Document:

exv10w5

 

Exhibit 10.5

EMPLOYMENT AGREEMENT

(Project Development Coordinator)

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 7th day
of November, 2005, by and between CARDINAL ETHANOL, LLC (“Cardinal”) and ANGELA J. ARMSTRONG
(“Armstrong”)/

     WHEREAS, CARDINAL intends to develop, finance and construct an ethanol plant (the “Project”),
and

     WHEREAS, Armstrong has valuable business experience,

     WHEREAS, CARDINAL wishes to employ Armstrong in connection with the Project, and Armstrong
desires to accept such employment by CARDINAL, upon the terms and conditions herein set forth.

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

     1. Employment. CARDINAL hereby employs Armstrong to provide ethanol project
development services as determined by CARDINAL (the “Services”) and Armstrong hereby accepts such
employment upon the terms and conditions hereinafter set forth.

     2. Term; Termination. The term of employment under this Agreement shall commence
effective November 11, 2005 and shall continue, unless terminated as provided herein, until
November 11, 2006. The Agreement shall renew for a one year term unless otherwise terminated.
Either party may terminate this Agreement at any time during the initial term or renewal term, with
or without cause, upon delivery of oral or written notice to the other party indicating an
intention to terminate the Agreement. In the even either party exercises its right to terminate
this Agreement, Armstrong shall be entitled to payments for Services actually rendered and
completed prior to such notice to terminate. This Agreement shall automatically terminate upon the
death or permanent disability of Armstrong.

     3. Compensation. For all services rendered to CARDINAL during the term of this
agreement, Armstrong shall be paid an annual salary of $50,000.00, which shall be paid in
accordance with CARDINAL’s normal payroll practices on a biweekly basis.

     4. Confidentiality. In providing Services hereunder, Armstrong may have access to
documents and information relating to CARDINAL and its properties and business operations
(hereafter referred to as “Confidential Information”). All such Confidential Information shall at
all times during the term of this Agreement and for a period of two (2) years thereafter, be
treated as confidential and sensitive proprietary business information. Armstrong shall not,
unless compelled by legal process, except in accordance with the express terms of this Agreement
shall not, unless compelled by legal process, except in accordance with the express terms of this
Agreement or with the prior written consent of CARDINAL, disclose or permit the disclosure of any
Confidential Information to any person or entity whatsoever, unless such information is otherwise
readily available in the public domain.

     5. Covenant Not to Compete. During the period of this Agreement and for a period of
twelve (12) months commencing as of the effective date of the termination of this Agreement (the
“Non-competition Period”), Armstrong shall not, directly or indirectly, by or for herself or
through others as her agent:

	 	a.	 	work for, promote or sell anywhere within one hundred (100) miles of
any business location of CARDINAL (the “Territory”) any business which is similar
to or directly in

 

 

	 	 	 	competition with the Business of CARDINAL as then being conducted by CARDINAL; or
	 
	 	b.	 	own, manage, operate, control, participate in, rendered advice to, or
have any right to or interest in any other business which provisions products or
services anywhere in the Territory which compete in any way with the Business of
CARDINAL as then being conducted by CARDINAL.

     6. Related Services and Compensation. Nothing in this Agreement shall prohibit
Armstrong from otherwise serving as an officer or director of CARDINAL during or following the term
of this Agreement and receiving and accepting compensation or reimbursements related to her
services as an officer or director.

     7. Covenant Not to Solicit. Armstrong further agrees that Armstrong shall not,
directly or indirectly, either for herself or any other person, firm or corporation:

	 	a.	 	call upon, solicit, divert, take away or accept business from any of
the customers or suppliers of CARDINAL in connection with any ethanol production
enterprise, or
	 
	 	b.	 	solicit for employment, retain or employ or become employed by any
past or present employee of CARDINAL, or request, induce or advise any employee to
leave the employ of or cease affiliation with CARDINAL in connection with any
ethanol production enterprise.

     8. Miscellaneous. Except as otherwise provided herein, any and all notices and
reports required or contemplated hereunder shall be in writing and shall be sent in a commercially
reasonable manner under the circumstances, addressed to the parties at their respective addresses.
This Agreement shall be governed by and construed in accordance with Indiana law, and shall not be
modified except in a writing signed by the parties. This Agreement is binding upon the parties and
their heirs representatives, agents, successors and permitted assigns. Neither this Agreement or
any parties’ rights, duties, responsibilities or obligations shall be assigned by either party, in
whole or in part, without the prior written consent of the other party hereto. If any provision
herein is held to be invalid or unenforceable in whole or in part, the remaining provisions shall
not be affected. No omission or delay by either party in enforcing any right or remedy or in
requiring any performance hereunder shall constitute a waiver of any such right, remedy or required
performance, nor shall it affect the right of either party to enforce such provision thereafter.
The headings contained herein are for convenience only and shall not be considered in interpreting
or construing this Agreement. This Agreement may be executed in counterparts.

     IN WITNESS WHEREOF, the parties hereto have duly executed this EMPLOYMENT AGREEMENT as of the
date first above written.

	 	 	 	 	 	 	 	 	 
	CARDINAL ETHANOL, LLC	 	 	 	ANGELA J. ARMSTRONG	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Troy Prescott
 

	 	 
	 	/s/ Angela J. Armstrong
 

	 	 
	 
	 	 	 	 	 	 	 	 
	Its: Charimanexv10w6

 

Exhibit 10.6

PHASE I AND PHASE II

ENGINEERING SERVICES AGREEMENT

BETWEEN

CARDINAL ETHANOL, LLC

AND

FAGEN ENGINEERING, LLC

December 13, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	Article 1 Definitions; Rules of Interpretation	 	 	1	 
	 
