Document:

exv4w3

 

Exhibit 4.3

ESCROW AGREEMENT

     THIS ESCROW AGREEMENT (this “Agreement”) is made this ___day of
                     , 2006, by and between Cardinal Ethanol, LLC an Indiana limited liability
company (“Cardinal Ethanol”) and                      as escrow agent (the “Escrow Agent”).

W I T N E S S E T H:

     WHEREAS, Cardinal Ethanol proposes to offer a minimum of 9,000 and a maximum of 16,400 of its
Membership Units (the “Units”) at a price of $5,000 per Unit, with a minimum purchase of Four (4)
Units in an offering registered with the Securities and Exchange Commission and in the states of
Alabama, Florida and Georgia, and possibly offered in other states pursuant to state securities
registration exemptions and under the provisions of the Securities Act of 1933, as amended (the
“Offering”);

     WHEREAS, Cardinal Ethanol will file a registration statement to register the Units with the
Securities and Exchange Commission, the States of Florida, Georgia, Illinois, Indiana, Kentucky
Michigan, Ohio and Tennessee, and possibly other states;

     WHEREAS, Cardinal Ethanol will allow investors in the Offering to deliver the purchase price
of the subscribed Units in installments; and

     WHEREAS, Cardinal Ethanol desires to comply with the requirements of federal and state
securities laws and regulations, and desires to protect the investors in the Offering by providing,
under the terms and conditions herein set forth, for the return to subscribers of the money which
they may pay on account of purchases of Units in the Offering if the Minimum Escrow Deposit
(hereinafter defined) is not deposited with the Escrow Agent.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good
and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties agree
as follows:

     1. Acceptance of Appointment.                                          hereby agrees to act as Escrow Agent under this
Agreement. The Escrow Agent shall have no duty to enforce any provision hereof requiring
performance by any other party hereunder.

     2. Establishment of Escrow Account. An escrow account (the “Escrow Account”) is
hereby established with the Escrow Agent for the benefit of the investors in the Offering. Except
as specifically provided in this Agreement, the Escrow Account shall be created and maintained
subject to the customary rules and regulations of the Escrow Agent pertaining to such accounts.

     3. Ownership of Escrow Account. Until such time as the funds deposited in the Escrow
Account (the “Deposited Funds”) shall equal the Minimum Escrow Deposit (as hereinafter defined),
all funds deposited in the Escrow Account by Cardinal Ethanol shall not become the property of
Cardinal Ethanol or be subject to the debts of Cardinal Ethanol or any other person but

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shall be held by the Escrow Agent solely for the benefit of the investors who have purchased Units
in the Offering.

     4. Deposit of Proceeds. All proceeds from sales of Units in the Offering shall be
delivered by Cardinal Ethanol to the Escrow Agent, within forty-eight hours of the receipt thereof
from investors, endorsed (if appropriate) to the order of the Escrow Agent, together with an
appropriate written statement setting forth name, address and social security number of each person
purchasing Units, the number of Units purchased, and the amount paid by each such purchaser. Any
such proceeds deposited with the Escrow Agent in the form of uncollected checks shall be promptly
presented by the Escrow Agent for collection through customary banking and clearing house
facilities. As the proceeds of each sale are deposited with the Escrow Agent, Cardinal Ethanol
shall reserve the number of Units confirmed to the purchaser thereof in connection with such sale.
All such deposited proceeds are referred to herein as the “Escrow Funds”.

     5. Investment of Escrow Account. The Escrow Funds shall be credited by the Escrow
Agent and recorded in the Escrow Account. The Escrow Agent shall be permitted, and is hereby
authorized to deposit, transfer, hold and invest all funds received under this Agreement, including
principal and interest, in those investments directed, in writing by Cardinal Ethanol. The Escrow
Agent is hereby authorized to invest Escrow Funds in the                           for temporary investment without written direction. Any interest received by
the Escrow Agent with respect to the Escrow Funds shall be paid to Cardinal Ethanol, or the
investors, as indicated elsewhere in this Agreement .

