICATE OF ACKNOWLEDGMENT

	 	 	 	 	 
	STATE OF INDIANA

	 	 	)	 
	 

	 	 	) ss.

	COUNTY OF Marion

	 	 	)	 

     Before me, a Notary Public in and for said County and State, personally appeared Troy
Prescott, known to me to be the President of Cardinal Ethanol, LLC, an Indiana limited liability
company, and acknowledged the execution of the foregoing Construction Loan Mortgage, Security
Agreement, Assignment of Leases and Rents and Fixture Financing Statement for and on behalf of such
limited liability company.

	 	 	 	 	 
	 

	 	Linda L. Schmidt
 

Notary Public-Signature
	 	 
	 
	 	 	 	 
	 

	 	 

Notary Public-Printed Name
	 	 
	 
	 	 	 	 
	 

	 	Date: December 19, 2006	 	 

	 	 	 
	My commission expires:
	 	 
	 
	 	 
	          6/29/2011
 

	 	 

SEAL                     OFFICIAL SEAL

LINDA L. SCHMIDT

NOTARY PUBLIC INDIANA

RESIDENT OF

MARION COUNTY

MY COMMISSION EXPIRES: JUNE 29, 2011

My County of Residence:      Marion                     County, Indiana

28

 

EXHIBIT A

LEGAL DESCRIPTION

Tract I, containing 207.623 acres

Situated in the Northeast and Southeast Quarters, both being in Section 17, Township 20 North,
Range 15 East, Wayne Township, Randolph County, Indiana, being more particularly described as
follows:

Beginning at a mag nail found at the southeast corner of the Southeast Quarter in Indiana State
Highway No. 32;

Thence North 89°50’43” West 1993.12 feet (bearing base established from State Plan Coordinates)
along the south line of said Southeast Quarter, Indiana State Highway No. 32, to a mag nail set,
witness an iron rod set North 00°09’17” East 30.00 feet (all iron rods set are 5/8” rebar with
plastic cap stamped “RLS 20400025”);

Thence North 00°09’17” East 332.46 feet, to an iron rod set;

Thence North 89°50’43” West 298.90 feet, to an iron rod set;

Thence South 00°09’17” West 332.46 feet, to a mag nail set on the south line of said Southeast
Quarter, witness an iron rod set North 00°09’17” East 30.00 feet;

Thence North 89°50’43” West 502.27 feet, along said south line, in said highway, to a mag nail
found at said southwest corner of said Southeast Quarter, witness a concrete post found North
01°31’35” East 30.52 feet;

Thence North 01°31’35” East 2649.53 feet along the west line of said Southeast Quarter, to an iron
rod set at the northwest corner of said Quarter (all iron rods set are 5/8” rebar with plastic cap
stamped “RLS 20400025”);

Thence North 01°31’35” East 378.81 feet along the west line of said Northeast Quarter, to an iron
rod set on the south right-of-way of the New York Central Lines Railroad;

Thence North 77°15’15” East 2775.43 feet along said south right-of-way, to a mag nail set on the
east line of said Northeast Quarter, in Randolph County Road 600 East, witness a concrete end post
found South 77°15’15” West 21.33 feet;

Thence South 00°40’05” West 1012.22 feet along the east line of said Northeast Quarter, in said
County Road to an iron rod found at the southeast corner of said Northeast Quarter;

Thence South 00°23’58” West 2635.04 feet along the east line of said Southeast Quarter, in said
road, to the point of beginning, containing 207.623 acres, more or less, there being 43.128 acres,
more or less, in the Northeast Quarter and 164.495 acres, more or less, in the Southeast Quarter.

 

 

Tract II, containing 87.598 acres

Situated in the Northwest and Southwest Quarters, both in Section 17, Township 20 North, Range 15
East, Wayne Township, Randolph County, Indiana, being more particularly described as follows:

Beginning at a mag nail found at the southeast corner of the Southwest Quarter, in Indiana State
Highway No.32, witness a concrete end post found North 01°31’35” East 30.52 feet;

Thence North 89°42’11” West 1320.67 feet (bearing base established from State Plan Coordinates)
along the south line of said Southwest Quarter, in said State Highway, to a mag nail set at the
Southeast corner of a 63.39 acre tract as recorded in Instrument 0002247, witness a concrete end
post found North 01°12’42” East 30.49 feet;

Thence North 01°12’42” East 2652.77 feet along the east line of said 63.39 acre tract, to an iron
rod set on the North line of said Southwest Quarter;

Thence North 01°12’42” East 64.26 feet, entering into the Northwest Quarter, to an iron rod set on
the south right-of-way of the New York Central Lines Railroad (all iron rods set with plastic cap
stamped 7955);

Thence North 77°15’15” East 1377.82 feet along said right-of-way, to an iron rod set on the east
line of said Northwest Quarter;

Thence South 01°31’35” West 378.81 feet along the east line of said Northwest Quarter, to an iron
rod set at the southeast corner of said Quarter;

Thence South 01°31’35” West 2649.53 feet along the east line of said Southwest Quarter, to the
point of beginning, containing 87.598 acres, more or less, there being 80.807 acres, more or less,
in the Southwest Quarter and 6.791 acres, more or less, in the Northwest Quarter.

 

 

EXHIBIT B

PERMITTED ENCUMBRANCES

None.

 

 

EXHIBIT C

ENVIRONMENTAL STUDIES

PHASE I ENVIRONMENTAL SITE ASSESSMENT DATED AUGUST 29, 2006 PREPARED BY AUGUST MACK ENVIRONMENTAL,
INC.exv10w27

 

Exhibit 10.27

SECURITY AGREEMENT

     This Security Agreement (“Agreement”), dated as of December 19, 2006, is between CARDINAL
ETHANOL, LLC, an Indiana limited liability company (the “Debtor”), and FIRST NATIONAL BANK OF
OMAHA, a national banking association (the “Secured Party”).

