Exhibit 10.27**SECURITY AGREEMENT**     This Security Agreement (“Agreement”), dated as of December 19, 2006, is between CARDINALETHANOL, LLC, an Indiana limited liability company (the “Debtor”), and FIRST NATIONAL BANK OFOMAHA, a national banking association (the “Secured Party”).     WHEREAS, the Debtor has entered into a Construction Loan Agreement dated of even date withthis Agreement (as amended, restated and in effect from time to time, the “Loan Agreement”), withthe Secured Party, pursuant to which the Secured Party, subject to the terms and conditionscontained therein, is to make loans or otherwise to extend credit to the Debtor; and     WHEREAS, it is a condition precedent to the Secured Party’s extending the Obligations to theDebtor under the Loan Agreement that the Debtor execute and deliver to the Secured Party a securityagreement in substantially the form hereof; and     WHEREAS, the Debtor wishes to grant a security interest in favor of the Secured Party asherein provided.     NOW, THEREFORE, in consideration of the promises contained herein and for other good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, the partieshereto agree as follows:     1. Definitions. All capitalized terms used herein without definitions shall have therespective meanings provided therefor in the Loan Agreement. The term “State,” as used herein,means the State of Nebraska. All terms defined in the Uniform Commercial Code of the State andused herein shall have the same definitions herein as specified therein. However, if a term isdefined in Article 9 of the Uniform Commercial Code of the State differently than in anotherArticle of the Uniform Commercial Code of the State, the term has the meaning specified in Article9. The term “Obligations,” as used herein, means all of the indebtedness, obligations andliabilities of the Debtor to the Secured Party of every kind, nature or description, individuallyor collectively, whether direct or indirect, joint or several, absolute or contingent, primary orsecondary, due or to become due, now existing or hereafter arising, whether provided for under orin respect of the Loan Agreement or otherwise or under any promissory notes or other instruments oragreements executed and delivered pursuant thereto or in connection therewith or this Agreement orotherwise and any overdrafts or other deposit account liabilities of the Debtor to the SecuredParty, and the term “Event of Default,” as used herein, means the failure of the Debtor to pay orperform any of the Obligations as and when due to be paid or performed under the terms of the LoanAgreement and the other Loan Documents and shall also have the meaning given to such term in theLoan Agreement or any other Loan Document.     2. Grant of Security Interest. The Debtor hereby grants to the Secured Party tosecure the payment and performance in full of all of the Obligations, a first priority securityinterest in and so pledges and assigns to the Secured Party in all goods, property and assets ofthe Debtor, including, but not limited to the following goods, property, assets and rights of the
 

 
Debtor, wherever located, whether now owned or hereafter acquired or arising, and all proceeds andproducts thereof (all of the same being hereinafter called the “Collateral”):     2.1. All personal and fixture property of every kind and nature including, without limitation,all goods, equipment, inventory, grain, furniture and fixtures, all of every kind and nature(including any accessions, additions, improvements, attachments and accessories thereto andproducts and proceeds thereof, and all operating manuals, service records, maintenance logs andwarranties applicable thereto), and including all inventory, including, but not limited to, allcorn, grain and ethanol inventory, in which the Debtor has an interest in mass or a joint or otherinterest or right of any kind.     2.2. All instruments (including promissory notes, notes receivable and supportingobligations), documents, negotiable and non-negotiable documents of title, negotiable andnon-negotiable warehouse receipts, bills of lading, transit receipts or other documents of title,however denominated (collectively, “Warehouse Receipts”), and the goods underlying or relating toWarehouse Receipts, including, but not limited to, the Debtor’s present and future rights to takepossession and delivery of goods underlying or relating to any Warehouse Receipt.     2.3. All accounts, all of the Debtor’s rights to goods represented by or securing anyaccounts, all proceeds from the disposition or collection of accounts, all of the Debtor’s rightsas an unpaid vendor, including the right to reclaim goods, the right to stop goods in transit andthe right to replevy goods, and all guaranties, letters of credit and other supports to the paymentof accounts, chattel paper (whether tangible or electronic), deposit accounts (whether maintainedwith the Secured Party or other financial institutions), certificates of deposit (whethernegotiable or non-negotiable), letter-of-credit rights (whether or not the letter of credit isevidenced by a writing), supporting obligations, any other contract rights or rights to the paymentof money, insurance claims and proceeds, trademarks, service marks, copyrights, patents and otherintellectual property rights and all of the Debtor’s rights therein or thereto, software, generalintangibles (including all payment intangibles), all payments and rights to payments whether or notearned by performance including, but not limited to, accounts and payments from the USDA CommodityCredit Corporation Bioenergy Program and other similar programs, price support payments, subsidypayments, guaranty payments, payments in kind, deficiency payments, letters of entitlements,storage payments, emergency assistance, diversion payments, production flexibility contracts,contract reserve payments, grain insurance fund claim rights, grain insurance fund proceeds and allsimilar programs of any and every kind, whether federal, state or local, and any other rights topayment under or from any preexisting, current or future federal, state or local governmentprogram, and the products and proceeds of all the foregoing.     2.4. All farm products, including, but not limited to, all poultry and livestock and theiryoung, together with all products and replacements for such poultry and livestock; all crops,annual or perennial, and all products of such crops; and all grain, feed, seed, fertilizer,chemicals, medicines, and other supplies used or produced in the Debtor’s operations or sold asinventory, and the products and proceeds and rights to payments associated with all or any of theforegoing.     2.5. All books, records, ledger sheets or cards, reports, invoices, purchase orders, customerlists, mailing lists, files, correspondence, computer programs, tapes, disks and other
