Echibit 4.1.14


 




 





 






 


BOND PLEDGE AND SECURITY AGREEMENT


 






 


 


by and among


 


 


MGP INGREDIENTS, INC.,

a Kansas corporation,


 


COMMERCE BANK, N.A., as trustee,

a national banking association


 


 


and


 


 


WELLS FARGO BANK, BANK NATIONAL ASSOCIATION,

a national banking association


 


 


relating to


 


$7,000,000


original principal amount of

City of Atchison, Kansas


Taxable Industrial Revenue Bonds

Series 2006

(MGP Ingredients Project)


 


 


Dated as of February 15, 2010


 




 





 


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BOND PLEDGE AND SECURITY AGREEMENT


 


THIS BOND PLEDGE AND SECURITY AGREEMENT, dated as of February 15,
2010 (hereinafter, as the same may from time to time be amended or
supplemented, called this “Bond Pledge and Security
Agreement”), made by and among MGP INGREDIENTS, INC., a Kansas corporation (the “Pledgor”), COMMERCE BANK, N.A.,
a national banking association (the “Trustee”), in
its capacity as trustee under that certain Trust Indenture, dated as of December 28,
2006 (the “Indenture”), between the City of
Atchison, Kansas (the “Issuer”) and
the Trustee, and WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association (the “Bank”):


 


WITNESSETH:


 


WHEREAS, the Issuer, pursuant to the Indenture, has
previously issued its Taxable Industrial Revenue Bonds, Series 2006 (MGP
Ingredients Project) in the original aggregate principal amount of $7,000,000
(the “Bonds”); and


 


WHEREAS, the Pledgor has acquired all of the outstanding
Bonds in the aggregate principal amount of $7,000,000 (the “Pledged Bonds”); and


 


WHEREAS, the Pledgor has executed and delivered that
certain Credit and Security Agreement dated as of July 21, 2009 (as the
same may from time to time be restated, modified, supplemented or otherwise
amended, the “Credit Agreement”), between the
Pledgor and the Bank; and


 


WHEREAS, it is a condition precedent to the extension of
certain loan facilities under the Credit Agreement that the Pledgor and the
Trustee will have executed and delivered this Bond Pledge and Security
Agreement to the Bank;


 


NOW, THEREFORE, in consideration of the premises and in
order to induce the Bank to extend certain loan facilities under the Credit
Agreement and for other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:


 


Section 1.              Defined
Terms.  Unless otherwise defined
herein, terms defined in the Credit Agreement will have such defined meanings
when used herein.


 


Section 2.              Pledge.  The Pledgor hereby pledges, assigns,
hypothecates, transfers and delivers to the Bank all of its right, title and
interest to the Pledged Bonds and hereby grants to the Bank a first lien on,
and security interest in, its right, title and interest in and to the Pledged
Bonds, the interest thereon and all proceeds thereof, as collateral security
for the prompt and complete payment of the Note (as defined in the Credit
Agreement) and performance of the obligations under the Note, the Credit
Agreement and any other loan document between the Borrower and the Bank (all
the foregoing being hereinafter called the “Obligations”).


 


Section 3.              Payments
with Respect to the Pledged Bonds.  If, while this Bond Pledge and Security
Agreement is in effect and after the occurrence of a Default or Event of
Default, the Pledgor becomes entitled to receive or receives any payment in
respect of the Pledged Bonds, the Pledgor agrees to accept the same as the Bank’s
agent and to hold the same in trust on behalf of the Bank and to deliver the
same forthwith to the Bank.  All sums of
money so paid in respect of the Pledged Bonds which are received by the Pledgor
and paid to the Bank will be credited against the Obligations.


 


Section 4.              Collateral.  All property at any time pledged with the
Bank hereunder (whether described herein or not) and all income therefrom and
proceeds thereof, are herein collectively sometimes called the “Collateral”.


 

















 


Section 5.              Rights
of the Bank.  The Bank
will not be liable for failure to collect or realize upon the Obligations or
any collateral security or guarantee therefor, or any part thereof, or for any
delay in so doing, nor will it be under any obligation to take any action
whatsoever with regard thereto.  If an
Event of Default has occurred and is continuing, the Bank may thereafter,
without notice, exercise all rights, privileges or options pertaining to any
Pledged Bonds as if it were the absolute owner thereof, upon such terms and
conditions as it may determine, all without liability except to account for
property actually received by it, but the Bank will have no duty to exercise any
of the aforesaid rights, privileges or options and will not be responsible for
any failure to do so or delay in so doing. 
Notwithstanding any provision of this Bond Pledge and Security Agreement
to the contrary, the rights of the Bank hereunder are subject in each and every
respect to the terms and conditions of the Indenture, including, but not
limited, any restrictions on the Bank’s ability to sell or otherwise dispose of
the Collateral.


