Document:

Exhibit 4.3

 

COMMODITY ACCOUNT CONTROL AGREEMENT

 

This
Commodity Account Control Agreement (the “Agreement”), dated as of November 19,
2008, is made by and among MGP INGREDIENTS, INC, a Kansas corporation (together
with its successors and assigns, “Debtor”), COMMERCE BANK, N.A. as Agent
for the Banks, as such terms are defined in the Credit Agreement referred to
below (together with its successors and assigns, and in such capacity, “Secured
Party”), and ADM INVESTOR SERVICES, INC. (together with its successors and
assigns, “Commodity Intermediary”).

 

WHEREAS,
Debtor, Secured Party and the Banks party thereto are parties to a Credit
Agreement dated as of May 5, 2008, as amended, and Debtor and Secured
Party are parties to a Security Agreement dated as of May 5, 2008, as
amended, which provide for Debtor’s grant of a security interest in certain of
its assets to Secured Party (such Credit Agreement and Security Agreement, as
each may be amended, renewed, restated, replaced or otherwise modified from
time to time, being collectively referred to herein as the “Financing
Agreement”); and

 

WHEREAS,
the assets pledged to Secured Party pursuant to the Financing Agreement include
Debtor’s interests in the Trading Account at Commodity Intermediary and the
Trading Account Property contained therein or credited thereto (each as defined
below); and

 

WHEREAS,
it is a requirement under the Financing Agreement that Debtor cause Commodity
Intermediary to enter into a commodity account control agreement with Debtor
and Secured Party;

 

NOW
THEREFORE, the parties agree as follows:

 

1.                                       Definitions.  As used herein, the following
terms have the following meanings:

 

“Commodity Intermediary Indebtedness” has the meaning provided
in Section 6 of this Agreement.

 

“Distributions” means interest, dividends and other distributions
of any nature on any Investment Property or other property that is credited to
the Trading Account at any time.

 

“Entitlement Order” has the meaning provided in Section 4
of this Agreement.

 

“Investment Property” means “investment property,” as defined in
UCC Section 9-102.

 

“Lien” means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a
security interest in such asset.

 

“Person” means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.

 

“Proceeds” means all cash and other proceeds and all other
profits, products, rents or receipts, in whatever form, arising from the
collection, sale, lease, exchange, assignment, licensing or other disposition
of, other realization upon any Investment Property or other property that is
credited to the Trading Account.

 

 

“Trading Account” has the meaning provided in Section 2(a)(i) of
this Agreement.

 

“Trading Account Property” means each item of property (whether
Investment Property, a security, a security entitlement, a commodity contract, a
commodity, an instrument or cash), including Proceeds and Distributions (i) that
is or may in the future be standing to the credit of the Trading Account, (ii) that
has been received and accepted, or may in the future be received and accepted,
by Commodity Intermediary for credit to the Trading Account, or (iii) as
to which Commodity Intermediary is or may in the future become obligated by
law, regulation, rule or agreement to credit to the Trading Account.

 

“UCC” means the Uniform Commercial Code as in effect in the
State of Missouri.

 

2.                                       Establishment of Trading Account; Debtor’s
Right to Excess Funds.

 

(a)                                  Commodity Intermediary confirms and agrees
that:

 

(i)                                     At the request of, and for the account of Debtor,
as owner of the assets therein, Commodity Intermediary has established account
number(s) 234-34802, 234-34803, 234-34804, 234-34805, 234-34806, 234-34807
and 234-34808 in the name of Debtor (such account(s) and any successor or
replacement account(s), whether one or more and however titled, being herein
called the “Trading Account”).

 

(ii)                                  Commodity Intermediary will not change the
name(s) or account number(s) of the Trading Account without obtaining
Secured Party’s prior written consent.

 

(iii)                               The Trading Account is an account to which Investment Property and
commodity contracts are or may be credited.

 

(b)                                 Except for initial and variation margin
payments, commission and fee payments required to be made in respect of the
Trading Account, no withdrawal of cash from or similar debit of cash with
respect to the Trading Account shall be made except pursuant to written
instructions from Secured Party, and Commodity Intermediary shall forthwith
honor all debit instructions from Secured Party without consent of Debtor by
transmitting each disbursement in immediately available funds as instructed by
Secured Party.  Notwithstanding the
above, Commodity Intermediary shall be entitled to withdraw funds from the
Trading Account to meet any and all Trading Account related obligations of
Debtor to Commodity Intermediary and additionally shall be allowed to send
excess funds from the Trading Account to Debtor in the ordinary course of
business unless Secured Party gives Commodity Intermediary written notice to
the contrary in accordance with its rights under this Agreement.

 

3.                                       Control.

 

(a)                                  Debtor hereby directs Commodity Intermediary,
and Commodity Intermediary hereby agrees subject to its rights under Section 6
of this Agreement, to comply with all instructions it receives from Secured
Party from time to time regarding the Trading Account, including, without
limitation, any instructions to liquidate or redeem any commodity contracts and/or
any other Trading Account Property in the Trading Account and any instructions to
remit all or any portion of the Proceeds thereof and/or any or all other
property in the Trading Account to Secured Party or to such other Person as
Secured Party may designate, in each case without further consent by Debtor.  Debtor agrees not to withdraw or attempt to
withdraw any funds or

 

2

 

other
property from the Trading Account except as permitted in writing by Secured
Party or except as otherwise permitted under this Agreement.

 

(b)                                 Any Trading Account Property or Proceeds
thereof remitted by Commodity Intermediary to Secured Party or its designee
pursuant to Secured Party’s instructions shall act to discharge Commodity
Intermediary’s obligations to Debtor to the extent of such Trading Account
Property or Proceeds, all as if such Trading Account Property or Proceeds had
been remitted to and received by Debtor.

 

(c)                                  Without limiting any other provisions of this
Agreement, this Agreement is intended and shall act to provide Secured Party “control”
of all commodity contracts carried at any time in the Trading Account and “control”
of the Trading Account itself, for purposes of UCC Section 9-106(b) and
(c), respectively; and Secured Party is hereby granted all rights and powers as
are legally necessary to obtain and exercise such control and all rights and
powers as may be reasonably incidental thereto, in each case subject only to
Commodity Intermediary’s express rights under this Agreement.

 

4.                                       Entitlement Orders.

 

(a)                                  Debtor grants its continuing consent to Commodity
Intermediary complying with any and all notifications, whether written or oral,
communicated to Commodity Intermediary directing transfer, liquidation, or
redemption of any of the Trading Account Property (each such notification being
referred to herein as an “Entitlement Order”) originated by Secured
Party, without any further consent by Debtor or any other Person.

 

(b)                                 Nothing herein contained shall be construed
so as to prevent Debtor from remaining the owner of the Trading Account,
subject to Secured Party’s security interest therein and its rights and
remedies under this Agreement and the Financing Agreement.  Until Secured Party elects to the contrary
and delivers notice of such election in writing to Commodity Intermediary, Debtor
may make such additional transactions in the Trading Account as Commodity
Intermediary shall be willing to accept for execution and/or clearance.  In the event Secured Party makes such
election and delivers such notice in writing to Commodity Intermediary, Debtor
shall not thereafter execute any transactions in the Trading Account.  After receipt of any such notice from Secured
Party, Commodity Intermediary shall cease complying with orders or other
directions concerning the Trading Account originated by Debtor.  Upon receipt by Commodity Intermediary of
notice of such election and if directed by Secured Party, Commodity
Intermediary will use commercially reasonable efforts to cancel open orders
that have been authorized by Debtor through Commodity Intermediary but which
have not yet been executed.  If Commodity
Intermediary is unable to cancel such orders before they are executed, the
transactions will be considered valid and binding on Debtor and Secured Party.  In the event that orders are executed for Debtor’s
account by a third party pursuant to the terms of a “give-up” or similar
agreement among Debtor, Commodity Intermediary and such third party, Commodity
Intermediary will use commercially reasonable efforts, subject to the terms of
such agreement, to notify such third party that Commodity Intermediary will not
thereafter accept trades executed by such third party for clearance into Debtor’s
account.

 

(c)                                  Commodity Intermediary confirms that it has
not entered into any agreement with Debtor or any other Person purporting to
limit or condition the obligation of Commodity Intermediary to comply with
Entitlement Orders originated by Secured Party.