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documents or data processing software that at any time relates to any of the foregoing or areotherwise necessary or helpful in realizing on or collecting on any Collateral.     2.6. All investment property, securities, securities accounts (including, but not limited to,all accounts maintained with First National Capital Markets, Inc.) and the securities entitlements,securities and investment property contained therein, all hedging accounts and all commodity andsecurities entitlements, investment property, commodities and other rights associated with suchhedging accounts, and all commodity accounts and all the commodities, securities and investmentproperty contained therein.     2.7. All commercial tort claims now existing or hereafter arising. The Secured Partyacknowledges that the attachment of its security interest in any additional commercial tort claimas original collateral is subject to the Debtor’s compliance with Section 4.7 below.     3. Authorization to File Financing Statements. The Debtor hereby irrevocablyauthorizes the Secured Party at any time and from time to time to file in any filing office in anyUniform Commercial Code jurisdiction any initial financing statements and amendments thereto that(a) indicate and describe the Collateral, including, but not limited to, descriptions of theCollateral as all assets of the Debtor, or words of similar effect, and (b) provide any otherinformation required by part 5 of Article 9 of the Uniform Commercial Code of the State, or suchother jurisdiction, for the sufficiency or filing office acceptance of any financing statement oramendment, including (i) whether the Debtor is an organization, the type of organization and anyorganizational identification number issued to the Debtor and, (ii) in the case of a financingstatement filed as a fixture filing or indicating Collateral as as-extracted collateral or timberto be cut, a sufficient description of real property to which the Collateral relates. The Debtoragrees to furnish any such information to the Secured Party promptly upon the Secured Party’srequest. In addition, the Debtor hereby authorizes the Secured Party to file all effectivefinancing statements pursuant to 7 U.S.C. Section 1631, and amendments to effective statements,describing the Collateral in any offices as the Secured Party, in its sole discretion, maydetermine. If requested by the Secured Party, the Debtor will provide the Secured Party with alist of the buyers, commission merchants and selling agents to or through whom the Debtor may sellfarm products or grain and a list of all elevators, warehousemen or others where the Debtor storescorn. The Debtor authorizes the Secured Party to notify all such buyers, commission merchants,selling agents, elevators, warehousemen or any other person, of the Secured Party’s securityinterest in the Debtor’s farm products, corn or grain unless prohibited by law. The Debtor alsoratifies its authorization for the Secured Party to have filed in any Uniform Commercial Codejurisdiction any like initial financing statements or amendments thereto if filed prior to the datehereof.     4. Other Actions. To further the attachment, perfection and first priority of, andthe ability of the Secured Party to enforce, the Secured Party’s security interest in theCollateral, and without limitation on the Debtor’s other obligations in this Agreement, the Debtoragrees, in each case at the Debtor’s expense, to take the following actions with respect to thefollowing Collateral:     4.1. Promissory Notes, Instruments and Tangible Chattel Paper. If the Debtorshall at any time hold or acquire any instruments, promissory notes or tangible chattel
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paper, the Debtor shall, upon request of the Secured Party, forthwith endorse, assign anddeliver the same to the Secured Party, accompanied by such instruments of transfer orassignment duly executed in blank as the Secured Party may from time to time specify. TheDebtor will not deliver possession of, endorse or assign any instruments, promissory notesor tangible chattel paper to any person or entity other than the Secured Party.     4.2. Deposit Accounts. For each deposit account that the Debtor at any timeopens or maintains, the Debtor shall, at the Secured Party’s request and option, pursuant toan agreement in form and substance satisfactory to the Secured Party, either (a) cause thedepositary bank to comply at any time with instructions from the Secured Party to suchdepositary bank directing the disposition of funds from time to time credited to suchdeposit account, without further consent of the Debtor, or (b) arrange for the Secured Partyto become the customer of the depositary bank with respect to the deposit account, with theDebtor being permitted, only with the consent of the Secured Party, to exercise rights towithdraw funds from such deposit account. The Secured Party agrees with the Debtor that theSecured Party shall not give any such instructions or withhold any withdrawal rights fromthe Debtor, unless an Event of Default has occurred and is continuing, or would occur, ifeffect were given to any withdrawal not otherwise permitted by the Loan Documents. Theprovisions of this paragraph shall not apply to (i) any deposit account for which theDebtor, the depositary bank and the Secured Party have entered into a cash collateralagreement specially negotiated among the Debtor, the depositary bank and the Secured Partyfor the specific purpose set forth therein, (ii) a deposit account for which the SecuredParty is the depositary bank and is in automatic control, and (iii) deposit accountsspecially and exclusively used for payroll, payroll taxes and other employee wage andbenefit payments to or for the benefit of the Debtor’s salaried employees.     4.3. Investment Property. If the Debtor shall at any time hold or acquire anycertificated securities, the Debtor shall forthwith endorse, assign and deliver the same tothe Secured Party, accompanied by such instruments of transfer or assignment duly executedin blank as the Secured Party may from time to time specify. If any securities now orhereafter acquired by the Debtor are uncertificated and are issued to the Debtor or itsnominee directly by the issuer thereof, the Debtor shall immediately notify the SecuredParty thereof and, at the Secured Party’s request and option, pursuant to an agreement inform and substance satisfactory to the Secured Party, either (a) cause the issuer to agreeto comply with instructions from the Secured Party as to such securities, without furtherconsent of the Debtor or such nominee, or (b) arrange for the Secured Party to become theregistered owner of the securities. If any commodity interests or securities, whethercertificated or uncertificated, or other investment property now or hereafter acquired bythe Debtor are held by the Debtor or its nominee through a securities intermediary orcommodity intermediary, the Debtor shall immediately notify the Secured Party thereof and,at the Secured Party’s request and option, pursuant to an agreement in form and substancesatisfactory to the Secured Party, either (i) cause such securities intermediary or (as thecase may be) commodity intermediary to agree to comply with entitlement orders or otherinstructions from the Secured Party to such securities intermediary as to such securities orother investment property, or (as the case
