Document:

Exhibit 4.1.1

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

This First Amendment to
Credit Agreement (the “Amendment”) is made as of September 3, 2008,
by and among MGP Ingredients, Inc., a Kansas corporation (“MGP”),
Midwest Grain Pipeline, Inc., a Kansas corporation (“Midwest Grain”),
Commerce Bank, N.A., as Agent, Issuing Bank and Swingline Lender under the
Credit Agreement referred to below, and the Banks party to the Credit Agreement
referred to below.  MGP and Midwest Grain
are each referred to herein as a “Borrower” and are collectively
referred to herein as the “Borrowers”. 
The Banks, the Agent, the Issuing Bank and the Swingline Lender are each
referred to herein as a “Bank Party” and are collectively referred to
herein as the “Bank Parties.”

 

Preliminary
Statements

 

(a)           The Borrowers and the Bank Parties are parties to a Credit
Agreement dated as of May 5, 2008 (the “Credit Agreement”).  Capitalized terms used and not defined in
this Amendment have the meanings given to them in the Credit Agreement.

 

(b)           The Borrowers have defaulted on certain of their
obligations under the Credit Agreement and have requested that the Banks
forebear from exercising certain rights and remedies they would otherwise have
because of such defaults and that certain provisions of the Credit Agreement be
modified in certain respects.

 

(c)           The Bank Parties are willing to agree to the foregoing
requests by the Borrowers, subject, however, to the terms, conditions and
agreements set forth in this Amendment.

 

(d)           MGP Ingredients of Illinois, Inc., an Illinois
corporation (“MGPI”), was an original party to the Credit Agreement and
has subsequently merged into MGP.

 

NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.                                      Acknowledgement of Defaults and
Banks’ Rights.  The Borrowers acknowledge and
agree that:

 

(a)           the
Borrowers have failed to comply with their obligations under Sections 6.3(b),
6.3(d) and 6.3(e) of the Credit Agreement for the Borrowers’ fiscal
quarter ending June 30, 2008 (each, a “Designated Default” and,
collectively, the “Designated Defaults”);

 

(b)           the
occurrence of each Designated Default constitutes an Event of Default under the
Credit Agreement;

 

(c)           because
of the Designated Defaults, and but for the Bank Parties’ agreements set forth
in Section 7 below, the Bank Parties have the present legal right (i) to
stop making Loans and other credit extensions under the Credit Documents, (ii) to
accelerate the maturity of the Obligations, and (iii) to exercise all other
rights or remedies available to the Bank Parties upon the occurrence of an
Event of Default; and

 

(d)           the
amount of principal and accrued but unpaid interest owing under the Loans, as
of August 28, 2008, are accurately set forth in Exhibit B attached
hereto.

 

 

2.                                      Increase in Revolver Commitments;
Elimination of Term Loan Facility.  Exhibit A to the Credit
Agreement is replaced by Exhibit A to this Amendment.  Section 2.4 of the Credit Agreement is
amended to read as follows:  “[intentionally
omitted]”.  The parties acknowledge that
the effect of the foregoing amendment to Section 2.4 of the Credit
Agreement is to eliminate the Term Loan facility under the Credit Agreement.

 

3.                                      Elimination of Revolver
Accordion.  Similarly, Section 2.1(d) of the
Credit Agreement is amended to read as follows: 
“[intentionally omitted]”.

 

4.                                      Maturity Dates.

 

(a)          General.  The definition of “Revolving Credit Termination Date” in Section 1.1
of the Credit Agreement is amended to read as follows:

 

“Revolving Credit
Termination Date” means the earlier to occur of (1) the first
anniversary of the First Amendment Closing Date, or (2) the expiration of
the Standstill Period; provided, however,
that, if such day is not a Business Day, the Revolving Credit Termination Date
shall be the immediately preceding Business Day.