     WHEREAS, the Debtor has entered into a Construction Loan Agreement dated of even date with
this Agreement (as amended, restated and in effect from time to time, the “Loan Agreement”), with
the Secured Party, pursuant to which the Secured Party, subject to the terms and conditions
contained therein, is to make loans or otherwise to extend credit to the Debtor; and

     WHEREAS, it is a condition precedent to the Secured Party’s extending the Obligations to the
Debtor under the Loan Agreement that the Debtor execute and deliver to the Secured Party a security
agreement in substantially the form hereof; and

     WHEREAS, the Debtor wishes to grant a security interest in favor of the Secured Party as
herein provided.

     NOW, THEREFORE, in consideration of the promises contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

     1. Definitions. All capitalized terms used herein without definitions shall have the
respective meanings provided therefor in the Loan Agreement. The term “State,” as used herein,
means the State of Nebraska. All terms defined in the Uniform Commercial Code of the State and
used herein shall have the same definitions herein as specified therein. However, if a term is
defined in Article 9 of the Uniform Commercial Code of the State differently than in another
Article of the Uniform Commercial Code of the State, the term has the meaning specified in Article
9. The term “Obligations,” as used herein, means all of the indebtedness, obligations and
liabilities of the Debtor to the Secured Party of every kind, nature or description, individually
or collectively, whether direct or indirect, joint or several, absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising, whether provided for under or
in respect of the Loan Agreement or otherwise or under any promissory notes or other instruments or
agreements executed and delivered pursuant thereto or in connection therewith or this Agreement or
otherwise and any overdrafts or other deposit account liabilities of the Debtor to the Secured
Party, and the term “Event of Default,” as used herein, means the failure of the Debtor to pay or
perform any of the Obligations as and when due to be paid or performed under the terms of the Loan
Agreement and the other Loan Documents and shall also have the meaning given to such term in the
Loan Agreement or any other Loan Document.

     2. Grant of Security Interest. The Debtor hereby grants to the Secured Party to
secure the payment and performance in full of all of the Obligations, a first priority security
interest in and so pledges and assigns to the Secured Party in all goods, property and assets of
the Debtor, including, but not limited to the following goods, property, assets and rights of the

 

 

Debtor, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and
products thereof (all of the same being hereinafter called the “Collateral”):

     2.1. All personal and fixture property of every kind and nature including, without limitation,
all goods, equipment, inventory, grain, furniture and fixtures, all of every kind and nature
(including any accessions, additions, improvements, attachments and accessories thereto and
products and proceeds thereof, and all operating manuals, service records, maintenance logs and
warranties applicable thereto), and including all inventory, including, but not limited to, all
corn, grain and ethanol inventory, in which the Debtor has an interest in mass or a joint or other
interest or right of any kind.

     2.2. All instruments (including promissory notes, notes receivable and supporting
obligations), documents, negotiable and non-negotiable documents of title, negotiable and
non-negotiable warehouse receipts, bills of lading, transit receipts or other documents of title,
however denominated (collectively, “Warehouse Receipts”), and the goods underlying or relating to
Warehouse Receipts, including, but not limited to, the Debtor’s present and future rights to take
possession and delivery of goods underlying or relating to any Warehouse Receipt.

     2.3. All accounts, all of the Debtor’s rights to goods represented by or securing any
accounts, all proceeds from the disposition or collection of accounts, all of the Debtor’s rights
as an unpaid vendor, including the right to reclaim goods, the right to stop goods in transit and
the right to replevy goods, and all guaranties, letters of credit and other supports to the payment
of accounts, chattel paper (whether tangible or electronic), deposit accounts (whether maintained
with the Secured Party or other financial institutions), certificates of deposit (whether
negotiable or non-negotiable), letter-of-credit rights (whether or not the letter of credit is
evidenced by a writing), supporting obligations, any other contract rights or rights to the payment
of money, insurance claims and proceeds, trademarks, service marks, copyrights, patents and other
intellectual property rights and all of the Debtor’s rights therein or thereto, software, general
intangibles (including all payment intangibles), all payments and rights to payments whether or not
earned by performance including, but not limited to, accounts and payments from the USDA Commodity
Credit Corporation Bioenergy Program and other similar programs, price support payments, subsidy
payments, guaranty payments, payments in kind, deficiency payments, letters of entitlements,
storage payments, emergency assistance, diversion payments, production flexibility contracts,
contract reserve payments, grain insurance fund claim rights, grain insurance fund proceeds and all
similar programs of any and every kind, whether federal, state or local, and any other rights to
payment under or from any preexisting, current or future federal, state or local government
program, and the products and proceeds of all the foregoing.

     2.4. All farm products, including, but not limited to, all poultry and livestock and their
young, together with all products and replacements for such poultry and livestock; all crops,
annual or perennial, and all products of such crops; and all grain, feed, seed, fertilizer,
chemicals, medicines, and other supplies used or produced in the Debtor’s operations or sold as
inventory, and the products and proceeds and rights to payments associated with all or any of the
foregoing.

     2.5. All books, records, ledger sheets or cards, reports, invoices, purchase orders, customer
lists, mailing lists, files, correspondence, computer programs, tapes, disks and other

2

 

documents or data processing software that at any time relates to any of the foregoing or are
otherwise necessary or helpful in realizing on or collecting on any Collateral.

     2.6. All investment property, securities, securities accounts (including, but not limited to,
all accounts maintained with First National Capital Markets, Inc.) and the securities entitlements,
securities and investment property contained therein, all hedging accounts and all commodity and
securities entitlements, investment property, commodities and other rights associated with such
hedging accounts, and all commodity accounts and all the commodities, securities and investment
property contained therein.

     2.7. All commercial tort claims now existing or hereafter arising. The Secured Party
acknowledges that the attachment of its security interest in any additional commercial tort claim
as original collateral is subject to the Debtor’s compliance with Section 4.7 below.