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may be) to apply any value distributed on account of any commodity contract as directed bythe Secured Party to such commodity intermediary, in each case without further consent ofthe Debtor or such nominee, or (ii) in the case of financial assets or other investmentproperty held through a securities intermediary, arrange for the Secured Party to become theentitlement holder with respect to such investment property, with the Debtor beingpermitted, only with the consent of the Secured Party, to exercise rights to withdraw orotherwise deal with such investment property. The Secured Party agrees with the Debtor thatthe Secured Party shall not give any such entitlement orders or instructions or directionsto any such issuer, securities intermediary or commodity intermediary, and shall notwithhold its consent to the exercise of any withdrawal or dealing rights by the Debtor,unless an Event of Default has occurred and is continuing, or, after giving effect to anysuch investment and withdrawal rights not otherwise permitted by the Loan Documents, wouldoccur.     4.4. Collateral in the Possession of a Bailee. If any Collateral is at anytime in the possession of a bailee, warehouseman or elevator, the Debtor shall promptlynotify the Secured Party thereof and, at the Secured Party’s request and option, shallpromptly obtain an acknowledgement from the bailee, warehouseman or elevator, in form andsubstance satisfactory to the Secured Party, that the bailee, warehouseman or elevator holdssuch Collateral for the benefit of the Secured Party, and that such bailee, warehouseman orelevator agrees to comply, without further consent of the Debtor, with instructions from theSecured Party as to such Collateral, including, but not limited to, the delivery of suchCollateral to the Secured Party or as the Secured Party directs, or the payment of the saleproceeds of such Collateral to the Secured Party, or as the Secured Party directs. TheSecured Party agrees with the Debtor that the Secured Party shall not give any suchinstructions unless an Event of Default has occurred and is continuing or would occur aftertaking into account any action by the Debtor with respect to the bailee, warehouseman orelevator.     4.5. Electronic Chattel Paper and Transferable Records. If the Debtor at anytime holds or acquires an interest in any electronic chattel paper or any “transferablerecord,” as that term is defined in Section 201 of the federal Electronic Signatures inGlobal and National Commerce Act (as hereafter amended), or in Section 16 of the UniformElectronic Transactions Act as in effect in any relevant jurisdiction, the Debtor shallpromptly notify the Secured Party thereof and, at the request and option of the SecuredParty, shall take such action as the Secured Party may reasonably request to vest in theSecured Party control, under Section 9-105 of the Uniform Commercial Code, of suchelectronic chattel paper or control under Section 201 of the federal Electronic Signaturesin Global and National Commerce Act or, as the case may be, Section 16 of the UniformElectronic Transactions Act, as so in effect in such jurisdiction, of such transferablerecord. The Secured Party agrees with the Debtor that the Secured Party will arrange,pursuant to procedures satisfactory to the Secured Party and so long as such procedures willnot result in the Secured Party’s loss of control, for the Debtor to make alterations to theelectronic chattel paper or transferable record permitted under UCC Section 9-105 or, as thecase may be, Section 201 of the federal Electronic Signatures in Global and NationalCommerce Act or Section 16 of the Uniform Electronic Transactions
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Act for a party in control to make without loss of control, unless an Event of Default hasoccurred and is continuing or would occur after taking into account any action by the Debtorwith respect to such electronic chattel paper or transferable record.     4.6. Letter-of-Credit Rights. If the Debtor is at any time a beneficiary undera letter of credit, the Debtor shall promptly notify the Secured Party thereof and, at therequest and option of the Secured Party, the Debtor shall, pursuant to an agreement in formand substance satisfactory to the Secured Party, either (i) arrange for the issuer and anyconfirmer or other nominated person of such letter of credit to consent to an assignment tothe Secured Party of the proceeds of the letter of credit, or (ii) arrange for the SecuredParty to become the transferee beneficiary of the letter of credit, with the Secured Partyagreeing, in each case, that the proceeds of the letter to credit are to be applied to theObligations in such order and priority as the Secured Party.     4.7 Commercial Tort Claims. If the Debtor shall at any time hold or acquire acommercial tort claim, the Debtor shall immediately notify the Secured Party in a writingsigned by the Debtor of the particulars thereof and grant to the Secured Party in suchwriting a security interest therein and in the proceeds thereof, all upon the terms of thisAgreement, with such writing to be in form and substance satisfactory to the Secured Party.     4.8 Other Actions as to Any and All Collateral. The Debtor further agrees, atthe request and option of the Secured Party, to take any and all other actions the SecuredParty may determine to be necessary or useful for the attachment, perfection and firstpriority of, and the ability of the Secured Party to enforce, the Secured Party’s securityinterest in any and all of the Collateral, including, without limitation, (a) executing,delivering and, where appropriate, filing financing statements and amendments relatingthereto under the Uniform Commercial Code, to the extent, if any, that the Debtor’ssignature thereon is required therefor, (b) causing the Secured Party’s name to be noted assecured party on any certificate of title for a titled good if such notation is a conditionto attachment, perfection or priority of, or ability of the Secured Party to enforce, theSecured Party’s security interest in such Collateral, (c) complying with any provision ofany statute, regulation or treaty of the United States as to any Collateral if compliancewith such provision is a condition to attachment, perfection or priority of, or ability ofthe Secured Party to enforce, the Secured Party’s security interest in such Collateral, (d)obtaining governmental and other third party waivers, consents and approvals in form andsubstance satisfactory to Secured Party, including, without limitation, any consent of anylicensor, lessor or other person obligated on Collateral, (e) obtaining waivers frommortgagees and landlords in form and substance satisfactory to the Secured Party and (f)taking all actions under any earlier versions of the Uniform Commercial Code or under anyother law, as reasonably determined by the Secured Party to be applicable in any relevantUniform Commercial Code or other jurisdiction, including any foreign jurisdiction.