 

(b)          Letters of Credit. 
Subpart (5) of Section 2.3(a) of the Credit Agreement is
amended to read as follows:

 

(5) the
expiry date of such Letter of Credit occurs, or under any circumstances may
occur, within 30 days before the Revolving Credit Termination Date;

 

5.                                      Interest Rate Pricing.

 

(a)          Single Tier Pricing.  The
definition of “Applicable Margin” in Section 1.1 of the Credit Agreement
is amended to read as follows:

 

“Applicable Margin” means, at any date, (1) in
the case of Base Rate Loans, 0.50%, (2) in the case of Libor Loans, 2.75%,
and (3) in the case of the Non-Use Fee, 0.30%.

 

(b)          Prime “Plus”
Applicable Margin.  The definition of “Adjusted Base Rate”
in Section 1.1 of the Credit Agreement is amended to read as follows:

 

“Adjusted Base Rate”
means, at any time, (1) the Base Rate at such time, plus (2) the Applicable Margin for
Base Rate Loans at such time.

 

6.                                      Additional Collateral.

 

(a)          Lien on Equipment,
General Intangibles and Investment Property.  Each
Borrower grants to the Agent, for the benefit of the Banks, as security for the
Obligations, a Lien on all of its existing and future Equipment (other than
Excluded Equipment), General Intangibles and Investment Property (other than
MGP’s equity interest in D.M. Ingredients GmbH) and all 

 

2

 

Proceeds
of each of the foregoing.  To further
evidence the foregoing grant of a security interest, but not as a condition
precedent thereto, each Borrower shall execute and deliver to the Agent, on the
date hereof, an amendment to the Borrower Security Agreement whereby the
Collateral encumbered thereby is amended to add all additional Collateral
described in this paragraph.

 

(b)          Illinois Real Estate.  Each Borrower agrees that the Agent, on
behalf of the Banks, shall have a mortgage lien, as security for the
Obligations, on MGP’s real property and improvements thereon located in or near
Pekin, Illinois, and on all proceeds thereof. 
To further evidence the foregoing, but not as a condition precedent
thereto, MGP shall execute and deliver to the Agent, on the date hereof, a
recordable mortgage instrument encumbering such property (the “Illinois
Mortgage”); and promptly thereafter cause a title insurer reasonably
acceptable to the Agent to insure the validity of the mortgage lien and its
priority as a first mortgage lien.

 

(c)           Conforming Change; Excluded
Assets Not to Include Additional Collateral.  The definition of “Excluded
Assets” in Section 1.1 of the Credit Agreement is amended to read as
follows:

 

“Excluded Assets” means all real or personal
property other than:

 

	
  (1)

  	
   

  	
  Accounts;

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  Chattel
  Paper, to the extent arising out of or otherwise relating to the sale or
  other transfer of Inventory or the furnishing of services;

  
	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  Instruments,
  to the extent arising out of or otherwise relating to the sale or other
  transfer of Inventory or the furnishing of services;

  
	
   

  	
   

  	
   

  
	
  (4)

  	
   

  	
  Inventory;

  
	
   

  	
   

  	
   

  
	
  (5)

  	
   

  	
  General
  Intangibles;

  
	
   

  	
   

  	
   

  
	
  (6)

  	
   

  	
  Investment
  Property (other than MGP’s equity interest in D.M. Ingredients GmbH);

  
	
   

  	
   

  	
   

  
	
  (7)

  	
   

  	
  the
  real property and improvements thereon encumbered by the Illinois Mortgage
  (as defined in the First Amendment);

  
	
   

  	
   

  	
   

  
	
  (8)

  	
   

  	
  Equipment,
  including, without limitation, Refinanced Equipment Collateral (but excluding
  Excluded Equipment);

  
	
   

  	
   

  	
   

  
	
  (9)

  	
   

  	
  Deposit
  Accounts maintained with the Agent or any Bank;

  
	
   

  	
   

  	
   

  
	
  (10)

  	
   

  	
  books,
  journals and other records (in each case whether electronic or otherwise)
  relating in whole or in part to any of the foregoing; and

  
	
   

  	
   

  	
   

  
	
  (11)

  	
   

  	
  Proceeds
  of the foregoing.

  

 

3

 

(d)          Conforming Change; Refinanced Equipment Collateral References.  Each
reference to “Refinanced Equipment Collateral” in Sections 3.4(a) and 3.4(b) of
the Credit Agreement is amended to read “Equipment (other than Excluded
Equipment)”.