	 	1.1	 	Rules of Construction	 	 	1	 
	 
	 	1.2	 	Defined Terms	 	 	2	 
	Article 2 Retention of Agent	 	 	4	 
	 
	 	2.1	 	Retention of Services	 	 	4	 
	Article 3 Engineer Responsibilities	 	 	4	 
	 
	 	3.1	 	Services	 	 	4	 
	 
	 	3.2	 	Phase I Design Package	 	 	4	 
	 
	 	3.3	 	Delivery of Phase I Design Package	 	 	4	 
	 
	 	3.4	 	Phase II Design Package	 	 	4	 
	 
	 	3.5	 	Delivery of Phase II Design Package	 	 	5	 
	 
	 	3.6	 	Delays	 	 	5	 
	 
	 	3.7	 	Utility Routing and Design Services Limited	 	 	5	 
	Article 4 Client Responsibilities	 	 	5	 
	 
	 	4.1	 	Client’s Representative	 	 	5	 
	 
	 	4.2	 	Client’s Requirements	 	 	6	 
	 
	 	4.3	 	Other Information	 	 	6	 
	 
	 	4.4	 	Access to Property	 	 	6	 
	 
	 	4.5	 	Review of Documents	 	 	6	 
	 
	 	4.6	 	Consents, Approvals, Licenses and Permits	 	 	6	 
	 
	 	4.7	 	Bids	 	 	6	 
	 
	 	4.8	 	Other Services	 	 	6	 
	 
	 	4.9	 	Service Outside Scope of Engineer’s Services	 	 	6	 
	 
	 	4.10	 	Deviation from Design	 	 	6	 
	 
	 	4.11	 	Developments Affecting Scope or Timing of Services	 	 	7	 
	Article 5 Compensation And Payment	 	 	7	 
	 
	 	5.1	 	Compensation	 	 	7	 
	 
	 	5.2	 	Reimbursement of Engineer Expenses	 	 	7	 
	 
	 	5.3	 	Reimbursement of Subcontractor Expenses	 	 	7	 
	 
	 	5.4	 	Fees for Work Outside Scope of Services	 	 	7	 
	 
	 	5.5	 	Collection of Unpaid Amounts	 	 	7	 
	 
	 	5.6	 	Reimbursement Schedules Subject to Change	 	 	8	 
	 
	 	5.7	 	Invoices	 	 	8	 
	 
	 	5.8	 	Payment	 	 	8	 
	 
	 	5.9	 	Late Payment and Interest	 	 	8	 
	 
	 	5.10	 	Suspension for Failure to Pay	 	 	8	 
	 
	 	5.11	 	Payments from Lawful Sources	 	 	8	 
	 
	 	5.12	 	Withholding Payments	 	 	8	 
	 
	 	5.13	 	Purchase Orders	 	 	8	 
	 
	 	5.14	 	Changes in Project	 	 	8	 
	Article 6 Construction Cost And Cost Estimates	 	 	8	 
	 
	 	6.1	 	Cost Estimates	 	 	8	 
	Article 7 Termination	 	 	9	 

					
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	 	7.1	 	Termination Upon Default	 	 	9	 
	 
	 	7.2	 	Termination Upon Abandonment of Plant	 	 	9	 
	Article 8 Ownership of Work Product	 	 	9	 
	 
	 	8.1	 	Work Product	 	 	9	 
	 
	 	8.2	 	Copies Provided to Client	 	 	9	 
	 
	 	8.3	 	Prohibited Use of Work Product	 	 	9	 
	 
	 	8.4	 	Derogation of Engineer’s Rights to Work Product	 	 	9	 
	Article 9 Successors and Assigns	 	 	10	 
	 
	 	9.1	 	Successors	 	 	10	 
	 
	 	9.2	 	Written Consent Required	 	 	10	 
	 
	 	9.3	 	No Third-Party Beneficiaries	 	 	10	 
	Article 10 Warranty	 	 	10	 
	 
	 	10.1	 	No Warranty Extended	 	 	10	 
	 
	 	10.2	 	No Responsibility for Construction	 	 	10	 
	Article 11 Indemnification	 	 	10	 
	 
	 	11.1	 	Engineer’s Indemnification	 	 	10	 
	 
	 	11.2	 	Client’s Indemnification	 	 	11	 
	 
	 	11.3	 	Hazardous Materials Indemnification	 	 	11	 
	Article 12 Dispute Resolution	 	 	11	 
	 
	 	12.1	 	Arbitration	 	 	11	 
	Article 13 Confidentiality	 	 	12	 
	 
	 	13.1	 	Non-Disclosure Obligation	 	 	12	 
	 
	 	13.2	 	Publicity and Advertising	 	 	12	 
	 
	 	13.3	 	Term of Obligation	 	 	12	 
	Article 14 Miscellaneous	 	 	12	 
	 
	 	14.1	 	Governing Law	 	 	12	 
	 
	 	14.2	 	Severability	 	 	12	 
	 
	 	14.3	 	No Waiver	 	 	13	 
	 
	 	14.4	 	Captions and Headings	 	 	13	 
	 
	 	14.5	 	Engineer’s Accounting Records	 	 	13	 
	 
	 	14.6	 	Counterparts	 	 	13	 
	 
	 	14.7	 	Survival	 	 	13	 
	 
	 	14.8	 	No Privity with Client’s Contractors	 	 	13	 
	 
	 	14.9	 	Amendments	 	 	13	 
	 
	 	14.10	 	Entire Agreement	 	 	13	 
	 
	 	14.11	 	Notice	 	 	13	 
	 
	 	14.12	 	Extent of Agreement	 	 	14	 
	 
	 	14.13	 	Subrogation Waiver	 	 	14	 

	 	 	 	 	 
	EXHIBIT A Fee Schedule
	 	 	16	 
	 
	 	 	 	 
	EXHIBIT B Reimbursable Expense Schedule
	 	 	17	 
	 
	 	 	 	 
	EXHIBIT C Client’s Deliverable Site Obligations
	 	 	18	 

					
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PHASE I AND PHASE II

ENGINEERING SERVICES AGREEMENT

     THIS PHASE I AND PHASE II ENGINEERING SERVICES AGREEMENT (the “Agreement”) is made as
of December 13, 2005, (the “Effective Date”) by and between Cardinal Ethanol, LLC, an
Indiana Limited Liability Company (the “Client”) and Fagen Engineering, LLC a Minnesota
Limited Liability Company (the “Engineer”). Each of the Client and Engineer are referred to
herein individually as a “Party” and collectively as the “Parties.”