 


Section 6.              Remedies.  In the event that any portion of the Obligations
becomes due and payable and are not paid when due, the Bank, without demand of
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
the Pledgor or any other person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase, contract to sell or
otherwise dispose of and deliver said Collateral, or any part thereof, in one
or more parcels at public or private sale or sales, at any exchange, broker’s
board or at any of the Bank’s offices or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk,
with the right of the Bank upon any such sale or sales, public or private, to purchase
the whole or any part of said collateral so sold, free of any right or equity
of redemption in the Pledgor, which right or equity is hereby expressly waived
or released.  The Bank will pay over the
net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care, safekeeping or otherwise of
any and all of the Collateral or in any way relating to the rights of the Bank hereunder,
including reasonable attorney’s fees and legal expenses, and the payment in
whole or in part of the Obligations in such order as the Bank may elect, the
Pledgor remaining liable for any deficiency remaining unpaid after such
application, and only after so paying over such net proceeds and after the
payment by the Bank of any other amount required by any provision of law, need
the Bank account for the surplus, if any, to the Pledgor.  The Pledgor agrees that the Bank will give at
least five (5) calendar days notice of the time and place of any public
sale or of the time after which a private sale or other intended disposition is
to take place and that such notice is reasonable notification of such
matters.  No notification need be given
to the Pledgor if it has signed after default a statement renouncing or
modifying any right to notification of sale or other intended disposition.  In addition to the rights and remedies
granted to it in this Bond Pledge and Security Agreement and in any other
instrument or agreement securing evidencing or relating to any of the
Obligations, the Bank will have all the rights and remedies of a secured party
under the Uniform Commercial Code of the State of Kansas.  The Pledgor further agrees to waive and
agrees not to assert any rights or privileges which it may acquire under the
Uniform Commercial Code and the Pledgor will be liable for the deficiency if
the proceeds of any sale or other disposition of the Collateral are
insufficient to pay all amounts to which the Bank is entitled, and the
reasonable fees of any attorneys employed by the Bank to collect such
deficiency.


 


Section 7.              Representations, Warranties and
Covenants of the Pledgor.  The
Pledgor represents and warrants that:


 


(a)           on the date of this Bond Pledge and Security
Agreement, it is the sole owner of all right, title or interest in and to the
Pledged Bonds;


 


(b)           it has full power, authority and legal right to
pledge all of its right, title and interest in and to the Pledged Bonds
pursuant to this Bond Pledge and Security Agreement;


 


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(c)           this Bond Pledge and Security Agreement has been
duly authorized, executed and delivered by the Pledgor and constitutes a legal,
valid and binding obligation of the Pledgor enforceable in accordance with its
terms;


 


(d)           no consent of any other party (including, without
limitation, creditors of the Pledgor) and no consent, license, permit, approval
or authorization of, exemption by, notice or report to, or registration, filing
or declaration with, any governmental authority, domestic or foreign, is
required to be obtained by the Pledgor in connection with the execution,
delivery or performance of this Bond Pledge and Security Agreement;


 


(e)           the execution, delivery and performance of this Bond
Pledge and Security Agreement will not materially violate any provision of any
applicable law or regulation or of any order, judgment, writ, award or decree
of any court, arbitrator or governmental authority, domestic or foreign, or of
the articles of incorporation or other governing instruments of the Pledgor or
of any securities issued by the Pledgor or of any deed of trust, mortgage,
indenture, lease, contract or other agreement, instrument or undertaking to
which the Pledgor is a party or which purports to be binding upon the Pledgor
or upon any of its assets and will not result in the creation or imposition of
any lien, charge or encumbrance on or security interest in any of the assets of
the Pledgor except as contemplated by this Bond Pledge and Security Agreement;
and


 


(f)            the pledge, assignment and delivery of the Pledged
Bonds pursuant to this Bond Pledge and Security Agreement will create a valid
first lien on and a first perfected security interest in, all right, title or
interest of the Pledgor in or to the Pledged Bonds, and the proceeds thereof,
subject to no prior pledge, lien, mortgage, hypothecation, security interest,
charge, option or encumbrance or to any agreement purporting to grant to any
third party a security interest in the property or assets of the Pledgor which
would include the Pledged Bonds.