     3. Authorization to File Financing Statements. The Debtor hereby irrevocably
authorizes the Secured Party at any time and from time to time to file in any filing office in any
Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that
(a) indicate and describe the Collateral, including, but not limited to, descriptions of the
Collateral as all assets of the Debtor, or words of similar effect, and (b) provide any other
information required by part 5 of Article 9 of the Uniform Commercial Code of the State, or such
other jurisdiction, for the sufficiency or filing office acceptance of any financing statement or
amendment, including (i) whether the Debtor is an organization, the type of organization and any
organizational identification number issued to the Debtor and, (ii) in the case of a financing
statement filed as a fixture filing or indicating Collateral as as-extracted collateral or timber
to be cut, a sufficient description of real property to which the Collateral relates. The Debtor
agrees to furnish any such information to the Secured Party promptly upon the Secured Party’s
request. In addition, the Debtor hereby authorizes the Secured Party to file all effective
financing statements pursuant to 7 U.S.C. Section 1631, and amendments to effective statements,
describing the Collateral in any offices as the Secured Party, in its sole discretion, may
determine. If requested by the Secured Party, the Debtor will provide the Secured Party with a
list of the buyers, commission merchants and selling agents to or through whom the Debtor may sell
farm products or grain and a list of all elevators, warehousemen or others where the Debtor stores
corn. The Debtor authorizes the Secured Party to notify all such buyers, commission merchants,
selling agents, elevators, warehousemen or any other person, of the Secured Party’s security
interest in the Debtor’s farm products, corn or grain unless prohibited by law. The Debtor also
ratifies its authorization for the Secured Party to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if filed prior to the date
hereof.

     4. Other Actions. To further the attachment, perfection and first priority of, and
the ability of the Secured Party to enforce, the Secured Party’s security interest in the
Collateral, and without limitation on the Debtor’s other obligations in this Agreement, the Debtor
agrees, in each case at the Debtor’s expense, to take the following actions with respect to the
following Collateral:

     4.1. Promissory Notes, Instruments and Tangible Chattel Paper. If the Debtor
shall at any time hold or acquire any instruments, promissory notes or tangible chattel

3

 

paper, the Debtor shall, upon request of the Secured Party, forthwith endorse, assign and
deliver the same to the Secured Party, accompanied by such instruments of transfer or
assignment duly executed in blank as the Secured Party may from time to time specify. The
Debtor will not deliver possession of, endorse or assign any instruments, promissory notes
or tangible chattel paper to any person or entity other than the Secured Party.

     4.2. Deposit Accounts. For each deposit account that the Debtor at any time
opens or maintains, the Debtor shall, at the Secured Party’s request and option, pursuant to
an agreement in form and substance satisfactory to the Secured Party, either (a) cause the
depositary bank to comply at any time with instructions from the Secured Party to such
depositary bank directing the disposition of funds from time to time credited to such
deposit account, without further consent of the Debtor, or (b) arrange for the Secured Party
to become the customer of the depositary bank with respect to the deposit account, with the
Debtor being permitted, only with the consent of the Secured Party, to exercise rights to
withdraw funds from such deposit account. The Secured Party agrees with the Debtor that the
Secured Party shall not give any such instructions or withhold any withdrawal rights from
the Debtor, unless an Event of Default has occurred and is continuing, or would occur, if
effect were given to any withdrawal not otherwise permitted by the Loan Documents. The
provisions of this paragraph shall not apply to (i) any deposit account for which the
Debtor, the depositary bank and the Secured Party have entered into a cash collateral
agreement specially negotiated among the Debtor, the depositary bank and the Secured Party
for the specific purpose set forth therein, (ii) a deposit account for which the Secured
Party is the depositary bank and is in automatic control, and (iii) deposit accounts
specially and exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of the Debtor’s salaried employees.

     4.3. Investment Property. If the Debtor shall at any time hold or acquire any
certificated securities, the Debtor shall forthwith endorse, assign and deliver the same to
the Secured Party, accompanied by such instruments of transfer or assignment duly executed
in blank as the Secured Party may from time to time specify. If any securities now or
hereafter acquired by the Debtor are uncertificated and are issued to the Debtor or its
nominee directly by the issuer thereof, the Debtor shall immediately notify the Secured
Party thereof and, at the Secured Party’s request and option, pursuant to an agreement in
form and substance satisfactory to the Secured Party, either (a) cause the issuer to agree
to comply with instructions from the Secured Party as to such securities, without further
consent of the Debtor or such nominee, or (b) arrange for the Secured Party to become the
registered owner of the securities. If any commodity interests or securities, whether
certificated or uncertificated, or other investment property now or hereafter acquired by
the Debtor are held by the Debtor or its nominee through a securities intermediary or
commodity intermediary, the Debtor shall immediately notify the Secured Party thereof and,
at the Secured Party’s request and option, pursuant to an agreement in form and substance
satisfactory to the Secured Party, either (i) cause such securities intermediary or (as the
case may be) commodity intermediary to agree to comply with entitlement orders or other
instructions from the Secured Party to such securities intermediary as to such securities or
other investment property, or (as the case

4

 

may be) to apply any value distributed on account of any commodity contract as directed by
the Secured Party to such commodity intermediary, in each case without further consent of
the Debtor or such nominee, or (ii) in the case of financial assets or other investment
property held through a securities intermediary, arrange for the Secured Party to become the
entitlement holder with respect to such investment property, with the Debtor being
permitted, only with the consent of the Secured Party, to exercise rights to withdraw or
otherwise deal with such investment property. The Secured Party agrees with the Debtor that
the Secured Party shall not give any such entitlement orders or instructions or directions
to any such issuer, securities intermediary or commodity intermediary, and shall not
withhold its consent to the exercise of any withdrawal or dealing rights by the Debtor,
unless an Event of Default has occurred and is continuing, or, after giving effect to any
such investment and withdrawal rights not otherwise permitted by the Loan Documents, would
occur.

     4.4. Collateral in the Possession of a Bailee. If any Collateral is at any
time in the possession of a bailee, warehouseman or elevator, the Debtor shall promptly
notify the Secured Party thereof and, at the Secured Party’s request and option, shall
promptly obtain an acknowledgement from the bailee, warehouseman or elevator, in form and
substance satisfactory to the Secured Party, that the bailee, warehouseman or elevator holds
such Collateral for the benefit of the Secured Party, and that such bailee, warehouseman or
elevator agrees to comply, without further consent of the Debtor, with instructions from the
Secured Party as to such Collateral, including, but not limited to, the delivery of such
Collateral to the Secured Party or as the Secured Party directs, or the payment of the sale
proceeds of such Collateral to the Secured Party, or as the Secured Party directs. The
Secured Party agrees with the Debtor that the Secured Party shall not give any such
instructions unless an Event of Default has occurred and is continuing or would occur after
taking into account any action by the Debtor with respect to the bailee, warehouseman or
elevator.

