Document:

exv4w2

 

Exhibit 4.2

CARDINAL ETHANOL, LLC

SUBSCRIPTION AGREEMENT

Limited Liability Company Membership Units

$5,000.00 per Unit

Minimum Investment of 4 Units ($20,000)

1 Unit Increments Thereafter ($5,000)

The undersigned subscriber, desiring to become a member of Cardinal Ethanol, LLC (“Cardinal
Ethanol”), an Indiana limited liability company, with its principal place of business at 2 OMCO
Square, Suite 201, Winchester IN 47394, hereby subscribes for the purchase of the membership
interests of Cardinal Ethanol, and agrees to pay the related purchase price, identified below.

A. SUBSCRIBER INFORMATION. Please print your individual or entity name and address. Joint
subscribers should provide their respective names. Your name and address will be recorded exactly
as printed below.

	 	 	 	 	 	 	 	 	 
	 

	 	 	1.	 	 	Subscriber’s Printed Name
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	2.	 	 	Title, if applicable
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	3.	 	 	Subscriber’s Address
	 	 
	 

	 	 	 	 	 	     Street
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	     City, State, Zip Code
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	4.	 	 	E-mail Address (optional)
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	5.	 	 	Home Telephone Number
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	6.	 	 	Business Telephone Number
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	7.	 	 	Mobile Telephone Number
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	8.	 	 	Subscriber’s Social

Security Number
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	9.	 	 	Joint Subscriber’s Social

Security Number
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	10.	 	 	Taxpayer Identification
No. (Business Entities)
	 	 
	 

	 	 	 	 	 	 	 	 

B. NUMBER OF UNITS PURCHASED. You must purchase at least 4 units. Your ownership interest may not
exceed 40% of all our outstanding membership units. We presently have 568 units outstanding.
Therefore, the maximum number of units you may own is 3,827 units if we sell the minimum offering
and 6,787 units if we sell the maximum.

	 	 	 	 	 	 	 
	 

	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 
	 	 	 

C. PURCHASE PRICE. Indicate the dollar amount of your investment (minimum investment is
$20,000).

	 	 	 	 	 	 	 	 	 
	1. Total Purchase Price

($5,000.00 Per Unit multiplied

by the number in box B above.)
	 	=
	 	2.
1st
Installment

(10% of the Total Purchase
Price)
	 	+
	 	3.
2nd
Installment

(90% of the Total Purchase
Price)

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	=	 	 	 	+	 	 
	 
	 	 	 	 	 	 	 	 

D. GENERAL INSTRUCTIONS FOR SUBSCRIBERS:

You should read the Prospectus dated [Date of Effectiveness] (the “Prospectus”) in its entirety
including exhibits for a complete explanation of an investment in Cardinal Ethanol, LLC. To
subscribe, you must:

1

 

INSTRUCTIONS IF YOU ARE SUBSCRIBING PRIOR TO THE COMPANY’S RELEASE OF FUNDS FROM ESCROW:
If you are subscribing prior to the Company’s release of funds from escrow, you must follow Steps 1
through 5 below:

     1. Complete all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 6 and the Member Signature Page to our Second Amended and Restated
Operating Agreement attached to this Subscription Agreement as Exhibit A.

     2. Immediately provide your personal (or business) check for the first installment of ten
percent (10%) of your investment amount made payable to “First Merchants Trust Company, N.A.,
escrow agent for Cardinal Ethanol, LLC.” You will determine this amount in box C.2 on page 1 of
this Subscription Agreement.

     3. Execute the Promissory Note and Security Agreement on page 7 of this Subscription Agreement
evidencing your commitment to pay the remaining ninety percent (90%) due for the Units that is
attached to this Subscription Agreement and grant Cardinal Ethanol a security interest in your
Units.