     6. Termination of Escrow. This Agreement and the Escrow created hereunder shall
be terminated as provided in paragraph 7 hereof or as of the date in calendar year 2007 (the
“Termination Date”), which is one year and one day following the date in calendar year 2006 upon
which the Securities and Exchange Commission authorizes the Offering (the “Offering’s Effective
Date”), provided; however, that if prior to Termination Date, the Company has sold membership units
equal to the minimum offering amount and the Company has advised the purchasers of those membership
units to remit to the Escrow Agent the balance of the purchase price, then the Escrow may continue
beyond the Termination Date until all Funds have been paid and the conditions for releasing the
Funds have been satisfied. In no event shall this date be later than three (3) months following
the Termination Date. The Company shall notify Escrow Agent of the Offering’s Effective Date
within thirty (30) days of the receipt of notice of the Offering’s Effective Date from the
Securities and Exchange Commission.

     7. Disposition of Escrow Funds. The Escrow Agent shall have the following duties and
obligations under this Agreement:

     A. The Escrow Agent shall send a written notice acknowledging the receipt of the
Deposited Funds every seven days to the Company.

     B. The Escrow Agent shall give the Company prompt written notice when the Deposited
Funds equal $4,500,000 (exclusive of interest). Following receipt of such notice, the
Company will advise the purchasers of Units to remit to the Escrow Agent the balance of the
purchase price within thirty (30) days. Thereafter, Escrow Agent shall give the

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Company written notice acknowledging the receipt of the Deposited Funds every seven
days. The Escrow Agent shall give the Company prompt written notice when the Deposited
Funds total $45,000,000 (exclusive of interest).

     C. At the time (and in the event) that: (a) the Deposited Funds shall, during the term
of this Agreement, equal $45,000,000 in subscription proceeds (exclusive of interest) (the
“Minimum Escrow Deposit”); (b) the Escrow Agent shall have received written confirmation
from the Company that the Company has obtained a written debt financing commitment for debt
financing ranging from a minimum of $67,140,000 to a maximum of $104,140,000; (c) the
Company has affirmatively elected in writing to terminate this Agreement; and (d) the Escrow
Agent shall have provided to each state securities department in which the Company has
registered its securities for sale, as communicated to the Escrow Agent by the Company, an
affidavit stating that the foregoing requirements (a), (b) and (c) of this subsection 7C
have been satisfied, then this Agreement shall terminate, and the Escrow Agent shall
promptly disburse the funds on deposit, including interest, to the Company to be used in
accordance with the provisions set out in the Registration Statement. The Company will
deliver a copy of the Registration Statement to the Escrow Agent upon execution of this
Agreement. The Escrow Agent will have no responsibility to examine the Registration
Statement with regard to the Escrow Account or otherwise and the Registration Statement
shall contain a provision to such effect. Upon the making of such disbursement, the Escrow
Agent shall be completely discharged and released of any and all further responsibilities
hereunder.

     D. In the event the Deposited Funds do not equal or exceed the Minimum Escrow Deposit
on or before the Termination Date or if the Company has not received a written debt
financing commitment as described herein on or before the Termination Date, the Escrow Agent
shall return to each of the purchasers of the Units in the Offering, as promptly as possible
after such Termination Date and on the basis of its records pertaining to the Escrow
Account: (a) the sum which each purchaser initially paid in on account of purchases of the
Units in the Offering and (b) each purchaser’s portion of the total interest earned on the
Escrow Account as of the Termination Date, (c) reduced by the transaction fees provided in
paragraph 10 hereof. Computation of any purchaser’s share of the net interest earned will
be a weighted average based on the proportion of such purchaser’s deposit in the Escrow
Account from the Offering to all such purchasers’ deposits held by the Escrow Agent and upon
the length of time in days such deposit was held in the Escrow Account as compared to all
such deposits. All computations with respect to each purchaser’s allocable share of net
interest shall be made by the Escrow Agent, which determinations shall be final and
conclusive. Any amount paid or payable to a purchaser pursuant to this paragraph shall be
deemed to be the property of such purchaser, free and clear of any and all claims of the
Company or its agents or creditors; and the respective purchases of the Units made and
entered into in the Offering shall thereupon be deemed, ipso facto, to be cancelled without
any further liability of the purchasers or any of them to pay for the Units purchased. At
such time as the Escrow Agent shall have made all the payments called for in this paragraph,
the Escrow Agent shall be completely discharged and released of any and all further
responsibilities hereunder, and the Units reserved (as provided in paragraph 4) shall be
released from such reservation, except that Escrow Agent shall be required to prepare and

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issue a single IRS Form 1099 to each investor in the event that funds are returned to
investors.