 

(e)           Conforming Change; Definitions.  Section 1.1
of the Credit Agreement is amended to add the following definitions in the
appropriate alphabetical order:

 

“Excluded Equipment” means any Equipment of a
Borrower so long as such Equipment is encumbered by a Permitted Lien set forth
on Schedule 5.1(m) hereof; provided, however,
that, upon the repayment or other satisfaction of the Permitted Debt secured by
any such Permitted Lien, the related Equipment shall no longer constitute
Excluded Equipment.

 

“General Intangible” means a “general
intangible,” as defined in UCC Article 9, and, to the extent not already a
general intangible under UCC Article 9, all intellectual property of any
nature whatsoever, including, without limitation, all copyrights, patents,
trademarks, trade names, trade secrets and proprietary processes.

 

“Investment Property” has the meaning given
to such term in UCC Article 9.

 

7.                                      Forbearance.

 

(a)          General.  A new Section 3.19 is added to the
Credit Agreement which reads as follows:

 

3.19         Banks’
Agreement Not to Exercise Certain Rights. 
Notwithstanding the occurrence of the Designated Defaults, the Banks
agree to forebear from exercising any rights or remedies against the Borrowers
under the Credit Documents for a period of time beginning on the First
Amendment Closing Date and ending on the earlier to occur of (a) the
occurrence of any Forbearance Default, or (b) October 31, 2008 (such
period of time being referred to herein as the “Standstill Period”).  So long as the Standstill Period is in
effect, the Borrowers shall have the right, subject to their compliance with
all other terms and conditions of this Agreement, to obtain Revolving Credit Loans,
Swingline Loans and Letters of Credit under this Agreement, in each case
notwithstanding the existence of the Designated Defaults.  Subject to the Banks’ agreements in the
preceding two sentences of this Section 3.19, nothing in this Agreement or
the First Amendment shall constitute a waiver of any Default or Event of
Default (including, without limitation, the Designated Defaults) that exist on
the First Amendment Closing Date; and, upon the expiration of the Standstill
Period, the Designated Defaults shall remain in effect, and shall not be deemed
cured or waived, and the Banks shall have all rights and remedies available to
the Banks during the continuation of an Event of Default.  Without limiting the foregoing, upon the
expiration of the Standstill Period, the Agent and/or the Banks, as the case
may be, shall have the right, if such Person or Persons so elect, to accelerate
the Obligations; to cease making Loans or other credit extensions under the
Credit Documents; and/or to exercise all other rights and remedies available to
the Agent or the Banks during the continuance of an 

 

4

 

Event
of Default; and in each case without regard to whether an Event of Default
other that an Designated Default shall have occurred.  Upon or prior to the expiration of the
Standstill Period, the Banks’, in the exercise of their sole and absolute
discretion, may elect to extend the Standstill Period (subject to no
Forbearance Default occurring during such extended Standstill Period) by giving
written notice of such extension to the Borrowers.  The Banks may also condition any such
extension upon the Borrowers’ agreement to pay to the Agent and/or the Banks
such fees and expenses and/or upon such modifications to the terms of the
Credit Documents as are, in each case, mutually agreeable to the Agent, the
Banks and the Borrowers, as evidenced by an amendment or other written
agreement among such parties to such effect.

 

(b)          Related Definitions.  Section 1.1 of the Credit Agreement is
amended to add the following definitions in the appropriate alphabetical order:

 

“Designated Default” has the meaning given to
such term in Section 1 of the First Amendment and shall also include – for
purposes of Section 3.19 of this Agreement (and the term “Forbearance
Default” as used therein) and for purposes of the amendments to the Credit
Agreement brought about by Section 16 of the First Amendment – any Event
of Default arising out of the Borrowers’ failure to comply with the provisions
of Section 6.3(c) of the Credit Agreement for the Borrowers’ fiscal
quarter ending September 30, 2008, should the Borrowers fail to comply
with such covenant for such fiscal quarter.