 

3

 

(d)                                 If at any time Commodity Intermediary shall
receive any Entitlement Order from Secured Party, Commodity Intermediary shall
comply with such Entitlement Order without further consent by Debtor or any
other Person, notwithstanding that such Entitlement Order may conflict with any
instruction or notification by Debtor or any other Person.

 

(e)                                  Commodity Intermediary need not investigate
whether Secured Party is entitled under Secured Party’s agreements with Debtor
to give an Entitlement Order or a notice of exclusive control.  Commodity Intermediary may rely on notices
and communications it reasonably believes are given by the appropriate party.

 

(f)                                    Commodity Intermediary will not be liable to Secured
Party for complying with orders or other instructions from Debtor that are
received by Commodity Intermediary before Commodity Intermediary has received
and has had reasonable opportunity to act on Secured Party’s notice of election
of exclusive control.

 

(g)                                 The rights and powers granted to Secured
Party under this Section 4, under Section 2(b) above, and the
other provisions of this Agreement have been granted in order to perfect Secured
Party’s Lien with respect to the Trading Account and the Trading Account
Property, are powers coupled with an interest, and will not be affected by the
bankruptcy of Debtor or by the lapse of time.

 

(h)                                 As between Secured Party and Debtor, Secured
Party agrees that it will not give an Entitlement Order or notice of exclusive
control under this Agreement unless an “Event of Default” exists under the
Financing Agreement or unless directed to do so by the Required Banks referred
to in the Financing Agreement; provided, however, that (i) nothing in Section 4(h) shall
affect Commodity Intermediary’s rights and obligations under this Agreement,
including, without limitation, its rights and obligations under Sections 4(d) and
4(e) above, and (ii) if Debtor disputes Secured Party’s right at any
time to give an Entitlement Order or notice of exclusive control under this
Agreement its sole remedy in respect thereof shall be to bring a suit for
monetary damages against Secured Party and the Banks under the Financing
Agreement; it being understood and agreed that Debtor may not, and Debtor
hereby waives any right to, bring any suit or similar action against Commodity
Intermediary, the Trading Account or any Trading Account Property in connection
with Secured Party’s exercise of its rights under this Agreement, and that
Debtor’s right to bring a suit for monetary damages against Secured Party and
such Banks constitutes an adequate remedy at law.

 

5.                                       Additional Rights of Secured Party.

 

(a)                                  Whenever Secured Party deems it necessary for
its protection, it shall be entitled, without obtaining the further consent of or
providing prior notice to Debtor, to direct Commodity Intermediary to liquidate
any or all then outstanding open positions in the Trading Account and to direct
Commodity Intermediary to pay to Secured Party any credit balance as shall
exist in the Trading Account after such liquidation and after the payment to Commodity
Intermediary of all Commodity Intermediary Indebtedness in connection with
transactions in Debtor’s accounts with Commodity Intermediary.  Debtor shall be liable to Commodity
Intermediary for any debit or deficit that may be created when Secured Party
initiates a liquidation.

 

(b)                                 If Commodity Intermediary requires additional
margin for an open position, Secured Party may, but shall not be obligated to, advance
to Commodity Intermediary on behalf of Debtor such amounts as may be required
by Commodity Intermediary to margin such position, and, if applicable, shall
give Commodity Intermediary immediate notice of its intent not to

 

4

 

advance
such margin as stated below; provided, however,
that Debtor in all respects shall remain liable to Secured Party for any amount
so advanced.  Secured Party shall notify Commodity
Intermediary immediately if Secured Party determines not to make any further
advance or extension of credit on behalf of Debtor. Failure to give timely
notice shall be deemed to be Secured Party’s determination not to make any
further advances or extensions of credit on behalf of Debtor.

 

(c)                                  Debtor and Secured Party agree that Secured
Party may obtain additional collateral for Debtor obligations and that Secured
Party may proceed hereunder against the Trading Account or resort to any other
collateral, or both, in its sole discretion.

 

(d)                                 Notwithstanding anything herein to the
contrary, insofar as the Financing Agreement provides that Secured Party is to
act as collateral agent or the like for any Person other than a Bank, Secured
Party shall be deemed to have entered into this Agreement on behalf of and as
agent for such other Person and Secured Party’s rights hereunder shall benefit
such other Person to the extent provided in the Financing Agreement.  Without limiting the generality of the
foregoing, if the Financing Agreement provides that Secured Party is to or may
act as collateral agent or the like on behalf of any letter of credit issuer,
swap counterparty or other obligee, whether such Person is a Bank, an affiliate
of a Bank or another Person, or with respect to any obligations due any such
Person or Persons, Secured Party’s rights under this Agreement shall extend to
and benefit such other Person or Persons to the extent provided in the
Financing Agreement.

 

6.                                       Commodity Intermediary’s Lien and Right of
Prior Payment.  The security interest and Lien of Secured
Party against Debtor’s Trading Account is subject to the prior payment of all margin,
commission, deficit account balance and fee payment indebtedness of Debtor to Commodity
Intermediary as may exist from time to time, including all fees and commissions
which may be incurred in connection with Debtor’s account and trading transactions
with Commodity Intermediary at any time (all such indebtedness and all such other
obligations being referred to herein as “Commodity Intermediary Indebtedness”),
and to Commodity Intermediary’s Lien and the right of foreclosure or other
realization thereof in connection with Commodity Intermediary Indebtedness (including
any right of Commodity Intermediary to liquidate open positions or exercise
commodity options, all without prior demand for additional margin and without
prior notice).

 

7.                                       Governing Law.

 

(a)                                  Regardless of any provisions of any other
agreement, but except as otherwise provided in Section 7(b) below, this
Agreement, the Trading Account, Trading Account Property and any other property
therein shall be governed by and construed in accordance with the internal law
(excluding the conflict-of-law rules) of the State of Illinois.

 

(b)                                 Regardless of any provision in any other
agreement, for purposes of Sections 9-304, 9-305, 9-306 and 8-110(e) of
the UCC Commodity Intermediary’s jurisdiction and the location of the Trading
Account shall be deemed to be the State of Illinois; provided,
however, that the foregoing shall not alter any choice of law
agreement between Commodity Intermediary and Debtor insofar as the application
of such chosen law does not adversely affect Secured Party’s rights and
remedies under the law chosen in Section 7(a) above or the perfection
of Secured Party’s Lien on the Trading Account or the Trading Account Property
or the exercise of Secured Party’s rights and remedies provided for in this
Agreement.

 

5

 

8.                                       Conflicts with Other Agreements.  In
the event of any conflict between the terms of Commodity Intermediary’s account
agreement (or any portion thereof) with Debtor and this Agreement, such account
agreement shall prevail unless such conflict has or may have an adverse effect
on the perfection of Secured Party’s lien on the Trading Account or the Trading
Account Property or the exercise of Secured Party’s rights and remedies
provided for in this Agreement in which case this Agreement shall control.  Notwithstanding the above, the parties agree
that Debtor’s account agreement shall control with respect to Commodity
Intermediary’s rights and obligations with respect to margin and margin calls.  In the event of any conflict between this
Agreement (or any portion thereof) and any other agreement now existing or
hereafter entered into, other than such account agreement, the terms of this
Agreement shall prevail.

 

9.                                       Amendments.  No amendment or modification
of this Agreement or waiver of any right hereunder shall be binding on any
party hereto unless it is in writing and is signed by all of the parties
hereto.

 

10.                                 Severability.  To
the extent any provision of this Agreement is found by a tribunal of competent
jurisdiction to be unenforceable, this Agreement will be construed as if the
unenforceable provision were omitted.

 

11.                                 Successor and Assigns.  This
Agreement shall be binding upon and inure to the benefit of Debtor, Secured
Party and Commodity Intermediary and their respective successors (including
their respective corporate successors or heirs and personal representatives who
obtain such rights solely by operation of law and not by agreement or other
voluntary act) and assigns, except that neither Debtor nor Commodity
Intermediary may assign or delegate any of its respective rights or obligations
under this Agreement without the prior written consent of Secured Party.  In the event of any assignment by Secured
Party, Secured Party shall give written notice of such assignment to Debtor and
Commodity Intermediary and the assignee will thereupon be Secured Party
hereunder, with all the same rights, duties and privileges as though originally
named as Secured Party hereunder.

