Document:

Exhibit 4.1.7

 

	
  This Mortgage was prepared
  by and when recorded should be mailed to:

   

  Bryan Cave LLP

  Attn: Trevor A. Jenkins

  1200 Main Street,
  Suite 3500

  Kansas City, Missouri
  64105

   

  Permanent Tax
  Identification Numbers described herein:

  10-10-09-200-001

  10-10-09-200-010

  04-10-04-400-002

   

  Street Address of Property
  described herein:

   

  1301 South Front Street

  Pekin, Illinois

  Space above reserved
  for Recorder’s Use Only

  

 

THIS INSTRUMENT SHOULD BE FILED AS A
MORTGAGE

AND AS A FIXTURE FILING (with future advance clause)

THE NAME OF THE RECORD FEE SIMPLE OWNER OF THE PROPERTY IS:

MGP INGREDIENTS, INC., a Kansas corporation, 

formerly known as Midwest Grain Products, Inc., a Kansas corporation

THE FEIN# OF THE DEBTOR IS: 
48-0531-200

 

MORTGAGE, ASSIGNMENT OF RENTS, SECURITY
AGREEMENT AND FIXTURE FILING FUTURE

ADVANCES ARE SECURED HEREBY PURSUANT TO 735 ILCS 5/15-1302 TO THE MAXIMUM

AMOUNT OF $25,000,000.

 

THIS LIMITATION DOES NOT INCLUDE INTEREST,
ATTORNEYS’ FEES, DISBURSEMENTS OR OTHER COSTS AND EXPENSES WHICH MORTGAGEE MAY COLLECT
PURSUANT TO THIS MORTGAGE (AS DEFINED HEREIN), THE LOAN DOCUMENTS (AS DEFINED
HEREIN) OR UNDER APPLICABLE LAW.

 

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THIS MORTGAGE, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (this “Mortgage”) is
executed as of August 19, 2009, by MGP INGREDIENTS, INC., a Kansas
corporation (“Mortgagor”), to WELLS FARGO BANK,
NATIONAL ASSOCIATION (“Mortgagee”).

 

ARTICLE I.  MORTGAGE

 

1.1                                 Grant.  For the
purposes and upon the terms and conditions in this Mortgage, Mortgagor
irrevocably mortgages, grants, conveys, assigns, bargains, sells, releases,
aliens, transfers and remises to Mortgagee and its successors and assigns
forever and hereby represents and warrants to Mortgagee with the right of entry
and possession, and grants to mortgagee and its successors and assigns forever
a continuing security interest in and to, Mortgagor’s interest in: (a) all
real property located in Tazewell County, Illinois, and described on Exhibit A
attached hereto; (b) all easements, rights-of-way and rights used in
connection with or as a means of access to any portion of said real property; (c) all
tenements, hereditaments and appurtenances thereof and thereto; (d) all
right, title and interest of Mortgagor, now owned or hereafter acquired, in and
to any land lying within the right-of-way of any street, open or proposed,
adjoining said real property, and any and all sidewalks, alleys and strips and
gores of land adjacent to or used in connection with said real property; (e) all
buildings, improvements and landscaping now or hereafter erected or located on
said real property; (f) all development rights, governmental or
quasi-governmental licenses, permits or approvals, zoning rights and other
similar rights or interests which relate to the development, use or operation
of, or that benefit or are appurtenant to, said real property; (g) all
mineral rights, oil and gas rights, air rights, water or water rights, owned by
Mortgagor, including without limitation, all wells, canals, ditches and
reservoirs of any nature and all rights thereto, appurtenant to or associated
with said real property, whether decreed or undecreed, tributary or
non-tributary, surface or underground, appropriated or unappropriated, and all
shares of stock in any water, canal, ditch or reservoir company, and all well
permits, water service contracts, drainage rights and other evidences of any
such rights; (h) all, fixtures (including, without limitation, all
heating, air conditioning, plumbing, lighting, communications and elevator
fixtures) and (i) all interest or estate which Mortgagor now has or may
hereafter acquire in said real property and all additions and accretions
thereto, and all awards or payments made for the taking of all or any portion
of said real property by eminent domain or any proceeding or purchase in lieu
thereof, or any damage to any portion of said real property (collectively, the “Subject Property”). 
The listing of specific rights or property shall not be interpreted as a
limitation of general terms.

 

TO HAVE AND TO HOLD the Subject Property unto
Mortgagee, its successors and assigns forever, for the purposes and uses set
forth in this Mortgage, and Mortgagor covenants with and warrants to Mortgagee
that, at the execution and delivery of this Mortgage, Mortgagor holds fee
simple title to, or if permitted in writing, a valid leasehold estate in, the
Subject Property and has a good and marketable indefeasible estate therein and
that the Subject Property is free from all encumbrances and claim of any other
person.  Mortgagor does under this
Mortgage bind itself, its successors and assigns, to WARRANT AND FOREVER DEFEND
the Subject Property against all claims and demands whatsoever, except as disclosed
to Mortgagee prior to the date hereof in a writing that refers to this
warranty.

 

PROVIDED, HOWEVER, that if and when Mortgagor has paid
all of the Secured Obligations (defined below) and performed and observed all
of the agreements, terms, conditions, provisions, and warranties relating to
the Secured Obligations, this Mortgage and the estate, right, and interest of
Mortgagee in and to the Subject Property shall cease and be released at the
cost of Mortgagor, but otherwise, shall remain in full force and effect.  Mortgagee shall be entitled to charge a
reasonable release fee.

 

1.2                                 Grant of Security Interest; Security
Agreement.  This Mortgage is intended to be a security
agreement pursuant to the Illinois Uniform Commercial Code (“UCC”) for any items of personal property specified above as part
of the Subject Property which, under applicable law, may be subject to a
security interest pursuant to the Illinois Uniform Commercial Code and which
are not herein effectively

 

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made part of the real property, and Mortgagor hereby grants Mortgagee a
security interest in said personal property, and in all additions thereto,
substitutions therefor and proceeds thereof, for the purpose of securing all
indebtedness and other obligations of Mortgagor now or hereafter secured by
this Mortgage, all of which shall be deemed part of the Subject Property.  Mortgagor authorizes the filing of financing
and continuation statements covering said personal property from time to time
and in such form as Mortgagee may require to perfect and continue the
perfection of Mortgagee’s lien or security interest with respect to said
personal property and all the Subject Property. 
Mortgagor shall pay all costs of filing such statements and renewals and
releases thereof and shall pay all reasonable costs and expenses of any record
searches for financing statements Mortgagee may reasonably require.  Without the prior written consent of
Mortgagee, Mortgagor shall not create or suffer to be created any other
security interest in any part of said Subject Property, including replacements
and additions thereto.  Upon the
occurrence of any default of Mortgagor hereunder, Mortgagee shall have the
rights and remedies of a secured party under the UCC as well as all other
rights and remedies available at law or in equity, and, at Mortgagee’s option,
Mortgagee may also invoke the remedies provided in Article V of
this Mortgage as to such personal property and all the portions of the Subject
Property which are personal property.

 

1.3                                 Fixture Filing. 
Certain of the Subject Property is or will become “fixtures” (as that
term is defined in the UCC) on the Subject Property.  Upon recording this Security Instrument in
the real property records, this Security Instrument shall be effective as a
financing statement filed as a fixture filing. 
In addition, a carbon, photographic or other reproduction of this
Security Instrument and/or any financing statement relating hereto shall be
sufficient for filing and/or recording as a financing statement.  The filing of any other financing statement
relating to any personal property rights or interests described herein shall
not be construed to diminish any right or priority hereunder.

 

1.4                                 Address.  The address
of the Subject Property (if known) is: 
1301 South Front Street, Pekin, Illinois.  Neither the failure to designate an address
nor any inaccuracy in the address designated shall affect the validity or
priority of the lien of this Mortgage on the Subject Property as described on Exhibit A.  In the event of any conflict between the
provisions of Exhibit A and said address, Exhibit A
shall control.

 

1.5                                 Usury.  Mortgagor
represents and agrees that the proceeds of the Loan Documents will be used for
the purposes specified in 815 ILCS 205/4 and that the Secured Obligations
constitute a business loan which comes within the purview of said 815 ILCS
205/4.

 

ARTICLE II.  OBLIGATIONS SECURED

 

2.1                                 Obligations Secured. 
Mortgagor makes this grant and assignment for the purpose of securing
the following obligations (each, a “Secured Obligation” and collectively, the “Secured
Obligations”):

 

(a)                                  payment to Mortgagee of all sums at any
time owing and performance of all other obligations arising under or in
connection with that certain promissory note (“Note”)
dated as of July 21, 2009, in the principal amount of Twenty Five Million
and N0/100 Dollars ($25,000,000), with interest as provided therein, executed
by Mortgagor and payable to Mortgagee or its order, together with the payment
and performance of any other indebtedness or obligations incurred in connection
with the credit accommodation evidenced by the Note, whether or not
specifically referenced therein; and

 

(b)                                 payment and performance of all
obligations of Mortgagor under this Mortgage, together with all advances, payments
or other expenditures made by Mortgagee as or for the payment or performance of
any such obligations of Mortgagor; and

 

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(c)                                  payment and performance of all
obligations, if any, and the contracts under which they arise, which any rider
attached to and recorded with this Mortgage recites are secured hereby; and

 

(d)                                 payment to Mortgagee of all liability,
whether liquidated or unliquidated, defined, contingent, conditional or of any
other nature whatsoever, and performance of all other obligations, arising
under any swap, derivative, foreign exchange or hedge transaction or
arrangement (or other similar transaction or arrangement howsoever described or
defined) at any time entered into with Mortgagee in connection with any Secured
Obligation; and

 

(e)                                  payment and performance of all future
advances (whether obligatory or to be made at the option of Mortgagee, or
otherwise) made by Mortgagee, to the same extent as if such future advances
were made on the date of execution of this Mortgage, and other obligations that
the then record owner of the Subject Property may agree to pay and/or perform
(whether as principal, surety or guarantor) for the benefit of Mortgagee, when
any such advance or other obligation is evidenced by a writing which recites
that it is secured by this Mortgage; and

 

(f)                                    all modifications, extensions and
renewals of any of the Secured Obligations (including without limitation, (i) modifications,
extensions or renewals at a different rate of interest, or (ii) deferrals
or accelerations of the required principal payment dates or interest payment
dates or both, in whole or in part), however evidenced, whether or not any such
modification, extension or renewal is evidenced by a new or additional promissory
note or notes.