     8. Agreement with Escrow Agent. To induce Escrow Agent to act hereunder, it is agreed
by Cardinal Ethanol that:

     A. The sole duty of the Escrow Agent, other than as herein specified, shall be to
receive the Escrow Funds and hold them subject to release, in accordance herewith, and the
Escrow Agent shall be under no duty to determine whether Cardinal Ethanol is complying with
the requirements of this Agreement in tendering to the Escrow Agent said proceeds of the
sale of said Units. The Escrow Agent may conclusively rely upon and shall be protected in
acting upon any statement, certificate, notice, request, consent, order or other document
believed by it to be genuine and to have been signed or presented by the proper party or
parties. The Escrow Agent shall have no duty or liability to verify any such statement,
certificate, notice, request, consent, order or other document, and its sole responsibility
shall be to act only as expressly set forth in this Agreement. The Escrow Agent shall be
under no obligation to institute or defend any action, suit or proceeding in connection with
this Agreement unless first indemnified to its satisfaction. The Escrow Agent may consult
counsel in respect of any question arising under this Agreement and the Escrow Agent shall
not be liable for any action taken or omitted in good faith upon advice of such counsel.

     B. Cardinal Ethanol hereby indemnifies and holds harmless the Escrow Agent from and
against any and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees, which the Escrow Agent may suffer or incur by reason of
any action, claim or proceeding brought against the Escrow Agent arising out of or relating
in any way to this Agreement or any transaction to which this Agreement relates unless such
action, claim or proceeding is the result of the gross negligence or willful misconduct of
the Escrow Agent.

     9. Resignation and Removal of Escrow Agent Successors. The Escrow Agent may resign
upon thirty (30) days advance written notice to Cardinal Ethanol. If a successor Escrow Agent is
not appointed within the 30-day period following such notice, Escrow Agent may petition any court
of competent jurisdiction to name a successor Escrow Agent. Any commercial banking institution or
trust company with which Escrow Agent may merge or consolidate, and any commercial banking
institution or trust company to which Escrow Agent transfers all or substantially all of its
corporate trust business shall be the successor Escrow Agent without further act.

     10. Fees and Expenses of Escrow Agent. Cardinal Ethanol agrees to pay the Escrow
Agent the fees specified in the Escrow Agent’s fee schedule attached hereto as Exhibit A, in the
manner set forth therein, unless otherwise agreed to by the parties in writing. The parties
further agree that such fees shall be paid from interest on the escrow account only and not from
principal. In the event the interest on the escrow account is insufficient to satisfy the full
amount of fees payable hereunder, Cardinal Ethanol shall be solely responsible for the payment of
such fees and the Escrow Agent shall not seek payment of the fees from investors or apply any
principal deposited by investors in the escrow account against such fees. The fee agreed upon
herein is intended as full

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consideration for the Escrow Agent’s services as contemplated by this Agreement; provided,
however, that in the event the Escrow Agent renders any material service not contemplated
in this Agreement or there is any assignment of interest in the subject matter of this Agreement,
or any material modification hereof; or if any material controversy arises hereunder, or the Escrow
Agent is made a party to any litigation pertaining to this Agreement, or the subject matter hereof,
then the Escrow Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all costs and expenses, including reasonable attorney’s fees, occasioned by any
delay, controversy, litigation or event, and the same shall be recoverable from Cardinal Ethanol,
but not from the escrow account.

     11. Notices. All notices, requests, demands, and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of
service if served personally on the party to whom notice is to be given, (b) on the day of
transmission if sent by facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission, (c) on the next day
on which such deliveries are made in Camilla, Georgia, when delivery is to Federal Express or
similar overnight courier or the Express Mail service maintained by the United States Postal
Service, or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and properly addressed,
return receipt requested, to the party as follows:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	If to Escrow Agent:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Attn:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Fax:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	Phone: 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	If to Cardinal Ethanol:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Cardinal Ethanol, LLC	 	 
	 	 	 	 	2 OMCO Square, Suite 201	 	 
	 	 	 	 	Winchester, Indiana 47394	 	 
	 	 	 	 	Attn: Troy Prescott, Chairman	 	 
	 	 	 	 	Fax: (765) 584-2209	 	 
	 	 	 	 	Phone: (765) 584-2209	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	with a required copy to:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Brown, Winick, Graves, Gross, Baskerville and Schoenebaum, P.L.C.
	 	 	 	 	666 Grand Avenue, Suite 2000	 	 
	 	 	 	 	Des Moines, IA 50309	 	 
	 	 	 	 	Attention: Miranda L. Hughes	 	 