RECITALS

     WHEREAS, Client is developing a 100 million gallons per year dry grind ethanol production
facility to be located in Winchester, IN (the “Plant”) to be owned and operated by Client;
and

     WHEREAS, Client and Fagen, Inc. (“Design – Builder”) intend to enter into that certain
Lump-Sum Design-Build Agreement (“Design-Build Agreement”) under which Fagen, Inc., an
affiliate of Engineer, will serve as the design-builder for the Plant and provide design,
engineering, procurement and construction services for the development and construction of the
Plant; and

     WHEREAS, Client wishes to retain an entity in advance of entering into the Design-Build
Agreement to perform certain engineering and design work that will be required under the
Design-Build Agreement on the terms and conditions set forth in this Agreement, and Engineer
desires to act as such entity upon the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual promises contained herein and other goad and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending
to be legally bound by this Agreement, the parties do hereby agree as follows:

Article 1

Definitions; Rules of Interpretation

     1.1 Rules of Construction.

     The capitalized terms listed in this Article 1 shall have the meanings set forth herein
whenever the terms appear in this Agreement, whether in the singular or the plural or in the
present or past tense. Other terms used in this Agreement but not listed in this Article shall have
meanings as commonly used in the English language and, where applicable, in generally accepted
construction and design-build industry standards. Words not otherwise defined herein that have well
known and generally accepted technical or trade meanings are used herein in

					
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accordance with such recognized meanings. In addition, the following rules of interpretation
shall apply:

	 	(a)	 	The masculine shall include the feminine and neuter.
	 
	 	(b)	 	References to “Articles,” “Sections,” “Schedules,” or “Exhibits” shall be to
Articles, Sections, Schedules or Exhibits of this Agreement.
	 
	 	(c)	 	This Agreement was negotiated and prepared by each of the Parties with the
advice and participation of counsel. The Parties have agreed to the wording of
this Agreement and none of the provisions hereof shall be construed against one
Party on the ground that such Party is the author of this Agreement or any part
hereof. The following definitions will apply in this Agreement:

     1.2 Defined Terms.

     In addition to definitions appearing elsewhere in this Agreement, the following terms have the
following meanings:

Agreement will have the meaning given to such term in the Preamble to this Agreement.

Applicable Law means

	 	(a)	 	any and all laws, legislation, statutes, codes, acts, rules, regulations,
ordinances, treaties or other similar legal requirements enacted, issued or promulgated
by a Governmental Authority;
	 
	 	(b)	 	any and all orders, judgments, writs, decrees, injunctions, Governmental
Approvals or other decisions of a Governmental Authority; and
	 
	 	(c)	 	any and all legally binding announcements, directives or published practices or
interpretations, regarding any of the foregoing in (a) or (b) of this definition,
enacted, issued or promulgated by a Governmental Authority;

to the extent, for each of the foregoing in (a), (b) and (c) of this definition, applicable to
or binding upon (i) a Party, its affiliates, its shareholders, its members, it partners or
their respective representatives, to the extent any such person is engaged in activities
related to the Services; or (ii) the property of a Party, its affiliates, its shareholders,
its members, its partners or their respective representatives, to the extent such property is
used in connection with the Services or an activity related to the Services.

Client will have the meaning given to such term in the Preamble to this Agreement.

Client’s Representative will have the meaning given to such term in Section 4.1

Design-Build Agreement will have the meaning given to such term in the Recitals to this Agreement.

Effective Date will have the meaning given to such term in the Preamble to this Agreement.

					
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Engineer will have the meaning given to such term in the Preamble to this Agreement.

Engineer Responsible Parties will have the meaning given to such term in Section 4.10.

Governmental Approvals will mean any material authorizations or permissions issued or granted by
any Governmental Authority to the Project, the Client, the Engineer, subcontractors and their
affiliates in connection with any activity related to the Services.

Governmental Authority will mean any federal, state, local or municipal governmental body; any
governmental, quasi-governmental, regulatory or administrative agency, commission, body or other
authority exercising or entitled to exercise any administrative, executive, judicial, legislative,
policy, regulatory or taxing authority or power; or any court or governmental tribunal; in each
case having jurisdiction over the Client, the Engineer, the Plant, or the Site.

Monthly Invoice will have the meaning given to such term in Section 5.7.

Party or Parties will have the meaning given to such term in the Preamble to this Agreement.

Phase 1 Deliverables will mean the Client’s deliverable obligations pursuant to Exhibit C attached
to this Agreement.

Phase I Design Package will have the meaning given to such term in Section 3.2.

Phase II Deliverables will mean the Client’s deliverable obligations pursuant to Exhibit C

Phase II Design Package will have the meaning given to such term in Section 3.4 attached to this
Agreement.

Plant will have the meaning given to such term in the Recitals to this Agreement.

Project will mean the Plant, together with all equipment, labor, services and materials furnished
under the Design-Build Agreement.

Services will have the meaning given to such term in Section3.1.

Site will mean the land or premises on which the Plant is located.

Subcontractor will mean any person or entity, including but not limited to independent engineers,
associates, and consultants, retained by Engineer, or by any person or entity retained directly or
indirectly by Engineer, in each case as an independent contractor, to perform a portion of the
Services.

Work Product will have the meaning given to such term in Section 8.1.

					
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Article 2

Retention of the Agent

     2.1 Retention of Services. On the terms and subject to the conditions hereinafter set forth,
Client hereby retains Engineer to perform, and Engineer hereby agrees to perform, the Services.
Engineer will provide such Services solely pursuant to the terms and conditions set forth herein
including any indemnifications and limitations on liability.

Article 3

Engineer Responsibilities

     3.1 Services. Engineer shall perform the Phase I Design Package and Phase II Design Package
engineering services necessary to facilitate Client’s completion of the Phase I and Phase II Site
work required of Client prior to the issuance of a Notice to Proceed pursuant to the Design-Build
Agreement (collectively, the “Services”).