 

2.2                                 Obligations. 
The term “obligations” is used herein in its most comprehensive sense
and includes any and all advances, debts, obligations and liabilities
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined, joint or
several, including without limitation, all principal, interest, charges,
including prepayment charges and late charges, and loan fees at any time
accruing or assessed on any Secured Obligation.

 

2.3                                 Incorporation. 
All terms of the Secured Obligations are incorporated herein by this
reference.  All persons who may have or
acquire an interest in the Subject Property are hereby deemed to have notice of
the terms of the Secured Obligations and to have notice, if provided therein,
that:  (a) the Note or any other
Secured Obligation may permit borrowing, repayment and reborrowing;  and (b) the rate of interest on one or
more of the Secured Obligations may vary from time to time.

 

2.4                                 Maximum Secured Amount. 
The maximum amount secured by this Mortgage may decrease or increase
from time to time, but shall never exceed twice the aggregate amount of the
Note and each other instrument, agreement or obligation specifically described
herein or in any rider attached to and recorded with this Mortgage, or
otherwise incorporated herein by reference, including any of the foregoing
which is incorporated into this Mortgage by a modification or similar document
recorded subsequent to the date hereof. 
The maximum amount secured by this Mortgage shall not in any way imply
that Mortgagee shall be obligated to advance any amount at any time.  Advances of disbursements made by Mortgagee
to protect the security, under the terms hereof, shall not be deemed to be
optional advances.

 

2.5                                 Future Advances. 
Mortgagor acknowledges and intends that any future advances, whenever
hereafter made, shall be a lien from the time this Mortgage is recorded, as
provided in Section 5/15-1302(b)(1) of the Illinois Mortgage
Foreclosure Law (the “Mortgage Act”),
735 ILCS 5/15-1101, et seq.,.  That
portion of the obligations which comprises the principal amount then
outstanding under the loans constitutes indebtedness secured by a mortgage on
real property, pursuant to the terms and conditions of 205 ILCS 5/5d, Mortgagor
covenants and agrees that this Mortgage shall secure the payment of all loans
and advances made pursuant to the terms and provisions of the Credit Agreement,
the Note and the other Loan Documents whether such loans and advances are made
as of the date

 

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hereof or at any time in the future, and whether such future advances
are obligatory or are to be made at the option of Mortgagee or otherwise (but
not advances or loans made more than 20 years after the date hereof), to the
same extent as if such future advances were made on the date of the execution
of this Mortgage and although there may be no advances made at the time of the
execution of this Mortgage and although there may be no other Secured
Obligations outstanding at the time any advance is made.  The lien of this Mortgage shall be valid as
to all Secured Obligations, including future advances, from the time of its
filing of record in the office of the Recorder of Deeds of the County in which
the Subject Property is located.  The
total amount of the Secured Obligations may increase or decrease from time to
time, but the total unpaid principal balance of the Secured Obligations
(including disbursements which Mortgagee may make under this Mortgage or any
other document or instrument evidencing or securing the Secured Obligations) at
any time outstanding may be substantially less but shall not exceed the amount
referred to in Section 2.4 of this Mortgage.  This Mortgage shall be valid and shall have
priority over all subsequent liens and encumbrances, including statutory liens,
except taxes and assessments levied on the Subject Property, to the extent of
the maximum amount secured hereby.

 

2.6                                 Illinois Mortgage Foreclosure Law. 
It is the intention of Mortgagor and Mortgagee that the enforcement of
the terms and provisions of this Mortgage shall be accomplished in accordance
with the Mortgage Act and with respect to such Mortgage Act, Mortgagor agrees
and covenants that:

 

(a)                                  Mortgagor and Mortgagee shall have the
benefit of all of the provisions of the Mortgage Act, including, to the extent
provided by law, all amendments thereto which may become effective from time to
time after the date hereof.  In the event
any provision of the Mortgage Act which is specifically referred to herein may
be repealed, Mortgagee shall have the benefit of such provision as most recently
existing prior to such repeal, as though the same were incorporated herein by
express reference;

 

(b)                                 Wherever provision is made in this
Mortgage for insurance policies to bear mortgagee clauses or other loss payable
clauses or endorsements in favor of Mortgagee, or to confer authority upon
Mortgagee to settle or participate in the settlement of losses under policies
of insurance or to hold and disburse or otherwise control use of insurance
proceeds, from and after the entry of judgment of foreclosure, all such rights
and powers of Mortgagee shall continue in Mortgagee as judgment creditor or
mortgagee until confirmation of sale;

 

(c)                                  Except as varied by a court of law, all
advances, disbursements and expenditures made or incurred by Mortgagee before
and during a foreclosure, and before and after judgment of foreclosure, and at
any time prior to sale, and, where applicable, after sale, and during the
pendency of any related proceedings, for the purpose of preserving or restoring
the Subject Property, preserving the lien of the Mortgage or the priority
thereof, or enforcing the Mortgage, in addition to those otherwise authorized
by this Mortgage or the other Loan Documents or by the Mortgage Act
(collectively “Protective
Advances”), shall have the benefit of all applicable provisions of
the Mortgage Act.  All Protective
Advances shall be so much additional indebtedness secured by this Mortgage, and
shall become immediately due and payable without notice and with interest
thereon from the date of the advance until paid at the rate of interest payable
after default under the terms of the Credit Agreement.  This Mortgage shall be a lien for all
Protective Advances as to subsequent purchasers and judgment creditors from the
time this Mortgage is recorded pursuant to Subsection (b)(5) of Section 5/15-1302
of the Mortgage Act;

 

(d)                                 In addition to any provision of this
Mortgage authorizing Mortgagee to take or be placed in possession of the
Subject Property, or for the appointment of a receiver, Mortgagee shall have
the right, in accordance with Sections 5/15-1701 and 5/15-1702 of the Mortgage
Act, to be placed in possession of the Subject Property or at its request to
have a receiver appointed, and such receiver, or Mortgagee, if and when placed
in possession, shall have, in addition to any other powers provided in this
Mortgage, all rights, powers, immunities, and duties as provided for in
Sections 5/15-1701, 5/15-1703 and 5/15-1704 of the Mortgage Act; and

 

(e)                                  Mortgagor acknowledges that the Subject
Property does not constitute agricultural real estate, as said term is defined
in Section 5/15-1201 of the Mortgage Act or residential real estate as 

 

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defined in Section 5/15-1219 of the Mortgage Act.  As provided by law and pursuant to Section 5/15-1601(b) of
the Mortgage Act, Mortgagor hereby waives any and all right of redemption.

 

ARTICLE III.  ASSIGNMENT OF RENTS

 

3.1                                 Assignment.  For the
purposes and upon the terms and conditions set forth herein, Mortgagor
irrevocably assigns to Mortgagee all of Mortgagor’s right, title and interest
in, to and under all leases, licenses, rental agreements and other agreements
of any kind relating to the use or occupancy of any of the Subject Property,
whether existing as of the date hereof or at any time hereafter entered into,
together with all guarantees of and security for any tenant’s or lessee’s
performance thereunder, and all amendments, extensions, renewals and
modifications thereto (each, a “Lease” and
collectively, the “Leases”),
together with any and all other rents, issues and profits of the Subject
Property (collectively, “Rents”).  This assignment shall not impose upon
Mortgagee any duty to produce Rents from the Subject Property, nor cause
Mortgagee to be: (a) a “mortgagee in possession” for any purpose; (b) responsible
for performing any of the obligations of the lessor or landlord under any
Lease; or (c) responsible for any waste committed by any person or entity
at any time in possession of the Subject Property or any part thereof, or for
any dangerous or defective condition of the Subject Property, or for any
negligence in the management, upkeep, repair or control of the Subject
Property.  This is an absolute
assignment, not an assignment for security only, and Mortgagee’s right to Rents
is not contingent upon and may be exercised without taking possession of the
Subject Property.  Mortgagor agrees to
execute and deliver to Mortgagee, within five (5) days of Mortgagee’s
written request, such additional documents as Mortgagee may reasonably request
to further evidence the assignment to Mortgagee of any and all Leases and
Rents.  Mortgagee, at Mortgagee’s option
and without notice, may notify any lessee or tenant of this assignment of the
Leases and Rents.

 

3.2                                 Protection of Security. 
To protect the security of this assignment, Mortgagor agrees:

 

(a)                                  At Mortgagor’s sole cost and
expense:  (i) to perform each
obligation to be performed by the lessor or landlord under each Lease and to
enforce or secure the performance of each obligation to be performed by the
lessee or tenant under each Lease; (ii) not to modify any Lease in any
material respect, i.e. affecting the rent or other payments, length of term,
identity of tenant, or substantially affect the landlord’s or tenant’s
obligations thereunder; nor accept surrender under or terminate the term of any
Lease; (iii) not to anticipate the Rents under any Lease; and (iv) not
to waive or release any lessee or tenant of or from any Lease obligations.  Mortgagor assigns to Mortgagee all of
Mortgagor’s right and power to modify the terms of any Lease (except for
nonmaterial modifications as described above), to accept a surrender under or
terminate the term of or anticipate the Rents under any Lease, and to waive or
release any lessee or tenant of or from any Lease obligations, and any attempt
on the part of Mortgagor to exercise any such rights or powers without
Mortgagee’s prior written consent shall be a breach of the terms hereof.

