Document:

Exhibit 4.5

 

	
  LOAN NUMBER

  	
   

  	
  LOAN
  NAME

  	
   

  	
  ACCT.
  NUMBER

  	
   

  	
  NOTE
  DATE

  	
   

  	
  INITIALS

  
	
   

  	
   

  	
  MGP
  Ingredients, Inc.

  	
   

  	
   

  	
   

  	
  03/31/09

  	
   

  	
  DB

  

 

	
  NOTE AMOUNT

  	
   

  	
  INDEX
  (w/Margin)

  	
   

  	
  RATE

  	
   

  	
  MATURITY
  DATE

  	
   

  	
  LOAN
  PURPOSE

  
	
  $

  	
  1,500,000.00 

  	
   

  	
  3 Year Treasury Index plus 6.000%

  	
   

  	
  7.250

  	
  %

  	
  03/31/14

  	
   

  	
  Commercial

  
										

 

Creditor Use Only

 

COMMERCIAL LOAN AGREEMENT

Single Advance Loan

 

DATE
AND PARTIES.  The date of
this Commercial Loan Agreement (Agreement) is March 31, 2009.  The parties and their addresses are:

 

LENDER:

UNION STATE BANK - BANK OF ATCHISON

545
Main Street

Everest,
KS  66424

 

BORROWER:

MGP INGREDIENTS, INC.

a
Kansas Corporation

PO
Box 130

Atchison,
KS  66002

 

1.              DEFINITIONS.  For the purposes of this Agreement, the
following terms have the following meanings:

 

A.            Accounting Terms.  In this Agreement,
any accounting terms that are not specifically defined will have their
customary meanings under generally accepted accounting principles.

 

B.            Insiders.  Insiders include those defined as insiders by
the United States Bankruptcy Code, as amended; or to the extent left undefined,
include without limitation any officer, employee, stockholder or member,
director, partner, or any immediate family member of any of the foregoing, or
any person or entity which, directly or indirectly, controls, is controlled by
or is under common control with me.

 

C.            Loan.  The Loan refers to this transaction
generally, including obligations and duties arising from the terms of all
documents prepared or submitted for this transaction.

 

D.            Loan Documents.  Loan Documents refer
to all the documents executed as a part of or in connection with the Loan.

 

E.              Pronouns.  The pronouns “I”, “me” and “my” refer to
every Borrower signing this Agreement, individually or together.  “You” and “your” refers to the Loan’s lender.

 

F.              Property.  Property is any property, real, personal or
intangible, that secures my performance of the obligations of this Loan.

 

2.              SINGLE ADVANCE.  In accordance with
the terms of this Agreement and other Loan Documents, you will provide me with
a term note in the amount of $1,500,000.00 (Principal).  I will receive the funds from this Loan in
one advance.  No additional advances are
contemplated, except those made to protect and preserve your interests as
provided in this Agreement or other Loan Documents.

 

3.              MATURITY DATE.  I agree to fully
repay the Loan by March 31, 2014.

 

4.              WARRANTIES AND REPRESENTATIONS.  I make to you the
following warranties and representations which will continue as long as this
Loan is in effect, except when this Agreement provides otherwise.

 

A.            Power.  I am duly organized, and validly existing and
in good standing in all jurisdictions in which I operate.  I have the power and authority to enter into
this transaction and to carry on my business or activity as it is now being
conducted and as applicable, am qualified to do so in each jurisdiction in
which I operate.

 

B.            Authority.  The execution, delivery and performance of
this Loan and the obligation evidenced by the Note are within my powers, have
been duly authorized, have received all necessary governmental approval, will
not violate any provision of law, or order of court or governmental agency, and
will not violate any agreement to which I am a party or to which I am or any of
my property is subject.

 

C.            Name and Place of Business.  Other than
previously disclosed in writing to you I have not changed my name or principal
place of business within the last 10 years and have not used any other trade or
fictitious name.  Without your prior
written consent, I do not and will not use any other name and will preserve my
existing name, trade names and franchises.

 

D.            Hazardous Substances.  Except as I
previously disclosed in writing and you acknowledge in writing, no Hazardous
Substance, underground tanks, private dumps or open wells are currently located
at, on, in, under or about the Property.

 

E.              Use of Property.  After diligent
inquiry, I do not know or have reason to know that any Hazardous Substance has
been discharged, leached or disposed of, in violation of any Environmental Law,
from the property onto, over or into any other property, or from any other
property onto, over or into the property.