     3.2 Phase I Design Package. (Grading and Drainage). The Phase I Design Package to be provided
by Engineer shall consist of the engineering and design of the Plant Site and shall include the
following drawings:

	 	a)	 	Cover Sheet
	 
	 	b)	 	Property Layout Drawing
	 
	 	c)	 	Grading, Draining and Erosion Control Plan Drawing (Multiple
Drawings if Required)

	 	i.	 	Used for Land Disturbance Permitting.
	 
	 	ii.	 	Site grading is held 6-inches low for
topsoil and seeding

	 	d)	 	Roadway Alignment Drawing
	 
	 	e)	 	Culvert Cross Sections and Details (Multiple Drawings)
	 
	 	f)	 	Seeding and Landscaping (If Required)

Plan sets along with a Bid Tabulation Sheet will be supplied to the Client so all contractors bid
the same quantities. A telephone conference call for a Phase I pre-bid meeting will be provided
upon Client’s request.

     3.3 Delivery of Phase I Design Package. Engineer shall deliver the completed Phase I Design
Package no later than 60 days after the receipt of all Phase I Deliverables,
however, this will be no sooner than  Nov. 27, 2006.

     3.4 Phase II Design Package. The Phase II Design Package to be provided by Engineer shall
provide the engineering and design of Site work and utilities for the Plant, all within the
property line of Plant, and shall consist of the following:

	 	a)	 	Cover Sheet
	 
	 	b)	 	Property Layout Drawing

					
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	 	c)	 	Site Grading and Draining Drawing (Final Interior Plant Grading)
	 
	 	d)	 	Roadway Alignment
	 
	 	e)	 	Utility Layout (Fire Loop)
	 
	 	f)	 	Utility Layout (Potable Water)
	 
	 	g)	 	Utility Layout (Well Water) if using on-Site wells
	 
	 	h)	 	Utility Layout (Sanitary Sewer)
	 
	 	i)	 	Utility Layout (Utility Water Blowdown)
	 
	 	j)	 	Utility Layout (Natural Gas)

	 	i.	 	Fagen Engineering provides a preferred
routing through the Site, line size and pipe specifications are
typically provided by the gas supplier.

	 	k)	 	Geometric Layout (For Project Control Verification)
	 
	 	l)	 	Site Utility Piping Tables Drawing
	 
	 	m)	 	Tank Farm Layout Drawing
	 
	 	n)	 	Tank Farm Details Drawing
	 
	 	o)	 	 Sections and Details Drawing (If required)
	 
	 	p)	 	Miscellaneous Details Drawing (If required)

A telephone conference call for a Phase 2 pre-bid meeting will be provided upon Client’s request.

     3.5 Delivery of Phase II Design Package. Engineer shall deliver the completed
Phase II Design Package no later than 60 days after the receipt of all Phase II Deliverables.

     3.6 Delays. The Parties agree that Engineer shall not be responsible for delays in
providing the Services under this Agreement due to factors beyond Engineer’s control.

     3.7 Utility Routing and Design Services Limited. The Parties agree that Engineer shall
provide the routing and design for the utilities necessary for the Plant only within the Plant
property line and up to the Plant property line, and that, for purposes of this Agreement,
Engineer assumes a tie-in point to a city utility. The Parties agree that, if there is no city
tie-in

point, Engineer will route the utilities to the Plant property line and stop. Any special tie-in
requirements necessary to connect the utilities at the Plant property line are not included in the
compensation or the scope of this Agreement and shall only be designed and engineered by Engineer
as change in the Project which affects the Services hereunder.

Article 4

Client Responsibilities

     4.1 Client’s Representative. Client shall, prior to the commencement of Services by Engineer,
name a representative (“Client’s Representative”) with authority to receive information
and transmit instructions for Client. Client’s Representative shall be vested with authority to
act on behalf of Client and Engineer shall be entitled to rely on Client’s Representative’s
communications with regard to the Services.

					
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     4.2 Client’s Requirements. Client shall, prior to the commencement of Services by
Engineer, provide Engineer with Client’s requirements for the Project, including objectives and
constraints, design and construction standards, bonding and insurance requirements, and contract
forms.

     4.3 Other Information. Prior to the commencement of Services by Engineer, Client shall provide
Engineer with all other information available to Client and pertinent to the Project and the
Services including, but not limited to, all items required pursuant to Exhibit C. The items
required by Client pursuant to this Section 4.3 shall be furnished at Client’s expense, and
Engineer shall be entitled to rely upon the accuracy and completeness thereof.

     4.4 Access to Property. Prior to the commencement of Services and as necessary during the
performance of Services, Client shall arrange for access by Engineer upon public and private
property, as required for the performance of the Services under this Agreement.

     4.5 Review of Documents. As related to the performance of Services hereunder, Client shall
examine documents presented by Engineer, obtain legal and other advice as Client deems
appropriate, and render written decisions within reasonable time. The items required by Client
pursuant to this Section 4.5 shall be furnished at Client’s expense, and Engineer shall be
entitled to rely upon the accuracy and completeness thereof.

     4.6 Consents, Approvals, Licenses and Permits. Prior to the commencement of Services and as
necessary during the performance of the Services, Client shall obtain all consents, approvals,
licenses, permits, and other Governmental Approvals necessary for the Project and for the
performance of the Services. The items required by Client pursuant to this Section 4.6 shall be
furnished at Client’s expense, and Engineer shall be entitled to rely upon the accuracy and
completeness thereof.

     4.7 Bids. Client shall advertise for and open bids when scheduled.

     4.8 Other Services Client shall furnish all legal, accounting and insurance counseling
services as may be necessary at any time for the Services, including auditing services the Client
may require to verify the monthly invoices or to ascertain how or for what purposes the Engineer
and/or Subcontractors have used the money paid by or on behalf of the Client.

     4.9 Service Outside Scope of Engineer’s Services. Client shall, at its own expense, as
necessary for the performance and completions of the Services, provide any additional services
necessary for the Project that are outside the scope of the Services provided by Engineer under
this Agreement. Engineer shall be entitled to rely upon, as applicable, the completeness and
accuracy of such additional services.