 

(b)                                 At Mortgagor’s sole cost and expense, to
defend any action in any manner connected with any Lease or the obligations
thereunder, and to pay all costs of Mortgagee, including reasonable attorneys’
fees, in any such action in which Mortgagee may appear.

 

(c)                                  That, should Mortgagor fail to do any act
required to be done by Mortgagor under a Lease, then Mortgagee, but without
obligation to do so and without notice to Mortgagor and without releasing
Mortgagor from any obligation hereunder, may make or do the same in such manner
and to such extent as Mortgagee deems necessary to protect the security hereof,
and, in exercising such powers, Mortgagee may employ attorneys and other
agents, and Mortgagor shall pay necessary costs and reasonable attorneys’ fees
incurred by Mortgagee, or its agents, in the exercise of the powers granted
herein.  Mortgagor shall give prompt
notice to Mortgagee of any material default by any lessee or tenant under any
Lease which continues beyond a reasonable cure period, and of any notice of
default on

 

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the part of Mortgagor under any Lease received from a lessee or tenant
thereunder, which continues beyond a reasonable cure period, together with an
accurate and complete copy thereof.

 

(d)                                 To pay to Mortgagee immediately upon
demand all sums expended under the authority hereof, including reasonable
attorneys’ fees, together with interest thereon at the highest rate per annum
payable under any Secured Obligation, and the same, at Mortgagee’s option, may
be added to any Secured Obligation and shall be secured hereby.

 

3.3                                 License.  Mortgagee
confers upon Mortgagor a license (“License”) to
collect and retain the Rents as, but not before, they come due and payable,
until the occurrence of any Default. 
Upon the occurrence of any Default, the License shall be automatically revoked,
and Mortgagee may, at Mortgagee’s option and without notice, either in person
or by agent, with or without bringing any action, or by a receiver to be
appointed by a court:  (a) enter,
take possession of, manage and operate the Subject Property or any part
thereof; (b) make, cancel, enforce or modify any Lease; (c) obtain
and evict tenants, fix or modify Rents, and do any acts which Mortgagee deems
proper to protect the security hereof; and (d) either with or without
taking possession of the Subject Property, in its own name, sue for or
otherwise collect and receive all Rents, including those past due and unpaid,
and apply the same in accordance with the provisions of this Mortgage.  The entering and taking possession of the
Subject Property, the collection of Rents and the application thereof as
aforesaid, shall not cure or waive any Default, nor waive, modify or affect any
notice of default hereunder, nor invalidate any act done pursuant to any such
notice.  The License shall not grant to
Mortgagee the right to possession, except as provided in this Mortgage.  Any indemnifications of Mortgagor in favor of
Mortgagee hereunder shall not extend to actions taken by Mortgagee with respect
to the Subject Property or the tenants or lessees after Mortgagee’s revocation
of the License contained herein.

 

ARTICLE IV.  RIGHTS AND DUTIES OF THE PARTIES

 

4.1                                 Title.  Mortgagor
warrants that, except as disclosed to Mortgagee prior to the date hereof in a
writing which refers to this warranty, Mortgagor lawfully possesses and holds
fee simple title to, or if permitted by Mortgagee in writing, a leasehold
interest in, the Subject Property without limitation on the right to encumber,
as herein provided, and that this Mortgage is a valid lien on the Subject
Property and all of Mortgagor’s interest therein.

 

4.2                                 Taxes and Assessments. 
Subject to the right, if any, of Mortgagor to contest payment of the
following pursuant to any other agreement between Mortgagor and Mortgagee,
Mortgagor shall pay prior to delinquency all taxes, assessments, levies and
charges imposed: (a) by any public or quasi-public authority or utility
company which are or which may become a lien upon or cause a loss in value of
the Subject Property or any interest therein; or (b) by any public
authority upon Mortgagee by reason of its interest in any Secured Obligation or
in the Subject Property, or by reason of any payment made to Mortgagee pursuant
to any Secured Obligation; provided however, that Mortgagor shall have no
obligation to pay any income taxes of Mortgagee.  Promptly upon request by Mortgagee, Mortgagor
shall furnish to Mortgagee satisfactory evidence of the payment of all of the
foregoing.  Mortgagee is hereby authorized
to request and receive from the responsible governmental and non-governmental
personnel written statements with respect to the accrual and payment of any of
the foregoing.

 

4.3                                 Performance of Secured Obligations. 
Mortgagor shall promptly pay and perform each Secured Obligation when
due.

 

4.4                                 Liens, Encumbrances and Charges. 
Mortgagor shall immediately discharge any lien on the Subject Property
not approved by Mortgagee in writing. 
The preceding sentence does not apply to liens which are exceptions to
the title of the Subject Property and which are actually set forth in Title
Commitment No. NCS-406271 dated July 30, 2009, issued by First
American Title Insurance Company, nor liens arising hereafter for ordinary real
estate taxes and assessments.  Except as
otherwise provided

 

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in any Secured Obligation or other agreement with Mortgagee, Mortgagor
shall pay when due all obligations secured by or reducible to liens and
encumbrances which shall now or hereafter encumber the Subject Property,
whether senior or subordinate hereto, including without limitation, any
mechanics’ liens, although if Mortgagor feels that any mechanic’s lien is filed
in excess of the true amount owing to the mechanic’s lien claimant, Mortgagor
may (so long as Mortgagor has not committed any Default hereunder) upon
depositing with Mortgagee an amount equal to such claim, contest the amount and
validity of such mechanic’s lien, and during the entire period of such contest
shall defend and indemnify Mortgagee against any loss, cost or expense incurred
by Mortgagee thereby, and Mortgagor shall in any event pay the full amount of
any final and nonappealable judgment resulting from such mechanic’s lien at
least thirty (30) days before any sale or other execution resulting from such
judgment is scheduled to take place.

 

4.5                                 Insurance.  Mortgagor
shall insure the Subject Property against loss or damage by fire and such other
risks as Mortgagee shall from time to time require.  Mortgagor shall carry public liability
insurance, flood insurance as may be required by applicable law and such other
insurance as Mortgagee may reasonably require and which is typical for
commercial properties in the vicinity of and of similar nature to the Property,
including without limitation, business interruption insurance or loss of rental
value insurance.  Mortgagor shall
maintain all required insurance at Mortgagor’s expense, under policies issued
by companies and in form and substance reasonably satisfactory to Mortgagee
(Mortgagee hereby agrees that mortgagor’s current insurers, of which Mortgagee
has been advised, are satisfactory). 
Mortgagee, by reason of accepting, rejecting, approving or obtaining
insurance, shall not incur any liability for: (a) the existence,
nonexistence, form or legal sufficiency thereof; (b) the solvency of any
insurer; or (c) the payment of losses. 
All policies and certificates of insurance shall name Mortgagee as an
additional loss payee, and shall provide that the insurance cannot be
terminated as to Mortgagee except upon a minimum of ten (10) days’ prior
written notice to Mortgagee.  Immediately
upon any request by Mortgagee, Mortgagor shall deliver to Mortgagee duplicates
of the original copies of all such policies or certificates, with receipts
evidencing annual prepayment of the premiums.

 

4.6                                 Tax and Insurance Impounds. 
In the event any Default occurs hereunder, and provided that a tax and
insurance impound is not then being implemented by the holder of a mortgage on
the Subject Property which is senior to the lien of this Mortgage, then at any
time thereafter upon written notice from Mortgagee to Mortgagor,, Mortgagor
shall, until all Secured Obligations have been paid in full, pay to Mortgagee
monthly, annually or as otherwise directed by Mortgagee an amount estimated by
Mortgagee to be equal to: (a) all taxes, assessments, levies and charges
imposed by any public or quasi-public authority or utility company which are or
may become a lien upon the Subject Property and will become due for the tax
year during which such payment is so directed; and (b) premiums for fire,
other hazard and mortgage insurance next due. 
If Mortgagee determines that amounts paid by Mortgagor are insufficient
for the payment in full of such taxes, assessments, levies and/or insurance
premiums, Mortgagee shall notify Mortgagor of the increased amount required for
the payment thereof when due, and Mortgagor shall pay to Mortgagee such
additional amount within thirty (30) days after notice from Mortgagee.  All amounts so paid shall not bear interest,
except to the extent and in the amount required by law.  So long as there is no Default, Mortgagee
shall apply said amounts to the payment of, or at Mortgagee’s sole option
release said funds to Mortgagor for application to and payment of, such taxes,
assessments, levies, charges and insurance premiums.  If a Default exists, Mortgagee at its sole
option may apply all or any part of said amounts to any Secured Obligation
and/or to cure such Default, in which event Mortgagor shall be required to
restore all amounts so applied, as well as to cure any Default not cured by
such application.  Mortgagor hereby
grants and transfers to Mortgagee a security interest in all amounts so paid
and held in Mortgagee’s possession, and all proceeds thereof, to secure the
payment and performance of each Secured Obligation.  Upon assignment of this Mortgage, Mortgagee
shall have the right to assign all amounts collected and in its possession to
its assignee, whereupon Mortgagee shall be released from all liability with respect
thereto.  The existence of said impounds
shall not limit Mortgagee’s rights under any other provision of this Mortgage
or any other agreement, statute or rule of law.  Within ninety-five (95) days following full
repayment of all Secured

 

8

 

Obligations (other than as a consequence of a foreclosure or conveyance
in lieu of foreclosure of the liens and security interests securing any Secured
Obligation), or at such earlier time as Mortgagee in its discretion may elect,
the balance of all amounts collected and in Mortgagee’s possession shall be
paid to Mortgagor, and no other party shall have any right of claim thereto.