 


The Pledgor covenants and agrees that it will defend the Bank’s right,
title and security interest in and to the Pledged Bonds and the proceeds
thereof against the claims and demands of all Persons whomsoever; and covenants
and agrees that it will have like title to and the right to pledge any other
property at any time hereafter pledged to the Bank as Collateral hereunder and
will likewise defend the Bank’s right thereto and security interest therein.


 


Section 8.              No
Dispositions, etc.  Without the
prior written consent of the Bank, the Pledgor agrees that it will not sell,
assign, transfer, exchange or otherwise dispose of, or grant any option with
respect to, the Collateral, nor will they incur or permit to exist any pledge,
lien, mortgage, hypothecation, security interest, charge, option or any other
encumbrance with respect to any of the Collateral, or any interest therein, or
any proceeds thereof, except for the lien and security interest provided for by
this Bond Pledge and Security Agreement, other than in accordance with the
Credit Agreement.


 


Section 9.              Sale of Collateral.


 


(a)           The Pledgor
recognizes that the Bank may be unable to effect a public sale of any or all of
the Pledged Bonds by reason of certain prohibitions contained in the Securities
Act of 1933, as amended (the “Securities Act”),
and applicable state securities laws, but may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale
thereof.  The Pledgor acknowledges and agrees
that any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that such private sale will be deemed to have been made
in a commercially reasonable manner.  The
Bank will be under no obligation to delay a sale of any of the Pledged Bonds
for the period of time necessary to permit the Issuer to register such
securities for public sale under the Securities Act, or under applicable state 


 


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securities laws, even if the Issuer would
agree to do so.  In the event that the
Bank elects to sell Pledged Bonds pursuant to the terms hereof and if permitted
by the terms of the Indenture, the Bank shall notify the purchaser thereof that
such Pledged Bonds are not then rated by any rating agency.


 


(b)           The Pledgor
further agrees to do or cause to be done all such other acts and things as may
be necessary to make such sale or sales of any portion or all of the Pledged
Bonds valid and binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, except registration under the
federal securities laws, all at the Pledgor’s expense.  The Pledgor further agrees that a breach of
any of the covenants contained in this Section 9
will cause irreparable injury to the Bank, that the Bank has no adequate remedy
at law in respect of such breach and, as a consequence, agrees that each and
every covenant contained in this Section 9
will be specifically enforceable against the Pledgor and the Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants, except for a defense that no Event of Default
has occurred under the Credit Agreement. 
The Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by the Bank by reason of a breach of
any of such covenants and, consequently, agrees that, if the Bank shall sue for
damages for breach, it will pay, as liquidated damages and not as a penalty, an
amount equal to the par value of the Pledged Bonds plus accrued interest, under
the Credit Agreement on the date the Bank will demand compliance with this Section 9.


 


Section 10.            Further
Assurances.  The Pledgor
agrees that at any time and from time to time upon the written request of the
Bank, the Pledgor will execute and deliver such further documents and do such
further acts and things as the Bank may reasonably request in order to effect
the purposes of this Bond Pledge and Security Agreement.


 


Section 11.            Severability.  Any provision of this Bond Pledge and
Security Agreement which is prohibited or unenforceable in any jurisdiction
will, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction will not
invalidate or render unenforceable such provision in any other jurisdiction.


 


Section 12.            No
Waiver, Cumulative Remedies.  The Bank will not, by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver will be valid unless in writing, signed by the Bank,
and then only to the extent therein set forth. 
A waiver by the Bank of any right or remedy hereunder on any one
occasion will not be construed as a bar to any right or remedy which the Bank
would otherwise have on any future occasion. 
No failure to exercise nor any delay in exercising on the part of the
Bank, any right, power or privilege hereunder, will operate as a waiver thereof;
nor will any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.  The
rights and remedies herein provided are cumulative and may be exercised singly
or concurrently, and are not exclusive of any rights or remedies provided by
law.


 


Section 13.            Binding
Effect.  This Bond Pledge and Security
Agreement and all obligations of the Pledgor hereunder will be binding upon the
successors and assigns of the Pledgor, and will, together with the rights and
remedies of the Bank hereunder, inure to the benefit of the Bank and its
respective successors and assigns.