 

“First Amendment” means the First Amendment
to Credit Agreement, dated on or about the First Amendment Closing Date, among
the Borrowers, the Agent, the Issuing Bank, the Swingline Lender and the other
Banks.

 

“First Amendment Closing Date” means September 3,
2008.

 

“Forbearance Default” means: (a) a
Borrower’s failure to pay, perform or observe any of its obligations under the
First Amendment in accordance with the terms thereof; or (b) the existence
or occurrence of any Default or Event of Default other than a Designated
Default.

 

“Standstill Period” has the meaning given to
such term in Section 3.19 of this Agreement.

 

8.                                      Inspection; Collateral Positions.  No
later than 15 days after the First Amendment Closing Date, the Borrowers,
acting through the Agent but at the Borrowers’ sole expense, shall have
contracted for (a) an auditor, reasonably satisfactory to the Agent, to
perform an audit, to be delivered to the Agent and the Banks, of the Inventory
and Accounts of each Borrower and a reconciliation of the Borrowers’ grain
positions, and (b) a grain hedging specialist, reasonably acceptable to
the Agent, to review the Borrowers’ existing commodity positions and their
ongoing hedging strategy, and the impact that such positions and strategy have
on the Borrowers’ margins.  The Borrowers
shall cooperate with the Agent, the Banks and such retained third parties and
make their respective properties and books and records available to all such
Persons in order to accomplish the purposes of this Section 8.

 

5

 

9.                                      Monthly Reporting Requirements.

 

(a)          Monthly Financials.  Section 6.1(b)(1) of
the Credit Agreement is amended to read as follows:

 

(1)           Monthly
Statements.  As soon as available and
in any event within 25 days after the end of each month, internally prepared
monthly consolidated financial statements (including, without limitation, a
balance sheet, income statement and statement of cash flows) as of the end of
such month and for the fiscal year to date, each certified by the chief
financial officer of each Borrower;

 

(b)          Borrowing Base Certificate.  Section 6.1(b)(3) of the Credit Agreement is amended to read
as follows:

 

(3)           Borrowing
Base Certificate.  As soon as
available and in any event within 25 days after the end of each month, a
Borrowing Base Certificate dated as of the last day of such month;

 

(c)           Covenant Compliance Certificate.

 

(i)           Monthly Certificate.  Section 6.1(b)(4) of
the Credit Agreement is amended to read as follows:

 

(4)           Covenant Compliance Certificate.  As soon as available and in any event within
25 days after the end of each month, a Covenant Compliance Certificate (it
being understood that certain reporting requirements set forth in the Covenant
Compliance Certificate apply only to periods ending on the last day of a fiscal
quarter);

 

(ii)          Form of Certificate.  Exhibit F to the Credit Agreement is
replaced by Exhibit F to this Amendment.

 

10.                               Changes to Certain Negative
Covenants.

 

(a)           No Permitted Acquisition Without
Banks’ Consent.  The clause in
the first sentence of Section 6.2(d) of the Credit Agreement which reads
“(1) the foregoing shall not prohibit a Borrower from making a Permitted
Acquisition,” is amended to read “(1) a Borrower may make a Permitted
Acquisition if all Banks have given their prior written consent to the
Permitted Acquisition,”.

 

(b)           Permitted
Debt Basket Reduced.  As noted in Section 12(b) below,
the Permitted Debt basket in subpart (7) of the definition of such term in
the Credit Agreement, prior to its amendment hereby, has been reduced from $5
million to $1 million.

 

(c)           Permitted
Investments Basket Reduced.  As noted in Section 12(a) below,
the Permitted Investments basket in subpart (7) of the definition of such
term in the Credit Agreement, prior to its amendment hereby, has been reduced
from $2 million to $500,000.

 

(d)          Additional Restrictions
on Distributions.  Section 6.2(j) of the Credit
Agreement is amended to read as follows:

 

6

 

(j)            Distributions;
Redemptions.  Without first obtaining
the Banks’ written consent, no Borrower or any of its Subsidiaries shall pay
any dividends on or make any other distributions in respect of any stock or
other equity interests of such Borrower or Subsidiary or redeem or otherwise
acquire any such stock or other equity interests; provided,
however, that, so long as Midwest Grain is a wholly-owned subsidiary
of MGP, such Person may pay dividends or make other distributions to MGP.