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          4.9. Warehouse Receipts.     (a) The Debtor has delivered or will deliver to the Secured Party any and alldocuments, instruments and writings in any way relating to the Warehouse Receipts or in anyway relating to the property evidenced thereby. As long as this Agreement remains ineffect, the Debtor shall immediately deliver to the Secured Party any and all futuredocuments, instruments, or other writings applicable or in any way relating to the foregoingin the Debtor’s possession. In the event that the Debtor is unable to deliver originalWarehouse Receipts, and such other documents, to the Secured Party at the time thisAgreement is executed, as required above, the Debtor agrees to deliver immediately suchWarehouse Receipts to the Secured Party upon issuance of the same.     (b) The Debtor further agrees that the Secured Party shall have the right at any time,and from time to time, whether or not one or more Event of Default exist under the LoanAgreement, to demand that the Debtor immediately deliver to the Secured Party any and allWarehouse Receipts held in the Debtor’s possession or control for or representing all or anypart of the Collateral that is then or may thereafter be issued in the name of the Debtor.The Debtor unconditionally agrees to deliver such Warehouse Receipts to the Secured Party ondemand.     (c) In addition to Warehouse Receipts, the Secured Party may require the Debtor fromtime to time, one or more times, to deliver to the Secured Party such lists, descriptionsand designations of any applicable Collateral not represented by Warehouse Receipts as theSecured Party may require to identify the nature, extent and location of the same.     (d) The Debtor represents and warrants to the Secured Party that all of the Debtor’sgrain at any time, and from time to time, represented by Warehouse Receipts or included inany list, description or designation referred to above, will at all times be owned by theDebtor free and clear of all liens, encumbrances and security interests of any kindwhatsoever, excepting only the security interest of the Secured Party pursuant hereto.     (e) As long as no Event of Default exists, the Debtor may sell or use in its operationsthe property released by the Secured Party from or under Warehouse Receipts, as well as theDebtor’s property not represented by Warehouse Receipts, in carrying on the Debtor’sbusiness in the ordinary course, substantially in the same manner as now conducted; but asale in the ordinary course of business shall not include any transfer or sale insatisfaction, partial or complete, of a debt owed by the Debtor.     4.10. Farm Products. After the occurrence of an Event of Default, the Debtorshall not store, transfer or consign any farm products without the prior written consent ofthe Secured Party. The Debtor shall not store, transfer or consign any farm productswithout first obtaining a written acknowledgment from any person to whom physical possessionof any such farm products are delivered (a) of the Secured Party’s security interest in suchfarm products, (b) that it holds possession of such farm products for the Secured Party’sbenefit, (c) that it will not issue negotiable documents with respect to
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such farm products and (d) that it agrees to follow the Secured Party’s instructions asto disposition of farm products upon its receipt of such instructions. The Debtor willcomply with the provisions of all federal, state or local government programs, agreementsand contracts to which the Debtor is a party.     4.11. Proceeds. The Debtor shall transfer all proceeds of all Collateral intothe Debtor’s main operating account established and maintained by the Debtor with theSecured Party, or in such other deposit account as required by the Secured Party. TheDebtor shall not grant any other person or entity a security interest, lien or otherencumbrance in or on such deposit account.     5. Relation to Other Security Documents. The provisions of this Agreement supplementthe provisions of the Loan Agreement, Mortgage and other Loan Documents. Nothing contained in theLoan Agreement, Mortgage or other Loan Documents shall derogate from any of the rights or remediesof the Secured Party hereunder.     6. Representations and Warranties Concerning Debtor’s Legal Status. The Debtorrepresents and warrants to the Secured Party as follows: (a) the Debtor’s exact legal name is thatindicated on the first page and on the signature page hereof, (b) the Debtor is an organization ofthe type, and is organized in the jurisdiction set forth on the first page of this Agreement, (c)the Debtor’s tax identification number is 20-2327916 and the Debtor’s organizational identificationnumber is 2005021100241 or if left blank, then the Debtor has none, and (d) each of the Debtor’splaces of business and, if more than one, its chief executive office, as well as the Debtor’smailing address, if different, are listed in Schedule A attached to this Agreement and incorporatedherein by reference.     7. Covenants Concerning Debtor’s Legal Status. The Debtor covenants with the SecuredParty as follows: (a) the Debtor will not change its name, its place of business or, if more thanone, chief executive office, or its mailing address or organizational identification number if ithas one, (b) if the Debtor does not have an organizational identification number and later obtainsone, the Debtor shall forthwith notify the Secured Party of such organizational identificationnumber, and (c) the Debtor will not change its type of organization, jurisdiction of organizationor other legal structure.     8. Representations and Warranties Concerning Collateral, Etc. The Debtor furtherrepresents and warrants to the Secured Party as follows: (a) the Debtor is the owner of theCollateral, free from any right or claim or any person or any adverse lien, security interest orother encumbrance, except for the security interest created by this Agreement and other lienspermitted by the Loan Agreement, (b) except as disclosed to the Secured Party, none of the accountdebtors or other persons obligated on any of the Collateral is a governmental authority covered bythe Federal Assignment of Claims Act or like federal, state or local statute or rule in respect ofsuch Collateral, (c) the Debtor holds no commercial tort claim except as indicated on Schedule Aattached to this Agreement, and (d) the Debtor has at all times operated its business in compliancewith all applicable provisions of the federal Fair Labor Standards Act, as amended, and with allapplicable provisions of federal, state and local statutes and ordinances dealing with the control,shipment, storage or disposal of hazardous materials or substances.