 

12.                                 No Adverse Claims. 
Except for the claims and interest of the parties hereto in the Trading
account and the Trading Account Property, Commodity Intermediary does not know
of any claim to, or interest in, the Trading Account or the Trading Account
Property.  If any Person notifies Commodity
Intermediary that it is asserting any Lien or adverse claim (including, but not
limited to, any writ, garnishment, judgment, warrant of attachment, execution
or similar process) against the Trading Account or the Trading Account Property,
Commodity Intermediary will promptly notify Secured Party and Debtor thereof.

 

13.                                 Maintenance of Trading Account.  In
addition to, and not in lieu of, the obligation of Commodity Intermediary to
honor Entitlement Orders as agreed in Section 4 hereof, Commodity
Intermediary agrees to maintain the Trading Account as follows:

 

(a)                                  Commodity Intermediary will promptly send
copies of all statements, confirmations and other correspondence concerning the
Trading Account to Debtor and simultaneously to Secured Party at the address
provided in this Agreement.

 

(b)                                 All items of income, gain, expense and loss
recognized in the Trading Account shall be reported to taxing authorities under
the name and taxpayer identification number (if applicable) of Debtor.

 

14.                                 Representations and Warranties of Commodity
Intermediary.  Commodity Intermediary covenants, represents
and warrants as follows:

 

6

 

(a)                                  it is a “commodity intermediary” as defined
in UCC Section 9-102;

 

(b)                                 Commodity Intermediary has not entered into,
and until the termination of this Agreement will not enter into without the
consent of Secured Party, any arrangements granting or purporting to grant “control”
(as defined in UCC Section 9-106) over the Trading Account or the Trading
Account Property with any Person except Secured Party;

 

(c)                                  the Trading Account (i) is or has been
established as set forth in Section 2 of this Agreement, (ii) is a “commodity
account” as such term is defined in UCC Section 9-102, and (iii) will
be maintained in the manner set forth herein until termination of this
Agreement; and

 

(d)                                 this Agreement is the valid and legally
binding obligation of Commodity Intermediary.

 

15.                                 Indemnification and Exculpation of Commodity
Intermediary.  Debtor agrees that (a) Commodity
Intermediary (which shall include for purposes of the entirety of this Section 15,
its directors, officers, employees and agents) is released from any and all
liabilities to Debtor arising from the terms of this Agreement and the
compliance of Commodity Intermediary with the terms of this Agreement, except
to the extent that such liabilities arise from Commodity Intermediary’s gross
negligence or willful misconduct, and (b) Debtor and its successors and
assigns shall at all times indemnify and save harmless Commodity Intermediary
from and against any and all claims, actions and suits of others arising out of
the terms of this Agreement or the Financing Agreement or the compliance of Commodity
Intermediary with the terms hereof, except to the extent that such arises from Commodity
Intermediary’s bad faith, gross negligence or willful misconduct and from and
against any and all liabilities, losses, damages, costs, charges, counsel fees
and disbursements and other expenses of every nature and character arising by
reason of the same. This indemnity shall survive the termination of the
Agreement and the resignation or removal of Commodity Intermediary.

 

16.                                 Power of Attorney; Further Assurances.

 

(a)                                  Debtor constitutes and appoints Secured Party
its true, lawful and irrevocable attorney (coupled with an interest) to demand,
receive and enforce payments and to give receipts, releases, satisfaction for,
and to sue for all monies payable to Debtor, and this may be done in the name
of Debtor or Secured Party with the same force and effect as if done by Debtor.

 

(b)                                 Debtor agrees to take such steps and execute
and deliver (or cause the execution and delivery of) such financing statements
and other documents, agreements (including, without limitation, security
agreements) and papers (all in form and substance acceptable to Secured Party)
as Secured Party may from time to time request to perfect or preserve the
security interest granted hereby or by the Financing Agreement.

 

17.                                 Notices.  Any notice, request or other
communication required or permitted to be given under this Agreement shall be
in writing and deemed to have been properly given when delivered in person, or
when sent by fax or other electronic means and electronic confirmation of error
free receipt is received or two days after being sent by certified or
registered United States mail, return receipt requested, postage prepaid,
addressed to the party at the address set forth below; provided,
however, that Entitlement Orders may be given orally and if so will
be deemed to have been properly given at the time of oral delivery.  In the event funds transfer instructions are
given (other than in writing at the time of execution of this Agreement), whether
in writing, by telecopy or otherwise, Commodity Intermediary is authorized to
seek confirmation of such instructions by telephone call-back to the source at
the source’s

 

7

 

voice
number as set forth below, and Commodity Intermediary may rely upon the
confirmations of anyone purporting to be the person or persons so
designated.  The persons and telephone
number for callbacks may be changed only in writing actually received and
acknowledged by Commodity Intermediary. 
The parties to this Agreement acknowledge that such security procedure
is commercially reasonable.

 

	
  Debtor:

  	
   

  
	
   

  	
   

  
	
  MGP
  Ingredients, Inc.

  	
   

  
	
  100
  Commercial Street

  	
   

  
	
  Atchison,
  KS 66002

  	
   

  
	
  Tel.
  No.: 800-255-0302

  	
   

  
	
  Fax
  No.: 913-360-5661

  	
   

  
	
   

  	
   

  
	
  Attn.: Robert
  Zonneveld

  	
   

  
	
   

  	
   

  
	
  Commodity
  Intermediary:

  	
   

  
	
   

  	
   

  
	
  ADM
  Investor Services, Inc.

  	
   

  
	
  141
  W. Jackson Blvd.

  	
   

  
	
  Suite 1600A

  	
   

  
	
  Chicago,
  IL 60604

  	
   

  
	
   

  	
   

  
	
  Attn:
  Char Dohr

  	
   

  
	
   

  	
   

  
	
  Secured
  Party:

  	
   

  
	
   

  	
   

  
	
  Commerce
  Bank, N.A.

  	
   

  
	
  1200
  Walnut Street

  	
   

  
	
  Kansas
  City, MO 64106

  	
   

  
	
  Tel.
  No.: 816-234-7248

  	
   

  
	
  Fax
  No.: 816-234-7290

  	
   

  
	
   

  	
   

  
	
  Attn: Wayne
  Lewis

  	
   

  

 

Any
party may change its address for notices in the manner set forth above.

 

18.                                 Termination.  The obligations of Commodity
Intermediary to Secured Party pursuant to this Agreement shall continue in
effect until the security interest of Secured Party in the Trading Account and
the Trading Account Property has been terminated pursuant to the terms of the
Financing Agreement and Secured Party has notified Commodity Intermediary of
such termination in writing.  The
termination of this Agreement shall not terminate the Trading Account or alter
the obligations of Debtor to Commodity Intermediary pursuant to any other
agreement with respect to the Trading Account.

 

19.                                 Counterparts.  This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original agreement, but all of which together shall constitute one
and the same agreement.  Electronic
delivery of an executed counterpart of a signature page to this Agreement
shall be effective as personal delivery of an original executed counterpart of
this Agreement.

 

[signature page(s) to follow]

 

8

 

IN
WITNESS THEREOF, the parties have entered into this Agreement as of the date
first written above.

 

	
   

  	
  Debtor:

  
	
   

  	
   

  
	
   

  	
  MGP
  INGREDIENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Zonneveld

  
	
   

  	
   

  	
  Name: Robert
  Zonneveld

  
	
   

  	
   

  	
  Title: V.
  P. Finance & CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  Secured
  Party:

  
	
   

  	
   

  
	
   

  	
  COMMERCE
  BANK, N.A., as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wayne C. Lewis

  
	
   

  	
   

  	
  Name: Wayne
  C. Lewis

  
	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  
	
   

  	
  Commodity
  Intermediary:

  
	
   

  	
   

  
	
   

  	
  ADM
  INVESTOR SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charleen N. Dohr

  
	
   

  	
   

  	
  Name: Charleen
  N. Dohr

  
	
   

  	
   

  	
  Title: Compliance

  

 

Commodity
Account Control Agreement – Signature PageExhibit 10.1

 

SUPPLY AGREEMENT

 

(ConAgra Foods
to MGP Ingredients)

 

THIS SUPPLY
AGREEMENT (the “Agreement”), dated as of this 24th, day of October, 2008, by
and between CONAGRA FOODS FOOD INGREDIENTS COMPANY, INC., a Delaware
corporation (“SUPPLIER”), and MGP Ingredients, Inc., a Kansas corporation
(“BUYER”).