 

11.                               Additional Financial Covenants
and Reporting Requirements.

 

(a)           EBITDA. 
A new Section 6.3(f) is
added to the Credit Agreement which reads as follows:

 

(f)            Adjusted
EBITDA.  MGP and its consolidated
subsidiaries on a consolidated basis shall achieve, at the end of each month
referenced below, a monthly Adjusted EBITDA (less gains or plus losses
attributable to mark-to-market GAAP accounting adjustments) of not less than
the amount set forth below:

 

	
  Month Ending:

  	
   

  	
  Adjusted EBITDA:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  July 31, 2008

  	
   

  	
  -$7,500,000 (loss

  	
  )

  
	
  August 31, 2008

  	
   

  	
  -$2,500,000 (loss

  	
  )

  
	
  September 30, 2008

  	
   

  	
  -$1,400,000 (loss

  	
  )

  

 

(b)          Net Worth. 
A new Section 6.3(g) is
added to the Credit Agreement which reads as follows:

 

(g)           Monthly Tangible Net Worth MGP and its consolidated
subsidiaries on a consolidated basis shall maintain, at the end of each month
referenced below, a Tangible Net Worth of not less than the amount set forth
below:

 

	
  Month Ending:

  	
   

  	
  Tangible Net Worth:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  July 31, 2008

  	
   

  	
  $

  	
  125,000,000

  	
   

  
	
  August 31, 2008

  	
   

  	
  $

  	
  123,000,000

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  121,000,000

  	
   

  

 

12.                               Disclosure Oversight; Firebird
Acquisitions Aircraft Financing.  The Borrowers inadvertently
failed to disclose the existence of a wholly-owned Subsidiary of MGP, Firebird
Acquisitions, LLC, and that such entity had obtained secured aircraft financing
from Commerce Bank, N.A. for purposes of acquiring an aircraft (collectively, the
“Aircraft Financing Transaction”). 
To that end, the parties agree as follows:

 

(a)          Permitted Investments.  Subpart (7) of the definition of
Permitted Investments in Section 1.1 of the Credit Agreement is deleted
and new subparts (7) and (8) thereof are added as follows:

 

7

 

(7) investments,
as of the Closing Date, in Firebird Acquisitions, LLC; and (8) investments,
other than those described in subparts (1) through (7) above,
provided that the aggregate amount of such investments at any time does not
exceed $500,000.

 

As a conforming change, the “, and” at the end of subpart (6) of
such definition is replaced by a semicolon.

 

(b)          Permitted Debt. 
Subparts (7) and (8) of the definition of Permitted Debt in Section 1.1
of the Credit Agreement are deleted and new subparts (7), (8) and (9) thereof
are added as follows:

 

(7)           Debt
of Firebird Acquisitions, LLC to Commerce Bank, N.A.;

 

(8)           Debt,
other than Debt described in subparts (1) through (7) above, which
Debt may be either unsecured Debt or Debt secured by Liens described in subpart
(7) of the definition of Permitted Liens in this Section, provided that
the aggregate principal amount of all such Debt outstanding does not exceed
$1,000,000 at any time; and

 

(9)           other
Debt approved in advance in a writing signed by the Required Banks and
delivered to the Agent.

 

(c)           Permitted Liens. 
Subpart (12) of the definition of Permitted Liens in Section 1.1 of
the Credit Agreement is deleted and new subparts (12) and (13) thereof are
added as follows:

 

(12)         Liens
granted by Firebird Acquisitions, LLC to Commerce Bank, N.A. securing Permitted
Debt of the type described in subpart (7) of the definition of Permitted
Debt in Section 1.1 of this Agreement; and

 

(13)         Other
Liens approved in advance in a writing signed by the Required Lenders Banks and
delivered to the Agent.

 

As a conforming change, the “and” at the end of subpart of subpart (11)
of such definition is deleted.