 

4.7                                 Damages; Insurance and Condemnation
Proceeds.

 

(a)                                  All awards of damages and all other
compensation payable directly or indirectly by reason of a condemnation or
proposed condemnation (or transfer in lieu thereof) for public or private use
affecting the Subject Property; (ii) all other claims and awards for
damages to or decrease in value of the Subject Property; (iii) all proceeds
of any insurance policies payable by reason of loss sustained to the Subject
Property; and (iv) all interest which may accrue on any of the foregoing,
are all (to the extent that such amounts are not being required to be paid to
the holder of a mortgage on the Subject Property which is senior to the lien of
this Mortgage) absolutely and irrevocably assigned to and shall be paid to
Mortgagee.  In such event, at the
absolute discretion of Mortgagee, whether or not its security is or may be
impaired, but subject to applicable law if any, and without regard to any
requirement contained in any other Section hereof, Mortgagee may apply all
or any of the proceeds it receives to its expenses in settling, prosecuting or
defending any such claim and apply the balance to the Secured Obligations in
any order, and release all or any part of the proceeds to Mortgagor upon any
conditions Mortgagee may impose.  In such
event, Mortgagee may commence, appear in, defend or prosecute any assigned
claim or action, and may adjust, compromise, settle and collect all claims and
awards assigned to Mortgagee; provided however, that in no event shall
Mortgagee be responsible for any failure to collect any claim or award,
regardless of the cause of the failure.

 

(b)                                 At its sole option, Mortgagee may permit
insurance or condemnation proceeds held by Mortgagee to be used for repair or
restoration but may impose any conditions on such use as Mortgagee deems
necessary.

 

4.8                                 Maintenance and Preservation of Subject
Property.  Subject to the provisions of any Secured
Obligation, Mortgagor covenants:

 

(a)                                  to keep the Subject Property in good
condition and repair;

 

(b)                                 except with Mortgagee’s prior written
consent, not to remove or demolish the Subject Property, nor alter, restore or
add to the Subject Property (except for the replacement of equipment or
fixtures with like items of similar or greater value), nor initiate or
acquiesce in any change in any zoning or other land classification which
affects the Subject Property;

 

(c)                                  to restore promptly and in good
workmanlike manner any portion of the Subject Property which may be damaged or
destroyed, unless Mortgagee requires that all of the insurance proceeds be used
to reduce the Secured Obligations as provided in the Section hereof
entitled Damages; Insurance and Condemnation Proceeds;

 

(d)                                 to comply with and not to suffer
violation of any or all of the following which govern acts or conditions on, or
otherwise affect the Subject Property:  (i) laws,
ordinances, regulations, standards and judicial and administrative rules and
orders; (ii) covenants, conditions, restrictions and equitable servitudes,
whether public or private; and (iii) requirements of insurance companies
and any bureau or agency which establishes standards of insurability;

 

(e)                                  not to commit or permit waste of the
Subject Property; and

 

(f)                                    to do all other acts which from the
character or use of the Subject Property may be reasonably necessary to
maintain and preserve its value.

 

9

 

4.9                                 Hazardous Substances; Environmental
Provisions.  Mortgagor represents and warrants to
Mortgagee to its actual knowledge as follows:

 

(a)                                  Except as disclosed to Mortgagee in
writing prior to the date hereof, the Subject Property is not and has not been
a site for the use, generation, manufacture, storage, treatment, disposal,
release or threatened release, transportation or presence of any substances
which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic
substances” under the Hazardous Materials Laws, as defined below, and/or other
applicable environmental laws, ordinances and regulations (collectively, the “Hazardous
Materials”).

 

(b)                                 Except as disclosed to Mortgagee in
Schedule 5.11 to the Credit and Security Agreement entered into between the
Mortgagor and the Mortgagee dated July 21, 2009 (as same may be amended or
replaced from time to time, the “Credit Agreement”),
the Subject Property is in compliance with all laws, ordinances and regulations
relating to Hazardous Materials (collectively, the “Hazardous Materials Laws”),
including without limitation, the Clean Air Act, the Federal Water Pollution
Control Act, the Federal Resource Conservation and Recovery Act of 1976, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Toxic
Substances Control Act and the Occupational Safety and Health Act, as any of
the same may be amended, modified or supplemented from time to time, and any
other applicable federal, state or local environmental laws, and any rules or
regulations adopted pursuant to any of the foregoing.

 

(c)                                  Except as disclosed to Mortgagee in
Schedule 5.11 to the Credit Agreement, there are no claims or actions pending or
threatened against Mortgagor or the Subject Property by any governmental entity
or agency, or any other person or entity, relating to any Hazardous Materials
or pursuant to any Hazardous Materials Laws.

 

(d)                                 Mortgagor hereby agrees to defend,
indemnify and hold harmless Mortgagee, its directors, officers, employees,
agents, successors and assigns, from and against any and all losses, damages,
liabilities, claims, actions, judgments, court costs and legal or other
expenses (including without limitation, attorneys’ fees and expenses) which
Mortgagee may incur as a direct or indirect consequence of the use, generation,
manufacture, storage, treatment, disposal, release or threatened release,
transportation or presence of Hazardous Materials in, on, under or about the
Subject Property.  Mortgagor shall pay to
Mortgagee immediately upon demand any amounts owing under this indemnity,
together with interest from the date of demand until paid in full at the
highest rate of interest applicable to any Secured Obligation.  MORTGAGOR’S DUTY AND OBLIGATION TO DEFEND,
INDEMNIFY AND HOLD HARMLESS MORTGAGEE SHALL SURVIVE THE CANCELLATION OF THE
SECURED OBLIGATIONS AND THE RELEASE OR PARTIAL RELEASE OF THIS MORTGAGE.

 

(e)                                  Mortgagor shall immediately advise
Mortgagee in writing upon Mortgagor’s discovery of any occurrence or condition
on the Subject Property, or on any real property adjoining or in the vicinity
of the Subject Property, that does or could cause all or any part of the
Subject Property to be contaminated with any Hazardous Materials or otherwise
be in violation of any Hazardous Materials Laws, or cause the Subject Property
to be subject to any restrictions on the ownership, occupancy, transferability
or use thereof under any Hazardous Materials Laws.

 

4.10                           Protection of Security. 
Mortgagor shall, at Mortgagor’s sole expense:  (a) protect, preserve and defend the
Subject Property and Mortgagor’s title and right to possession of the Subject
Property against all adverse claims; (b) if Mortgagor’s interest in the
Subject Property is a leasehold interest or estate, pay and perform in a timely
manner all obligations to be paid and/or performed by the lessee or tenant
under the lease or other agreement creating such leasehold interest or estate;
and (c) protect, preserve and defend the security of this Mortgage and the
rights and powers of Mortgagee under this Mortgage against all adverse
claims.  Mortgagor shall give Mortgagee
prompt notice in writing

 

10

 

of the assertion of any claim, the filing of any action or proceeding,
or the occurrence of any damage, condemnation offer or other action relating to
or affecting the Subject Property and, if Mortgagor’s interest in the Subject
Property is a leasehold interest or estate, of any notice of default or demand
for performance under the lease or other agreement pursuant to which such
leasehold interest or estate was created or exists.

 

4.11                           Powers and Duties of Mortgagee. 
Mortgagee may, upon written request, without obligation to do so or
liability therefor and without notice:  (a) release
all or any part of the Subject Property from the lien of this Mortgage; (b) consent
to the making of any map or plat of the Subject Property; and (c) join in
any grant of easement or declaration of covenants and restrictions with respect
to the Subject Property, or any extension agreement or any agreement
subordinating the lien or charge of this Mortgage.  Mortgagee may from time to time apply to any court
of competent jurisdiction for aid and direction in the exercise or enforcement
of its rights and remedies available under this Mortgage, and may obtain orders
or decrees directing, confirming or approving acts in the exercise or
enforcement of said rights and remedies. 
Mortgagee has no obligation to notify any party of any pending sale or
any action or proceeding (including, but not limited to, actions in which
Mortgagor or Mortgagee shall be a party) unless held or commenced and
maintained by Mortgagee under this Mortgage.

 

4.12                           Compensation; Exculpation;
Indemnification.

 

(a)                                  Mortgagor shall pay Mortgagee reasonable
compensation for services rendered concerning this Mortgage, including without
limitation, the providing of any statement of amounts owing under any Secured
Obligation.  Mortgagee shall not directly
or indirectly be liable to Mortgagor or any other person as a consequence
of:  (i) the exercise of any rights,
remedies or powers granted to Mortgagee in this Mortgage; (ii) the failure
or refusal of Mortgagee to perform or discharge any obligation or liability of
Mortgagor under this Mortgage or any Lease or other agreement related to the
Subject Property; or (iii) any loss sustained by Mortgagor or any third
party as a result of Mortgagee’s failure to lease the Subject Property after
any Default or from any other act or omission of Mortgagee in managing the
Subject Property after any Default unless such loss is caused by the willful
misconduct or gross negligence of Mortgagee; and no such liability shall be
asserted or enforced against Mortgagee, and all such liability is hereby
expressly waived and released by Mortgagor.