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     9. Covenants Concerning Collateral, Etc. The Debtor further covenants with theSecured Party as follows: (a) the Collateral, to the extent not delivered to the Secured Partypursuant to Section 4, will be kept at those locations listed on Schedule A and the Debtor will notmove any Collateral to any location not shown in Schedule A without providing at least thirty (30)days prior written notice to the Secured Party, which notice shall include the new location, (b)except for the security interest herein granted and liens permitted by the Loan Agreement, theDebtor shall be the owner of the Collateral free from any right or claim of any other person, lien,security interest or other encumbrance, and the Debtor shall defend the same against all claims anddemands of all persons at any time claiming the same or any interests therein adverse to theSecured Party, (c) the Debtor shall not pledge, mortgage or create, or suffer to exist any right ofany person in or claim by any person to the Collateral, or any security interest, lien orencumbrance in the Collateral in favor of any person, other than the Secured Party except for lienspermitted by the Loan Agreement, (d) the Debtor will keep the Collateral in good order and repairand will not use the same in violation of law or any policy of insurance thereon, (e) the Debtorwill permit the Secured Party, or its designee, to inspect and audit the Collateral at anyreasonable time, wherever located, according to the terms of the Loan Agreement, (f) the Debtorwill pay promptly when due all taxes, assessments, governmental charges and levies upon theCollateral according to the terms of the Loan Agreement or incurred in connection with the use oroperation of such Collateral or incurred in connection with this Agreement, (g) the Debtor willcontinue to operate, its business in compliance with all applicable provisions of the federal FairLabor Standards Act, as amended, and with all applicable provisions of federal, state and localstatutes and ordinances dealing with the control, shipment, storage or disposal of hazardousmaterials or substances, (h) the Debtor will apply for all subsidies, price support payments,guaranty payments and other payments of any kind available to the Debtor under any federal, stateor local governmental program relating to the use of corn to produce ethanol, the production ofethanol, the sale of ethanol and any other activities of the Debtor, will file for all tax creditsand deductions available for any of the foregoing, and will take no action, or omit to take anyaction, which would preclude or jeopardize in any manner the Debtor’s ability to participate in anysuch payments, programs, tax credits or deductions and (i) the Debtor will not the Debtor will notdiscount, factor, sell or otherwise dispose, or offer to sell or otherwise dispose, of any of theCollateral, including, but not limited to, instruments, general intangibles, tangible or electronicchattel paper, promissory notes and/or accounts, or any interest therein except for (i) sales andleases of inventory in the ordinary course of business and (ii) so long as no Event of Default hasoccurred and is continuing, sales or other dispositions of obsolescent items of equipmentconsistent with past practices; provided, however, that permitted sales under this Section are alsopermitted under the Loan Agreement. In the event that such sales are not permitted under the LoanAgreement, then such sales are also not permitted hereunder. In addition, the Debtor will onlystore grain owned by the Debtor not evidenced by a Warehouse Receipt in facilities owned by theDebtor at locations set forth on Schedule A.     10. Insurance.     10.1. Maintenance of Insurance. The Debtor will maintain the insurancerequired in the Loan Agreement. All such insurance covering the Collateral shall be
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payable to the Secured Party as loss payee under a “standard” or “New York” loss payeeclause.     10.2. Insurance Proceeds. The proceeds of any casualty insurance in respect ofany casualty loss of any of the Collateral shall, subject to the rights, if any, of otherparties with an interest having priority in the property covered thereby, (i) so long as noEvent of Default has occurred and is continuing, the damaged Collateral can be economicallyrepaired or replaced in the sole discretion of the Secured Party and the conditionsprecedent in the Loan Agreement with respect to the disbursement of insurance proceeds tothe Debtor have been satisfied, be disbursed to the Debtor for direct application by theDebtor solely to the repair or replacement of the Debtor’s property so damaged or destroyed,and (ii) in all other circumstances, be held by the Secured Party as cash collateral for theObligations. Subject to the foregoing, the Secured Party may, at its sole option, disbursefrom time to time all or any part of such proceeds so held as cash collateral, upon suchterms and conditions as the Secured Party may reasonably prescribe, for direct applicationby the Debtor solely to the repair or replacement of the Debtor’s property so damaged ordestroyed, or the Secured Party may apply all or any part of such proceeds to theObligations with the amount of the Loans, as described in the Loan Agreement (if not thenterminated) being reduced by the amount so applied to the Obligations.     10.3. Continuation of Insurance. All policies of insurance shall provide forat least 20 days prior written cancellation notice to the Secured Party. In the event offailure by the Debtor to provide and maintain insurance as herein provided, the SecuredParty may, at its option, provide such insurance and charge the amount thereof to theDebtor, subject to the terms of the Loan Agreement. The Debtor shall furnish the SecuredParty with certificates of insurance and policies evidencing compliance with the foregoinginsurance provision.     11. Collateral Protection Expenses; Preservation of Collateral.     11.1. Expenses Incurred by Secured Party. In the Secured Party’s discretion,if the Debtor fails to do so, the Secured Party may discharge taxes and other encumbrancesat any time levied or placed on any of the Collateral, maintain any of the Collateral, makerepairs thereto and pay any necessary filing fees or insurance premiums. The Debtor agreesto reimburse the Secured Party on demand for all expenditures so made. The Secured Partyshall have no obligation to the Debtor to make any such expenditures, nor shall the makingthereof be construed as the waiver or cure of any Event of Default.     11.2. Secured Party’s Obligations and Duties. Anything herein to the contrarynotwithstanding, the Debtor shall remain obligated and liable under each contract oragreement comprised in the Collateral to be observed or performed by the Debtor thereunder.The Secured Party shall not have any obligation or liability under any such contract oragreement by reason of or arising out of this Agreement or the receipt by the Secured Partyof any payment relating to any of the Collateral, nor shall the Secured Party be obligatedin any manner to perform any of the obligations of the Debtor under or