 

RECITALS:

 

(a)                                  The
BUYER desires to secure a source of supply for various ingredients whose
specifications are described in Exhibit “A” (the “Ingredients”); and

 

(b)                                 SUPPLIER
desires to sell such Ingredients to BUYER on the terms herein.

 

AGREEMENT:

 

NOW,
THEREFORE, in consideration of the premises, and the mutual covenants
hereinafter set forth, the parties hereby agree as follows:

 

1.                                       Purchase/Sale
of Ingredients.  During the term of
this Agreement BUYER shall purchase all of its requirements of the Ingredients
from SUPPLIER, and SUPPLIER shall sell to BUYER all of BUYER’s requirements of
the Ingredients as provided herein.

 

1.1          Ingredients;
Specifications.  All Ingredients
supplied hereunder shall be prepared, processed, packaged and handled in strict
accordance with the product standards and specifications which have been
furnished by SUPPLIER to BUYER (the “Specifications”) and are attached to Exhibit A.  BUYER shall have the right to make reasonable
changes to the Specifications upon 30 days prior written notice to SUPPLIER;
provided, however, that in the event of any material change in Specifications
the pricing for all affected products will be amended by the parties in writing
prior to SUPPLIER’s obligation to deliver such Ingredients.

 

1.2          Orders.  All orders for Ingredients shall be submitted
by BUYER to the sales office designated by SUPPLIER from time to time.  SUPPLIER shall confirm acceptance of BUYER’s
orders by facsimile or e-mail after receipt of BUYER’s order.  In the same communication, SUPPLIER shall
confirm with the BUYER the date of delivery of the Ingredients covered by the
order.  BUYER understands that orders
must be placed at least 7 days in advance of delivery for items covered by this
Agreement.

 

1.3          Facilities;
Equipment; Subcontractors.  SUPPLIER
shall own, lease or otherwise have available all labor, equipment, machinery
and raw materials necessary to produce, handle and package the Ingredients in
compliance with the Specifications and BUYER’s scheduling requirements.  SUPPLIER shall not 

 

*** indicates that material
deemed confidential has been omitted from this document pursuant to a request
for confidential treatment under Exchange Act Rule 24b-2 and 5 U.S.C. 552(b)(4)
and has been filed separately with the Office of the Secretary of the
Securities and Exchange Commission

 

 

subcontract any aspect of the production of
Ingredients without prior approval from BUYER.

 

1.4          Shipment and Delivery.  All flour Ingredients sold by SUPPLIER to
BUYER hereunder shall be delivered F.O.B. BUYER’S facility unless otherwise
agreed to by both parties.  Title to and
risk of loss of the flour Ingredients shall pass from SUPPLIER to BUYER when so
delivered.

 

1.5          Product Coding.  SUPPLIER shall utilize the product coding
system as described in the Specifications and will code all Ingredients in
accordance therewith.

 

1.6          Forecasts.  On the date hereof and during the first week
of each month hereafter, BUYER shall provide SUPPLIER with written, nonbinding
forecasts of the BUYER’S purchase requirements for each of the Ingredients for
the following 3 months.

 

1.7          Credit.  Upon execution of this Agreement, BUYER shall
deposit *** with SUPPLIER.  On Monday of
each week during the Term of this Agreement, SUPPLIER will send BUYER a
statement listing the balance due for outstanding Ingredients shipments and
BUYER will pay the balance due on such statement on Tuesday of each week by
electronic funds transfer.  If either
Monday or Tuesday is a holiday, then the respective invoicing and/or payment
will be delayed to the following business day respectively.  From time to time, SUPPLIER reserves the
right to modify the credit terms extended to BUYER under this Agreement.

 

1.8          Additional Terms:  The parties hereby agree that the terms
contained in SUPPLIER’s standard Product Contract attached hereto as Exhibit C
shall serve to supplement the terms of this Agreement but this Agreement shall
control over any terms of the Product Contract that modify or contradict the
terms of this Agreement.

 

2.                                       Purchase
Price.

 

2.1          The price to be paid
by BUYER for flour Ingredients shall be based on the formulas set forth in Exhibit “B”.

 

2.2          SUPPLIER shall provide
a pricing sheet for the Ingredients on a ***basis and such pricing shall be
effective until SUPPLIER provides a new pricing sheet.  SUPPLIER agrees, at a minimum, to provide an
updated pricing sheet to BUYER *** and SUPPLIER reserves the right to update
the pricing sheet on *** basis.  The
pricing sheets will contain the current *** pricing for the Ingredients by
month for the next *** period.  The
purchase price for the Ingredients sold hereunder will be based on the ***
pricing sheet or *** pricing sheet, if 

 

*** indicates that material
deemed confidential has been omitted from this document pursuant to a request
for confidential treatment under Exchange Act Rule 24b-2 and 5 U.S.C. 552(b)(4)
and has been filed separately with the Office of the Secretary of the
Securities and Exchange Commission

 

2

 

applicable, corresponding to the date and
time of BUYER’s order and shall be set forth in a written or electronic
confirmation which shall be subject to the terms and conditions of this
Agreement.

 

2.3          The labor components
of the margin charge will be adjusted *** by the percent changes (whether up or
down) in the Bureau of Labor and Statistics Producer Price Index for Non-farm Business
Unit Labor Cost.  The energy components
of the margin charge will be adjusted *** by the percent changes (whether up or
down) in the Bureau of Labor and Statistics Producer Price Index for Commercial
Electric Power.  Should the Bureau of
Labor and Statistics cease reporting the Producer Price Index for either of the
above indices, then the adjustments for both labor and energy shall be based on
the percentage changes in the Bureau of Labor and Statistics Producer Price
Index for Intermediate Materials, Supplies and Components.

 

3.                                       Market
Information.  An important component
of the service SUPPLIER provides to BUYER is to inform BUYER of general market
and industry conditions, including information related to the wheat
market.  SUPPLIER will provide BUYER
information on the wheat market on a weekly basis or as requested by BUYER.

 

4.                                       Term.  This Agreement shall commence on the date
hereof and continue hereafter for an initial period of five (5) years,
subject to termination as set forth in Section 7 hereof.  This Agreement shall automatically renew for
one additional period of five (5) years unless either party gives the
other written notice of termination at least one hundred and eighty (180) days
prior to the end of the initial term.

 

5.                                       Quality
Control.

 

5.1          Inspection.  BUYER (or its designated representatives)
shall, upon 48 hours’ prior written notice, during any production operations
contemplated under this Agreement, have the right to inspect the SUPPLIER’S
facilities, procedures and equipment utilized in producing the
Ingredients.  BUYER (or its designated
representatives) shall comply with all of SUPPLIER’s standard facility entry
policies and procedures.  If any such
facilities, procedures or equipment are not in accordance with applicable
procedures standard to the industry and/or the Specifications, SUPPLIER shall
take immediate action to correct such deficiencies at no cost to BUYER.  It is understood that BUYER is responsible
for the costs, and entitled to the results, of any such inspection.  SUPPLIER shall advise BUYER promptly of any
report, violation, citation or other adverse action which has been provided to
SUPPLIER by any agent or representative of any governmental agency or authority
which could reasonably be expected to adversely impact SUPPLIER’s ability to
perform its obligations under this 

 

*** indicates that material
deemed confidential has been omitted from this document pursuant to a request
for confidential treatment under Exchange Act Rule 24b-2 and 5 U.S.C. 552(b)(4)
and has been filed separately with the Office of the Secretary of the
Securities and Exchange Commission

 

3

 

Agreement. 
No such inspections by BUYER shall relieve SUPPLIER of its obligations
under this Agreement.

 

SUPPLIER will
provide BUYER annually with a copy of its third-party food safety audit for its
facilities which provide Products to BUYER.

 

5.2          HACCP.  SUPPLIER hereby represents that it shall
produce all Ingredients pursuant to the HACCP plan currently in place at the
facilities.  At the discretion of BUYER,
SUPPLIER may be required to provide a representation on at least a semi-annual
basis that it is in compliance with the HACCP plan at the facilities.  SUPPLIER represents that it will update the
HACCP plan as required by governmental agencies and that it shall make such
updates available for review.