 

(b)                                 Mortgagor shall indemnify Mortgagee
against, and hold Mortgagee harmless from, any and all losses, damages,
liabilities, claims, causes of action, judgments, court costs, attorneys’ fees
and other legal expenses, costs of evidence of title, costs of evidence of
value, and other expenses which Mortgagee may suffer or incur:  (i) by reason of this Mortgage; (ii) by
reason of the performance of any act required or permitted hereunder or by law;
(iii) as a result of any failure of Mortgagor to perform Mortgagor’s
obligations; or (iv) by reason of any alleged obligation or undertaking of
Mortgagee to perform or discharge any of the representations, warranties,
conditions, covenants or other obligations contained in any other document
related to the Subject Property, including without limitation, the payment of
any taxes, assessments, rents or other lease obligations, liens, encumbrances
or other obligations of Mortgagor under this Mortgage.  Mortgagor’s duty to indemnify Mortgagee shall
survive the payment, discharge or cancellation of the Secured Obligations and
the release or satisfaction, in whole or in part, of this Mortgage.

 

(c)                                  Mortgagor shall pay all indebtedness
arising under this Section immediately upon demand by Mortgagee, together
with interest thereon from the date of demand until paid in full at the highest
rate per annum payable under any Secured Obligation.  Mortgagee may, at its option, add any such
indebtedness to any Secured Obligation.

 

4.13                           Due on Sale or Encumbrance. 
Except as permitted by the provisions of any Secured Obligation or
applicable law, if the Subject Property or any interest therein shall be sold,
transferred, mortgaged, assigned, encumbered or leased, whether voluntarily,
involuntarily or by operation of law

 

11

 

(each of which actions and events is called a “Transfer”), without
Mortgagee’s prior written consent, THEN Mortgagee may, at its sole option,
declare all Secured Obligations immediately due and payable in full.  Mortgagor shall notify Mortgagee in writing
of each Transfer within ten (10) business days of the date thereof.

 

4.14                           Releases, Extensions, Modifications and
Additional Security.  Without notice to or the consent, approval or
agreement of any persons or entities having any interest at any time in the
Subject Property or in any manner obligated under any Secured Obligation (each,
an “Interested Party”), Mortgagee may, from time to time, release any
Interested Party from liability for the payment of any Secured Obligation, take
any action or make any agreement extending the maturity or otherwise altering
the terms or increasing the amount of any Secured Obligation, accept additional
security, and enforce, waive, subordinate or release all or a portion of the
Subject Property or any other security for any Secured Obligation.  None of the foregoing actions shall release
or reduce the personal liability of any Interested Party, nor release or impair
the priority of the lien of this Mortgage upon the Subject Property.

 

4.15                           Release of Mortgage. 
Upon satisfaction in full of the Secured Obligations, Mortgagee, without
warranty, shall deliver for recording in the appropriate real property records
a satisfaction or release of Mortgage for the Subject Property, or that portion
thereof then covered hereby, from the lien of this Mortgage.

 

4.16                           Subrogation. 
Mortgagee shall be subrogated to the lien of all encumbrances, whether
or not released of record, paid in whole or in part by Mortgagee pursuant to
this Mortgage or by the proceeds of any Secured Obligation.

 

4.17                           Mortgagor Different From Obligor (“Third
Party Mortgagor”).  As used in this Section, the term “Obligor”
shall mean each person or entity obligated in any manner under any of the
Secured Obligations; and the term “Third Party Mortgagor” shall mean (1) each
person or entity included in the definition of Mortgagor herein and which is
not an Obligor under all of the Secured Obligations, and (2) each person
or entity included in the definition of Mortgagor herein if any Obligor is not
included in said definition.

 

(a)                                  Representations and Warranties. 
Each Third Party Mortgagor represents and warrants to Mortgagee
that:  (i) this Mortgage is executed
at an Obligor’s request; (ii) this Mortgage complies with all agreements
between each Third Party Mortgagor and any Obligor regarding such Third Party
Mortgagor’s execution hereof; (iii) Mortgagee has made no representation
to any Third Party Mortgagor as to the creditworthiness of any Obligor; and (iv) each
Third Party Mortgagor has established adequate means of obtaining from each
Obligor on a continuing basis financial and other information pertaining to
such Obligor’s financial condition.  Each
Third Party Mortgagor agrees to keep adequately informed from such means of any
facts, events or circumstances which might in any way affect such Third Party
Mortgagor’s risks hereunder.  Each Third
Party Mortgagor further agrees that Mortgagee shall have no obligation to
disclose to any Third Party Mortgagor any information or material about any
Obligor which is acquired by Mortgagee in any manner.  The liability of each Third Party Mortgagor
hereunder shall be reinstated and revived, and the rights of Mortgagee shall
continue if and to the extent that for any reason any amount at any time paid
on account of any Secured Obligation is rescinded or must otherwise be restored
by Mortgagee, whether as a result of any proceedings in bankruptcy or reorganization
or otherwise, all as though such amount had not been paid.  The determination as to whether any amount so
paid must be rescinded or restored shall be made by Mortgagee in its sole
discretion; provided however, that if Mortgagee chooses to contest any such
matter at the request of any Third Party Mortgagor, each Third Party Mortgagor
agrees to indemnify and hold Mortgagee harmless from and against all costs and
expenses, including reasonable attorneys’ fees, expended or incurred by
Mortgagee in connection therewith, including without limitation, in any
litigation with respect thereto.

 

12

 

(b)                                 Waivers.

 

(i)             Each Third Party Mortgagor waives any right to require
Mortgagee to:  (A) proceed against
any Obligor or any other person; (B) marshal assets or proceed against or
exhaust any security held from any Obligor or any other person; (C) give
notice of the terms, time and place of any public or private sale or other
disposition of personal property security held from any Obligor or any other
person; (D) take any other action or pursue any other remedy in Mortgagee’s
power; or (E) make any presentment or demand for performance, or give any
notice of nonperformance, protest, notice of protest or notice of dishonor
hereunder or in connection with any obligations or evidences of indebtedness
held by Mortgagee as security for or which constitute in whole or in part the
Secured Obligations, or in connection with the creation of new or additional
obligations.

 

(ii)          Each Third Party Mortgagor waives any defense to its
obligations hereunder based upon or arising by reason of: (A) any
disability or other defense of any Obligor or any other person; (B) the
cessation or limitation from any cause whatsoever, other than payment in full,
of any Secured Obligation; (C) any lack of authority of any officer,
director, partner, agent or any other person acting or purporting to act on
behalf of any Obligor which is a corporation, partnership or other type of
entity, or any defect in the formation of any such Obligor; (D) the
application by any Obligor of the proceeds of any Secured Obligation for
purposes other than the purposes represented by any Obligor to, or intended or
understood by, Mortgagee or any Third Party Mortgagor; (E) any act or
omission by Mortgagee which directly or indirectly results in or aids the
discharge of any Obligor or any portion of any Secured Obligation by operation
of law or otherwise, or which in any way impairs or suspends any rights or
remedies of Mortgagee against any Obligor; (F) any impairment of the value
of any interest in any security for the Secured Obligations or any portion
thereof, including without limitation, the failure to obtain or maintain
perfection or recordation of any interest in any such security, the release of
any such security without substitution, and/or the failure to preserve the
value of, or to comply with applicable law in disposing of, any such security; (G) any
modification of any Secured Obligation, in any form whatsoever, including
without limitation the renewal, extension, acceleration or other change in time
for payment of, or other change in the terms of, any Secured Obligation or any
portion thereof, including increase or decrease of the rate of interest
thereon; or (H) any requirement that Mortgagee give any notice of
acceptance of this Mortgage.  Until all
Secured Obligations shall have been paid in full, no Third Party Mortgagor
shall have any right of subrogation, and each Third Party Mortgagor waives any
right to enforce any remedy which Mortgagee now has or may hereafter have
against any Obligor or any other person, and waives any benefit of, or any
right to participate in, any security now or hereafter held by Mortgagee.  Each Third Party Mortgagor further waives all
rights and defenses it may have arising out of: (1) any election of
remedies by Mortgagee, even though that election of remedies, such as a
non-judicial foreclosure with respect to any security for any portion of the
Secured Obligations, destroys such Third Party Mortgagor’s rights of
subrogation or such Third Party Mortgagor’s rights to proceed against any
Obligor for reimbursement; or (2) any loss of rights any Third Party
Mortgagor may suffer by reason of any rights, powers or remedies of any Obligor
in connection with any anti-deficiency laws or any other laws limiting,
qualifying or discharging any Obligor’s obligations.

 

(iii)       If any of said waivers is determined to be contrary to
any applicable law or public policy, such waiver shall be effective to the
extent permitted by applicable law or public policy.

 

ARTICLE V.  DEFAULT PROVISIONS

 

5.1                                 Default.  The
occurrence of any of the following shall constitute a “Default” under this
Mortgage: (a) Mortgagor shall fail to observe or perform any obligation or
agreement contained herein; (b) any representation or warranty of
Mortgagor herein shall prove to be incorrect, false or misleading in any
material respect when made; or (c) any material default in the payment or
performance of any obligation, or any defined event of default, under any
provisions of the Note or any other contract, instrument or document executed
in connection with, or with respect to, any Secured Obligation, which continues
after

 

13

 

the expiration of any applicable notice and right to cure provisions
contained in the relevant document describing such event of default.

 

5.2                                 Rights and Remedies. 
Upon the occurrence of any Default, and at any time thereafter,
Mortgagee shall have all the following rights and remedies:

 

(a)                                  With or without notice, to declare all
Secured Obligations immediately due and payable in full.

 

(b)                                 With or without notice, without releasing
Mortgagor from any Secured Obligation and without becoming a mortgagee in possession,
to cure any Default of Mortgagor and, in connection therewith: (i) to
enter upon the Subject Property and to do such acts and things as Mortgagee
deems necessary or desirable to protect the security of this Mortgage,
including without limitation, to appear in and defend any action or proceeding
purporting to affect the security of this Mortgage or the rights or powers of
Mortgagee hereunder; (ii) to pay, purchase, contest or compromise any
encumbrance, charge, lien or claim of lien which, in the judgment of Mortgagee,
is senior in priority to this Mortgage, the judgment of Mortgagee being
conclusive as between the parties hereto; (iii) to obtain, and to pay any
premiums or charges with respect to, any insurance required to be carried
hereunder; and (iv) to employ counsel, accountants, contractors and other
appropriate persons to assist Mortgagee.