     4.10 Deviation from Design. Client shall indemnify and hold harmless Engineer, its employees,
its agents, its affiliates, and any other persons or entities within its control

					
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or for whom
Engineer would otherwise be responsible (“Engineer Responsible Parties”) against claims
arising out of Engineer’s design, if there has been, in the completion of the Phase I and Phase II
Site work required of Client prior to the issuance of a Notice to Build Agreement, a failure to
follow Engineer’s recommendation and such deviation or failure caused the claims.

     4.11 Developments Affecting Scope or Timing of Services. Client shall promptly notify
Engineer, in writing, when Client learns of contractor error or any development that affects the
scope or timing of Engineer’s Services.

Article 5

Compensation and Payment

     5.1 Compensation. In consideration of its performance of the Services, Client shall pay
Engineer for Engineer’s time in the performance of the Services at a fixed fee of $92,500 (“Fixed
Fee”) as compensation. Engineer’s compensation under this Section 5.1 shall be pursuant to the Fee
schedule attached hereto as Exhibit A, as such schedule may be modified from time to time. The full
amount of compensation paid by Client under this Section 5.1 shall be included in and credited to
the Design-Build Agreement’s contract price if entered into upon payment in full by Client.

     5.2 Reimbursement of Engineer Expenses. In addition to the fixed fee in 5.1, Client shall
reimburse Engineer for its expenses related to the performance of the Services in accordance with
Engineer’s current reimbursable expense schedule attached hereto as Exhibit B.

     5.3 Reimbursement of Subcontractor Expenses.

     5.3.1 Subcontractor charges related to time spent in the performance of the Services
shall not be marked-up by Engineer. Client shall reimburse Engineer for costs related to
Subcontractors’ time in accordance with the Subcontractors’ invoices for the work.

     5.3.2 Subcontractor reimbursable expenses will be marked up in accordance with the
current reimbursable expense schedule attached hereto as Exhibit B.

     5.4 Fees for Work Outside Scope of Services. Fees for all work outside the scope of
Engineer’s responsibilities described in. Article 3, including change order work, shall be
computed in accordance with Engineer’s current fee schedules, attached hereto as Exhibits A and B,
as such schedules may be revised from time to time, unless otherwise agreed to in writing.

     5.5 Collection of Unpaid Amounts. If any amount due is not paid in accordance with this
Agreement and Engineer must collect that amount, Engineer shall be entitled to recover, in
addition to the amount due, the cost of collection, including reasonable attorney’s
fees in connection with those collection efforts.

					
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     5.6 Reimbursement Schedules Subject to Change. Engineer’s reimbursement schedule and
reimbursable expense schedule attached hereto as Exhibits A and B are subject to change on January
1 of each year.

     5.7
Invoices. Engineer shall submit a monthly invoice
(“Monthly Invoice”)
for Services provided and for reimbursable expenses incurred by Engineer and any Subcontractors.

     5.8 Payment. Within thirty (30) days after Client’s receipt of each Monthly Invoice, Client
shall pay Engineer all amounts due.

     5.9 Late Payment and Interest. If Client fails to make payment within thirty (30) days after
receipt of Monthly Invoice, interest at the maximum legal rate or at an annual rate of 18%,
whichever is less, shall accrue

     5.10 Suspension for Failure to Pay. If Client fails to make payment within thirty (30) days
after receipt of Monthly Invoice, Engineer may, at its option, after giving seven (7) days’
written notice, suspend Services until all amounts due to Engineer by Client have been paid in
full.

     5.11 Payments from Lawful Sources. Client shall provide for payment from one or more lawful
source of all sums to be paid Engineer.

     5.12 Withholding Payments. Engineer’s compensation shall not be reduced on account of any
amounts withheld from payment to Subcontractors.

     5.13 Purchase Orders. If Client issues a purchase order or other document to initiate the
commencement of Services hereunder, it
is expressly agreed that any terms and conditions appearing thereon shall have no application
and only the provisions of this Agreement shall apply.

     5.14 Changes in Project. If Client requests changes in the Project which affect the Services,
compensation for and time of performance of Engineer’s services shall be adjusted appropriately.

Article 6

Construction Cost and Cost Estimates

     6.1 Cost Estimates. Client and Engineer acknowledge that Engineer has no control over cost of
labor, materials, equipment of services furnished by others, over contractors’ methods of
determining prices, or other competitive bidding or market conditions and that Engineer’s
estimates of Project construction cost will be made on the basis of its employees’ experience and
qualifications and will represent Engineer’s employees’ best judgment as experienced and qualified
professionals, familiar with the construction industry. Engineer does not guarantee that proposal,
bids, or icing

					
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construction cost will not vary from its estimates of Project cost and Client
acknowledges the same.

Article 7

Termination

     7.1 Termination Upon Default. Either party may terminate this Agreement upon twenty (20) days’
written notice if the non-terminating party has defaulted through no fault of the terminating
party.

     7.2 Termination Upon Abandonment of Plant. Client may terminate Engineer’s obligation to
provide further services upon twenty (20) days’ written notice if Client abandons development of
the Plant. In such event, all past due amounts for services rendered (including Subcontractor’s
fees, if any) and any unpaid reimbursable expenses shall be immediately due and payable by Client.

Article 8

Ownership of Work Product

     8.1 Work Product. All tangible items prepared by Engineer, including but not limited to all
drawings, specifications, calculations, data, notes and other materials and documents, including
electronic data furnished by Engineer to Client and to Subcontractors under this Agreement
(“Work Product”) shall be instruments of service, and Engineer shall retain the ownership
and property interests therein, including the copyrights thereto.

     8.2 Copies Provided to Client. Client may retain copies of Work Product for reference;
provided, however, that Client may not make copies of the Work Product available without Engineer’s
written permission, and, granted such permission, may only do so to the extent the use of such
copies of the Work Product directly pertains to the Services, the Plant, or the construction
thereof. Pursuant to Section 8.1 of this Agreement, Engineer retains ownership of and property
interests in any Work Product made available and/or copied.