     4.5. Electronic Chattel Paper and Transferable Records. If the Debtor at any
time holds or acquires an interest in any electronic chattel paper or any “transferable
record,” as that term is defined in Section 201 of the federal Electronic Signatures in
Global and National Commerce Act (as hereafter amended), or in Section 16 of the Uniform
Electronic Transactions Act as in effect in any relevant jurisdiction, the Debtor shall
promptly notify the Secured Party thereof and, at the request and option of the Secured
Party, shall take such action as the Secured Party may reasonably request to vest in the
Secured Party control, under Section 9-105 of the Uniform Commercial Code, of such
electronic chattel paper or control under Section 201 of the federal Electronic Signatures
in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable
record. The Secured Party agrees with the Debtor that the Secured Party will arrange,
pursuant to procedures satisfactory to the Secured Party and so long as such procedures will
not result in the Secured Party’s loss of control, for the Debtor to make alterations to the
electronic chattel paper or transferable record permitted under UCC Section 9-105 or, as the
case may be, Section 201 of the federal Electronic Signatures in Global and National
Commerce Act or Section 16 of the Uniform Electronic Transactions

5

 

Act for a party in control to make without loss of control, unless an Event of Default has
occurred and is continuing or would occur after taking into account any action by the Debtor
with respect to such electronic chattel paper or transferable record.

     4.6. Letter-of-Credit Rights. If the Debtor is at any time a beneficiary under
a letter of credit, the Debtor shall promptly notify the Secured Party thereof and, at the
request and option of the Secured Party, the Debtor shall, pursuant to an agreement in form
and substance satisfactory to the Secured Party, either (i) arrange for the issuer and any
confirmer or other nominated person of such letter of credit to consent to an assignment to
the Secured Party of the proceeds of the letter of credit, or (ii) arrange for the Secured
Party to become the transferee beneficiary of the letter of credit, with the Secured Party
agreeing, in each case, that the proceeds of the letter to credit are to be applied to the
Obligations in such order and priority as the Secured Party.

     4.7 Commercial Tort Claims. If the Debtor shall at any time hold or acquire a
commercial tort claim, the Debtor shall immediately notify the Secured Party in a writing
signed by the Debtor of the particulars thereof and grant to the Secured Party in such
writing a security interest therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory to the Secured Party.

     4.8 Other Actions as to Any and All Collateral. The Debtor further agrees, at
the request and option of the Secured Party, to take any and all other actions the Secured
Party may determine to be necessary or useful for the attachment, perfection and first
priority of, and the ability of the Secured Party to enforce, the Secured Party’s security
interest in any and all of the Collateral, including, without limitation, (a) executing,
delivering and, where appropriate, filing financing statements and amendments relating
thereto under the Uniform Commercial Code, to the extent, if any, that the Debtor’s
signature thereon is required therefor, (b) causing the Secured Party’s name to be noted as
secured party on any certificate of title for a titled good if such notation is a condition
to attachment, perfection or priority of, or ability of the Secured Party to enforce, the
Secured Party’s security interest in such Collateral, (c) complying with any provision of
any statute, regulation or treaty of the United States as to any Collateral if compliance
with such provision is a condition to attachment, perfection or priority of, or ability of
the Secured Party to enforce, the Secured Party’s security interest in such Collateral, (d)
obtaining governmental and other third party waivers, consents and approvals in form and
substance satisfactory to Secured Party, including, without limitation, any consent of any
licensor, lessor or other person obligated on Collateral, (e) obtaining waivers from
mortgagees and landlords in form and substance satisfactory to the Secured Party and (f)
taking all actions under any earlier versions of the Uniform Commercial Code or under any
other law, as reasonably determined by the Secured Party to be applicable in any relevant
Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction.

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          4.9. Warehouse Receipts.

     (a) The Debtor has delivered or will deliver to the Secured Party any and all
documents, instruments and writings in any way relating to the Warehouse Receipts or in any
way relating to the property evidenced thereby. As long as this Agreement remains in
effect, the Debtor shall immediately deliver to the Secured Party any and all future
documents, instruments, or other writings applicable or in any way relating to the foregoing
in the Debtor’s possession. In the event that the Debtor is unable to deliver original
Warehouse Receipts, and such other documents, to the Secured Party at the time this
Agreement is executed, as required above, the Debtor agrees to deliver immediately such
Warehouse Receipts to the Secured Party upon issuance of the same.

     (b) The Debtor further agrees that the Secured Party shall have the right at any time,
and from time to time, whether or not one or more Event of Default exist under the Loan
Agreement, to demand that the Debtor immediately deliver to the Secured Party any and all
Warehouse Receipts held in the Debtor’s possession or control for or representing all or any
part of the Collateral that is then or may thereafter be issued in the name of the Debtor.
The Debtor unconditionally agrees to deliver such Warehouse Receipts to the Secured Party on
demand.

     (c) In addition to Warehouse Receipts, the Secured Party may require the Debtor from
time to time, one or more times, to deliver to the Secured Party such lists, descriptions
and designations of any applicable Collateral not represented by Warehouse Receipts as the
Secured Party may require to identify the nature, extent and location of the same.

     (d) The Debtor represents and warrants to the Secured Party that all of the Debtor’s
grain at any time, and from time to time, represented by Warehouse Receipts or included in
any list, description or designation referred to above, will at all times be owned by the
Debtor free and clear of all liens, encumbrances and security interests of any kind
whatsoever, excepting only the security interest of the Secured Party pursuant hereto.