     4. Deliver each of the original executed documents referenced in Items 1 and 3 of these
Instructions, together with your personal or business check described in Item 2 of these
Instructions to either of the following:

	 	 	 
	Cardinal Ethanol, LLC

	 	First Merchants Trust Company, N.A.
	Attention: Angela Armstrong

	 	Attention: N. Jane Smith
	2 OMCO Square, Suite 201

	 	P.O. Box 1467
	Winchester, IN 47394

	 	Muncie, IN 47308

     5. Upon written notice from Cardinal Ethanol stating that its sales of Units have exceeded the
Minimum Offering amount of $45,000,000, you must, within thirty (30) days secure an additional
personal (or business) check for the second installment of ninety percent (90%) of your investment
amount made payable to “First Merchants Trust Company, N.A., escrow agent for Cardinal Ethanol,
LLC” in satisfaction of the Promissory Note and Security Agreement. You will determine this amount
in box C.3 on page 1 of this Subscription Agreement. You must deliver this check to the same
address set forth above in Instruction 4 within thirty (30) days of the date of Cardinal Ethanol’s
written notice. If you fail to pay the second installment pursuant to the Promissory Note and
Security Agreement, Cardinal Ethanol shall be entitled to retain your first installment and to seek
other damages, as provided in the Promissory Note and Security Agreement.

Your funds will be placed in Cardinal Ethanol’s escrow account at First Merchants Trust Company,
N.A. The funds will be released to Cardinal Ethanol or returned to you in accordance with the
escrow arrangements described in the Prospectus. Cardinal Ethanol may, in its sole discretion,
reject or accept any part or all of your subscription. If Cardinal Ethanol rejects your
subscription, your Subscription Agreement and investment will be promptly returned to you, plus
nominal interest, minus escrow fees. Cardinal Ethanol may not consider the acceptance or rejection
of your subscription until a future date near the end of this offering.

INSTRUCTIONS IF YOU ARE SUBSCRIBING AFTER THE COMPANY’S RELEASE OF FUNDS FROM ESCROW: If
you are subscribing after the Company’s release of funds from escrow, you must follow Steps 1
through 3 below:

     1. Complete all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 6 and the Member Signature Page to our Second Amended and Restated
Operating Agreement attached to this Subscription Agreement as Exhibit A.

     2. Immediately provide your personal (or business) check for the entire amount of your
investment (as determined in Box C.1 on page 1) made payable to “Cardinal Ethanol, LLC.”

     3. Deliver the original executed documents referenced in Item 1 of these Instructions,
together with your personal or business check described in Item 2 of these Instructions to the
following:

Cardinal Ethanol, LLC

Attention: Angela Armstrong

2 OMCO Square, Suite 201

Winchester IN 47394

2

 

     If you are subscribing after we have released funds from escrow and we accept your investment,
your funds will be immediately at-risk as described in the Prospectus. Cardinal Ethanol may, in
its sole discretion, reject or accept any part or all of your subscription. If Cardinal Ethanol
rejects your subscription, your Subscription Agreement and investment will be returned to you
promptly, plus nominal interest, minus escrow fees. Cardinal Ethanol may not consider the
acceptance or rejection of your subscription until a future date near the end of this offering.

You may
direct your questions to one of our directors listed below or to Cardinal Ethanol at
701-883-5783.

	 	 	 	 	 
	Director	 	Telephone Number	 
	Troy Prescott
	 	 	(765) 969-5541	 
	Tom Chalfant
	 	 	(765) 729-3129	 
	Ralph Brumbaugh
	 	 	(937) 423-0964	 
	Thomas Chronister
	 	 	(260) 437-0418	 
	Everett Hart
	 	 	(937) 459-7301	 
	Jeremey Herlyn
	 	 	(765) 914-4938	 
	Steven Snider
	 	 	(765) 744-1881	 
	Jerrold Voisinet
	 	 	(937) 773-1069	 
	Andrew Zawosky
	 	 	(937) 459-0162	 

E. Additional Subscriber Information. The subscriber, named above, certifies the following under
penalties of perjury:

	 	1.	 	Form of Ownership. Check the appropriate box (one only) to indicate form of
ownership. If the subscriber is a Custodian, Corporation, Partnership or Trust, please
provide the additional information requested.

	 	 	 	 	 	 	 	 	 
	 

	 	o
	 	Individual
	 	 	 	 
	 	 	o	 	Joint Tenants with Right of Survivorship (Both signatures must appear on Page 6.)
	 	 	o	 	Corporation, Limited Liability Company or Partnership
(Corporate Resolutions, Operating Agreement or Partnership Agreement must be
enclosed.)
	 

	 	o
	 	Trust	 	 	 	 
	 

	 	 	 	     Trustee’s Name:

     Trust Date:
	 
 

 
 

	 	  
	 	 	o	 	Other: Provide detailed information in the space immediately below.
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

	 	2.	 	Subscriber’s Taxpayer Information. Check the appropriate box if you are a
non-resident alien, a U.S. Citizen residing outside the United States or subject to
backup withholding. Trusts should provide their taxpayer identification number.
Custodians should provide the minor’s Social Security Number. All individual
subscribers should provide their Social Security Number. Other entities should provide
their taxpayer identification number.