 

F.              Environmental Laws.  I have no knowledge
or reason to believe that there is any materials, pending or threatened
investigation, claim, judgment or order, violation, lien, or other notice under
any Environmental Law that concerns me or the property.  The property and any activities on the
property are in full compliance with all Environmental Law.

 

G.            Loan Purpose.  The purpose of this
Loan is Cash Infusion to Working Capital.

 

H.            No Other Liens.  I own or lease all
property that I need to conduct my business and activities.  I have good and marketable title to all
property that I own or lease.  All of my
Property is free and clear of all liens, security interests, encumbrances and
other adverse claims and interests, except those to you or those you consent to
in writing.

 

I.                 Compliance With Laws.  I am not violating
any laws, regulations, rules, orders, judgments or decrees applicable to me or
my property, except for those which I am challenging in good faith through
proper proceedings after providing adequate reserves to fully pay the claim and
its challenge should I lose.

 

	
  MGP
  Ingredients, Inc.

  	
   

  	
   

  
	
  Kansas
  Commercial Loan Agreement

  	
   

  	
  Initials

  	
   

  
	
   

  	
   

  	
   

  
	
  KS/4CTHARMAN00000000000156025033109N

  	
  © 1996 Bankers Systems,
  Inc., St. Cloud, MN 

  	
   

  

 

1

 

J.              Additional Representation or Warranty.  Clarification and
Disclosure of Paragraph C, and all other documents associated with this Loan
Agreement.

 

The
Borrower has change their name in the last 10 years.  Their former name was Midwest Grain Products, Inc.

 

Add
the following language to Paragraph D. and E.

 

Except
as may be disclosed in a Phase I report provided to you.

 

Add
the following language to Paragraph H.

 

or
except debt as permitted under my Credit Agreement dated May 5, 2008, as
amended, with Commerce Bank, as agent

 

5.              FINANCIAL STATEMENTS.  I will prepare and
maintain my financial records using consistently applied generally accepted
accounting principles then in effect.  I
will provide you with financial information in a form that you accept and under
the following terms.

 

A.            Certification.  I represent and
warrant that any financial statements that I provide you fairly represents my
financial condition for the stated periods, is current, complete, true and
accurate in all material respects, includes all of my direct or contingent
liabilities and there has been no material adverse change in my financial
condition, operations or business since the date the financial information was
prepared.

 

B.            Frequency.  In addition to the financial statements
provided to you prior to closing, I will provide you with current financial
statements on an annual basis, or as otherwise requested by you, until I have
performed all of my obligations under the Loan and you terminate the Loan in
writing.

 

C.            Requested Information.  I will provide you
with any other information about my operations, financial affairs and condition
within 10 days after your request.

 

6.              COVENANTS.  Until the Loan and all related debts,
liabilities and obligations are paid and discharged, I will comply with the
following terms, unless you waive compliance in writing.

 

A.            Participation.  I consent to you
participating or syndicating the Loan and sharing any information that you
decide is necessary about me and the Loan with the other participants or
syndicators.

 

B.            Inspection.  Following your written request, I will
immediately pay for all one-time and recurring out-of-pocket costs that are
related to the inspection of my records, business or Property that secures the
Loan.  Upon reasonable notice, I will
permit you or your agents to enter any of my premises and any location where my
Property is located during regular business hours to do the following.

 

(1)          You
may inspect, audit, check, review and obtain copies from my books, records,
journals, orders, receipts, and any correspondence and other business related
data.

 

(2)          You
may discuss my affairs, finances and business with any one who provides you
with evidence that they are a creditor of mine, the sufficiency of which will
be subject to your sole discretion.

 

After prior notice to me,
you may discuss my financial condition and business operations with my independent
accountants, if any, or my chief financial officer and I may be present during
these discussions.  As long as the Loan
is outstanding, I will direct all of my accountants and auditors to permit you
to examine my records in their possession and to make copies of these
records.  You will use your best efforts
to maintain the confidentiality of the information you or your agents obtain,
except you may provide your regulator, if any, with required information about
my financial condition, operation and business or that of my parent,
subsidiaries or affiliates.

 

C.            Business Requirements.  I will preserve and
maintain my present existence and good standing in the jurisdiction where I am
organized and all of my rights, privileges and franchises.  I will do all that is needed or required to
continue my business or activities as presently conducted, by obtaining
licenses, permits and bonds everywhere I engage in business or activities or
own, lease or locate my property.  I will
obtain your prior written consent before I cease my business or before I engage
in any new line of business that is materially different from my present
business.