     8.3 Prohibited Use of Work Product. Reuse of the Work Product on any another Project without
Engineer’s written consent is prohibited. Client shall indemnify and hold harmless Engineer
Responsible Parties against claims resulting from such prohibited reuse. Said items are not
intended to be suitable for completion of this Project by others.

     8.4 Derogation of Engineer’s Rights to Work Product. Submittal or distribution of Work Product
in connection with the performance and completion of the Services and the construction of the
Project does not constitute publication in derogation of Engineer’s rights and does not in any way
diminish Engineer’s Work Product rights established herein.

					
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Article 9

Successors and Assigns

     9.1 Successors. The Parties intend that the provisions of this Agreement are binding upon the
Parties, their employees, agents, heirs, successors and assigns.

     9.2 Written Consent Required. Neither Party shall assign, sublet, or transfer any interest in
this Agreement without written consent of the other; provided, however, that Engineer may employ
such Subcontractors as it may deem appropriate and may transfer or assign any interest in this
Agreement or the Work Product to Design-Builder without consent of Client.

     9.3 No Third-Party Beneficiaries. None of the provisions of this Agreement will be for the
benefit of or enforceable by any person other than the Parties hereto, their successors and
permitted assigns and legal representatives

Article 10

Warranty

     10.1 No Warranty Extended. Engineer shall use reasonable care to reflect requirements of all
Applicable Laws, rules, or regulations of which Engineer has knowledge or about which Client
specifically advises in writing, which are in effect on the date of this Agreement. ENGINEER
INTENDS TO RENDER SERVICES IN ACCORDANCE WITH GENERALLY ACCEPTED PROFESSIONAL STANDARDS, BUT NO
OTHER WARRANTY IS EXTENDED, EITHER EXPRESS OR IMPLIED, IN CONNECTION WITH SUCH SERVICES. Client’s
rights and remedies in this Agreement are exclusive.

     10.2 No Responsibility for Construction. Engineer shall not be responsible for construction of
the Plant, contractors’ construction means, methods, techniques, sequences, or procedures, or for
contractors’ safety precautions and programs, or for contractors’ failure according to contract
documents.

Article 11

Indemnification

     11.1 Engineer’s Indemnification. To the fullest extent permitted by law, Engineer shall
indemnify and hold harmless Client, Client’s officers, directors, partners, employees, and agents
from and against any and all claims for bodily injury and for damage to tangible property caused
solely by the negligent acts or omissions of Engineer or Engineer Responsible Parties and
Engineer’s Engineers in the performance and furnishing of Engineer’s Services under this Agreement.
Any indemnification shall be limited to the terms and amounts of coverage of the Engineer’s
insurance policies.

					
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     11.2 Client’s Indemnification. To the fullest extent permitted by law, Client shall indemnify
and hold harmless Engineer, Engineer’s officers, directors, partners, employees, and agents and
Engineer’s Engineers from and against any and all claims for bodily injury and for damage to
tangible property caused solely by the negligent acts of omission of Client or Client’s officers,
directors, partners, employees, agents, and Client’s Engineers with.. respect to this Agreement or
the Project.

     11.3 Hazardous Materials Indemnification. In addition to the indemnity provided under this
section, and to the fullest extent permitted by law, Client shall indemnify and hold harmless
Engineer and its officers, directors, partners, employees, and agents and Engineer’s Engineers from
and against all claims, costs, losses, and damages (including but not limited to all fees and
charges of engineers, architects, attorneys, and other professionals and all court or arbitration
or other dispute resolution costs) caused by, arising out of, or relating to the presence,
discharge, release, or escape of asbestos, PCBs, petroleum, hazardous waste, or radioactive
materials at, on, under, or from the Site.

Article 12

Dispute Resolution

     12.1 Arbitration. In an effort to resolve any conflicts that arise out of or relate to this
Agreement, the Client and the Engineer agree that all disputes shall be submitted first to
nonbinding mediation. If mediation does not resolve the conflicts, the controversy shall be decided
by final and binding arbitration conducted in Minneapolis, Minnesota in accordance with the
Construction Industry Arbitration Rules of the American Arbitration Association then in effect,
unless the Parties mutually agree otherwise.

The award of the arbitrator(s) shall be final and binding upon the Parties without the right of
appeal to the courts. Judgment may be entered upon it in accordance with Applicable Law by any
court having jurisdiction thereof.

Engineer and Client expressly agree that any arbitration pursuant to this Section 12.1 may be
joined or consolidated with any arbitration involving any other person or entity (i) necessary to
resolve the claim, dispute or controversy, or (ii) substantially involved in or affected by such
claim, dispute or controversy. Both Engineer and Client will include appropriate provisions in all
contracts they execute with other parties in connection with the Services to require such joinder
or consolidation.

The prevailing Party in any arbitration, or any other final, binding dispute proceeding upon which
the Parties may agree, shall be entitled to recover from the other Party reasonable attorneys’ fees
and expenses incurred by the prevailing Party.

					
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Article 13

Confidentiality

     13.1 Non-Disclosure Obligation. Except as required by court order, subpoena, or Applicable
Law, neither Party shall disclose to third parties any confidential or proprietary information
regarding the other Party’s business affairs, finances, technology, processes, plans or
installations, product information, know-how, or other information that is received from the other
Party pursuant to this Agreement or the Parties’ relationship prior thereto or is developed
pursuant to this Agreement, without the express written consent of the other Party, which consent
shall not be unreasonably withheld. The Parties shall at all times use their respective reasonable
efforts to keep all information regarding the terms and conditions of this Agreement confidential
and shall disclose such information to third Persons only as reasonably required for the permitting
of the Project; financing the development, construction, ownership, operation and maintenance of
the Plant; or as reasonably required by either Party for performing its obligations hereunder and
if prior to such disclosure, the disclosing Party informs such third Persons of the existence of
this confidentiality obligation and only if such third Persons agree to maintain the
confidentiality of any information received. This Article 13 shall not apply to information that
was already in the
possession of one Party prior to receipt from the other, that is now or hereafter becomes a
part of the public domain through no fault of the Party wishing to disclose, or that corresponds in
substance to information heretofore or hereafter furnished by third parties without restriction on
disclosure,

     13.2 Publicity and Advertising. Neither Client nor Engineer shall make or permit any of their
subcontractors, agents, or vendors to make any external announcement or publication, release any
photographs or information concerning the Project or any part thereof, or make any other type of
communication to any member of the public, press, business entity, or any official body which names
the other Party unless prior written consent is obtained from the other Party, which consent shall
not be unreasonably withheld.