	 	 	 	 	 
	 

	 	o
	 	Check box if you are a non-resident alien
	 

	 	o
	 	Check box if you are a U.S. citizen residing outside of the United States
	 

	 	o
	 	Check this box if you are subject to backup withholding

	 	 	 	 	 	 	 
	 

	 	Subscriber’s Social Security No.
	 	 
 

	 	 
	 

	 	Joint Subscriber’s Social Security No.
	 	 
 

	 	 
	 

	 	Taxpayer Identification No.
	 	 	 	 
	 

	 	 	 	 	 	 

	 	3.	 	Member Report Address. If you would like duplicate copies of member reports
sent to an address that is different than the address identified in section A, please
complete this section.

	 	 	 	 	 	 	 
	 

	 	Address:
	 	 
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 
	 	 
	 

	 	 	 	 	 	 

3

 

	 	4.	 	State of Residence.

	 	 	 	 	 	 	 
	 

	 	State of Principal Residence:
	 	 
 

	 	 
	 

	 	State where driver’s license is issued:
	 	 
 

	 	 
	 

	 	State where resident income taxes are filed:
	 	 
 

	 	 

State(s) in which you have maintained your principal residence during the past three
years:

	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 
	 	 
	 	 	a	 	 	b.	 	c.	 
	 	 
	 	 	 	 	 	 	 	 	 

	 	5.	 	Suitability Standards. You cannot invest in Cardinal Ethanol unless you meet
one, or more, of the following suitability tests (a or b) set forth below. Please
review the suitability tests and check the box(es) next to the following suitability
test that you meet. For husbands and wives purchasing jointly, the tests below will be
applied on a joint basis.

	 	 	 	 	 	 	 
	 

	 	a.
	 	o
	 	I (We) have annual income from whatever
source of at least $45,000 and a net worth of at least $45,000,
exclusive of home, furnishings and automobiles; or
	 
	 	 	 	 	 	 
	 

	 	b.
	 	o
	 	I (We) do not reside in Ohio and I (we) have a net
worth of at least $100,000, exclusive of home, furnishings and automobiles; or
	 
	 	 	 	 	 	 
	 

	 	c.
	 	o
	 	I (We) reside in Ohio and I (we) have a net worth of
$200,000, exclusive of home, home furnishings, and automobiles.

	 	6.	 	Subscriber’s Representations and Warranties. You must read and certify your
representations and warranties by placing your initials where indicated and by signing
and dating this Subscription Agreement. Joint subscribers are also required to
initial and sign as indicated.

(Initial here) (Joint initials) By signing below the subscriber represents and warrants to E Energy
Adams that he, she or it:

	 	 	 	 	 	 	 
	                    

	 	                    
	 	a.
	 	has received a copy of Cardinal Ethanol’s Prospectus
dated [effective date] and the exhibits thereto or has
received notice that this sale has been made pursuant
to a registration statement in which a final
prospectus would have been required to have been
delivered in the absence of Rule 172;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	b.
	 	has been informed that the units of Cardinal Ethanol
are offered and sold in reliance upon a federal
securities registration; state registrations in
Florida, Georgia, Illinois, Indiana, Kentucky,
Michigan, Ohio, and Tennessee; and exemptions from
securities registrations in various other states, and
understands that the units to be issued pursuant to
this subscription agreement can only be sold to a
person meeting requirements of suitability;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	c.
	 	has been informed that the securities purchased
pursuant to this Subscription Agreement have not been
registered under the securities laws of any state
other than Florida, Georgia, Illinois, Indiana,
Kentucky, Michigan, Ohio, and Tennessee and that
Cardinal Ethanol is relying in part upon the
representations of the undersigned Subscriber
contained herein;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	d.
	 	has been informed that the securities subscribed for
have not been approved or disapproved by the SEC, or
the Florida, Georgia, Illinois, Indiana, Kentucky,
Michigan, Ohio, and Tennessee Securities Departments
or any other regulatory authority, nor has any
regulatory authority passed upon the accuracy or
adequacy of the Prospectus;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	e.
	 	 intends to acquire the units for his/her/its own
account without a view to public distribution or
resale and that he/she/it has no contract,
undertaking, agreement or arrangement to sell or
otherwise transfer or dispose of any units or any
portion thereof to any other person;