 

D.            Compliance with Laws.  I will not violate
any laws, regulations, rules, orders, judgments or decrees applicable to me or
my Property, except for those which I challenge in good faith through proper
proceedings after providing adequate reserves to fully pay the claim and its
appeal should I lose.  Laws include
without limitation the Federal Fair Labor Standards Act requirements for
producing goods, the federal Employee Retirement Income Security Act of 1974’s
requirements for the establishment, funding and management of qualified
deferred compensation plans for employees, health and safety laws,
environmental laws, tax laws, licensing and permit laws.  On your request, I will provide you with
written evidence that I have fully and timely paid my taxes, assessments and
other governmental charges levied or imposed on me, my income or profits and my
property.  Taxes include without
limitation sales taxes, use taxes, personal property taxes, documentary stamp
taxes, recordation taxes, franchise taxes, income taxes, withholding taxes,
FICA taxes and unemployment taxes.  I
will adequately provide for the payment of these taxes, assessments and other
charges that have accrued but are not yet due and payable.

 

E.              New Organizations.  I will obtain your
written consent before organizing, merging into, or consolidating with an
entity; acquiring all or substantially all the assets of another; materially
changing the legal structure or financial condition; or effecting or entering
into a domestication, conversion or interest exchange.

 

F.              Other Liabilities.  I will not incur,
assume or permit any debt evidenced by notes, bonds or similar obligations,
except:  debt in existence on the date of
this Agreement and fully disclosed to you; debt subordinated in payment to you
on conditions and terms acceptable to you; accounts payable incurred in the
ordinary course of my business and paid under customary trade terms or
contested in good faith with reserves satisfactory to you.

 

G.            Notice to You.  I will promptly
notify you of any material change in my financial condition, of the occurrence
of a default under the terms of this Agreement or any other Loan Document, or a
default by me under any agreement between me and any third party which
materially and adversely affects my property, operations, financial condition
or business.

 

H.            Dispose of No Assets.  Without your prior
written consent or as the Loan Documents permit, I will not sell, lease,
assign, transfer, dispose of or otherwise distribute all or substantially all
of my assets to any person other than in the ordinary course of business for
the assets’ depreciated book value or more.

 

I.                 Insurance.  I will obtain and maintain insurance with
insurers, in amounts and coverages that are acceptable to you and customary
with industry practice.  This may include
without limitation insurance policies for public liability, fire, hazard and
extended risk, workers compensation, and, at your request, business
interruption and/or rent loss insurance. 
At your request, I will deliver to you certified copies of all of these
insurance policies, binders or certificates. 
I will obtain and maintain a mortgagee or lender loss payee endorsement
for you when these endorsements are available. 
I will immediately notify you of cancellation or termination of
insurance.  I will require all insurance
policies to provide you with at least 10 days prior written notice to you of
cancellation or modification.  I consent
to you using or disclosing information relative to any contract of insurance
required by the Loan for the purpose of replacing this insurance.  I also authorize my insurer and you to
exchange all relevant information related to any contract of insurance required
by any document executed as part of this Loan.

 

J.              Additional Taxes.  I will pay all
filing and recording costs and fees, including any recordation, documentary or
transfer taxes or stamps, that are required to be paid with respect to this
Loan and any Loan Documents.

 

	
   

  	
  Initials
               

  

 

2

 

K.            Additional Covenants.  Add the following
language to Paragraph F.

 

or
except debt as permitted under my Credit Agreement dated May 5, 2008, as
amended, with Commerce Bank

 

7.              DEFAULT.  I will be in default if any of the following
occur:

 

A.            Payments.  I fail to make a payment in full when due.

 

B.            Insolvency or Bankruptcy.  The death,
dissolution or insolvency of, appointment of a receiver by or on behalf of,
application of any debtor relief law, the assignment for the benefit of
creditors by or on behalf of, the voluntary or involuntary termination of
existence by, or the commencement of any proceeding under any present or future
federal or state insolvency, bankruptcy, reorganization, composition or debtor
relief law by or against me or any co-signer, endorser, surety or guarantor of
this Agreement or any other obligations I have with you.

 

C.            Business Termination.  I merge, dissolve,
reorganize, end my business or existence.

 

D.            Failure to Perform.  I fail to perform
any condition or to keep any promise or covenant of this Agreement.

 

E.              Other Documents.  A default occurs
under the terms of any other Loan Document.

 

F.              Other Agreements.  I am in default on
any other debt or agreement I have with you.

 

G.            Misrepresentation.  I make any verbal or
written statement or provide any financial information that is untrue,
inaccurate, or conceals a material fact at the time it is made or provided.