 

5.3          Certifications.  SUPPLIER will provide the following
certifications on annual basis as requested by BUYER:

 

a.                                       Kosher
Certificate;

b.                                      Halal
Certificate, or Halal Suitability Statement;

c.                                       Continuing
Guarantee (FDA);

d.                                      Certificate
of Origin;

e.                                       Melamine
Free Statement;

f.                                         GMO
Free Statement;

g.                                      Allergen
Statement;

h.                                      Bovine
Spongiform Encephalopathy (BSE)/Transmissible Spongiform Encephalopathy (TSE)
Free Statement;

i.                                          Residual
Pesticide Analysis (each new crop year); and

j.                                          Heavy
Metals Analysis (most current).

 

6.                                       Proprietary
Information.  Each party shall treat
as confidential all terms, pricing, specifications and other information
supplied by the other party or obtained as a result of performance under this
Agreement.  Neither party shall disclose
any information related to or disclosed under this Agreement to any person not
authorized by the other party in writing to receive it, unless required by law
to do so.  Notwithstanding the above,
neither party shall have an obligation of confidentiality with respect to
information which:  (i) was in the
public domain at the time of receipt from the other party, or which subsequently
enters into the public domain through no fault of the receiving party; (ii) was
known and can be shown to have been known by the receiving party at the time of
receipt from the other party and was not previously acquired from the other
party on a confidential basis; or (iii) becomes known to the receiving
party on a non-confidential basis through a third party whose own acquisition
and disclosure were independent of the other party.

 

7.                                       Representations
and Warranties of SUPPLIER.  SUPPLIER
warrants and represents that all Ingredients shall, upon delivery to BUYER:

 

4

 

(a)                                  comply
with all applicable federal and state laws, rules and regulations
including, without limitation, the Federal Food, Drug and Cosmetic Act and the
Federal Meat Inspection Act;

 

(b)                                 be
goods that are articles which, under the provisions of Section 404, 505 or
512 of the Federal Food, Drug and Cosmetic Act, may be introduced into
interstate commerce;

 

(c)                                  not
be misbranded within the meaning of any federal, state or local law, when
bearing labels in accordance with the Specifications; and

 

(d)           be
unadulterated, merchantable and fit for human consumption under applicable U.S.
law, and otherwise comply with the Specifications.

 

8.                                       Default
and Termination.

 

8.1                                 Default
under this Agreement shall mean:

 

(i)            in
respect to either party:  (i) an
assignment for the benefit of creditors which is not dismissed within thirty
(30) days; or (ii) any proceeding relating to bankruptcy, insolvency or
debtor’s relief being initiated by or against such party unless such proceeding
is dismissed or this Agreement is assumed in such proceeding within sixty (60)
days;

 

(ii)           failure
by either party to fulfill any of its material obligations under this
Agreement, which in respect to SUPPLIER shall include, but not be limited to,
SUPPLIER’s failure to:  (i) timely
provide the Ingredients to BUYER; (ii) comply with the warranties set
forth in Section 6; or (iii) permit BUYER to perform the inspections
as provided herein; or

 

(iii)          failure
by either party to pay any amount due to the other within the terms agreed to
under this Agreement, unless disputed in good faith by such party.

 

8.2           The
defaulting party shall be given ten (10) days to cure a default after
receiving written notice from the non-defaulting party.  If the defaulting party fails to cure in such
ten (10) day period, the non-defaulting party may immediately terminate
this Agreement upon written notice to the defaulting party.

 

8.3           Expiration
or termination of this Agreement shall not affect any rights or obligations of
either party which have accrued through the date of termination or expiration,
or which otherwise survive termination in accordance with their respective
terms.  Nothing herein shall prevent either
party from seeking specific performance or damages for breach in respect of any
right or obligation contained in this Agreement.  The rights and remedies set forth in this Section 7
shall be in addition to any other rights or remedies that may otherwise be
available at law or equity.

 

5

 

9.                                       Nonconforming
Ingredients; Recall.

 

9.1           Ingredient
Replacement.  BUYER shall have the
right but not the obligation to inspect, accept or reject nonconforming
Ingredients.  If so directed by BUYER in
good faith, SUPPLIER will replace at no charge to BUYER any Ingredients that
are not in compliance with the Specifications at the time of delivery to BUYER.  SUPPLIER shall complete such replacement as
soon as possible using all commercially-reasonable efforts.  The foregoing shall not limit any rights or
remedies which may otherwise be available to BUYER, and no such inspection or
acceptance of the Ingredients shall relieve SUPPLIER of its obligations
hereunder.

 

9.2           Recall
of Ingredients.  BUYER shall have the
right at any time, in its commercially reasonable discretion, to order a
recall, in whole or in part, that relates to any of the Ingredients purchased
from SUPPLIER hereunder.  BUYER and
SUPPLIER agree to promptly communicate with each other regarding any condition
or event that could result in such a recall. 
SUPPLIER agrees to cooperate fully with BUYER in effecting any such
recall of Ingredients that, at the time of delivery by SUPPLIER to BUYER, do
not conform to the Specifications or to any other representations or warranties
of SUPPLIER set forth herein.  To the
extent practicable, BUYER agrees to give SUPPLIER advance notice of any such
recall, to work with SUPPLIER to coordinate such recall and, consistent with BUYER’s
responsibilities, to minimize the impact of such recall on BUYER and
SUPPLIER.  SUPPLIER shall bear the cost
(including the replacement cost of Ingredients) of any such recall that arises
as the result of any act, omission or default that occurs or fails to occur in
respect to the Ingredients prior to delivery to BUYER.  BUYER shall bear the cost of any recall that
results from any action or inaction which affects the Ingredients after
delivery to BUYER.  SUPPLIER shall
maintain production records sufficient to enable BUYER to conduct actual or
mock recalls, as BUYER may desire.

 

10.                                 Indemnity
/ Insurance / Limitation of Liability.

 

10.1         Indemnification.  Each party (“Indemnifying Party”) shall
defend, indemnify and hold harmless the other party (“Indemnified Party”)
against and in respect of any and all liability, loss, damage, deficiency or
expense resulting from any breach of a representation, warranty, covenant or
agreement by the Indemnifying Party under this Agreement, and all actions,
suits, proceedings, claims, demands, assessments, judgments, costs and expenses
(including reasonable fees and expenses of counsel) incident to any of the
foregoing.

 

10.2         Insurance.  For purposes of the above indemnity, SUPPLIER
agrees during the term hereof and for a minimum of one (1) year thereafter
to maintain adequate public liability insurance with reputable, duly-qualified
insurance companies.  Within fifteen (15)
days of this Agreement, SUPPLIER shall furnish BUYER with a certificate of insurance
properly executed by the respective insurance company evidencing such
insurance, giving thirty (30) days notice to BUYER in 

 

6

 

the event of cancellation or material
alternation of such coverage.  Failure to
maintain the required insurance is a material default of this Agreement which
shall permit BUYER to terminate the Agreement immediately.  The insurance coverage to be maintained
hereunder shall be as follows:

 

(i)          Commercial general
liability insurance written on an occurrence form, providing blanket
contractual liability coverage and products liability, including coverage for
terroristic acts with a “terrorism” rider, against claims for bodily injury,
death and property damage, affording minimum single limit protection of Five
Million Dollars ($5,000,000) per occurrence. 
BUYER shall be named as additional insured under this policy.

 

(ii)          Worker’s compensation
insurance in accordance with the statutory requirements of the states where
SUPPLIER conducts its operations, and employer’s liability insurance affording
minimum single limit protection of One Million Dollars ($1,000,000) with
respect to personal injury or death resulting from one occurrence.

 

10.3         Limitation
of Liability.  In no event shall either
party be liable to the other under any theory of tort, contract, strict
liability or other legal or equitable theory for any indirect, incidental,
consequential, special, exemplary, speculative or punitive damages including,
but not limited to, lost profits, regardless of whether or not advised of the
possibility of such damages.