 

(c)                                  To commence and maintain an action or
actions in any court of competent jurisdiction to foreclose this Mortgage or to
obtain specific enforcement of the covenants of Mortgagor under this Mortgage,
and Mortgagor agrees that such covenants shall be specifically enforceable by
injunction or any other appropriate equitable remedy.  For the purposes of any suit brought under
this subsection, Mortgagor waives the defenses of laches and any applicable
statute of limitations.

 

(d)                                 To apply to a court of competent
jurisdiction for and obtain appointment of a receiver of the Subject Property
as a matter of strict right and without regard to: (i) the adequacy of the
security for the repayment of the Secured Obligations; (ii) the existence
of a declaration that the Secured Obligations are immediately due and payable;
or (iii) the filing of a notice of default; and Mortgagor consents to such
appointment.

 

(e)                                  To take and possess all documents, books,
records, papers and accounts of Mortgagor or the then owner of the Subject
Property; to make or modify Leases of, and other agreements with respect to,
the Subject Property upon such terms and conditions as Mortgagee deems proper;
and to make repairs, alterations and improvements to the Subject Property
deemed necessary, in Mortgagee’s judgment, to protect or enhance the security
hereof.

 

(f)                                    To resort to and realize upon the
security hereunder and any other security now or later held by Mortgagee
concurrently or successively and in one or several consolidated or independent
judicial actions or lawfully taken non-judicial proceedings, or both, and to
apply the proceeds received in accordance with the Section hereof entitled
Application of Foreclosure Sale Proceeds, all in such order and manner
as Mortgagee shall determine in its sole discretion.

 

(g)                                 Upon sale of the Subject Property at any
judicial foreclosure, Mortgagee may credit bid (as determined by Mortgagee in
its sole discretion) all or any portion of the Secured Obligations.  In determining such credit bid, Mortgagee
may, but is not obligated to, take into account all or any of the following: (i) appraisals
of the Subject Property as such appraisals may be discounted or adjusted by
Mortgagee in its sole underwriting discretion; (ii) expenses and costs
incurred by Mortgagee with respect to the Subject Property prior to
foreclosure; (iii) expenses and costs which Mortgagee anticipates will be
incurred with respect to the Subject Property after foreclosure, but prior to
resale, including without limitation, costs of structural reports and other due
diligence, costs to carry the Subject Property prior to resale, costs of resale
(e.g., commissions, attorneys’ fees, and taxes), Hazardous Materials clean-up
and

 

14

 

monitoring, deferred maintenance, repair, refurbishment and retrofit,
and costs of defending or settling litigation affecting the Subject Property; (iv) declining
trends in real property values generally and with respect to properties similar
to the Subject Property; (v) anticipated discounts upon resale of the
Subject Property as a distressed or foreclosed property; (vi) the
existence of additional collateral, if any, for the Secured Obligations; and (vii) such
other factors or matters that Mortgagee deems appropriate.  Mortgagor acknowledges and agrees that: (A) Mortgagee
is not required to use any or all of the foregoing factors to determine the
amount of its credit bid; (B) this Section does not impose upon
Mortgagee any additional obligations that are not imposed by law at the time
the credit bid is made; (C) the amount of Mortgagee’s credit bid need not
have any relation to any loan-to-value ratios specified in any agreement
between Mortgagor and Mortgagee or previously discussed by Mortgagor and
Mortgagee; and (D) Mortgagee’s credit bid may be, at Mortgagee’s sole
discretion, higher or lower than any appraised value of the Subject Property.

 

5.3                                 Application of Foreclosure Sale Proceeds. 
After deducting all costs, fees and expenses of sale, including costs of
evidence of title and attorneys’ fees in connection with a sale, all proceeds
of any foreclosure sale shall be applied first, to payment of all Secured
Obligations (including without limitation, all sums expended by Mortgagee under
the terms hereof and not then repaid, with accrued interest at the highest rate
per annum payable under any Secured Obligation), in such order and amounts as
Mortgagee in its sole discretion shall determine; and the remainder, if any, to
the person or persons legally entitled thereto.

 

5.4                                 Application of Other Sums. 
All Rents or other sums received by Mortgagee or any agent or receiver
hereunder, less all costs and expenses incurred by Mortgagee or such agent or
receiver, including reasonable attorneys’ fees, shall be applied to payment of
the Secured Obligations in such order as Mortgagee shall determine in its sole
discretion; provided however, that Mortgagee shall have no liability for funds
not actually received by Mortgagee.

 

5.5                                 No Cure or Waiver. 
Neither Mortgagee’s or any receiver’s entry upon and taking possession
of the Subject Property, nor any collection of Rents, insurance proceeds,
condemnation proceeds or damages, other security or proceeds of other security,
or other sums, nor the application of any collected sum to any Secured
Obligation, nor the exercise of any other right or remedy by Mortgagee or any
receiver shall impair the status of the security of this Mortgage, or cure or
waive any breach, Default or notice of default under this Mortgage, or nullify
the effect of any notice of default or sale (unless all Secured Obligations and
any other sums then due hereunder have been paid in full and Mortgagor has
cured all other Defaults), or prejudice Mortgagee in the exercise of any right
or remedy, or be construed as an affirmation by Mortgagee of any tenancy, lease
or option of the Subject Property or a subordination of the lien of this
Mortgage.

 

5.6                                 Costs, Expenses and Attorneys’ Fees. 
Mortgagor agrees to pay to Mortgagee immediately upon demand the full
amount of all payments, advances, charges, costs and expenses, including court
costs and reasonable attorneys’ fees (to include outside counsel fees and all
allocated costs of Mortgagee’s in-house counsel), expended or incurred by
Mortgagee pursuant to this Article V, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any
of the foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding, contested matter or
motion brought by Mortgagee or any other person) relating to Mortgagor or in
any way affecting any of the Subject Property or Mortgagee’s ability to exercise
any of its rights or remedies with respect thereto.  All of the foregoing shall be paid by
Mortgagor with interest from the date of demand until paid in full at the
highest rate per annum payable under any Secured Obligation.

 

5.7                                 Power to File Notices and Cure Defaults. 
Mortgagor hereby irrevocably appoints Mortgagee and its successors and
assigns as Mortgagor’s true attorney-in-fact to perform any of the following
powers, which agency is coupled with an interest: (a) to execute and/or
record any notices of completion, cessation of labor, or any other notices that
Mortgagee deems appropriate to protect

 

15

 

Mortgagee’s interest; and (b) upon the occurrence of any event,
act or omission which with the giving of notice or the passage of time, or
both, would constitute a Default, to perform any obligation of Mortgagor
hereunder; provided however, that Mortgagee, as such attorney-in-fact, shall
only be accountable for such funds as are actually received by Mortgagee, and
Mortgagee shall not be liable to Mortgagor or any other person or entity for
any failure to act under this Section.

 

5.8                                 Remedies Cumulative; No Waiver. 
All rights, powers and remedies of Mortgagee hereunder are cumulative
and are in addition to all rights, powers and remedies provided by law or in
any other agreements between Mortgagor and Mortgagee.  No delay, failure or discontinuance of
Mortgagee in exercising any right, power or remedy hereunder shall affect or
operate as a waiver of such right, power or remedy; nor shall any single or
partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy.

 

5.9                                 Mortgagee’s Right to Procure Insurance. 
Mortgagor acknowledges receipt of the following notice: “Unless you
[Mortgagor] provide evidence of the insurance coverage required by your
agreement with us [Mortgagee], we may purchase insurance at your expense to
protect our interests in your collateral. 
This insurance may, but need not, protect your interests.  The coverage that we purchase may not pay any
claim that you make or any claim that is made against you in connection with
the collateral.  You may later cancel any
insurance purchased by us, but only after providing evidence that you have
obtained insurance as required by our agreement.  If we purchase insurance for the collateral,
you will be responsible for the costs of that insurance, including the
insurance premium, interest and any other charges we may impose in connection
with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance. 
The costs of the insurance may be added to your total outstanding
balance or obligation.  The costs of the
insurance may be more than the cost of insurance you may be able to obtain on
your own.”

 

If Mortgagor fails to maintain any insurance required
hereunder, Mortgagee may, but shall not be obligated to, purchase such required
insurance at Mortgagor’s expense to protect Mortgagee’s interests in the
Subject Property.  This insurance may,
but need not, protect Mortgagor’s interests in the Subject Property.  The coverage that Mortgagee purchases shall
not be required to pay any claim that the Mortgagor makes or any claim that is
made against Mortgagor in connection with the Subject Property.  Mortgagor may later cancel any insurance
purchased by Mortgagee, but only after providing evidence that Mortgagor has obtained
the insurance required hereunder.  If
Mortgagee purchases insurance for the Subject Property, Mortgagor will be
responsible for the costs of the insurance, including the insurance premium,
interest thereon from the date of each such payment or expenditure at the then
applicable rate under the Note and any other charges Mortgagee may impose in
connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance. 
The costs of the insurance obtained by Mortgagee may be more than the cost
of insurance Mortgagor may be able to obtain on its own.  Unless Mortgagee otherwise agrees in writing,
Mortgagor shall pay to Mortgagee the full costs of such insurance, together
with the accrued interest thereon and the other charges in connection therewith,
within thirty (30) days after “Notice of Placement of Insurance” as required by
applicable law.