     (e) As long as no Event of Default exists, the Debtor may sell or use in its operations
the property released by the Secured Party from or under Warehouse Receipts, as well as the
Debtor’s property not represented by Warehouse Receipts, in carrying on the Debtor’s
business in the ordinary course, substantially in the same manner as now conducted; but a
sale in the ordinary course of business shall not include any transfer or sale in
satisfaction, partial or complete, of a debt owed by the Debtor.

     4.10. Farm Products. After the occurrence of an Event of Default, the Debtor
shall not store, transfer or consign any farm products without the prior written consent of
the Secured Party. The Debtor shall not store, transfer or consign any farm products
without first obtaining a written acknowledgment from any person to whom physical possession
of any such farm products are delivered (a) of the Secured Party’s security interest in such
farm products, (b) that it holds possession of such farm products for the Secured Party’s
benefit, (c) that it will not issue negotiable documents with respect to

7

 

such farm products and (d) that it agrees to follow the Secured Party’s instructions as
to disposition of farm products upon its receipt of such instructions. The Debtor will
comply with the provisions of all federal, state or local government programs, agreements
and contracts to which the Debtor is a party.

     4.11. Proceeds. The Debtor shall transfer all proceeds of all Collateral into
the Debtor’s main operating account established and maintained by the Debtor with the
Secured Party, or in such other deposit account as required by the Secured Party. The
Debtor shall not grant any other person or entity a security interest, lien or other
encumbrance in or on such deposit account.

     5. Relation to Other Security Documents. The provisions of this Agreement supplement
the provisions of the Loan Agreement, Mortgage and other Loan Documents. Nothing contained in the
Loan Agreement, Mortgage or other Loan Documents shall derogate from any of the rights or remedies
of the Secured Party hereunder.

     6. Representations and Warranties Concerning Debtor’s Legal Status. The Debtor
represents and warrants to the Secured Party as follows: (a) the Debtor’s exact legal name is that
indicated on the first page and on the signature page hereof, (b) the Debtor is an organization of
the type, and is organized in the jurisdiction set forth on the first page of this Agreement, (c)
the Debtor’s tax identification number is 20-2327916 and the Debtor’s organizational identification
number is 2005021100241 or if left blank, then the Debtor has none, and (d) each of the Debtor’s
places of business and, if more than one, its chief executive office, as well as the Debtor’s
mailing address, if different, are listed in Schedule A attached to this Agreement and incorporated
herein by reference.

     7. Covenants Concerning Debtor’s Legal Status. The Debtor covenants with the Secured
Party as follows: (a) the Debtor will not change its name, its place of business or, if more than
one, chief executive office, or its mailing address or organizational identification number if it
has one, (b) if the Debtor does not have an organizational identification number and later obtains
one, the Debtor shall forthwith notify the Secured Party of such organizational identification
number, and (c) the Debtor will not change its type of organization, jurisdiction of organization
or other legal structure.

     8. Representations and Warranties Concerning Collateral, Etc. The Debtor further
represents and warrants to the Secured Party as follows: (a) the Debtor is the owner of the
Collateral, free from any right or claim or any person or any adverse lien, security interest or
other encumbrance, except for the security interest created by this Agreement and other liens
permitted by the Loan Agreement, (b) except as disclosed to the Secured Party, none of the account
debtors or other persons obligated on any of the Collateral is a governmental authority covered by
the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of
such Collateral, (c) the Debtor holds no commercial tort claim except as indicated on Schedule A
attached to this Agreement, and (d) the Debtor has at all times operated its business in compliance
with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all
applicable provisions of federal, state and local statutes and ordinances dealing with the control,
shipment, storage or disposal of hazardous materials or substances.

8

 

     9. Covenants Concerning Collateral, Etc. The Debtor further covenants with the
Secured Party as follows: (a) the Collateral, to the extent not delivered to the Secured Party
pursuant to Section 4, will be kept at those locations listed on Schedule A and the Debtor will not
move any Collateral to any location not shown in Schedule A without providing at least thirty (30)
days prior written notice to the Secured Party, which notice shall include the new location, (b)
except for the security interest herein granted and liens permitted by the Loan Agreement, the
Debtor shall be the owner of the Collateral free from any right or claim of any other person, lien,
security interest or other encumbrance, and the Debtor shall defend the same against all claims and
demands of all persons at any time claiming the same or any interests therein adverse to the
Secured Party, (c) the Debtor shall not pledge, mortgage or create, or suffer to exist any right of
any person in or claim by any person to the Collateral, or any security interest, lien or
encumbrance in the Collateral in favor of any person, other than the Secured Party except for liens
permitted by the Loan Agreement, (d) the Debtor will keep the Collateral in good order and repair
and will not use the same in violation of law or any policy of insurance thereon, (e) the Debtor
will permit the Secured Party, or its designee, to inspect and audit the Collateral at any
reasonable time, wherever located, according to the terms of the Loan Agreement, (f) the Debtor
will pay promptly when due all taxes, assessments, governmental charges and levies upon the
Collateral according to the terms of the Loan Agreement or incurred in connection with the use or
operation of such Collateral or incurred in connection with this Agreement, (g) the Debtor will
continue to operate, its business in compliance with all applicable provisions of the federal Fair
Labor Standards Act, as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous
materials or substances, (h) the Debtor will apply for all subsidies, price support payments,
guaranty payments and other payments of any kind available to the Debtor under any federal, state
or local governmental program relating to the use of corn to produce ethanol, the production of
ethanol, the sale of ethanol and any other activities of the Debtor, will file for all tax credits
and deductions available for any of the foregoing, and will take no action, or omit to take any
action, which would preclude or jeopardize in any manner the Debtor’s ability to participate in any
such payments, programs, tax credits or deductions and (i) the Debtor will not the Debtor will not
discount, factor, sell or otherwise dispose, or offer to sell or otherwise dispose, of any of the
Collateral, including, but not limited to, instruments, general intangibles, tangible or electronic
chattel paper, promissory notes and/or accounts, or any interest therein except for (i) sales and
leases of inventory in the ordinary course of business and (ii) so long as no Event of Default has
occurred and is continuing, sales or other dispositions of obsolescent items of equipment
consistent with past practices; provided, however, that permitted sales under this Section are also
permitted under the Loan Agreement. In the event that such sales are not permitted under the Loan
Agreement, then such sales are also not permitted hereunder. In addition, the Debtor will only
store grain owned by the Debtor not evidenced by a Warehouse Receipt in facilities owned by the
Debtor at locations set forth on Schedule A.