 

11.           Ownership
of Intellectual Property and Specifications.  BUYER agrees that SUPPLIER (including its
affiliated or third-party licensors) are the sole owners of all right, title
and interest in the Specifications as well as all trademarks, trade names,
trade dress, logos, graphics, photographs, artwork and textual materials
(collectively, the ‘‘Trademarks”) used in connection with the packaging of the
Ingredients under this Agreement, and that all intellectual property rights
that may be acquired by use of the Specifications or the Trademarks shall inure
to the sole benefit of the SUPPLIER (or its licensors).  BUYER agrees to execute such further
documents as may be required to effectuate the assignment to SUPPLIER (or its
affiliated or third-party licensors) of any intellectual property rights that
BUYER may acquire in the Specifications or the Trademarks, including any
goodwill associated with the same.  BUYER
agrees that it will not, at any time, do or cause to be done any act which will
in any way impair the rights of SUPPLIER (or its licensors) in and to the
Specifications and the Trademarks.

 

12.           Continuous
Improvement:  SUPPLIER and BUYER will
work together to determine the optimal flour blends to be used in BUYER’s
manufacturing operations to improve BUYER’s products and plant
efficiencies.  This may include specific
wheat varieties as well as hard wheat and spring wheat blends.

 

13.                                 Miscellaneous.  The following miscellaneous provisions shall
apply to this Agreement:

 

7

 

13.1         Notices.  All notices which are required or may be
given pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered personally or
mailed by registered, certified or express mail, postage prepaid, or by
reputable overnight courier or sent by facsimile as follows:

 

	
  If to BUYER:

  	
  MGP
  Ingredients, Inc.

  
	
   

  	
  100
  Commercial Street

  
	
   

  	
  PO Box 130

  
	
   

  	
  Atchison, KS
  66002-0130

  
	
   

  	
   

  
	
   

  	
  Attn: Legal
  Counsel

  
	
   

  	
  Fax: 913 367
  1480

  
	
   

  	
   

  
	
  If to SUPPLIER:

  	
  ConAgra
  Foods Food Ingredients Company, Inc.

  
	
   

  	
  Eleven
  ConAgra Drive

  
	
   

  	
  Omaha, NE
  68102

  
	
   

  	
  Attn:
  President, ConAgra Mills

  
	
   

  	
  Fax: (402)
  978-5501

  
	
   

  	
   

  
	
  With a copy to:

  	
  ConAgra
  Foods Food Ingredients Company, Inc.

  
	
   

  	
  Five ConAgra
  Drive

  
	
   

  	
  Omaha, NE
  68102

  
	
   

  	
  Attn: Legal
  Department

  
	
   

  	
  Fax: (402)
  595-6149

  

 

or at such
other address as either party hereto shall have designated by notice in writing
to the other party hereto in accordance with this Section.  All such notices shall be deemed to have been
given when so delivered personally or by overnight courier, or if mailed as set
forth above, three days after the date of mailing, or if sent by facsimile,
when received.

 

13.2         Waiver.  No provision of this Agreement may be waived
by any party except in writing.  The
parties hereto agree that the waiver by any party of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of that provision by the same party, or any other provision
or condition of this Agreement.

 

13.3         Independent
Contractors.  The relationship
between BUYER and SUPPLIER shall be that of independent contractors.  This Agreement is not intended to create and shall
not be construed as creating between the parties hereto a relationship of
principal and agent, joint venturers, co-partners, or any other similar
relationship, the existence of which is hereby expressly denied by the parties.

 

13.4         Binding
Effect.  This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and assigns.

 

13.5         Entire
Agreement.  This Agreement (including
the exhibits referenced herein) constitutes the entire agreement of the parties
with respect to the subject matter 

 

8

 

hereof, and all prior understandings and
agreements with respect to such matter are superseded by this Agreement.  This Agreement may not be modified or amended
by additional or other terms contained on any purchase order or in any manner
except in writing duly executed by both parties.

 

13.6         Assignment.  This Agreement may not be assigned by either
party hereto without the prior written consent of the other party, which
consent will not be unreasonably withheld.

 

13.7         Governing
Law.  This Agreement shall be
governed by the internal laws of the State of Delaware without resort to such
state’s choice of law rules.

 

13.8         Force
Majeure.  Either party shall be
excused from performance under this Agreement while and solely to the extent
that such performance is prevented by an act of God, strike, war or war
condition, act of terrorism, riot, civil disorder, government regulation,
embargo, fire, flood or any other such casualty beyond the reasonable control
of such party.  In the event that either
party shall be unable to perform any of its obligations as undertaken, it shall
promptly advise the other party of its inability to perform and the reason for
such non-performance.

 

IN WITNESS
WHEREOF, the parties have each executed this Agreement as of the date first
above written:

 

	
  CONAGRA FOODS FOOD INGREDIENTS

  COMPANY, INC.

  	
   

  	
  MGP INGREDIENTS, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Paul Maass

  	
   

  	
  By:

  	
  /s/ Timothy W. Newkirk

  
	
   

  	
   

  	
   

  
	
  Printed Name:Paul Maass

  	
   

  	
  Printed Name:Timothy W. Newkirk

  
	
   

  	
   

  	
   

  
	
  Its:President & General Manager

  	
   

  	
  Its:President & CEO

  
	
   

  	
   

  	
   

  
	
  Date:11/06/08

  	
   

  	
  Date:11/06/08

  
					

 

9

 

EXHIBIT A

 

Ingredients

 

	
  Ingredient Code

  	
   

  	
  Ingredient Description

  	
   

  	
  Specifications

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MGP
  No. 100219

  	
   

  	
  Straight Grade Wheat Flour

  	
   

  	
  See attached.

  	
   

  

 

10

 

Ingredient
Purchase Specification for

 

Straight
Grade Wheat Flour

 

MGP
Ingredients, Inc.® Item Number: 
800825

 

Straight Grade
Wheat Flour will be used in food grade products and hence must be manufactured
in accordance with all applicable regulations set forth by the Food, Drug and
Cosmetic Act of 1938, as amended and the Regulations issued thereunder.  The Straight Grade Wheat Flour must comply
with all applicable laws, rules and regulations of any applicable state or
respective subdivision thereof.

 

Kosher requirement:  Certified
Kosher Pareve.

 

***

 

Quality Guarantee:

The vendor shall submit with each shipment a Certificate of Analysis
(COA) verifying the conformance to the above specification.  The COA will include all analysis data for
each property listed above and MGP Ingredients’ purchase order number.  The COA shall arrive with the shipment
attached to the Bill of Lading.

 

*** indicates that material
deemed confidential has been omitted from this document pursuant to a request
for confidential treatment under Exchange Act Rule 24b-2 and 5 U.S.C. 552(b)(4)
and has been filed separately with the Office of the Secretary of the
Securities and Exchange Commission

 

11

 

EXHIBIT B

 

***

 

***.

 

(one page omitted)

 

*** indicates that material
deemed confidential has been omitted from this document pursuant to a request
for confidential treatment under Exchange Act Rule 24b-2 and 5 U.S.C. 552(b)(4)
and has been filed separately with the Office of the Secretary of the
Securities and Exchange Commission

 

12

 

Exhibit B

 

***

 

(one page omitted)

 

U.S. DEPARMENT OF LABOR

 

BUREAU OF LABOR STATISTICS

 

Databases, Tables & Calculators by
Subject

 

Data extracted on:  November 5,
2008

 

Major Sector
Productivity and Costs Index

 

	
  Series Id:

  	
  PRS85006113

  
	
  Duration:

  	
  Index, 1992 = 100

  
	
  Measure:

  	
  Unit Labor Costs

  
	
  Sector:

  	
  Nonfarm Business

  

 

	
  Year

  	
   

  	
  Qtr1

  	
   

  	
  Qtr2

  	
   

  	
  Qtr3

  	
   

  	
  Qtr4

  	
   

  	
  Annual

  	
   

  
	
  1998

  	
   

  	
  108.166

  	
   

  	
  109.330

  	
   

  	
  109.895

  	
   

  	
  109.885

  	
   

  	
  109.327

  	
   

  
	
  1999

  	
   

  	
  110.936

  	
   

  	
  111.132

  	
   

  	
  111.315

  	
   

  	
  111.668

  	
   

  	
  111.268

  	
   

  
	
  2000

  	
   

  	
  116.119

  	
   

  	
  114.395

  	
   

  	
  116.886

  	
   

  	
  116.436

  	
   

  	
  115.970

  	
   

  
	
  2001

  	
   