     13.3 Term of Obligation. The confidentiality obligations of the Parties pursuant to this
Article 13 shall survive the expiration or other termination of this Agreement.

Article 14

Miscellaneous

     14.1 Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with, the substantive laws of the state of Minnesota, without regard to the conflict of
laws provisions thereof.

     14.2 Severability. If any provision or any part of a provision of the Agreement shall be
finally determined to be superseded, invalid, illegal, or otherwise unenforceable pursuant to any
applicable Legal Requirements, such determination shall not impair or otherwise affect the
validity, legality, or enforceability of the remaining provision or parts of

					
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the provision of the
Agreement, which shall remain in full force and effect as if the unenforceable provision or part
were deleted.

     14.3 No Waiver. The failure of either Engineer or Client to insist, in any one or more
instances, on the performance of any of the obligations required by the other under this Agreement
shall not be construed as a waiver or relinquishment of such obligation or right with respect to
future performance.

     14.4 Captions and Headings. The table of contents and the headings used in this Agreement are
for ease of reference only and shall not in any way be construed to limit, define, extend,
describe, alter, or otherwise affect the scope or the meaning of any provision of this Agreement.

     14.5 Engineer’s Accounting Records. Records of Engineer’s personnel time, reimbursable
expenses, and accounts between parties shall be maintained on a generally recognized accounting
basis.

     14.6 Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall be deemed one and the same Agreement,
and may be executed and delivered by facsimile signature, which shall be considered an original.

     14.7 Survival. Notwithstanding any provisions herein to the contrary, the Work Product
provisions set forth in Article 8 and the indemnity obligations set forth herein shall survive (in
full force) the expiration or termination of this Agreement, and shall continue to apply to the
Parties to this Agreement even after termination of this Agreement or the transfer of such Party’s
interest in this Agreement.

     14.8 No Privity with Client’s Contractors. Nothing in this Agreement is intended or deemed to
create any legal or contractual relationship between Engineer and any Client contractor or
subcontractor retained to perform the Phase I and Phase II Site work required of Client prior to
the issuance of a Notice to Proceed pursuant to the Design-Build Agreement,

     14.9 Amendments. This Agreement may not be changed, altered, or amended in any way except in
writing signed by a duly authorized representative of each Party.

     14.10 Entire Agreement. This Agreement consists of the terms and conditions set forth herein,
as well as the Exhibits hereto, which are incorporated by reference herein and made a part hereof.
This Agreement sets forth the full and complete understanding of the Parties as of the Effective
Date with respect to the subject matter hereof

     14.11 Notice. Whenever the Agreement requires that notice be provided to a Party, notice shall
be delivered in writing to such party at the address listed below. Notice will be deemed to have
been validly given if delivered (i) in person to the individual intended to receive such notice,
(ii) by registered or by certified mail, postage prepaid to the address

					
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indicated in the Agreement
within four (4) days after being sent, or (iii) by facsimile, by the time stated in a machine
generated confirmation that notice was received at the facsimile number of the intended recipient.

If to Engineer, to:

Fagen Engineering LLC

501 W. High way 212 P. O. Box 159

Granite Falls, MN 36241

Attention: John Austgen

Fax: (320) 564-4861

with a copy to:

Fagen, Inc.

501 W. Highway 212

P. O. Box 159

Granite Falls, MN 56241

Attention: Bruce Langseth

Fax: (320) 564-3278

If to Client, to:

Mr. Troy Prescott

Cardinal Ethanol, LLC

2 Omco Square, Suite 201

PO Box 501

Winchester, IN 47394

     14.12 Extent of Agreement. This Agreement and the Exhibits incorporated therein represent
the entire agreement between the Parties and may be amended only by written instrument signed by
both Parties.

     14.13 Subrogation Waiver. The Parties waive all rights against each other, and against the
contractors, Engineers, agents, and employees of the other fur damages covered by any property
insurance during construction, and each shall require similar waivers from their contractors,
Engineers, and agents.

					
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IN WITNESS WHEREOF, the Parties hereto have caused their names to be hereunto subscribed by their
officers thereunto duly authorized, intending thereby that this Agreement shall be effective as of
this December 13, 2005.

	 	 	 	 	 	 	 	 	 	 	 
	CARDINAL ETHANOL, LLC	 	 	 	FAGEN ENGINEERING, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Troy Prescot
	 	 	 	By:
	 	/s/ John Austgen	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:

	 	President
	 	 	 	Title:
	 	Vice President	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Address for giving notices:	 	 	 	Address for giving notices:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	2 Omco Square, Suite 201	 	 	 	501 West Highway 212	 	 
	PO Box 501	 	 	 	PO Box 159	 	 
	Winchester, IN 47394	 	 	 	Granite Falls, MN 56241	 	 

					
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EXHIBIT A

FAGEN ENGINEERING LLC

Fee Schedule FY 2005

CONFIDENTIAL

	 	 	 	 	 	 	 	 	 
	TYPICAL ASSIGNMENT	 	BILLING CLASS	 	BILLING RATE
	Clerical / CADD Operator
	 	 	1	 	 	$	31.00	 
	Clerical / CADD Operator
	 	 	2	 	 	$	47.85	 
	CADD Operator / Designer
	 	 	3	 	 	$	61.97	 
	CADD Operator / Designer / Engineer
	 	 	4	 	 	$	77.45	 
	Designer / Engineer / PM
	 	 	5	 	 	$	93.29	 
	Engineer / Senior Engineer 1 PM
	 	 	6	 	 	$	108.93	 
	Senior Engineer / PM
	 	 	7	 	 	$	124.76	 
	Senior Engineer / PM
	 	 	8	 	 	$	140.25	 
	Senior Engineer 1 PM / Principal
	 	 	9	 	 	$	156.08	 
	PM / Principal
	 	 	10	 	 	$	171.72	 
	Principal
	 	 	11	 	 	$	187.36	 
	Principal
	 	 	12	 	 	$	203.04	 
	Principal
	 	 	13	 	 	$	218.68	 