 

H.            Judgment.  I fail to satisfy or appeal any judgment
against me.

 

I.                 Forfeiture.  The Property is used in a manner or for a
purpose that threatens confiscation by a legal authority.

 

J.              Name Change.  I change my name or assume an additional name
without notifying you before making such a change.

 

K.            Property Transfer.  I transfer all or a
substantial part of my money or property.

 

L.             Property Value.  You determine in
good faith that the value of the Property has declined or is impaired.

 

M.          Material Change.  Without first
notifying you, there is a material change in my business.

 

N.            Insecurity.  You determine in good faith that a material
adverse change has occurred in Borrower’s financial condition from the
conditions set forth in Borrower’s most recent financial statement before the
date of this Agreement or that the prospect for payment or performance of the
Loan is impaired for any reason.

 

O.           Additional Default.  Change Paragraph A.
to read as follows:

 

A.           Payments.  I fall to make a payment in full when due or
within 5 days thereafter.

 

Change
Paragraph D. to read as follows:

 

D.            Failure to Perform.  I fail to perform any condition or to keep
any promise or covenant of this Agreement and fail to cure the same within 5
days.

 

8.              REMEDIES.  After I default, you may at your option do
any one or more of the following.

 

A.            Acceleration.  You may make all or
any part of the amount owing by the terms of the Loan immediately due.  If I am a debtor in a bankruptcy petition or
in an application filed under section 5(a)(3) of the Securities Investor
Protection Act, the Loan is automatically accelerated and immediately due and
payable without notice or demand upon filing of the petition or application.

 

B.            Sources.  You may use any and all remedies you have
under state or federal law or in any Loan Document.

 

C.            Insurance Benefits.  You may make a claim
for any and all insurance benefits or refunds that may be available on my
default.

 

D.            Payments Made On My Behalf.  Amounts advanced on
my behalf will be immediately due and may be added to the balance owing under
the terms of the Loan, and accrue interest at the highest post-maturity
interest rate.

 

E.              Set-Off.  You may use the right of set-off.  This means you may set-off any amount due and
payable under the terms of the Loan against any right I have to receive money
from you.

 

My right to receive money
from you includes any deposit or share account balance I have with you; any
money owed to me on an item presented to you or in your possession for
collection or exchange; and any repurchase agreement or other non-deposit
obligation.  “Any amount due and payable
under the terms of the Loan” means the total amount to which you are entitled
to demand payment under the terms of the Loan at the time you set-off.

 

Subject to any other written
contract, if my right to receive money from you is also owned by someone who
has not agreed to pay the Loan, your right of set-off will apply to my interest
in the obligation and to any other amounts I could withdraw on my sole request
or endorsement.

 

Your right of set-off does
not apply to an account or other obligation where my rights arise only in a
representative capacity.  It also does
not apply to any Individual Retirement Account or other tax-deferred retirement
account.

 

You will not be liable for
the dishonor of any check when the dishonor occurs because you set-off against
any of my accounts.  I agree to hold you
harmless from any such claims arising as a result of your exercise of your
right of set-off.

 

F.              Waiver.  Except as otherwise required by law, by
choosing any one or more of these remedies you do not give up your right to use
any other remedy.  You do not waive a
default if you choose not to use a remedy. 
By electing not to use any remedy, you do not waive your right to later
consider the event a default and to use any remedies if the default continues
or occurs again.

 

9.              COLLECTION EXPENSES AND ATTORNEYS’ FEES.  On or after Default,
to the extent permitted by law, I agree to pay all expenses of collection,
enforcement or protection of your rights and remedies under this Agreement or
any other Loan Document.  Expenses
include, but are not limited to, attorneys’ fees, court costs and other legal
expenses.  These expenses are due and
payable immediately.  If not paid
immediately, these expenses will bear interest from the date of payment until
paid in full at the highest interest rate in effect as provided for in the
terms of this Loan.  All fees and
expenses will be secured by the Property I have granted to you, if any.  In addition, to the extent permitted by the
United States Bankruptcy Code, I agree to pay the reasonable attorneys’ fees
incurred by you to protect your rights and interests in connection with any
bankruptcy proceedings initiated by or against me.

 

10.       APPLICABLE LAW.  This Agreement is
governed by the laws of Kansas, the United States of America, and to the extent
required, by the laws of the jurisdiction where the Property is located, except
to the extent such state laws are preempted by federal law.  In the event of a dispute, the exclusive
forum, venue and place of jurisdiction will be in Kansas, unless otherwise
required by law.