 

ARTICLE VI.  MISCELLANEOUS PROVISIONS

 

6.1                                 No Merger.  No merger
shall occur as a result of Mortgagee’s acquiring any other estate in, or any
other lien on, the Subject Property unless Mortgagee specifically consents to a
merger in writing.

 

6.2                                 Execution of Documents. 
Mortgagor agrees, upon demand by Mortgagee, to execute any and all
documents and instruments required to effectuate the provisions hereof.

 

16

 

6.3                                 Right of Inspection. 
Mortgagee or its agents or employees may enter onto the Subject Property
at any reasonable time for the purpose of inspecting the Subject Property and
ascertaining Mortgagor’s compliance with the terms hereof.

 

6.4                                 Notices.  All notices,
requests and demands which Mortgagor or Mortgagee is required or may desire to
give to the other party must be in writing, delivered to Mortgagee at the
following address:

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION

MAC N9312-040

109 South 7th Street, 4th
Floor

Minneapolis, MN 55402

Attention:  Becky
A. Koehler

 

and to Mortgagor at its address set forth at the signature lines below,
or at such other address as either party shall designate by written notice to
the other party in accordance with the provisions hereof.

 

6.5                                 Successors; Assignment. 
This Mortgage shall be binding upon and inure to the benefit of the
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto; provided however, that this Section does not waive
the provisions of the Section hereof entitled Due on Sale or
Encumbrance.  Mortgagee reserves the
right to sell, assign, transfer, negotiate or grant participations in all or
any part of, or any interest in, Mortgagee’s rights and benefits under the
Note, any and all other Secured Obligations and this Mortgage.  In connection therewith, Mortgagee may
disclose all documents and information which Mortgagee now has or hereafter
acquires relating to the Subject Property, all or any of the Secured
Obligations and/or Mortgagor and, as applicable, any partners, joint venturers
or members of Mortgagor, whether furnished by any Mortgagor or otherwise.

 

6.6                                 Rules of Construction.  (a) When
appropriate based on the identity of the parties or other circumstances, the
masculine gender includes the feminine or neuter or both, and the singular
number includes the plural; (b) the term “Subject Property” means all and
any part of or interest in the Subject Property; (c) all Section headings
herein are for convenience of reference only, are not a part of this Mortgage,
and shall be disregarded in the interpretation of any portion of this Mortgage;
(d) if more than one person or entity has executed this Mortgage as “Mortgagor,”
the obligations of all such Mortgagors hereunder shall be joint and several;
and (e) all terms of Exhibit A, and each other exhibit and/or rider
attached hereto and recorded herewith, are hereby incorporated into this
Mortgage by this reference.

 

6.7                                 Severability of Provisions. 
If any provision of this Mortgage shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or any remaining provisions of this Mortgage.

 

6.8                                 Governing Law. 
This Mortgage shall be governed by and construed in accordance with the
laws of the State of Illinois, but giving effect to federal laws applicable to
national banks.

 

6.9                                 Waiver of Jury Trial.

 

THE MORTGAGOR AND THE MORTGAGEE WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION AT LAW OR IN EQUITY OR IN ANY OTHER PROCEEDING
BASED ON OR PERTAINING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.

 

[Signature Pages Follow]

 

17

 

IN WITNESS WHEREOF, Mortgagor has executed this
Mortgage as of the date first set forth above.

 

	
  Mortgagor:

   

  MGP INGREDIENTS, INC.

  a Kansas corporation

  	
   

  	
   

   

  Address

   

  100 Commercial Street

  Atchison, KS 66002

   

  
	
  By:

  	
  /s/ Timothy W. Newkirk

  	
   

  	
   

  
	
  Name: Timothy W. Newkirk

  	
   

  	
   

  
	
  Its: President

  	
   

  	
   

  
				

 

	
  STATE OF KANSAS

  	
  )

  
	
   

  	
  ) SS.

  
	
  COUNTY OF ATCHISON

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  

 

I, Marta L. Myers, Notary Public in and for said
County and State, do hereby certify that Timothy W. Newkirk, President of MGP
Ingredients, Inc., a corporation organized under the laws of Kansas, who
is personally known to me to be the same person whose name is subscribed to the
foregoing instrument, appeared before me this day in person and acknowledged
that he/she signed and delivered the said instrument as President of said
corporation, as his free and voluntary act and deed, and the free and voluntary
act and deed of said corporation for the uses and purposes therein set forth.

 

GIVEN under my hand and official seal, this the 21 day
of August, 2009.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Marta L. Myers

  
	
   

  	
   

  	
  Notary Public

  
	
   

  	
   

  	
   

  
	
  My commission expires:

  	
  01/03/2010

  	
   

  	
   

  
				

 

18

 

EXHIBIT A

(Description of Property)

 

Exhibit A to MORTGAGE, ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING executed by MGP Ingredients, Inc., a
Kansas corporation, as Mortgagor, to WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Mortgagee.

 

Street Address of
Subject Property:  1301 South Front
Street, Pekin, Illinois

 

Permanent Real Estate
Index Number:  10-10-09-200-001,
10-10-09-200-010 and 04-10-04-400-002.

 

Description of Property

 

Tract 1:

 

A part of the Northeast Quarter of Fractional Section 9,
and a part of Lots 6 and 8 in the Southeast Quarter of Fractional Section 4,
said Lots 6 and 8 being shown on plat recorded on page 57 of Plat Book “B”,
in the Recorder’s Office of Tazewell County, Illinois, all being in Township 24
North, Range 5 West of the Third Principal Meridian, Tazewell County, Illinois,
and more particularly described as follows:

 

Commencing at the Northeast corner of said Northeast
Quarter of Fractional Section 9; thence South 89 degrees 29 minutes 14
seconds West, along the North line of said Fractional Section 9, a
distance of 1,629.48 feet to the Place of Beginning; thence from said Place of
Beginning South 20 degrees 05 minutes 14 seconds West a distance of 13.41 feet;
thence South 86 degrees 48 minutes 22 seconds East a distance of 267.42 feet;
thence South 00 degrees 56 minutes 03 seconds West a distance of 159.82 feet to
the North line of The Quaker Oats Company by deed recorded in Book 2045, page 72,
of the Tazewell County Recorder’s Office; thence South 89 degrees 27 minutes 16
seconds West along said North line a distance of 104.33 feet; thence South 00
degrees 56 minutes 03 seconds West along the West line of The Quaker Oats
Company property as described in aforementioned deed, a distance of 253.00 feet
to the South line of The American Distilling Company property; thence South 89
degrees 27 minutes 16 seconds West along the South line of The American
Distilling property, a distance of 850.76 feet to the Southeast corner of a
parcel conveyed by The American Distilling Company to Pekin River and Warehouse
Terminal, Inc., by deed recorded in Book 2351, page 208, of the
Tazewell County Recorder’s Office; thence North 25 degrees 40 minutes 22
seconds West along the Easterly line of said parcel, a distance of 371.70 feet;
thence North 00 degrees 02 minutes 54 seconds West along the Easterly line of
said parcel, a distance of 106.63 feet to the South line of said Fractional Section 4;
thence continuing North 00 degrees 02 minutes 54 seconds along Easterly line of
said parcel 77.64 feet to the Northerly corner of Pekin River and Warehouse
Terminal Inc. property, and also being a point on the Northwesterly line of Lot
8 as recorded in Plat Book “B”, page 57, of the Tazewell County Recorder’s
Office; thence North 46 degrees 59 minutes 11 seconds East along the
Northwesterly line, of said Lot 8 a distance of 1,110.92 feet; thence South 43
degrees 00 minutes 54 seconds East a distance of 280.47 feet; thence South 42
degrees 00 minutes 08 seconds West, a distance of 188.94 feet; thence South 19
degrees 51 minutes 12 seconds West, a distance of 276.07 feet; thence South 69
degrees 54 minutes 46 seconds East, a distance of 148.90 feet; thence South 20
degrees 05 minutes 14 seconds West, a distance of 182.59 feet to the Place of
Beginning; situate, lying and being in the County of Tazewell and State of
Illinois.

 

Tract 2:

 

A part of the Northeast Quarter of Fractional Section 9,
and a part of Lots 6 and 8 in the Southeast Quarter of Fractional Section 4,
said Lots 6 and 8 being shown on plat recorded in page 57 of Plat Book “B”
in the Recorder’s office of Tazewell County, Illinois, all being in Township 24
North, Range 5 West of the Third Principal Meridian, Tazewell County, Illinois
and more particularly described as follows:

 

19

 

Commencing at the Southeast corner of the Southeast
Quarter of said Fractional Section 4; thence South 89 degrees 29 minutes
14 seconds West, along the South line of the Southeast Quarter of Fractional Section 4,
a distance of 1,020.92 feet to a concrete monument being the Place of Beginning
for the Tract herein being described; thence North 37 degrees 03 minutes 04
seconds East a distance of 1,013.11 feet; thence North 57 degrees 55 minutes
West a distance of 292.65 feet to the Northwesterly right-of-way line of South
Front Street; thence North 29 degrees 56 minutes 48 seconds East, along the
Northeasterly right-of-way line of South Front Street, a distance of 481.39
feet to a concrete monument; thence North 46 degrees 54 minutes 36 seconds West
a distance of 263.31 feet to a point on the Northeasterly line of Lot 6 as
recorded in Plat Book “B”, page 57, of the Tazewell County Recorder’s
Office; thence North 24 degrees 46 minutes 48 seconds west, along the
Northeasterly line of said Lot 6 a distance of 35.6 feet; thence North 87
degrees 04 minutes 48 seconds West a distance of 214.55 feet to a point on the
Northwesterly line of said Lot 6; said point being 200 feet from the Northerly
corner of said Lot 6; thence South 46 degrees 59 minutes 11 seconds West, along
the Northwesterly line of said Lot 6 and 8 as recorded in Plat Book “B”, page 57
of the Tazewell County Recorder’s Office, a distance of 1,146.23 feet to the
Northerly corner of Tract I previously described; thence South 43 degrees 00
minutes 54 seconds East, along said Tract I, a distance of 280.47 feet; thence
South 42 degrees 00 minutes 08 seconds West, along said Tract I, a distance of
188.94 feet thence South 19 degrees 51 minutes 12 seconds West, along said
Tract I, a distance of 276.97 feet; thence South 69 degrees 54 minutes 46
seconds East, along said Tract I, a distance of 148.90 feet; thence South 20
degrees 05 minutes 14 seconds West, along said Tract I, a distance of 196.00
feet; thence South 86 degrees 48 minutes 22 seconds East, along said Tract I, a
distance of 267.42 feet; thence South 00 degrees 56 minutes 03 seconds West,
along said Tract I, a distance of 159.82 feet to the property line of Quaker
Oats Company; thence North 89 degrees 27 minutes 16 seconds East, along said
property line a distance of 345.67 feet; thence North 00 degrees 56 minutes 03
seconds East, along said property line, a distance of 189.47 feet of the Place
of Beginning; situate, lying and being in the County of Tazewell and State of
Illinois.