4

 

	 	 	 	 	 	 	 
	                    

	 	                    
	 	f.
	 	understands that there is no present market for
Cardinal Ethanol’s membership units, that the
membership units will not trade on an exchange or
automatic quotation system, that no such market is
expected to develop in the future and that there are
significant restrictions on the transferability of the
membership units;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	g.
	 	has been encouraged to seek the advice of his legal
counsel and accountants or other financial advisers
with respect to investor-specific tax and/or other
considerations relating to the purchase and ownership
of units;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	h.
	 	has received a copy of the Cardinal Ethanol Second
Amended and Restated Operating Agreement, dated
February 1, 2006, and understands that upon closing
the escrow by Cardinal Ethanol, the subscriber and the
membership units will be bound by the provisions of
the Second Amended and Restated Operating Agreement
which contains, among other things, provisions that
restrict the transfer of membership units;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	i.
	 	understands that the units are subject to substantial
restrictions on transfer under certain tax and
securities laws along with restrictions in the
Cardinal Ethanol Second Amended and Restated Operating
Agreement, and agrees that if the membership units or
any part thereof are sold or distributed in the
future, the subscriber shall sell or distribute them
pursuant to the terms of the Second Amended and
Restated Operating Agreement, and the requirements of
the Securities Act of 1933, as amended, and applicable
tax and securities laws;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	j.
	 	meets the suitability test marked in Item 5 above and
is capable of bearing the economic risk of this
investment, including the possible total loss of the
investment;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	k.
	 	understands that Cardinal Ethanol will place a
restrictive legend on any certificate representing any
unit containing substantially the following language
as the same may be amended by the Governors of
Cardinal Ethanol in their sole discretion:
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	THE TRANSFERABILITY OF THE MEMBERSHIP UNITS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED. SUCH UNITS MAY NOT BE SOLD, ASSIGNED,
OR TRANSFERRED, AND NO ASSIGNEE, VENDEE, TRANSFEREE OR ENDORSEE
THEREOF WILL BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH UNITS FOR
ANY PURPOSES, UNLESS AND TO THE EXTENT SUCH SALE, TRANSFER,
HYPOTHECATION, OR ASSIGNMENT IS PERMITTED BY, AND IS COMPLETED IN
STRICT ACCORDANCE WITH, APPLICABLE FEDERAL AND STATE LAW AND THE
TERMS AND CONDITIONS SET FORTH IN THE SECOND AMENDED AND RESTATED
OPERATING AGREEMENT OF THE COMPANY, AS AMENDED FROM TIME TO TIME.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
UNDER APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
UNDER APPLICABLE STATE SECURITIES LAWS.
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	l.
	 	understands that, to enforce the above legend,
Cardinal Ethanol may place a stop transfer order with
its registrar and stock transfer agent (if any)
covering all certificates representing any of the
membership units;

5

 

	 	 	 	 	 	 	 
	                    

	 	                    
	 	m.
	 	understands that, to enforce the above legend,
Cardinal Ethanol may place a stop transfer order with
its registrar and stock transfer agent (if any)
covering all certificates representing any of the
membership units;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	n.
	 	has knowledge and experience in business and financial
matters as to be able to evaluate the merits and risks
of an investment in the units, believes that the
investment in units is suitable for the subscriber and
can bear the economic risk of the purchase of units
including the total loss of the undersigned’s
investment;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	o.
	 	may not transfer or assign this subscription
agreement, or any of the subscriber’s interest herein;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	p.
	 	has written his, her, or its correct taxpayer
identification number under Item E.2 on this
subscription agreement;
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	q.
	 	is not subject to back up withholding either because
he, she or it has not been notified by the Internal
Revenue Service (“IRS”) that he, she or it is subject
to backup withholding as a result of a failure to
report all interest or dividends, or the IRS has
notified him, her or it that he is no longer subject
to backup withholding (Note this clause (p) should be
crossed out if the backup withholding box in Item E.2
is checked);
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	r.
	 	understands that execution of the attached Promissory
Note and Security Agreement will allow Cardinal
Ethanol or its assigns to pursue the obligor for
payment of the amount due thereon by any legal means,
including, but not limited to, acquisition of a
judgment against the obligor in the event that the
subscriber defaults on that Promissory Note and
Security Agreement; and
	 
	 	 	 	 	 	 
	                    

	 	                    
	 	s.
	 	acknowledges that Cardinal Ethanol may retain
possession of certificates representing subscriber’s
Units to perfect its security interest in those units.