     10. Insurance.

     10.1. Maintenance of Insurance. The Debtor will maintain the insurance
required in the Loan Agreement. All such insurance covering the Collateral shall be

9

 

payable to the Secured Party as loss payee under a “standard” or “New York” loss payee
clause.

     10.2. Insurance Proceeds. The proceeds of any casualty insurance in respect of
any casualty loss of any of the Collateral shall, subject to the rights, if any, of other
parties with an interest having priority in the property covered thereby, (i) so long as no
Event of Default has occurred and is continuing, the damaged Collateral can be economically
repaired or replaced in the sole discretion of the Secured Party and the conditions
precedent in the Loan Agreement with respect to the disbursement of insurance proceeds to
the Debtor have been satisfied, be disbursed to the Debtor for direct application by the
Debtor solely to the repair or replacement of the Debtor’s property so damaged or destroyed,
and (ii) in all other circumstances, be held by the Secured Party as cash collateral for the
Obligations. Subject to the foregoing, the Secured Party may, at its sole option, disburse
from time to time all or any part of such proceeds so held as cash collateral, upon such
terms and conditions as the Secured Party may reasonably prescribe, for direct application
by the Debtor solely to the repair or replacement of the Debtor’s property so damaged or
destroyed, or the Secured Party may apply all or any part of such proceeds to the
Obligations with the amount of the Loans, as described in the Loan Agreement (if not then
terminated) being reduced by the amount so applied to the Obligations.

     10.3. Continuation of Insurance. All policies of insurance shall provide for
at least 20 days prior written cancellation notice to the Secured Party. In the event of
failure by the Debtor to provide and maintain insurance as herein provided, the Secured
Party may, at its option, provide such insurance and charge the amount thereof to the
Debtor, subject to the terms of the Loan Agreement. The Debtor shall furnish the Secured
Party with certificates of insurance and policies evidencing compliance with the foregoing
insurance provision.

     11. Collateral Protection Expenses; Preservation of Collateral.

     11.1. Expenses Incurred by Secured Party. In the Secured Party’s discretion,
if the Debtor fails to do so, the Secured Party may discharge taxes and other encumbrances
at any time levied or placed on any of the Collateral, maintain any of the Collateral, make
repairs thereto and pay any necessary filing fees or insurance premiums. The Debtor agrees
to reimburse the Secured Party on demand for all expenditures so made. The Secured Party
shall have no obligation to the Debtor to make any such expenditures, nor shall the making
thereof be construed as the waiver or cure of any Event of Default.

     11.2. Secured Party’s Obligations and Duties. Anything herein to the contrary
notwithstanding, the Debtor shall remain obligated and liable under each contract or
agreement comprised in the Collateral to be observed or performed by the Debtor thereunder.
The Secured Party shall not have any obligation or liability under any such contract or
agreement by reason of or arising out of this Agreement or the receipt by the Secured Party
of any payment relating to any of the Collateral, nor shall the Secured Party be obligated
in any manner to perform any of the obligations of the Debtor under or

10

 

pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by the Secured Party in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or agreement, to present
or file any claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to the Secured Party or to which the Secured
Party may be entitled at any time or times. The Secured Party’s sole duty with respect to
the custody, safe keeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Uniform Commercial Code of the State or otherwise, shall be to
deal with such Collateral in the same manner as the Secured Party deals with similar
property for its own account.

     12. Securities and Deposits. The Secured Party may at any time following and during
the continuance of an Event of Default, at its option, transfer to itself or any nominee any
securities constituting Collateral, receive any income thereon and hold such income as additional
Collateral or apply it to the Obligations. Whether or not any Obligations are due, the Secured
Party may following and during the continuance of an Event of Default demand, sue for, collect, or
make any settlement or compromise which it deems desirable with respect to the Collateral.
Regardless of the adequacy of Collateral or any other security for the Obligations, any deposits or
other sums at any time credited by or due from the Secured Party to the Debtor may at any time be
applied to or set off against any of the Obligations.

     13. Notification to Account Debtors and Other Persons Obligated on Collateral. If an
Event of Default shall have occurred and be continuing, the Debtor shall, at the request and option
of the Secured Party, notify account debtors and other persons obligated on any of the Collateral
of the security interest of the Secured Party in any account, chattel paper, general intangible,
instrument or other Collateral and that payment thereof is to be made directly to the Secured Party
or to any financial institution designated by the Secured Party as the Secured Party’s agent
therefor, and the Secured Party may itself, if an Event of Default shall have occurred and be
continuing, without notice to or demand upon the Debtor, so notify account debtors and other
persons obligated on Collateral. After the making of such a request or the giving of any such
notification, the Debtor shall hold any proceeds of collection of accounts, chattel paper, general
intangibles, instruments and other Collateral received by the Debtor as trustee for the Secured
Party without commingling the same with other funds of the Debtor and shall turn the same over to
the Secured Party in the identical form received, together with any necessary endorsements or
assignments. The Secured Party shall apply the proceeds of collection of accounts, chattel paper,
general intangibles, instruments and other Collateral received by the Secured Party to the
Obligations, such proceeds to be immediately credited after final payment in cash or other
immediately available funds of the items giving rise to them.