  	
  118.499

  	
   

  	
  117.583

  	
   

  	
  117.689

  	
   

  	
  116.830

  	
   

  	
  117.650

  	
   

  
	
  2002

  	
   

  	
  116.637

  	
   

  	
  117.680

  	
   

  	
  117.016

  	
   

  	
  117.095

  	
   

  	
  117.105

  	
   

  
	
  2003

  	
   

  	
  117.677

  	
   

  	
  117.965

  	
   

  	
  116.618

  	
   

  	
  117.707

  	
   

  	
  117.485

  	
   

  
	
  2004

  	
   

  	
  117.408

  	
   

  	
  117.540

  	
   

  	
  118.802

  	
   

  	
  120.176

  	
   

  	
  118.491

  	
   

  
	
  2005

  	
   

  	
  120.040

  	
   

  	
  120.527

  	
   

  	
  121.233

  	
   

  	
  122.681

  	
   

  	
  121.132

  	
   

  
	
  2006

  	
   

  	
  123.485

  	
   

  	
  123.151

  	
   

  	
  124.401

  	
   

  	
  127.148

  	
   

  	
  124.551

  	
   

  
	
  2007

  	
   

  	
  128.686

  	
   

  	
  127.653

  	
   

  	
  126.883

  	
   

  	
  128.281

  	
   

  	
  127.873

  	
   

  
	
  2008

  	
   

  	
  128.654

  	
   

  	
  128.477

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*** indicates that material
deemed confidential has been omitted from this document pursuant to a request
for confidential treatment under Exchange Act Rule 24b-2 and 5 U.S.C. 552(b)(4)
and has been filed separately with the Office of the Secretary of the
Securities and Exchange Commission

 

13

 

EXHIBIT C

 

Product
Contract

 

See attached.

 

14

 

Product
Contract

 

SELLER

 

	
   

  	
  CONTRACT NO.

  	
  DATED

  
	
   

  	
   

  	
   

  
	
  AGREES TO

  SELL TO

  	
  and BUYER AGREES TO BUY from Seller the following commodities (to be
  manufactured on the terms and conditions and subject to the agreements stated
  below and on the back hereof.)

  o  F.O.B. Carrier at shipment point, freight charges (basis car load
  freight rate in effect on date of this contract) to be prepaid or allowed by
  Seller.

  o  Delivered

  
	
  (Check one)   

   

  
	
   

  	
  to

  	
   

  	
  (Specify destination point)

  
	
  BUYER

  	
   

  	
   

  
					

 

 

 

 

*AUTOMATIC INCREASE IN PRICE IN CERTAIN CASES:  If
the time of shipment herein specified under caption “Time of Shipment” is a
longer period than sixty (60) days from the date hereof, then in such case on
installment of this contract shipped after sixty (60) days from the date hereof
and prior to the time fixed herein for final shipment under said caption, it is
agreed that the basic price above specified per cwt. of flour made from wheat
or rye shall be automatically increased                                      cents per
day, commencing on the sixty first (61) day after the date hereof, and
continuing until date of shipment

within said time fixed herein for final shipment.

CHANGES; ADJUSTMENTS; LIMITATIONS:  Buyer
may direct shipment of all or any part of said flour in containers of a
different size or kind than specified in the above column headed “Containers”
if any are therein specified, or in containers if “Bulk” is specified in said
column, in either which case the price shall be adjusted in accordance with
Seller’s package differential schedule in effect at date hereof.  If “Bulk” is specified in said column, Seller
nevertheless shall not be obligated to ship in bulk unless so specified under
the caption “Mode of Shipment” below and then only as therein specified.

 

TIME OF SHIPMENT

	
  On direction to be furnished by Buyer shipment is to be made as
  follows:

  	
   

  
	
  TERMS

  	
  DRAFT

  	
   

  	
  BANK OF

  	
   

  
						

 

	
  RR DELIVERY AT DESTINATION

  	
  (Seller shall have the options as to routing

  
	
   

  	
  except as to the delivering carrier)

  
	
  MODE OF SHIPMENT

  	
  (Specify whether CL, LCL, split car, mixed car, truck,

  
	
   

  	
  boat, barge, bulk R.R. car or bulk truck)

  

 

If shipments in bulk are
specified in this paragraph, Seller may nevertheless be required to make bulk
shipments only to one or more of the following destinations:

	
  BY RAILROAD

  	
  BY TRUCK

  

 

This contract constitutes the
complete agreement between the parties hereto; and cannot be changed in any
manner except in writing subscribed by Buyer and Seller on their duly
authorized officers.  CONDITIONS
CONTINUED ON THE BACK HEREOF.

 

This contract is subject to
confirmation by the seller at OMAHA, NEBRASKA

 

	
  CONAGRA FOODS SELLER

  	
   

  
	
  BY

  	
   

  	
  BUYER

  	
   

  
	
   

  	
  BY

  	
   

  
	
  CONFIRMED BY:

  	
   

  	
  DATE

  	
   

  
	
  CONAGRA FOODS SELLER

  	
   

  
							

 

15

 

TERMS AND
CONDITIONS (Continued from the front)

 

NET WEIGHTS:  The commodities covered by this contract are
sold on the basis of net weights when packed, or, if shipped in bulk, net
weights when loaded.

 

COLLECTIONS:  Where Buyer designates the collecting bank he
shall be responsible to Seller for any loss or damage to Seller by reason of
any failure or default, on the part of said bank in connection with payment by
Buyer under this contract.

 

TAXES AND FREIGHT
RATES:  Any and all increases, changes,
adjustments or surcharges (including, without limitation, fuel surcharges)
which may be in connection with the freight charges, rates or classifications
included as part of this contract, shall be for the Buyer’s account.  The prices set forth in the within contract
include any and all taxes, impositions, exactions, or charges of every nature
in effect on the date of the execution hereof. 
Any and all taxes, impositions, executions, or charges, or any increase
therein, whether for revenue or for regulation of commerce, or for any other
purpose, not in effect on the date of this contract, which may, prior to the
completion of deliveries hereunder, be levied, imposed, required, or increased
by the United States or any State thereof or other Governmental agency on or
measured in terms of any of the finished products remaining unshipped and which
are to be delivered hereunder, or on or measured in terms of any commodity used
in the manufacture of such containers, or the processing, purchase, sale,
holding for sale, distribution, dealing in, transportation, use or handling of
any of such products, commodities or containers, if paid or borne by Seller
directly or indirectly shall be billed separately to Buyer, where not
prohibited by law, and where the determination of the amount of the tax,
imposition, exaction, charge or increase per cwt. or other unit of measure is
possible of calculation by the application of any official published conversion
rate or otherwise, and shall be paid by Buyer to Seller.  Any of such taxes, impositions, exactions,
charges or increases which the Seller shall be finally relieved from paying or
which shall be later refunded or returned to Seller at any time and for any
cause shall be refunded or credited to Buyer by Seller as promptly as possible
after deduction by Seller of any reasonable expenses incurred in preventing collection
of such taxes, impositions, exactions, charges or increases or in obtaining or
securing such refunds or returns and in making such reimbursement to Buyer, and
after paying and discharging all tax liabilities to which Seller may be
subjected by reason of its having been relieved from paying such taxes,
impositions, exactions, charges or increases or having secured such refunds or
returns.  Seller shall be under no
obligation to contest the validity of any such tax, 

 

16

 

imposition, exaction, charge
or increase or to prosecute any such claims for refunds or returns, but in the
event Seller does not elect to contest such taxes, impositions, exactions,
charges or increases, or to prosecute such claims for refunds, Buyer shall be
entitled to an assignment or mutually acceptable conditions of all to Seller’s
rights and causes of action in the premises.

 

SHIPMENTS:  When the basis of shipment is F.O.B. delivery
of goods by the Seller to the carrier at point of shipment shall constitute
delivery to Buyer, subject to the lien of Seller for the unpaid purchase
price.  Buyer shall furnish Seller
complete shipping instructions (and when required, the necessary containers) at
least ten (10) days before the time of shipment.  If there is more than one installment of
goods shipped or stipulated herein to be shipped, the contract shall be
construed to be severable as to each installment, except where such
construction would be in direct conflict with the provisions hereinafter set
forth under “Rights of Buyer” and “Rights of Seller”, and breach or default of
either Buyer or Seller as to any installment or installments shall not give the
other party a right to cancel this contract, except as herein otherwise
expressly provided.