 

	
   

  	
  Initials
               

  

 

3

 

11.       JOINT AND INDIVIDUAL LIABILITY AND
SUCCESSORS.  My obligation to pay the Loan is independent
of the obligation of any other person who has also agreed to pay it.  You may sue me alone, or anyone else who is
obligated on the Loan, or any number of us together, to collect the Loan.  Extending the Loan or new obligations under
the Loan, will not affect my duty under the Loan and I will still be obligated
to pay the Loan.  You may assign all or
part of your rights or duties under this Agreement or the Loan Documents
without my consent.  If you assign this
Agreement, all of my covenants, agreements, representations and warranties
contained in this Agreement or the Loan Documents will benefit your successors
and assigns.  I may not assign this
Agreement or any of my rights under it without your prior written consent.  The duties of the Loan will bind my
successors and assigns.

 

12.       AMENDMENT, INTEGRATION AND SEVERABILITY.  This Agreement may
not be amended or modified by oral agreement. 
No amendment or modification of this Agreement is effective unless made
in writing and executed by you and me. 
This Agreement and the other Loan Documents are the complete and final
expression of the understanding between you and me.  If any provision of this Agreement is
unenforceable, than the unenforceable provision will be severed and the
remaining provisions will still be enforceable.

 

13.       INTERPRETATION.  Whenever used, the
singular includes the plural and the plural includes the singular.  The section headings are for convenience only
and are not to be used to interpret or define the terms of this Agreement.

 

14.       NOTICE, FINANCIAL REPORTS AND ADDITIONAL
DOCUMENTS.  Unless otherwise required by law, any notice
will be given by delivering it or mailing it by first class mail to the
appropriate party’s address listed in the DATE AND PARTIES section, or to any
other address designated in writing. 
Notice to one Borrower will be deemed to be notice to all
Borrowers.  I will inform you in writing
of any change in my name, address or other application information.  I will provide you any financial statement or
information you request.  All financial
statements and information I give you will be correct and complete.  I agree to sign, deliver, and file any
additional documents or certifications that you may consider necessary to
perfect, continue, and preserve my obligations under this Loan and to confirm
your lien status on any Property.  Time
is of the essence.

 

15.       WAIVER OF JURY TRIAL.  All of the parties to this Agreement knowingly and
intentionally, irrevocably and unconditionally, waive any and all right to a
trial by jury in any litigation arising out of or concerning this Agreement or
any other Loan Document or related obligation. 
All of these parties acknowledge that this section has either been brought
to the attention of each party’s legal counsel or that each party had the
opportunity to do so.

 

THIS
WRITTEN AGREEMENT IS THE FINAL EXPRESSION OF THE AGREEMENT BETWEEN YOU AND
LENDER, AND AS SUCH IT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR OR
CONTEMPORANEOUS ORAL AGREEMENT.

 

ADDITIONAL
TERMS:

 

BY
SIGNING OR INITIALING BELOW, BOTH PARTIES AFFIRM THAT NO UNWRITTEN ORAL
AGREEMENT BETWEEN THEM EXISTS.

 

	
   

  	
  Lender:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Union State Bank - Bank of Atchison

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
   

  	
   

  	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Donald
  E. Ball, Senior Vice President

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Borrower:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MGP Ingredients, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
   

  	
   

  	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  TIMOTHY
  W NEWKIRK, President/CEO

  	
   

  	
   

  	
   

  	
   

  

 

16.       SIGNATURES.  By signing, I agree to the terms contained in
this Agreement.  I also acknowledge
receipt of a copy of this Agreement.

 

	
   

  	
  BORROWER:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MGP Ingredients, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
   

  	
   

  	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  TIMOTHY
  W NEWKIRK, President/CEO

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Union State Bank - Bank of Atchison

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
   

  	
   

  	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Donald
  E. Ball, Senior Vice President

  	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
  Initials
               

  

 

4Exhibit 4.5.1

 

	
  LOAN NUMBER

  	
   

  	
  LOAN NAME

  	
   

  	
  ACCT. NUMBER

  	
   

  	
  NOTE DATE

  	
   

  	
  INITIALS

  	
   

  
	
   

  	
   

  	
  MGP Ingredients, Inc.