[Remainder of page intentionally left blank.]

6

 

Signature of Subscriber/ Joint Subscriber:

			
	Date:	 	                                        

	 	 	 
	Individuals:	 	Entities:
	 

	 	 
	     Name of Individual Subscriber (Please Print)

	 	Name of Entity (Please Print)
	 
	 	 
	 

	 	 
	     Signature of Individual

	 	Print Name and Title of Officer
	 
	 	 
	 

	 	 
	     Name of Joint Individual Subscriber (Please Print)

	 	 Signature of Officer
	 
	 	 
	 

     Signature of Joint Individual Subscriber

	 	 

ACCEPTANCE OF SUBSCRIPTION BY CARDINAL ETHANOL, LLC:

Cardinal Ethanol, LLC hereby accepts Subscriber’s subscription for                     units.

Dated this                     day of                                         , 200                    .

	 	 	 	 	 
	CARDINAL ETHANOL, LLC	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Its:
	 	 	 	 
	 

	 	 	 	 

7

 

PROMISSORY NOTE AND SECURITY AGREEMENT

Date of Subscription Agreement:                                         , 200                    .

$5,000.00 per Unit

Minimum Investment of 4 Units ($20,000), 1 Unit Increments Thereafter ($5,000)

	 	 	 
	 

	 	Number of Units subscribed
	 

	 	 
	 
	 	 
	 

	 	Total Purchase Price ($5,000.00 per Unit multiplied by number of Units subscribed)
	 

	 	 
	 
	 	 
	(       )

	 	 Less Initial Payment (10% of Principal Amount)
	 

	 	 
	 
	 	 
	 

	 	Principal Balance
	 

	 	 

FOR VALUE RECEIVED, the undersigned hereby promises to pay to the order of Cardinal Ethanol, LLC,
an Indiana limited liability company (“Cardinal Ethanol”), at its principal office located at 2
OMCO Square, Suite 201, Winchester IN 47394, or at such other place as required by Cardinal
Ethanol, the Principal Balance set forth above in one lump sum to be paid without interest within
30 days following the call of the Cardinal Ethanol Board of Directors, as described in the
Subscription Agreement. In the event the undersigned fails to timely make any payment owed, the
entire balance of any amounts due under this full recourse Promissory Note and Security Agreement
shall be immediately due and payable in full with interest at the rate of 12% per annum from the
due date and any amounts previously paid in relation to the obligation evidenced by this Promissory
Note and Security Agreement may be forfeited at the discretion of Cardinal Ethanol.

The undersigned agrees to pay to Cardinal Ethanol on demand, all costs and expenses incurred to
collect any indebtedness evidenced by this Promissory Note and Security Agreement, including,
without limitation, reasonable attorneys’ fees. This Promissory Note and Security Agreement may
not be modified orally and shall in all respects be governed by, construed, and enforced in
accordance with the laws of the State of Indiana.

The provisions of this Promissory Note and Security Agreement shall inure to the benefit of
Cardinal Ethanol and its successors and assigns, which expressly reserves the right to pursue the
undersigned for payment of the amount due thereon by any legal means in the event that the
undersigned defaults on obligations provided in this Promissory Note and Security Agreement.

The undersigned waives presentment, demand for payment, notice of dishonor, notice of protest, and
all other notices or demands in connection with the delivery, acceptance, performance or default of
this Promissory Note and Security Agreement.

The undersigned grants to Cardinal Ethanol, and its successors and assigns (“Secured Party”), a
purchase money security interest in all of the undersigned’s Membership Units of Cardinal Ethanol
now owned or hereafter acquired. This security interest is granted as non-exclusive collateral to
secure payment and performance on the obligation owed Secured Party from the undersigned evidenced
by this Promissory Note and Security Agreement. The undersigned further authorizes Secured Party to
retain possession of certificates representing such Membership Units and to take any other actions
necessary to perfect the security interest granted herein.