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pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiencyof any payment received by the Secured Party in respect of the Collateral or as to thesufficiency of any performance by any party under any such contract or agreement, to presentor file any claim, to take any action to enforce any performance or to collect the paymentof any amounts which may have been assigned to the Secured Party or to which the SecuredParty may be entitled at any time or times. The Secured Party’s sole duty with respect tothe custody, safe keeping and physical preservation of the Collateral in its possession,under Section 9-207 of the Uniform Commercial Code of the State or otherwise, shall be todeal with such Collateral in the same manner as the Secured Party deals with similarproperty for its own account.     12. Securities and Deposits. The Secured Party may at any time following and duringthe continuance of an Event of Default, at its option, transfer to itself or any nominee anysecurities constituting Collateral, receive any income thereon and hold such income as additionalCollateral or apply it to the Obligations. Whether or not any Obligations are due, the SecuredParty may following and during the continuance of an Event of Default demand, sue for, collect, ormake any settlement or compromise which it deems desirable with respect to the Collateral.Regardless of the adequacy of Collateral or any other security for the Obligations, any deposits orother sums at any time credited by or due from the Secured Party to the Debtor may at any time beapplied to or set off against any of the Obligations.     13. Notification to Account Debtors and Other Persons Obligated on Collateral. If anEvent of Default shall have occurred and be continuing, the Debtor shall, at the request and optionof the Secured Party, notify account debtors and other persons obligated on any of the Collateralof the security interest of the Secured Party in any account, chattel paper, general intangible,instrument or other Collateral and that payment thereof is to be made directly to the Secured Partyor to any financial institution designated by the Secured Party as the Secured Party’s agenttherefor, and the Secured Party may itself, if an Event of Default shall have occurred and becontinuing, without notice to or demand upon the Debtor, so notify account debtors and otherpersons obligated on Collateral. After the making of such a request or the giving of any suchnotification, the Debtor shall hold any proceeds of collection of accounts, chattel paper, generalintangibles, instruments and other Collateral received by the Debtor as trustee for the SecuredParty without commingling the same with other funds of the Debtor and shall turn the same over tothe Secured Party in the identical form received, together with any necessary endorsements orassignments. The Secured Party shall apply the proceeds of collection of accounts, chattel paper,general intangibles, instruments and other Collateral received by the Secured Party to theObligations, such proceeds to be immediately credited after final payment in cash or otherimmediately available funds of the items giving rise to them.     14. Power of Attorney.     14.1. Appointment and Powers of Secured Party. The Debtor hereby irrevocablyconstitutes and appoints the Secured Party and any officer or agent thereof, with full powerof substitution, as its true and lawful attorneys-in-fact with full irrevocable power andauthority in the place and stead of the Debtor or in the Secured Party’s own name, for thepurpose of carrying out the terms of this Agreement, to take
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any and all appropriate action and to execute any and all documents and instruments that maybe necessary or useful to accomplish the purposes of this Agreement and, without limitingthe generality of the foregoing, hereby gives said attorneys the power and right, on behalfof the Debtor, without notice to or assent by the Debtor, to do the following:     (a) upon the occurrence and during the continuance of an Event of Default,generally to sell, transfer, pledge, make any agreement with respect to or otherwisedispose of or deal with any of the Collateral in such manner as is consistent withthe Uniform Commercial Code of the State and as fully and completely as though theSecured Party were the absolute owner thereof for all purposes, and to do, at theDebtor’s expense, at any time, or from time to time, all acts and things which theSecured Party deems necessary or useful to protect, preserve or realize upon theCollateral and the Secured Party’s security interest therein, in order to effect theintent of this Agreement, all at least as fully and effectively as the Debtor mightdo, including, without limitation, (i) the filing and prosecuting of registrationand transfer applications with the appropriate federal, state, local or otheragencies or authorities with respect to trademarks, copyrights and patentableinventions and processes, (ii) upon written notice to the Debtor, the exercise ofvoting rights with respect to voting securities, which rights may be exercised, ifthe Secured Party so elects, with a view to causing the liquidation of assets of theissuer of any such securities, and (iii) the execution, delivery and recording, inconnection with any sale or other disposition of any Collateral, of theendorsements, assignments or other instruments of conveyance or transfer withrespect to such Collateral; and     (b) to the extent that the Debtor’s authorization given in Section 3 is notsufficient, to file such financing statements with respect hereto, with or withoutthe Debtor’s signature, or a photocopy of this Agreement in substitution for afinancing statement, as the Secured Party may deem appropriate and to execute in theDebtor’s name such financing statements and amendments thereto and continuationstatements which may require the Debtor’s signature.     14.2. Ratification by Debtor. To the extent permitted by law, the Debtorhereby ratifies all that said attorneys shall lawfully do or cause to be done by virtuehereof. This power of attorney is a power coupled with an interest and is irrevocable.     14.3. No Duty on Secured Party. The powers conferred on the Secured Partyhereunder are solely to protect its interests in the Collateral and shall not impose anyduty upon it to exercise any such powers. The Secured Party shall be accountable only forthe amounts that it actually receives as a result of the exercise of such powers, andneither it nor any of its officers, directors, employees or agents shall be responsible tothe Debtor for any act or failure to act, except for the Secured Party’s own grossnegligence or willful misconduct.     15. Rights and Remedies. If an Event of Default shall have occurred and be continuingbeyond any applicable grace or notice and cure period provided for in the Loan