 

(d)          Default Waiver. 
Insofar as any aspect of the Aircraft Financing Transaction constituted
a Default or Event of Default prior to the First Amendment Closing Date, the
Bank Parties waive each such Default or Event of Default.  Similarly, insofar as any such Default or
Event of Default constituted a default or event of default under the aircraft
financing agreements between Commerce Bank, N.A. and Firebird Acquisitions,
LLC, Commerce Bank, N.A. waives any such default or event of default.

 

13.                               MGPI Merger.  The
Borrowers represent and warrant to the Agent, for the benefit of the Banks,
that MGPI has merged with and into MGP, with MGP being the sole surviving
entity, and that such merger was permitted under Section 6.2(d) of
the Credit Agreement.

 

8

 

14.                               Inventory at Leased Locations.

 

(a)          Leased Location.  The Borrowers represent and
warrant to the Agent, for the benefit of the Banks, that no Inventory or other
Collateral is located on any leased property or on any other real property that
is not owned by a Borrower, other than (i) Inventory in transit in the
ordinary course of a Borrower’s business, and (ii) Inventory located on
leased property (including warehouses or similar storage facilities) described
in Exhibit C to this Amendment.  If
any Inventory or other Collateral is located on any real property leased by a
Borrower (including warehouses or similar storage facilities), within 30 days
after the First Amendment Closing Date the Borrowers shall cause the landlord
thereof to execute and deliver a landlord’s waiver or similar agreement
acceptable in form and content to the Agent, which agreement shall, at a
minimum, provide for a waiver of any landlord’s or other Lien in favor of the
landlord, other than for storage fees and expenses, and permit the Agent reasonable
rights of access, so long as an Event of Default is in effect, to remove
Inventory or other Collateral located on such property, and provide the Agent
default notice and cure rights with respect to the related lease.  If the Borrowers fail to comply with the
foregoing covenant with respect to one or more leased properties, no Default or
Event of Default shall occur as a result thereof but any Inventory or other
Collateral located on such leased property shall be excluded from the Borrowing
Base until such time as the Borrowers comply with such covenant.

 

(b)          Eligible Inventory.  A new
sentence is added to the end of the definition of “Eligible Inventory” in Section 1.1
of the Credit Agreement which reads as follows:

 

Further,
notwithstanding anything in the Credit Documents to the contrary, no Inventory
(other than Inventory in transit in the ordinary course of a Borrower’s
business) shall constitute Eligible Inventory if such Inventory is located on
real property not owned by a Borrower unless, within 30 days after the First
Amendment Closing Date, the Agent shall have been provided a landlord’s waiver
agreement with respect to such property that complies with the provisions of Section 14(a) of
the First Amendment.

 

15.                               Mandatory Prepayment.  A new
Section 3.4(d) is added to the Credit Agreement which reads as
follows:

 

(d)           Additional
Prepayment Events.  Notwithstanding
anything to the contrary in this Section 3.4 or elsewhere in the Credit
Documents, the Borrowers shall pay to the Agent (to be allocated among the
Banks in accordance with their respective Pro-Rata Shares), as a mandatory
prepayment of the Loans, the net proceeds received by a Borrower in connection
with or as a result of (1) any issuance of debt or equity securities by a
Borrower, and/or (2) any sale or other transfer of any property of a
Borrower, including, without limitation, any sale of Excluded Equipment or any
real property owned by a Borrower, but excluding the sale of Inventory in the
ordinary course of a Borrower’s business. 
“Net proceeds,” as used in the preceding sentence, means gross proceeds
less ordinary and reasonable expenses incurred by a Borrower in connection with
any such issuance, sale or transfer, as the case may be, and shall take into
effect, in the case of any sale of Excluded Equipment, the amount of Permitted
Debt secured thereby that is required to be repaid by the holder thereof as a
result of such sale.

 

9

 

16.                               Certain Actions Permitted
Notwithstanding Existence of Designated Defaults.

 

(a)          Application of Payments.  The phrase “so long as no Event of Default
exists” in the second sentence of Section 3.10 of the Credit Agreement is
amended to read: “so long as no Event of Default (other than a Designated
Default) exists”.