 

WARRANTY:  Seller expressly warrants that any goods
contracted herein will be representative of the brand or grade specified herein
to be sold, and will comply with all the applicable provisions of the Federal
Food, Drug and Cosmetic Act and to any applicable State Pure Food and Drug
Act.  Buyer hereby waives any claim or
defense based on the quality of the commodities specified herein, unless (1) within
ten (10) days after Buyer learns by use of otherwise of the defect
complained of, but in any event within forty-five (45) days after receipt of
notice of arrival of said commodities at destination Buyer sends Seller at
Seller’s main office a letter by registered mail specifying the nature of the
complaint and (2) within said forty-five (45) days sends by parcel post or
express prepaid to Seller’s said office a five (5) pound sample of the
goods alleged to be defective or inferior, provided that compliance by Buyer
with the above enumerated steps shall not constitute an admission by Seller of
the merits or amounts of Buyer’s said claim or defense.

 

RIGHTS OF BUYER:  In case of default by seller (provided that
Seller shall, without limitation, be in “default” if Seller becomes insolvent
or is adjudged bankrupt, or if at any time the property and assets of Seller
are in liquidation, or if Seller’s financial responsibility becomes impaired,
but that Seller shall not be in “default” for non-performance due to fire,
flood, earthquake, tornado, labor difficulties, riot, federal or state laws or
regulations, acts or defaults by common carriers, shortage of necessary bulk
trucks or bulk railroad cars unless Buyer has furnished Seller with shipping
instructions at least twenty (20) days prior to time of shipment, or Act of God
or the public 

 

17

 

enemy).  Buyer may (within thirty (30) days after he
has knowledge thereof) by written notice sent by registered mail to Seller at
Seller’s main office:

 

1)              cancel the contract, or,

 

2)              terminate the contract as to the portion thereof
in default and purchase within said thirty (30) days an equal quantity of goods
of the same kind and grade and recover from Seller the excess of the price so
paid over the purchase price named herein, plus any incidental loss or expense,
and in addition thereto, recover a sum equal to one per cent (1%) of the
contract price named herein; or,

 

3)              terminate the contract as to any unshipped
balance, and recover from Seller as liquidated damages a sum to be computed by
the following formula:  (a) one per
cent (1%) of the per cwt. contract price named herein multiplied by the number
of cwts remaining unshipped, plus (b) amount of rise, if any, per bushel
in the market value of cash wheat or rye, as the case may be in carload lots at
Seller’s mill between date of contract and date of termination multiplied by
two and thirty-five hundredths (2.35) times the number of cwts. remaining
unshipped.  In case of a decline in such
value of such wheat or rye between said dates, Buyer shall recover the sum
specified in (a) less the amount of such decline per bushel multiplied by
two and thirty-five hundredths (2.35) times the number of cwts remaining
unshipped.  Such amount shall be credited
to the amount provided in (b) solely in reduction of damages.

 

Provided:  That if the default consists of a failure by
Seller to ship at the time required, Buyer may cancel or terminate the contract
as above provided only after giving Seller preliminary written notice of
intention to cancel or terminate by registered mail addressed to the Seller’s
main office.  If Seller does not ship
within eight (8) days after mailing of such notice, then Buyer may, within
thirty (30) days after the expiration of said eight (8) days, cancel or
terminate the contract as above provided.

 

RIGHTS OF SELLER:  In case of default by Buyer (provided that
Buyer shall, without limitation, be in “default” if Buyer becomes insolvent or
is adjudged bankrupt, or if Buyer shall fail to make any payment to Seller when
due under this or any other contract between Buyer and Seller or if at any time
the property and assets of Buyer are in liquidation if Buyer’s financial
responsibility becomes impaired, but as to any unshipped balance hereunder
Buyer shall not be in “default” for delay in performance due to fire, flood,
earthquake, tornado, labor difficulties, riot, federal or state laws or
regulations, acts or defaults or common carriers, or act of God or the public
enemy), Seller 

 

18

 

may within thirty (30) days
after he has knowledge thereof) by written notice send by registered mail to
Buyer at Buyer’s main office:

 

1)              cancel the contract; or,

 

2)              terminate the contract as to the portion
thereof in default or as to any unshipped balance, or both, and

 

A)          resell, within said thirty (30) days any of the above goods which have
been shipped and which Buyer has wrongfully failed or refused to accept and
recover from Buyer differences between the above purchase price thereof, and
the price obtained on resale, if latter be less than former; also any
incidental loss and expense, including salesmen’s times and expense in
connection with such resale, and all demurrage (resale anywhere in the usual
course of Seller’s business or at any terminal market or at or near destination
shall be proper and conclusive in the absence of bad faith) and

 

B)            If Seller terminates as to unshipped balance,
recover from Buyer as liquidated damages a sum to be computed by the following
formula: (a) (see percentage on front of contract) per day for each day
from date of contract to date of termination for each cwt. remaining unshipped,
plus (b) ten (10¢) cents for each cwt. remaining unshipped as the cost of
selling, plus (c) amount of decline, if any, per bushel in the market
value of cash wheat or rye, as the case may be, in carload lots at Seller’s
mill between date of contract and date of termination multiplied by two and
thirty-five hundredths (2.35) times the number of cwts. remaining
unshipped.  In case of a rise in such
value of such wheat or rye between said dates, Seller shall recover the sums
specified in (a) and (b), less the amount of such rise per bushel
multiplied by two and thirty-five hundredths (2.35) times the number of cwts.
remaining unshipped.  Such amount shall
be credited to the amounts provided in a (a) and (b) solely in
reduction of damages.

 

Provided: That if the
default consists of a failure by Buyer to provide shipping instructions as
required “Shipments,” Seller may cancel or terminate the contract as above
provided only after giving Buyer preliminary written notice of intention to
cancel or terminate, by registered mail addressed to Buyer’s main office.  If Buyer does not provide, within eight (8) days
after mailing of such notice, shipping instructions for immediate delivery of
all past due shipments, then Seller may, within thirty (30) days after the
expiration of said eight (8) days period such shipping instructions for
immediate delivery, Seller shall have at least ten (10 days after receipt
thereof instructions for immediate delivery. 
Seller shall have at least ten (10) days after receipt thereof
within which to ship and shall and 

 

19

 

have such additional time as
may in Seller’s sole discretion by reasonably necessary, having in mind the
Seller’s then milling operations and requirements.

 

PROVISIONS FOR AUTOMATIC
EXTENSION:  If Buyer shall fail to
furnish complete shipping instructions (and when required, the necessary
containers) to reach Seller at his main office ten (10) days before the
date for any shipment specified herein, or before the final date specified for
shipment, as the case may be, and if Buyer shall fail to notify Seller that he
does not intend to accept any further deliveries under this contract, then
(unless Seller elects to exercise his right to cancel or terminate the
contract) this contract as to such shipment, or shipments shall without notice
automatically be extended from day to day until Buyer furnishes complete
shipping instructions (and when required, the necessary containers), in
accordance with the provisions of paragraph entitled “Shipment” or until Buyer
notifies Seller that he does not intend to accept any further deliveries under
this contract, or until Seller exercises his right provided herein to cancel or
terminate the contract; and for each day during which the contract is thus
automatically extended Buyer will pay Seller carrying charges at the rate of
(see percentage on front of contract) per cwt. per day.

 

LIMITATIONS OF ACTIONS: No
action at law or in equity shall be maintained by Buyer against Seller or any
of Seller’s other vendees to recover damages for alleged violation of Seller or
said vendee of any law, Federal or State, now in effect or hereinafter enacted,
pertaining to discrimination in price, services or facilities including the
Cayton Act (U.S.C. Title 15 Secs. 12 to 27 inclusive) as amended by Act of
Congress approved June 19, 1936, or any further amendment thereto, as
respects any products delivered by Seller to Buyer pursuant to this contract
unless (1) written notice of the particular deliveries on which the claim
for such damages is based shall be given by Buyer to Seller at Seller’s main
office by registered mail within six (6) months after delivery thereof to
Buyer with a full statement of the particulars to such claim then known to
Buyer, and (2) action shall be commenced within one (1) year after
delivery of such products to Buyer.

 

20

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