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	 	 	 	 	Fax: (515) 283-0231
	 	 
	 	 	 	 	Phone: (515) 242-2400	 	 

     12. Governing Law. This Agreement shall be construed, performed, and enforced in
accordance with, and governed by, the internal laws of the State of Indiana, without giving effect
to the principles of conflict of laws thereof.

     13. Successors and Assigns. Except as otherwise provided in this Agreement, no party
hereto shall assign this Agreement or any rights or obligations hereunder without the prior written
consent to the other parties hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect. This Agreement shall inure to the benefit of and
shall be binding upon the successors and permitted assigns of the parties hereto.

     14. Severability. In the event that any part of this Agreement is declared by any
court or other judicial or administrative body to be null, void, or unenforceable, said provision
shall survive to the extent it is not so declared, and all of the other provisions of this
Agreement shall remain in full force and effect.

     15. Further Assurances. Each of the parties shall execute such documents and other
papers and take such further actions, as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.

     16. Amendments. This Agreement may be amended or modified, and any of the terms,
covenants, representations, warranties, or conditions hereof may be waived, only by a written
instrument executed by the parties hereto, or in the case of a waiver, by the party waiving
compliance. Any waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation, or warranty contained in the Agreement, in any one or more instances,
shall not be deemed to be nor construed as further or continuing waiver of any such conditions, or
of the breach of any other provision, term, covenant, representation, or warranty of this
Agreement.

     17. Entire Agreement. This Agreement contains the entire understanding among the
parties hereto with respect to the escrow contemplated hereby and supersedes and replaces all prior
and contemporaneous agreements and understandings, oral or written, with regard to such escrow.

     18. Section Headings. The section headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this Agreement.

     19. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one and the same
instrument.

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IN WITNESS WHEREOF, the parties hereto have hereunto affixed their signatures as of the day and
year first written above.

	 	 	 	 	 	 	 	 	 
	Cardinal Ethanol:	 	 	 	ESCROW AGENT

	 
	 	 	 	 	 	 	 	 
	CARDINAL ETHANOL, LLC	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:  	 	 
	 

	 	 
	 	 	 	 	 
	 

	 	Troy Prescott, Chairman
	 	 	 	 	 	(Name)
	 

	 	 	 	 	 	Title:	 
	 

	 	 	 	 	 	 	 	 

7exv10w1

 

Exhibit 10.1

LETTER OF INTENT

	 	 	 
	Date:

	 	June 13, 2005
	 
	 	 
	Parties:

	 	Fagen, Inc., a Minnesota Corporation, of Granite Falls, MN
(“Fagen”) and Indiana Ethanol, LLC, an Indiana limited liability
company of Winchester, Indiana (“Owner”)

WHEREAS, Owner is an entity organized to facilitate the development and building of a locally-owned
fuel ethanol plant near Winchester, Indiana (the “Facility” or “Project”); and

WHEREAS, Fagen is an engineering and contstruction firm capable of providing development
assistance, as well as designing and constructing the Facility being considered by Owner.

NOW, THEREFORE, in consideration of the promises and mutual covenants set forth herein, Owner and
Fagen agree to use best efforts in jointly developing this Project under the following terms:

     1. Fagen agrees to provide Owner with preliminary Design-Build services as described
in this Letter of Intent as necessary to establish a contract price for designing and
constructing the Facility and to define the Facility in adequate detail to determine if the
Project is feasible and to obtain financing.