     14. Power of Attorney.

     14.1. Appointment and Powers of Secured Party. The Debtor hereby irrevocably
constitutes and appoints the Secured Party and any officer or agent thereof, with full power
of substitution, as its true and lawful attorneys-in-fact with full irrevocable power and
authority in the place and stead of the Debtor or in the Secured Party’s own name, for the
purpose of carrying out the terms of this Agreement, to take

11

 

any and all appropriate action and to execute any and all documents and instruments that may
be necessary or useful to accomplish the purposes of this Agreement and, without limiting
the generality of the foregoing, hereby gives said attorneys the power and right, on behalf
of the Debtor, without notice to or assent by the Debtor, to do the following:

     (a) upon the occurrence and during the continuance of an Event of Default,
generally to sell, transfer, pledge, make any agreement with respect to or otherwise
dispose of or deal with any of the Collateral in such manner as is consistent with
the Uniform Commercial Code of the State and as fully and completely as though the
Secured Party were the absolute owner thereof for all purposes, and to do, at the
Debtor’s expense, at any time, or from time to time, all acts and things which the
Secured Party deems necessary or useful to protect, preserve or realize upon the
Collateral and the Secured Party’s security interest therein, in order to effect the
intent of this Agreement, all at least as fully and effectively as the Debtor might
do, including, without limitation, (i) the filing and prosecuting of registration
and transfer applications with the appropriate federal, state, local or other
agencies or authorities with respect to trademarks, copyrights and patentable
inventions and processes, (ii) upon written notice to the Debtor, the exercise of
voting rights with respect to voting securities, which rights may be exercised, if
the Secured Party so elects, with a view to causing the liquidation of assets of the
issuer of any such securities, and (iii) the execution, delivery and recording, in
connection with any sale or other disposition of any Collateral, of the
endorsements, assignments or other instruments of conveyance or transfer with
respect to such Collateral; and

     (b) to the extent that the Debtor’s authorization given in Section 3 is not
sufficient, to file such financing statements with respect hereto, with or without
the Debtor’s signature, or a photocopy of this Agreement in substitution for a
financing statement, as the Secured Party may deem appropriate and to execute in the
Debtor’s name such financing statements and amendments thereto and continuation
statements which may require the Debtor’s signature.

     14.2. Ratification by Debtor. To the extent permitted by law, the Debtor
hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue
hereof. This power of attorney is a power coupled with an interest and is irrevocable.

     14.3. No Duty on Secured Party. The powers conferred on the Secured Party
hereunder are solely to protect its interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. The Secured Party shall be accountable only for
the amounts that it actually receives as a result of the exercise of such powers, and
neither it nor any of its officers, directors, employees or agents shall be responsible to
the Debtor for any act or failure to act, except for the Secured Party’s own gross
negligence or willful misconduct.

     15. Rights and Remedies. If an Event of Default shall have occurred and be continuing
beyond any applicable grace or notice and cure period provided for in the Loan

12

 

Agreement, the Secured Party, without any other notice to or demand upon the Debtor have in any
jurisdiction in which enforcement hereof is sought, in addition to all other rights and remedies,
whether conferred in the Loan Agreement or at law or in equity, the rights and remedies of a
secured party under the Uniform Commercial Code of the State and any additional rights and remedies
which may be provided to a secured party in any jurisdiction in which Collateral is located,
including, without limitation, the right to take possession of the Collateral, and for that purpose
the Secured Party may, so far as the Debtor can give authority therefor, enter upon any premises on
which the Collateral may be situated and remove the same therefrom. The Secured Party may in its
discretion require the Debtor to assemble all or any part of the Collateral at such location or
locations within the jurisdiction(s) of the Debtor’s principal office(s) or at such other locations
as the Secured Party may reasonably designate. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized market, the Secured
Party shall give to the Debtor at least ten (10) days prior written notice of the time and place of
any public sale of Collateral or of the time after which any private sale or any other intended
disposition is to be made. The Debtor hereby acknowledges that ten (10) days prior written notice
of such sale or sales shall be reasonable notice. In addition, the Debtor waives any and all
rights that it may have to a judicial hearing in advance of the enforcement of any of the Secured
Party’s rights and remedies hereunder, including, without limitation, its right following an Event
of Default to take immediate possession of the Collateral and to exercise its rights and remedies
with respect thereto.

     16. Standards for Exercising Rights and Remedies. To the extent that applicable law
imposes duties on the Secured Party to exercise remedies in a commercially reasonable manner, the
Debtor acknowledges and agrees that it is not commercially unreasonable for the Secured Party (a)
to fail to incur expenses reasonably deemed significant by the Secured Party to prepare Collateral
for disposition or otherwise to fail to complete raw material or work in process into finished
goods or other finished products for disposition, (b) to fail to obtain third party consents for
access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to
obtain governmental or third party consents for the collection or disposition of Collateral to be
collected or disposed of, (c) to fail to exercise collection remedies against account debtors or
other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse
claims against Collateral, (d) to exercise collection remedies against account debtors and other
persons obligated on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through publications or media
of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact
other persons, whether or not in the same business as the Debtor, for expressions of interest in
acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the collateral is of a specialized nature,
(h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of doing so, or that
match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements
to insure the Secured Party against risks of loss, collection or disposition of Collateral or to
provide to the Secured Party a guaranteed return from the collection or disposition of Collateral,
or (l) to the extent deemed appropriate by the Secured Party, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist the Secured Party in the

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collection or disposition of any of the Collateral. The Debtor acknowledges that the purpose of
this Section 16 is to provide non-exhaustive indications of what actions or omissions by the
Secured Party would fulfill the Secured Party’s duties under the Uniform Commercial Code or other
law of the State or any other relevant jurisdiction in the Secured Party’s exercise of remedies
against the Collateral and that other actions or omissions by the Secured Party shall not be deemed
to fail to fulfill such duties solely on account of not being indicated in this Section 16.
Without limitation upon the foregoing, nothing contained in this Section 16 shall be construed to
grant any rights to the Debtor or to impose any duties on the Secured Party that would not have
been granted or imposed by this Agreement or by applicable law in the absence of this Section 16.

     17. No Waiver by Secured Party, Etc. The Secured Party shall not be deemed to have
waived any of its rights or remedies in respect of the Obligations or the Collateral unless such
waiver shall be in writing and signed by the Secured Party. No delay or omission on the part of
the Secured Party in exercising any right or remedy shall operate as a waiver of such right or
remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar
to or waiver of any right or remedy on any future occasion. All rights and remedies of the Secured
Party with respect to the Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly, alternatively,
successively or concurrently at such time or at such times as the Secured Party deems expedient.