 

20Exhibit 4.1.9

 

CONSENT AND RELEASE

 

THIS
CONSENT AND RELEASE, dated as of August 19, 2009 (this “Release”), among MGP Ingredients, Inc.,
a Kansas corporation (the “Borrower”), and
Wells Fargo Bank, National Association
(the “Lender”) acting through its Wells Fargo
Business Credit operating division.

 

W I T N E S S E T H :

 

WHEREAS,
pursuant to that certain Credit and 
Security Agreement, dated as of July 21, 2009 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms defined therein and
used herein having the meanings given to them in the Credit Agreement), among
the Borrower and the Lender, the Lender has agreed to make extensions of credit
to the Borrower upon the terms and subject to the conditions set forth therein;

 

WHEREAS,
pursuant to the Credit Agreement, the Borrower granted to the Lender a lien on
and security interest in the Collateral of the Borrower; and

 

WHEREAS,
pursuant to that certain Asset Purchase Agreement, a true, correct and complete
copy of which is attached as Exhibit A (the “Purchase
Agreement”), by and between Sergeant’s Pet Care Products, Inc.,
a Nevada corporation (the “Buyer”) and the
Borrower, the Borrower will sell and the Buyer will purchase certain assets of
the Borrower used in the Borrower’s business of manufacturing and marketing
formulated pet treat products at the KCK Facility (the “Pet Treat
Business”), upon the terms and conditions of, and as further
described in, the Purchase Agreement; and

 

WHEREAS,
pursuant to Section 6.18 and Section 6.31 of the Credit
Agreement, the Lender has approval rights relating to the Pet Business Sale;

 

NOW,
THEREFORE, in consideration of the premises and the agreements hereinafter
contained, it is hereby agreed as follows:

 

1.                                       Consent to Pet
Business Sale.  To the
extent required by the Credit Agreement, Lender hereby consents to and approves
the terms and conditions of the Pet Business Sale as set forth in the Purchase
Agreement and to Borrower completing the Pet Business Sale provided that:

 

(a)                                  proceeds from the Pet
Business Sale, in an amount not less than Two Million Four Hundred Fifty
Thousand and No/100 Dollars ($2,450,00.00) shall be paid to General Electric
Capital Corporation concurrent with the closing of the Pet Business Sale, which
shall constitute a complete payoff of that certain 2005 equipment note (the “GE Proceeds”);
and

 

(b)                                 all proceeds from the Pet
Business Sale which are not GE Proceeds (which proceeds shall be approximately
One Million and No/100 Dollars ($1,000,000) shall be

 

 

deposited in Borrower’s Collection Account concurrent with the closing
of the Pet Business Sale (the “Excess Proceeds”).

 

In
addition to and upon satisfaction on the foregoing conditions, to the extent
the Borrower’s sale of the KCK Facility pursuant to the Purchase Agreement and
the Borrower’s lease of a portion of the KCK Facility from the Buyer for the
Borrower’s Wheatex assets constitutes a sale and leaseback, the Lender waives
any breach of Section 6.20 [Sale and Leaseback]
of the Credit Agreement caused thereby.

 

2.                                       Release of
Liens.  Effective upon the Closing
Date (as defined in the Purchase Agreement) and satisfaction of the
requirements set forth in Section 1 hereof (i) the Lender
hereby releases and terminates any and all security interests and liens held by
or for the benefit of the Lender (to the extent Lender had a security interest)
in the assets set forth on Exhibit B attached hereto (the “Released Assets”) and (ii) Lender agrees to file a UCC
amendment to release the Released Assets.

 

3.                                       Representations
of the Borrower.  The
Borrower hereby represents and warrants to the Lender that (a) upon
execution of this Release, the disposition of the Released Assets pursuant to
the Purchase Agreement is in compliance with the Credit Agreement and the other
Loan Documents, and (b) before and after giving effect to the disposition
of the Released Assets, no Default or Event of Default has occurred and is
continuing as of the date hereof and as of the Closing Date.

 

4.                                       Satisfaction of
Pet Business Sale Covenant.  The completion of the transactions set forth
herein shall be deemed to satisfy the sale of the Pet Business required by Section 6.31
of the Credit Agreement and upon satisfaction by Borrower of the requirements
set forth in Section 1 hereof such Section 6.31 of the
Credit Agreement shall be of no further force and effect.

 

5.                                       Delivery of
Collateral Assignment.  On
or before September 30, 2009, Borrower shall have delivered to Lender a
collateral assignment of its rights under the Purchase Agreement relating to
Borrower’s rights to additional payments from Borrower, which agreement shall
have been acknowledged by Buyer and in a form and substance acceptable to
Lender in its sole but reasonable discretion.

 

6.                                       Consent to
Extension of Delivery Date.  Pursuant to Section 6.28 of the Credit
Agreement, Borrower was required to deliver to Lender on or before August 21,
2009 (the “Original  Delivery
Date”), evidence that Borrower has closed any and all deposit
accounts maintained by Borrower with Commerce Bank or any financial institution
other than Lender (the “Account Evidence”).  This letter shall serve as notice of Lender’s
consent to further extend the delivery of the Account Evidence solely as to
Borrower’s account #2927598 located at Commerce Bank until September 20,
2009 (the “Extended Delivery Date”).  In the event the Account Evidence is not
delivered to Lender, on or before the Extended Delivery Date, such failure
shall be an Event of Default under the Credit Agreement and Lender shall have
the right to proceed as if the Delivery Date had not been extended past the
Original Delivery Date.

 

 

7.                                       Governing Law,
Etc.  This Release shall be governed
by, and construed in accordance with, the law of the State of Minnesota.  This Release may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one agreement. 
Delivery of an executed signature page of this Release by facsimile
or electronic transmission shall be effective as delivery of a manually
executed counterpart hereof.

 

8.                                       Third Party
Beneficiaries.  This Release
is not intended to confer any legal or equitable rights or remedies upon any
party other than the parties hereto.

 

[SIGNATURE
PAGE FOLLOWS]

 

 

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

 

	
   

  	
  MGP
  INGREDIENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Timothy W. Newkirk

  
	
   

  	
   

  	
  Timothy
  W. Newkirk

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Becky A. Koehler

  
	
   

  	
   

  	
  Becky
  A. Koehler

  
	
   

  	
   

  	
  Vice President

  

 

 

Exhibit A

 

Asset Purchase Agreement

 

(Attached)

 

 

Exhibit B

 

Released Assets

 

1.                                       The specific
assets set forth on Schedule I attached hereto.

 

2.                                       The
Intellectual Property Rights set forth on Schedule II attached hereto.

 

3.                                       All of the
rights of the Borrower under contracts, arrangements, licenses, leases and
other agreements set forth on Schedule III attached hereto.

 

4.                                       All inventories
of raw materials, work in process, finished products, goods, spare parts,
replacement and component parts, and office and other supplies utilized
exclusively for the Pet Treat Business and which are actually located at the
KCK Facility on the Closing Date.

 

5.                                       Those spare
parts, replacement and component parts and tools for the KCK Facility which are
actually located at the KCK Facility on the Closing Date.

 

6.                                       All rights in
and to the products sold and the formulas which exist on the Closing Date and
which are utilized exclusively for the Pet Treat Business.

 

7.                                       All credits,
prepaid expenses, deferred charges, advance payments, security deposits and
prepaid items which exist on the Closing Date and which relate exclusively to
the Pet Treat Business.

 

8.                                       All books,
records, manuals and other materials (in any form or medium), including,
without limitation, all records and materials maintained at the headquarters of
Borrower, advertising matter, catalogues, price lists, correspondence, mailing
lists, lists of customers, distribution lists, photographs, production data,
sales and promotional materials and records, purchasing materials and records,
personnel records, manufacturing and quality control records and procedures,
blueprints, research and development files, records, data and laboratory books,
intellectual property disclosures, media materials and plates, accounting
records, sales order files and litigation files which exist on the Closing Date
and which relate exclusively to the Pet Treat Business.

 

9.                                       The government
approvals set forth on Schedule IV attached hereto.

 

10.                                 All rights to
causes of action, lawsuits, judgments, claims and demands of any nature
available to or being pursued by the Borrower which exist on the Closing Date
and which relate exclusively to the Pet Treat Business.

 

11.                                 The ownership,
use, function or value of any of the forgoing, whether arising by way of
counterclaim or otherwise.

 

12.                                 All guarantees,
warranties, indemnities and similar rights in favor of the Borrower with
respect to the foregoing.

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