	 	 	 
	Dated:      , 200 .
	 	 
	OBLIGOR/DEBTOR:

	 	  JOINT OBLIGOR/DEBTOR:

	 	 	 	 	 	 	 
	 	 	 
	Printed or Typed Name of Obligor	 	Printed or Typed Name of Joint Obligor
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	 

	 	(Signature)
	 	 	 	(Signature)
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Officer Title if Obligor is an Entity	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Address of Obligor	 	 	 	 

8

 

EXHIBIT “A”

MEMBER SIGNATURE PAGE

ADDENDA

TO THE

SECOND AMENDED AND RESTATED OPERATING AGREEMENT OF

CARDINAL ETHANOL, LLC

     The undersigned does hereby represent and warrant that the undersigned, as a condition to
becoming a Member in Cardinal Ethanol, LLC, has received a copy of the Second Amended and Restated
Operating Agreement, dated February 1, 2006, and, if applicable, all amendments and modifications
thereto, and does hereby agree that the undersigned, along with the other parties to the Second
Amended and Restated Operating Agreement, shall be subject to and comply with all terms and
conditions of said Second Amended and Restated Operating Agreement in all respects as if the
undersigned had executed said Second Amended and Restated Operating Agreement on the original date
thereof and that the undersigned is and shall be bound by all of the provisions of said Second
Amended and Restated Operating Agreement from and after the date of execution hereof.

	 	 	 
	Individuals:	 	Entities:
	 

	 	 
	      Name of Individual Member (Please Print)

	 	     Name of Entity (Please Print)
	 
	 	 
	 

	 	 
	     Signature of Individual

	 	     Print Name and Title of Officer
	 
	 	 
	 

	 	 
	     Name of Joint Individual Member (Please Print)

	 	     Signature of Officer
	 
	 	 
	 

     Signature of Joint Individual Member

	 	 

Agreed and accepted on behalf of the

Company and its Members:

	 	 	 	 	 
	CARDINAL ETHANOL, LLC	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Its:
	 	 	 	 
	 

	 	 

	 	 

9exv4w3

 

Exhibit 4.3

ESCROW AGREEMENT

     THIS ESCROW AGREEMENT (this “Agreement”) is made this 21st day of
April, 2006, by and between Cardinal Ethanol, LLC an Indiana limited liability company
(“Cardinal Ethanol”) and First Merchants Trust Company, N.A. 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
Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Ohio and Tennessee 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 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. First Merchants Trust Company, N.A. 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 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

1

 

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 Federated U.S. Treasury Cash Reserves (CUSIP
60934N674) 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 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).

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     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
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

3

 

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 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

4

 

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 Winchester, Indiana, 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:

First Merchants Trust Company

P.O. Box 1467

Muncie, IN 47308

Attn: N. Jane Smith

Fax: (765) 751-1869

Phone: (765) 747-1304

njsmith@firstmerchants.com

     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

Fax: (515) 283-0231

Phone: (515) 242-2400

5

 

     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.

6

 

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	 	First Merchants Trust Company, N.A.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Troy Prescott
	 	By:
	 	     /s/ James E. Keene
	 

	 	 
	 	 	 	 
	 

	 	Troy Prescott, Chairman
	 	 	 	 
	 

	 	 	 	Its:
	 	V.P. & Trust Officer
	 

	 	 	 	 	 	 

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EXHIBIT A

Escrow Account Fees:

Escrow Agent shall be paid an amount to be determined by the principal value of the account based
on the following annualized schedule:

	 	 	 	 	 
	For the first $100,000
	 	 	0.50	%
	For the first $400,000
	 	 	0.20	%
	For the balance over $500,000
	 	 	0.10	%

The minimum annual fee paid to Escrow Agent shall be $500.00.

The maximum annual fee paid to Escrow Agent shall be $5,800.00.

Trailer Fees:

The money market fund will pay a service fee to the Escrow Agent equal to an annual rate of 0.25%
of the balance invested.

Termination Fees:

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 and funds are returned to investors, Escrow Agent shall be paid a transaction fee
in the amount of $25.00 per investor.

8

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