     18. Suretyship Waivers by Debtor. The Debtor waives demand, notice, protest, notice
of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or
delivered or other action taken in reliance hereon and all other demands and notices of any
description. With respect to both the Obligations and the Collateral, the Debtor assents to any
extension or postponement of the time of payment or any other indulgence, to any substitution,
exchange or release of or failure to perfect any security interest in any Collateral, to the
addition or release of any party or person primarily or secondarily liable, to the acceptance of
partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such
manner and at such time or times as the Secured Party may deem advisable. The Secured Party shall
have no duty as to the collection or protection of the Collateral or any income therefrom, the
preservation of rights against prior parties, or the preservation of any rights pertaining thereto
beyond the safe custody thereof as set forth in Section 11.2. The Debtor further waives any and
all other suretyship defenses.

     19. Marshalling. The Secured Party shall not be required to marshal any present or
future collateral security (including but not limited to the Collateral) for, or other assurances
of payment of, the Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of its rights and remedies hereunder and in
respect of such collateral security and other assurances of payment shall be cumulative and in
addition to all other rights and remedies, however existing or arising. To the extent that it
lawfully may, the Debtor hereby agrees that it will not invoke any law relating to the marshalling
of collateral which might cause delay in or impede the enforcement of the Secured Party’s rights
and remedies under this Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any of the

14

 

Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully
may, the Debtor hereby irrevocably waives the benefits of all such laws.

     20. Proceeds of Dispositions; Expenses. The Debtor shall pay to the Secured Party on
demand any and all expenses, including reasonable attorneys’ fees and disbursements, incurred or
paid by the Secured Party in protecting, preserving or enforcing the Secured Party’s rights and
remedies under or in respect of any of the Obligations or any of the Collateral. After deducting
all of said expenses, the residue of any proceeds of collection or sale or other disposition of the
Collateral shall, to the extent actually received in cash, be applied to the payment of the
Obligations in such order or preference as the Secured Party may determine, proper allowance and
provision being made for any Obligations not then due. Upon the final payment and satisfaction in
full of all of the Obligations and after making any payments required by Sections 9-608(a)(1)(C) or
9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall be returned to the
Debtor. In the absence of final payment and satisfaction in full of all of the Obligations, the
Debtor shall remain liable for any deficiency.

     21. Overdue Amounts. Until paid, all amounts due and payable by the Debtor hereunder
shall be a debt secured by the Collateral and shall bear, whether before or after judgment,
interest at the rate of interest for overdue principal set forth in the Loan Agreement.

     22. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED TO TAKE EFFECT
AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEBRASKA. The Debtor agrees that any action or claim arising out of, or any dispute in
connection with, this Agreement, any rights, remedies, obligations, or duties hereunder, or the
performance or enforcement hereof or thereof, may be brought in the courts of the State or any
federal court sitting therein and consents to the non-exclusive jurisdiction of such court and to
service of process in any such suit being made upon the Debtor by mail at the address specified in
the notice provision of the Loan Agreement. The Debtor hereby waives any objection that it may now
or hereafter have to the venue of any such suit or any such court or that such suit is brought in
an inconvenient court.

     23. Waiver of Jury Trial. THE DEBTOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS,
REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF.
Except as prohibited by law, the Debtor waives any right which it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual damages. The Debtor (i)
certifies that neither the Secured Party nor any representative, agent or attorney of the Secured
Party has represented, expressly or otherwise, that the Secured Party would not, in the event of
litigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement, and
(ii) acknowledges that, in entering into the Loan Agreement and the other Loan Documents to which
the Secured Party is a party, the Secured Party is relying upon, among other things, the waivers
and certifications contained in this Section 23.

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     24. Miscellaneous. The headings of each section of this Agreement are for convenience
only and shall not define or limit the provisions thereof. This Agreement and all rights and
obligations hereunder shall be binding upon the Debtor and its respective successors and assigns,
and shall inure to the benefit of the Secured Party and its successors and assigns. If any term of
this Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other
terms hereof shall in no way be affected thereby, and this Agreement shall be construed and be
enforceable as if such invalid, illegal or unenforceable term had not been included herein. The
Debtor acknowledges receipt of a copy of this Agreement.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, intending to be legally bound, the Debtor has caused this Agreement to be
duly executed as of the date first above written.

	 	 	 	 	 	 	 
	 	 	CARDINAL ETHANOL, LLC, an Indiana limited

liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Troy President	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Troy Prescott, President	 	 
	 
	 	 	 	 	 	 
	 	 	Accepted:	 	 
	 
	 	 	 	 	 	 
	 	 	FIRST NATIONAL BANK OF OMAHA, a

national banking association,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Fallon Savage	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Fallon Savage, Commercial Loan Officer	 	 

17

 

CERTIFICATE OF ACKNOWLEDGMENT

	 	 	 	 	 	 	 	 	 
	STATE OF INDIANA

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	ss.	 	 
	COUNTY OF Marion

	 	 	)	 	 	 	 	 

     Before me, the undersigned, a Notary Public in and for the county aforesaid, on this
19th day of December, 2006, personally appeared Troy Prescott, to me known personally,
and who, being by me duly sworn, deposes and says that he is the President of Cardinal Ethanol,
LLC, and that said instrument was signed on behalf of said limited liability company by authority
of its Board of Directors, and said officers acknowledged said instrument to be the free act and
deed of said limited liability company.

	 	 	 	 	 
	 

	 	     /s/ Linda L. Schmidt
	 	 
	 

	 	 	 	 
	 

	 	Notary Public	 	 
	 
	 	 	 	 
	My commission expires:
	 	 	 	 

______________________

SEAL                      OFFICIAL SEAL

LINDA L. SCHMIDT

NOTARY PUBLIC INDIANA

RESIDENT OF

MARION COUNTY

MY COMMISSION EXPIRES: JUNE 29, 2011

18

 

SCHEDULE A

Locations/Commercial Tort Claims

	 	I.	 	Debtor Locations:

2 OMCO Square, Suite 201

Winchester, Indiana 47394

The Land and Improvements as such terms are defined in the Mortgage

	 	II.	 	Commercial Tort Claims:

None

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]