Subject to Revision January 1, 2006

					
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EXHIBIT B

Fagen Engineering LLC

Reimbursable Expense Schedule

Effective January 1, 2005

CONF1DENTLAL

	 	 	 	 	 	 	 
	Expense Code	 	Expense Description	 	Billing Rate
	BCA

	 	Blackline Print Copy — A
	 	$	 .95
	BCB

	 	Blackline Print Copy — B
	 	$	 .95
	BCC

	 	Blackline Print Copy — C
	 	$	 1.20
	BCD

	 	Blackline Print Copy — D
	 	$	 1.80
	BCE

	 	Blackline Print Copy — E
	 	$	 3.55
	BOA

	 	Paper Print Original — A
	 	$	 1.20
	BOB

	 	Paper Print Original — B
	 	$	 1.50
	BOC

	 	Paper Print Original — C
	 	$	 1.80
	BOD

	 	Paper Print Original — D
	 	$	 2.10
	BOE

	 	Paper Print Original — E
	 	$	 4.20
	DISK

	 	Floppy Disk
31/2”lea
	 	$	 2.40
	FAX

	 	Fax Machine Usage/Page
	 	$	 1.15
	LD

	 	Long Distance Phone Calls
	 	cost plus 10% markup

	LODGING

	 	Lodging
	 	cost plus 10% markup

	MEALS

	 	Meal Expense
	 	cost plus 10% markup

	MILEAGE

	 	Mileage/Mile
	 	$	 .405
	PC1

	 	Photocopies 81A.x1l (<100)/ea
	 	$	 .23
	PC2

	 	Photocopies 11 x 17/ea
	 	$	 .49
	PC3

	 	Photocopies (>100)/ea
	 	$	 .16
	PO

	 	Postage
	 	cost plus 10% markup

	PROSVC

	 	Outside Professional Services
	 	Cost

	PROSVCEXP

	 	Outside Professional Services Expenses
	 	cost plus 10% markup

	FLM

	 	Film & Developing
	 	cost plus 10% markup

	SPECCOV

	 	Specification Book — Cover & Binder/ea
	 	$	 3.00
	TRANS

	 	Transportation
	 	cost plus 10% markup

	UPS

	 	Delivery Service Charges
	 	cost plus 10% markup

	VELLUM

	 	Original Print/square foot
	 	$	 3.00

Subject to Revision January 1, 2006

					
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EXHIBIT C

Client’s Deliverable Site Obligations

Phase I Deliverables

          Prior to Engineer’s commencement of the Phase I Design Package work, the Client shall provide
Engineer with the following Phase I Deliverables:

	 	1.	 	A legal description of the Site
	 
	 	2.	 	Temporary and permanent easements, zoning, and other requirements and encumbrances
affecting land use or necessary to permit the proper design and construction of the
Project and enable Design-Builder to perform the Work
	 
	 	3.	 	To the extent available, as-built and record drawings of any existing structures at
the Site
	 
	 	4.	 	Environmental studies, reports and impact statements describing the environmental
conditions, including Hazardous Conditions, in existence at the Site
	 
	 	5.	 	Preliminary approval from Client’s Rail service provider of rail design as prepared
by Client’s Rail Designer.
	 
	 	6.	 	Client’s written approval of final site layout including rail design and
environmental permitting emission points.
	 
	 	7.	 	Review, comment, and written approval of Client’s air permit application.
	 
	 	8.	 	Topographic Survey to one (1) foot contours including property boundaries and at
least two (2) benchmarks including existing service and utility lines.
	 
	 	9.	 	Soil borings logs for all soil borings complete at Engineer’s specified locations.
	 
	 	10.	 	Geotechnical Report regarding subsurface conditions with Client’s Geotechnical
Engineer’s recommendations from Engineer approved Geotechnical Engineer (Terracon is
preferred) including soil borings, and any other surveys or information available
describing other latent or concealed physical conditions at the Site.
	 
	 	11.	 	On-site location for Storm Water discharge.
	 
	 	12.	 	Preliminary NPDES discharge location for water discharges from utility discharges
including, but not limited to the water pre-treatment system, water softeners, and cooling
tower blowdown.
	 
	 	13.	 	Preliminary indication of source, analysis, and location of Client’s water supply.
	 
	 	14.	 	Client’s risk insurance provider’s specific requirements for fire protection or
approval to design fire protection to Liberty Insurance standards.
	 
	 	15.	 	Any special sizing or other requirements for ethanol storage tank farm.
	 
	 	16.	 	Preliminary location and design of administration building.

					
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Phase II Deliverables

          Prior to Engineer’s commencement of the Phase II Design. Package work, the Client shall
provide Engineer with the following Phase II Deliverables:

	 	1.	 	Final location, source and quality of Client’s water supply.
	 
	 	2.	 	Off-site utility tie-in locations at or near the property lines (this includes, but
is not limited to, gas supply, electrical supply, water supply if no on-site wells,
on-site or off-site sanitary sewer)
	 
	 	3.	 	Final NPDES discharge location for Utility Water Blowdown.
	 
	 	4.	 	An insurance provider to allow the proper positioning and number of required hydrants
and hydrants with monitors.
	 
	 	5.	 	Written approval of final rail design from the Client’s rail service provider.
	 
	 	6.	 	Final location and design. (general arrangement) of the Client’s administration
building.
	 
	 	7.	 	Final water pre-treatment design and operating parameters.
	 
	 	8.	 	Design and location of sanitary sewer discharge point of septic system.

					
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