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Agreement, the Secured Party, without any other notice to or demand upon the Debtor have in anyjurisdiction in which enforcement hereof is sought, in addition to all other rights and remedies,whether conferred in the Loan Agreement or at law or in equity, the rights and remedies of asecured party under the Uniform Commercial Code of the State and any additional rights and remedieswhich may be provided to a secured party in any jurisdiction in which Collateral is located,including, without limitation, the right to take possession of the Collateral, and for that purposethe Secured Party may, so far as the Debtor can give authority therefor, enter upon any premises onwhich the Collateral may be situated and remove the same therefrom. The Secured Party may in itsdiscretion require the Debtor to assemble all or any part of the Collateral at such location orlocations within the jurisdiction(s) of the Debtor’s principal office(s) or at such other locationsas the Secured Party may reasonably designate. Unless the Collateral is perishable or threatens todecline speedily in value or is of a type customarily sold on a recognized market, the SecuredParty shall give to the Debtor at least ten (10) days prior written notice of the time and place ofany public sale of Collateral or of the time after which any private sale or any other intendeddisposition is to be made. The Debtor hereby acknowledges that ten (10) days prior written noticeof such sale or sales shall be reasonable notice. In addition, the Debtor waives any and allrights that it may have to a judicial hearing in advance of the enforcement of any of the SecuredParty’s rights and remedies hereunder, including, without limitation, its right following an Eventof Default to take immediate possession of the Collateral and to exercise its rights and remedieswith respect thereto.     16. Standards for Exercising Rights and Remedies. To the extent that applicable lawimposes duties on the Secured Party to exercise remedies in a commercially reasonable manner, theDebtor acknowledges and agrees that it is not commercially unreasonable for the Secured Party (a)to fail to incur expenses reasonably deemed significant by the Secured Party to prepare Collateralfor disposition or otherwise to fail to complete raw material or work in process into finishedgoods or other finished products for disposition, (b) to fail to obtain third party consents foraccess to Collateral to be disposed of, or to obtain or, if not required by other law, to fail toobtain governmental or third party consents for the collection or disposition of Collateral to becollected or disposed of, (c) to fail to exercise collection remedies against account debtors orother persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverseclaims against Collateral, (d) to exercise collection remedies against account debtors and otherpersons obligated on Collateral directly or through the use of collection agencies and othercollection specialists, (e) to advertise dispositions of Collateral through publications or mediaof general circulation, whether or not the Collateral is of a specialized nature, (f) to contactother persons, whether or not in the same business as the Debtor, for expressions of interest inacquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers toassist in the disposition of Collateral, whether or not the collateral is of a specialized nature,(h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets ofthe types included in the Collateral or that have the reasonable capability of doing so, or thatmatch buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retailmarkets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancementsto insure the Secured Party against risks of loss, collection or disposition of Collateral or toprovide to the Secured Party a guaranteed return from the collection or disposition of Collateral,or (l) to the extent deemed appropriate by the Secured Party, to obtain the services of otherbrokers, investment bankers, consultants and other professionals to assist the Secured Party in the
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collection or disposition of any of the Collateral. The Debtor acknowledges that the purpose ofthis Section 16 is to provide non-exhaustive indications of what actions or omissions by theSecured Party would fulfill the Secured Party’s duties under the Uniform Commercial Code or otherlaw of the State or any other relevant jurisdiction in the Secured Party’s exercise of remediesagainst the Collateral and that other actions or omissions by the Secured Party shall not be deemedto fail to fulfill such duties solely on account of not being indicated in this Section 16.Without limitation upon the foregoing, nothing contained in this Section 16 shall be construed togrant any rights to the Debtor or to impose any duties on the Secured Party that would not havebeen granted or imposed by this Agreement or by applicable law in the absence of this Section 16.     17. No Waiver by Secured Party, Etc. The Secured Party shall not be deemed to havewaived any of its rights or remedies in respect of the Obligations or the Collateral unless suchwaiver shall be in writing and signed by the Secured Party. No delay or omission on the part ofthe Secured Party in exercising any right or remedy shall operate as a waiver of such right orremedy or any other right or remedy. A waiver on any one occasion shall not be construed as a barto or waiver of any right or remedy on any future occasion. All rights and remedies of the SecuredParty with respect to the Obligations or the Collateral, whether evidenced hereby or by any otherinstrument or papers, shall be cumulative and may be exercised singularly, alternatively,successively or concurrently at such time or at such times as the Secured Party deems expedient.     