 

(b)          Deemed Representation
Regarding No Event of Default. 
The phrase “no Default or Event of Default” near the end of the last
sentence of Section 4.3 is amended to read:  “no Default or Event of Default (other than a
Designated Default)”.

 

(c)           Certain Permitted Mergers.  The phrase “So long as no Default is in
effect” in the last sentence of Section 6.1(c) of the Credit
Agreement is amended to read:  “So long
as no Default (other than a Designated Default) is in effect”.

 

(d)          Inventory Sales and other Asset Sales.  The phrase “so long as no Event of Default
exists” in the third sentence of Section 6.2(d) of the Credit
Agreement is amended to read:  “so long
as no Event of Default (other than a Designated Default) exists”.

 

17.                               Fee.  On
the First Amendment Closing Date, the Borrowers shall jointly and severally pay
to the Agent, for distribution to the Banks in accordance with their respective
Pro-Rata Shares, the sum of $150,000, which amount shall be deemed fully-earned
and non-refundable on the First Amendment Closing Date, and which amount shall
be in addition to any other amounts the Borrowers have promised to pay pursuant
to this Amendment or any of the other Credit Documents.

 

18.                               No Other Amendments; No
Waiver.  Except as amended hereby, the Credit
Agreement and the other Credit Documents shall remain in full force and effect
and be binding on the parties in accordance with their respective terms.  Nothing in this Amendment shall constitute a
waiver by any of the Bank Parties of any Default or Event of Default which may
exist on the date hereof (subject to the Banks’ agreements set forth in the
first two sentences of Section 3.19 of the Credit Agreement, and except as
otherwise provided in Section 12(d) of this Amendment), and nothing
herein shall require any Bank Party to waive any Default or Event of Default
which may arise hereafter.  Nothing
herein shall act to release any Lien on any Collateral or limit the scope or
amount of the obligations secured thereby.

 

19.                               Reaffirmation of Credit Documents.  Each
Borrower reaffirms its obligations under the Credit Agreement, as amended
hereby, and the other Credit Documents to which it is a party or by which it is
bound, and represents, warrants and covenants to the Bank Parties, as a
material inducement to the Bank Parties to enter into this Amendment, that: (a) such
Borrower has no and in any event waives any defense, claim or right of setoff
with respect to its obligations under, or in any other way relating to, the
Credit Agreement, as amended hereby, or any of the other Credit Documents to
which it is a party, or any Bank Party’s actions or inactions in respect of any
of the foregoing, and (b) except as otherwise expressly provided in this
Amendment, all representations and warranties made by such Borrower in the
Credit Agreement or the other Credit Documents to which it is a party are true
and complete on the date hereof as if made on the date hereof.

 

20.                               Representations and
Warranties.  Each Borrower represents and warrants to the
Bank Parties as follows:  (a) it is
a validly existing corporation and has full corporate power and authority to
enter into this Amendment and any documents or transactions contemplated hereby
and to pay and perform any obligations it may have in respect of the foregoing;
(b) its execution, delivery and performance of this Amendment and any
documents or transactions contemplated hereby do not violate or conflict with,
or require any consent under, (1) its organizational documents or any
other agreement or document relating to its formation, existence or authority
to act, (2) any agreement or instrument by 

 

10

 

which
it or any its properties is bound, (3) any court order, judicial
proceeding or any administrative or arbitral order or decree, or (4) any
applicable law, rule or regulation; and (c) no authorization,
approval or consent of or by, and no notice to or filing or registration with,
any governmental authority or any other Person is necessary for it to enter
into this Amendment or any document or transaction contemplated hereby or to
perform any of its obligations with respect to any of the foregoing.