  	
   

  	
   

  	
   

  	
  03/31/09

  	
   

  	
  DB

  	
   

  

 

	
  NOTE AMOUNT

  	
   

  	
  INDEX (w/Margin)

  	
   

  	
  RATE

  	
   

  	
  MATURITY DATE

  	
   

  	
  LOAN PURPOSE

  	
   

  
	
  $

  	
  1,500,000.003

  	
   

  	
  Year Treasury
  Index plus 6.000%

  	
   

  	
  7.250

  	
  %

  	
  03/31/14

  	
   

  	
  Commercial

  	
   

  
											

 

Creditor
Use Only

 

PROMISSORY NOTE

(Commercial - Single Advance)

 

DATE
AND PARTIES.  The date of
this Promissory Note (Note) is March 31, 2009.  The parties and their addresses are:

 

LENDER:

UNION STATE BANK - BANK OF ATCHISON

545
Main Street

Everest,
KS  66424

Telephone:
(785) 548-7521

 

BORROWER:

MGP
INGREDIENTS, INC.

a
Kansas Corporation

PO
Box 130

Atchison,
KS  66002

 

1.               DEFINITIONS.  As used in this Note, the terms have the
following meanings:

 

A.           Pronouns.  The pronouns “I,” “me,” and “my” refer to
each Borrower signing this Note, individually and together.  “You” and “Your” refer to the Lender.

 

B.             Note.  Note refers to this document, and any
extensions, renewals, modifications and substitutions of this Note.

 

C.             Loan.  Loan refers to this transaction generally,
including obligations and duties arising from the terms of all documents
prepared or submitted for this transaction such as applications, security
agreements, disclosures or notes, and this Note.

 

D.            Loan Documents.  Loan Documents refer to all the documents
executed as a part of or in connection with the Loan.

 

E.              Property.  Property is any property, real, personal or
intangible, that secures my performance of the obligations of this Loan.

 

F.              Percent.  Rates and rate change limitations are
expressed as annualized percentages.

 

2.               PROMISE TO PAY.  For value received,
I promise to pay you or your order, at your address, or at such other location
as you may designate, the principal sum of $1,500,000.00 (Principal) plus
interest from March 31, 2009 on the unpaid Principal balance until this
Note matures or this obligation is accelerated.

 

3.               INTEREST.  Interest will accrue on the unpaid Principal
balance of this Note at the rate of 7.250 percent (Interest Rate) until June 30,
2009, after which time it may change as described in the Variable Rate
subsection.

 

A.           Post-Maturity Interest.  After maturity or acceleration, interest will
accrue on the unpaid Principal balance of this Note at the variable Interest
Rate in effect from time to time, plus an additional 2.000 percent, until paid
in full.

 

B.             Maximum Interest Amount.  Any amount assessed or collected as interest
under the terms of this Note will be limited to the maximum lawful amount of
interest allowed by state or federal law, whichever is greater.  Amounts collected in excess of the maximum
lawful amount will be applied first to the unpaid Principal balance.  Any remainder will be refunded to me.

 

C.             Statutory Authority.  The amount assessed or collected on this Note
is authorized by the Kansas usury laws under Kan. Stat. Ann. § 16-207.

 

D.            Accrual.  Interest accrues using an Actual/360 days
counting method.

 

E.              Variable Rate.  The Interest Rate may change during the term
of this transaction.

 

(1)     Index.
Beginning with the first Change Date, the Interest Rate will be based on the
following index: the weakly average yield on United States Treasury securities
adjusted to a constant maturity of three years.

 

The Current Index is the most recent Index figure available on each
Change Date. You do not guaranty by selecting this index, or the margin, that
the Interest Rate on this Note will be the same rate you charge on any other
loans or class of loans you make to me or other borrowers. If this Index is no
longer available, you will substitute a similar Index. You will give me notice
of your choice.

 

(2)     Change Date.
Each date on which the Interest Rate may change is called a Change Date. The
Interest Rate may change June 30, 2009 and every 3 months thereafter.

 

(3)     Calculation
Of Change. On each Change Date you will calculate the Interest Rate,
which will be the Current Index plus 8.000 percent. The result of this
calculation will be rounded to the nearest .001 percent. Subject to any
limitations, this will be the interest Rate until the next Change Date. The new
Interest Rate will become affective on each Change Date. The Interest Rate and
other charges on this Note will never exceed the highest rate or charge allowed
by law for this Note.

 

(4)     Effect Of
Variable Rate. A change in the Interest Rate will have the following
effect on the payments: The amount of scheduled payments and the amount of the
final payment will change.

 

4.               REMEDIAL CHARGES.  In addition to
interest or other finance charges, I agree that I will pay these additional
fees based on my method and pattern of payment. 
Additional remedial charges may be described elsewhere in this Note.

 

A.           Late Charge.  If a payment is more than 10 days late, I
will be charged 6.000 percent of the Amount of Payment.  I will pay this late charge promptly but only
once for each late payment.