 


Section 14.            Waiver
of Jury Trial.  THE PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS BOND PLEDGE
AND SECURITY AGREEMENT.  THIS WAIVER IS
KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY THE PARTIES HERETO AND EACH
PARTY ACKNOWLEDGES THAT NEITHER BANK NOR 


 


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ANY PERSON ACTING ON BEHALF OF
BANK HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY
JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.  THE PARTIES HERETO FURTHER ACKNOWLEDGE THAT
THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS BOND PLEDGE AND SECURITY
AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.  EACH
PARTY FURTHER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND
RAMIFICATIONS OF THIS WAIVER PROVISION.


 


Section 15.            Amendments;
Etc.  No amendment or waiver of any
provision of this Bond Pledge and Security Agreement nor consent to any
departure by the Pledgor herefrom shall in any event be effective unless the
same will be in writing and signed by the Bank, and then such waiver or consent
will be effective only in the specific instance and for the specific purpose
for which given.


 


Section 16.            Addresses
for Notices.  All notices
and other communications provided for hereunder must be in writing and
delivered as provided in the Credit Agreement.


 


Section 17.            Continuing
Security Interest.  This Bond
Pledge and Security Agreement will create a continuing security interest in the
Pledged Bonds and will (a) remain in full force and effect until payment
in full of the Obligations and the termination of the Bank’s obligations to
fund any loans or other credit facilities under the terms of the Credit
Agreement, (b) be binding upon the Pledgor, the Pledgor’s successors,
transferees and assigns, and (c) inure, together with the rights and
remedies of the Bank hereunder, to the benefit of the Bank and its successors,
transferees and assigns.  Without
limiting the generality of the foregoing clause (c), the Bank may assign or
otherwise transfer its obligations under the Credit Agreement to any other
person or entity, and such other person or entity will thereupon become vested
with all the benefits in respect thereof granted to the Bank herein or
otherwise.  Upon the payment in full of
the Obligations and the termination of the Bank’s obligations to fund any loans
or other credit facilities under the terms of the Credit Agreement, the Pledgor
will be entitled to the return, upon Pledgor’s request and at Pledgor’s
expense, of such of the Pledged Bonds as shall not have been sold or otherwise
applied pursuant to the terms hereof or of the Indenture.


 


Section 18.            Governing
Law; Terms.  This Bond
Pledge and Security Agreement will be governed by and construed in accordance
with the laws of the State of Kansas, except as required by mandatory
provisions of law and except to the extent that the validity or perfection of
the security interest hereunder or remedies hereunder in respect of any particular  Pledged Bonds are governed by the laws of
another jurisdiction.  Unless otherwise
defined herein or in the Credit Agreement, terms used in Article 9 of the
Uniform Commercial Code in the State of Kansas are used herein as therein
defined.  The descriptive headings of the
various provisions are for convenience only and will not be deemed to limit or
expand the intent of the Sections.  The
masculine gender will, where appropriate, be deemed to include the feminine and
neuter and the singular the plural and vice versa.  If there is any conflict between the terms
and conditions contained herein and the terms and conditions contained in the
Credit Agreement, the terms and conditions in the Credit Agreement shall govern
and control.


 


Section 19.            Understanding
of Transaction.  The Pledgor
has received answers to all of Pledgor’s questions and understand the structure
of and reason for this transaction.  The
Pledgor has agreed to and wishes to pledge to the Bank and grant to the Bank a
security interest in all of the Pledgor’s right, title and interest in and to
the Pledged Bonds because the Pledgor desires to consummate the transactions
contemplated under the Credit Agreement which are conditioned upon such pledge.


 


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IN WITNESS WHEREOF, the parties hereto have
caused this Bond Pledge and Security Agreement to be duly executed and
delivered by its duly authorized representatives as of the day and year first
above written.


 


	
   

  	
   

  	
  PLEDGOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MGP INGREDIENTS, INC.

  
	
   

  	
   

  	
  a Kansas corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/Timothy W. Newkirk

  
	
   

  	
   

  	
  Name:

  	
  Timothy W. Newkirk

  
	
   

  	
   

  	
  Title:

  	
  President

  
					



 


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  TRUSTEE:

  
	
   

  	
   

  
	
   

  	
  COMMERCE BANK, N.A., a national
  banking capacity, in its capacity as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Merry Evans

  
	
   

  	
  Name: Merry Evans

  
	
   

  	
  Title: Vice President

  



 


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  BANK:

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, NATIONAL ASSOCIATION, a national
  banking association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: Becky Koehler

  
	
   

  	
  Name:

  	
  /s/  Becky Koehler

  
	
   

  	
  Title: Vice President

  



 


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