     Owner agrees that Fagen will Design-Build the Facility if determined by Owner to be
feasible and if adequate financing is obtained. Should Owner choose to develop or pursue a
relationship with a company other than Fagen to provide the preliminary engineering or
design-build services for the project, then Owner shall reimburse Fagen for all expenses
Fagen has incurred in connection with the Project based upon Fagen’s standard rate schedule
plus all third party costs incurred from the date of this Letter of Intent. Such expenses
include, but are not limited to, labor rates and reimbursable expenses such as legal
charges for document review and preparation, travel expenses, reproduction costs, long
distance phone costs, and postage. In the event Fagen’s services are terminated by Owner,
title to the technical data, which may include preliminary engineering drawings and layouts
and proprietary process related information, shall remain with Fagen; however, Owner shall,
upon payment of the foregoing expenses, have the limited license to use the above described
technical data, excluding proprietary process related information, for completing
documentation required for construction, operation, repair and maintenance of the Project,
at Owner’s sole risk.

     Owner acknowledges that the technical data provided by Fagen under this Letter of
Intent shall be prelmiminary and may not be suitable for construction

 

 

and agrees that any use of such technical data without Fagen’s involvement shall be at
Owner’s sole risk.

     If Fagen intentionally or by gross negligence fails or refuses to comply with its
commitments contained in this Ltter of Intent, Fagen shall absorb all of its own expenses,
and Owner shall have the right to terminate the Letter of Intent immediately upon written
notice to Fagen, and Owner shall be released from its obligations to pay or reimburse Fagen
as described above.

     2. Fagen will provide Owner with assistance in evaluating, from both a technical and
business perspective:

	 	1	 	Owner organizational
options;
	 
	 	2	 	The appropriate
location of the proposed Facility; and
	 
	 	3	 	Business plan
development.

Fagen assumes no risk or liability of representation or advise to Owner by assisting in
evaluating the above. All decisions made regarding feasibility, financing, and business
risks are the Owner’s sole responsibility and liability.

     3. Fagen agrees to Design-Build the Facility, utilizing ICM, Inc. technology in the
plant process, for a lump sum price. Such price shall be determined upon final scope
definition. Once determined, this lump sum price shall remain firm by Fagen to Owner until
December 31, 2005, and may be subject to revision and/or escalation by Fagen after such
date.

     4. Fagen will assist Owner in locating appropriate management for the Facility.

     5. Fagen will assist Owner in presenting information to potential investors, potential
lenders, and various entities or agencies that may provide project development assistance,
so long as the Project has 5% of less dilution. In addition, pro forma projections shall
be greater than 20% ROI by year five.

     6. During the term of this Letter of Intent the Owner agrees that Fagen will be the
exclusive Developer and Design-Builder for the Owner in connection with matters covered by
this Letter of Intent, and Owner shall not disclose any information related to this Letter
of Intent to a competitor or prospective competitor of Fagen.

     7. This Letter of Intent shall terminate on December 31, 2007 unless the basic size
and design of the Facility have been determined and mutually agreed upon, and a specific
site or sites have been determined and mutually agreed upon, and at least 10% of the
necessary equity has been raised. Furthermore, this Letter of Intent shall terminate on
December 31, 2008 unless

 

 

financing for the Facility has been secured. Either of the aforementioned dates may
be extended upon mutual written agreement of the Parties.

     8. Fagen and Owner agree to negotiate in good faith and enter into a definitive lump
sum design-build agreement, including Exhibits thereto, acceptable to the Parties.

     9. The Parties will jointly agree on the timing and content of any public disclosure,
including, but not limited to, press releases, relating to Fagen’s involvement in Owner’s
Project, and no such disclosure shall be made without mutual consent and approval, except
as may be required by applicable law.

     10. The Parties agree that this Letter of Intent may be modified only by written
agreement by the Parties.

     11. This Letter of Intent may be executed in one or more counterparts, each of which
when so executed and delivered shall be deemed an original, but all of which taken together
constitute one and the same instrument. Signatures which have been affixed and transmitted
by facsimile shall be binding to the same extent as an original signature, although the
Parties contemplate that a fully executed counterpart with original signatures will be
delivered to each Party.

	 	 	 	 	 	 	 	 	 
	Indiana Ethanol, LLC	 	 	 	Fagen, Inc.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Troy Prescott
	 	 	 	By:
	 	/s/ Illegible
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Its:

	 	General Manager
	 	 	 	Its:
	 	Senior Vice President
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:

	 	6/22/05
	 	 	 	Date:
	 	6/30/05

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