 

5.               GOVERNING AGREEMENT.  This Note is further
governed by the Commercial Loan Agreement executed between you and me as a part
of this Loan, as modified, amended or supplemented.  The Commercial Loan Agreement states the
terms and conditions of this Note, including the terms and conditions under
which the maturity of this Note may be accelerated.  When I sign this Note, I represent to you
that I have reviewed and am in compliance with the terms contained in the Commercial
Loan Agreement.

 

6.               PAYMENT.  I agree to pay this Note in installments of
accrued interest beginning September 30, 2009, and then on the last day of
each 8 month period thereafter.  I agree
to pay the entire unpaid Principal and any accrued but unpaid interest on March 31,
2014.

 

Payments will be rounded to
the nearest $.01.  With the final payment
I also agree to pay any additional fees or charges owing and the amount of any
advances you have made to others on my behalf. 
Payments scheduled to be paid on the 29th, 30th or 31st day of a month
that contains no such day will, instead, be made on the last day of such month.

 

Each payment I make on this
Note will be applied first to any charges that I owe other than principal and
finance, then to interest that is due, and finally to principal that is
due.  If you and I agree to a different
application of payments, we will describe our agreement on this Note.  You may change how payments are applied in
your sole discretion without notice to me. 
The actual amount of my final payment will depend on my payment record.

 

7.               PREPAYMENT.  I may prepay this Loan in full or in part at
any time.  Any partial prepayment will
not excuse any later scheduled payments until I pay in full.

 

8.               LOAN PURPOSE.  The purpose of this
Loan is Cash Infusion to Working Capital.

 

9.               ADDITIONAL TERMS.  A) Additional
payment Schedule:  Borrower agrees to
make 3 Level principal payments of $150,000 on the following dates:  March 31, 2011, March 31, 2012, March 31,
2013.  A final payment of the remaining
principal balance is due on March 31, 2014.  B) Borrower agrees to pay all Bank fees
related to this loan transaction including but not limited to the
following:  Appraisal Fees, Title
Insurance Fees, Attorney Fees, etc.  C)
Borrow further agrees to maintain and provide adequate insurance coverage on
the property listed in the Mortgage & Security Agreement documents and
provide the bank with proof of coverage with the Bank listed as the lien holder
on these assets.  D) Borrow and Lender
acknowledge that this loan was closed and disbursed to a Cashier’s Check on March 31,
2009 as required by Borrower’s 8th Amendment of Credit Agreement with Commerce
Bank, N.A., as agent.  However, Lender
will not release Cashier’s Check to Borrower or Commerce Bank, N.A. until
Commerce Bank, N.A. provides Lender with a final, acceptable and executed
intercreditor Agreement between Lender and Commerce Bank, N.A.

 

	
  MGP Ingredients, Inc.

  	
   

  	
   

  
	
  Kansas Promissory Note

  	
   

  	
  Initials

  	
   

  
	
   

  	
   

  	
   

  
	
  KS/4XXXDBALL00000000000156025033109N

  	
  © 1996 Bankers Systems, Inc., St. Cloud, MN  

  	
   

  

 

1

 

10.         SECURITY.  The Loan is secured by the following,
previously executed, security instruments or agreements:

 

(1)          Security
Agreement dated 03/31/2009 consisting of Machinery and Equipment

 

(2)          Real
Estate Mortgage dated 03/31/2008 in the amount of $1,500,000.00

 

(3)          intercreditor
agreement dated 3-31-09.

 

11.         WAIVERS AND CONSENT.  To the extent not
prohibited by law, I waive protest, presentment for payment, demand, notice of
acceleration, notice of intent to accelerate and notice of dishonor.

 

A.           Additional Waivers By Borrower.  In addition, I, and
any party to this Note and Loan, to the extent permitted by law, consent to
certain actions you may take, and generally waive defenses that may be
available based on these actions or based on the status of a party to this
Note.

 

(1)          You
may renew or extend payments on this Note, regardless of the number of such
renewals or extensions.

 

(2)          You
may release any Borrower, endorser, guarantor, surety, accommodation maker or
any other co-signer.

 

(3)          You
may release, substitute or impair any Property securing this Note.

 

(4)          You,
or any institution participating in this Note, may invoke your right of
set-off.

 

(5)          You
may enter into any sales, repurchases or participations of this Note to any
person in any amounts and I waive notice of such sales, repurchases or
participations.

 

(6)          I
agree that any of us signing this Note as a Borrower is authorized to modify
the terms of this Note or any instrument securing, guarantying or relating to
this Note.