18. Suretyship Waivers by Debtor. The Debtor waives demand, notice, protest, noticeof acceptance of this Agreement, notice of loans made, credit extended, Collateral received ordelivered or other action taken in reliance hereon and all other demands and notices of anydescription. With respect to both the Obligations and the Collateral, the Debtor assents to anyextension or postponement of the time of payment or any other indulgence, to any substitution,exchange or release of or failure to perfect any security interest in any Collateral, to theaddition or release of any party or person primarily or secondarily liable, to the acceptance ofpartial payment thereon and the settlement, compromising or adjusting of any thereof, all in suchmanner and at such time or times as the Secured Party may deem advisable. The Secured Party shallhave no duty as to the collection or protection of the Collateral or any income therefrom, thepreservation of rights against prior parties, or the preservation of any rights pertaining theretobeyond the safe custody thereof as set forth in Section 11.2. The Debtor further waives any andall other suretyship defenses.     19. Marshalling. The Secured Party shall not be required to marshal any present orfuture collateral security (including but not limited to the Collateral) for, or other assurancesof payment of, the Obligations or any of them or to resort to such collateral security or otherassurances of payment in any particular order, and all of its rights and remedies hereunder and inrespect of such collateral security and other assurances of payment shall be cumulative and inaddition to all other rights and remedies, however existing or arising. To the extent that itlawfully may, the Debtor hereby agrees that it will not invoke any law relating to the marshallingof collateral which might cause delay in or impede the enforcement of the Secured Party’s rightsand remedies under this Agreement or under any other instrument creating or evidencing any of theObligations or under which any of the Obligations is outstanding or by which any of the
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Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfullymay, the Debtor hereby irrevocably waives the benefits of all such laws.     20. Proceeds of Dispositions; Expenses. The Debtor shall pay to the Secured Party ondemand any and all expenses, including reasonable attorneys’ fees and disbursements, incurred orpaid by the Secured Party in protecting, preserving or enforcing the Secured Party’s rights andremedies under or in respect of any of the Obligations or any of the Collateral. After deductingall of said expenses, the residue of any proceeds of collection or sale or other disposition of theCollateral shall, to the extent actually received in cash, be applied to the payment of theObligations in such order or preference as the Secured Party may determine, proper allowance andprovision being made for any Obligations not then due. Upon the final payment and satisfaction infull of all of the Obligations and after making any payments required by Sections 9-608(a)(1)(C) or9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall be returned to theDebtor. In the absence of final payment and satisfaction in full of all of the Obligations, theDebtor shall remain liable for any deficiency.     21. Overdue Amounts. Until paid, all amounts due and payable by the Debtor hereundershall be a debt secured by the Collateral and shall bear, whether before or after judgment,interest at the rate of interest for overdue principal set forth in the Loan Agreement.     22. Governing Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED TO TAKE EFFECTAS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THESTATE OF NEBRASKA. The Debtor agrees that any action or claim arising out of, or any dispute inconnection with, this Agreement, any rights, remedies, obligations, or duties hereunder, or theperformance or enforcement hereof or thereof, may be brought in the courts of the State or anyfederal court sitting therein and consents to the non-exclusive jurisdiction of such court and toservice of process in any such suit being made upon the Debtor by mail at the address specified inthe notice provision of the Loan Agreement. The Debtor hereby waives any objection that it may nowor hereafter have to the venue of any such suit or any such court or that such suit is brought inan inconvenient court.     23. Waiver of Jury Trial. THE DEBTOR WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TOANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS,REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER, OR THE PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF.Except as prohibited by law, the Debtor waives any right which it may have to claim or recover inany litigation referred to in the preceding sentence any special, exemplary, punitive orconsequential damages or any damages other than, or in addition to, actual damages. The Debtor (i)certifies that neither the Secured Party nor any representative, agent or attorney of the SecuredParty has represented, expressly or otherwise, that the Secured Party would not, in the event oflitigation, seek to enforce the foregoing waivers or other waivers contained in this Agreement, and(ii) acknowledges that, in entering into the Loan Agreement and the other Loan Documents to whichthe Secured Party is a party, the Secured Party is relying upon, among other things, the waiversand certifications contained in this Section 23.
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     24. Miscellaneous. The headings of each section of this Agreement are for convenienceonly and shall not define or limit the provisions thereof. This Agreement and all rights andobligations hereunder shall be binding upon the Debtor and its respective successors and assigns,and shall inure to the benefit of the Secured Party and its successors and assigns. If any term ofthis Agreement shall be held to be invalid, illegal or unenforceable, the validity of all otherterms hereof shall in no way be affected thereby, and this Agreement shall be construed and beenforceable as if such invalid, illegal or unenforceable term had not been included herein. TheDebtor acknowledges receipt of a copy of this Agreement.[SIGNATURE PAGE FOLLOWS]
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     IN WITNESS WHEREOF, intending to be legally bound, the Debtor has caused this Agreement to beduly executed as of the date first above written.         CARDINAL ETHANOL, LLC, an Indiana limited