 

B.             No Waiver By Lender.  Your course of dealing, or your forbearance
from, or delay in, the exercise of any of your rights, remedies, privileges or
right to insist upon my strict performance of any provisions contained in this
Note, or any other Loan Document, shall not be construed as a waiver by you,
unless any such waiver is in writing and is signed by you.

 

12.         COMMISSIONS.  I understand and agree that you (or your affiliate)
will earn commissions or fees on any insurance products, and may earn such fees
on other services that I buy through you or your affiliate.

 

13.         APPLICABLE LAW.  This Note is
governed by the laws of Kansas, the United States of America, and to the extent
required, by the laws of the jurisdiction where the Property is located, except
to the extent such state laws are preempted by federal law.  In the event of a dispute, the exclusive
forum, venue and place of jurisdiction will be in Kansas, unless otherwise
required by law.

 

14.         JOINT AND INDIVIDUAL LIABILITY AND
SUCCESSORS.  My obligation to pay the Loan is independent
of the obligation of any other person who has also agreed to pay it.  You may sue me alone, or anyone else who is
obligated on the Loan, or any number of us together, to collect the Loan.  Extending the Loan or new obligations under
the Loan, will not affect my duty under the Loan and I will still be obligated
to pay the Loan.  This Note shall inure
to the benefit of and be enforceable by you and your successors and assigns and
shall be binding upon and enforceable against me and my personal
representatives, successors, heirs and assigns.

 

15.         AMENDMENT. INTEGRATION AND SEVERABILITY.  This Note may not be
amended or modified by oral agreement. 
No amendment or modification of this Note is effective unless made in
writing and executed by you and me.  This
Note and the other Loan Documents are the complete and final expression of the
agreement.  If any provision of this Note
is unenforceable, then the unenforceable provision will be severed and the
remaining provisions will still be enforceable. 
No present or future agreement securing any other debt I owe you will
secure the payment of this Loan if, as a result, this Loan would become subject
to Section 670 of the John Warner National Defense Authorization Act for
Fiscal Year 2007.

 

16.         INTERPRETATION.  Whenever used, the
singular includes the plural and the plural includes the singular.  The section headings are for convenience only
and are not to be used to interpret or define the terms of this Note.

 

17.         NOTICE, FINANCIAL REPORTS AND ADDITIONAL
DOCUMENTS.  Unless otherwise required by law, any notice
will be given by delivering it or mailing it by first class mail to the
appropriate party’s address listed in the DATE AND PARTIES section, or to any
other address designated in writing. 
Notice to one Borrower will be deemed to be notice to all
Borrowers.  I will inform you in writing
of any change in my name, address or other application information.  I agree to sign, deliver, and file any
additional documents or certifications that you may consider necessary to
perfect, continue, and preserve my obligations under this Loan and to confirm
your lien status on any Property.  Time
is of the essence.

 

18.         CREDIT INFORMATION.  I agree to supply
you with whatever information you reasonably request.  You will make requests for this information
without undue frequency, and will give me reasonable time in which to supply
the information.

 

19.         ERRORS AND OMISSIONS.  I agree, if
requested by you, to fully cooperate in the correction, if necessary, in the
reasonable discretion of you of any and all loan closing documents so that all
documents accurately describe the loan between you and me.  I agree to assume all costs including by way
of illustration and not limitation, actual expenses, legal fees and marketing
losses for failing to reasonably comply with your requests within thirty (30)
days.

 

20.         WAIVER OF JURY TRIAL.  All of the parties
to this Note knowingly and intentionally, irrevocably and unconditionally,
waive any and all right to trial by Jury in any litigation arising out of or
concerning this Note or any other Loan Document or related obligation.  All of these parties acknowledge that this
section has either been brought to the attention of each party’s legal counsel
or that each party had the opportunity to do so.

 

21.         SIGNATURES.  By signing, I agree to the terms contained in
this Note.  I also acknowledge receipt of
a copy of this Note.

 

BORROWER:

 

MGP
Ingredients, Inc.

 

 

	
  By:

  	
  /s/ Timothy W. Newkirk

  	
   

  	
  Date

  	
  3/31/09

  
	
  TIMOTHY W. NEWKIRK, President/CEO

  	
   

  	
   

  	
   

  

 

LENDER:

 

Union
State Bank - Bank of Atchison

 

 

	
  By:

  	
  /s/ Donald E. Ball            

  	
   

  	
  Date

  	
  3/31/09

  
	
  Donald E. Ball, Senior Vice President

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
  Initials

  	
   

  

 

2

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