 

21.                               Release of Bank Parties. 
Without limiting any other provision of this Amendment, each Borrower,
on behalf of itself and any officers, directors, agents, attorneys, employees,
representatives, affiliates, successors and assigns it may have and anyone
claiming through or under it (collectively, with respect to all Borrowers, the “Releasing
Parties”), hereby releases, remises and acquits each Bank Party, and its
officers, directors, agents, attorneys, employees, representatives, affiliates,
successors and assigns and anyone claiming through or under it (collectively,
with respect to all Bank Parties, the “Released Parties”), from all
manners of action, causes of action, claims and demands of every kind and
nature whatsoever, whether known or unknown, fixed or contingent, liquidated or
unliquidated, as of the date of this Amendment, that any of the Releasing
Parties had or may have against any of the Released Parties.

 

22.                               Conditions Precedent to
Amendment.  Unless and to the extent the Agent waives the
benefits of this sentence by giving written notice thereof to the Borrowers,
the Bank Parties shall have no duties under this Amendment, nor shall any
extensions, waivers or other concessions by the Bank Parties under this
Amendment be effective, in each case until the Agent has received fully
executed originals of each of the following, each in form and substance
satisfactory to the Agent:

 

(a)                               Amendment.  This
Amendment;

 

(b)                               Replacement Revolver Notes.  An
Amended and Restated Revolving Credit Note, from the Borrowers, as joint and
several co-makers, to each Bank, as payee, in the stated principal amount of
each Bank’s Revolving Credit Commitment;

 

(c)                                First Amendment to Security
Agreement; UCC Amendments.  A First Amendment to Security Agreement
whereby the Collateral encumbered thereby is modified to include the additional
Collateral described in Section 6(a) of this Amendment, together with
related amendments to each Uniform Commercial Code financing statement from
each Borrower, as debtor, to the Agent, as secured party;

 

(d)                               Mortgage.  The
Illinois Mortgage; and

 

(e)                                Other.  Such
other documents, consents, agreements or other items as the Agent may
reasonably request.

 

23.                               Survey. 
Within 45 days after the First Amendment Closing Date, the Borrowers, at
their expense, shall cause a survey to be prepared with respect to MGP’s Pekin,
Illinois facility.  The survey shall,
with respect to each parcel of real property comprising the facility, indicate
or provide for the following: (a) an accurate metes and bounds or lot,
block and parcel description of such property; (b) the correct location of
all building, structures and other improvements on such property, including,
without limitation, all streets, easements, rights of way and utility lines; (c) the
location of ingress and egress from such property, and the location of any
set-back or other building lines affecting such property; and (d) a
certification by a registered land surveyor in form and substance acceptable to
the Agent, certifying in the Agent’s favor to the accuracy and completeness of
such survey and to such other matters relating to such real property and survey
as the Agent shall reasonably request.

 

11

 

24.                               Exhibits.  The
only Exhibits to this Amendment are Exhibits A, B, C and F.

 

25.                               Joint and Several Liability.  Notwithstanding anything in this Amendment to
the contrary, each Borrower’s representations, warranties and covenants under
this Amendment (and under the other Credit Documents as amended hereby) shall
be the joint and several representations, warranties and covenants of all
Borrowers.

 

26.                               Expenses.  The
Borrowers shall pay the reasonable out-of-pocket legal fees and expenses
incurred by the Agent in connection with the preparation and closing of this
Amendment and any other documents referred to herein and the consummation of
any transactions referred to herein or therein.

 

27.                               Governing Law.  This
Amendment shall be governed by the same law that governs the Credit Agreement.

 

28.                               Counterparts; Fax
Signatures.  This Amendment may be executed in one or more
counterparts and by different parties thereto, all of which counterparts, when
taken together, shall constitute but one agreement.  This Amendment may be validly executed and
delivered by fax, e-mail or other electronic means and any such execution or
delivery shall be fully effective as if executed and delivered in person.

 

[signature page(s) to follow]

 

12

 

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

 

	
   

  	
   

  	
  MGP
  INGREDIENTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Robert Zonneveld

  
	
   

  	
   

  	
   Name: Robert
  Zonneveld

  
	
   

  	
   

  	
   Title: VP
  Finance & CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MIDWEST
  GRAIN PIPELINE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Robert Zonneveld

  
	
   

  	
   

  	
   Name: Robert
  Zonneveld

  
	
   

  	
   

  	
   Title: VP
  Finance & CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMMERCE
  BANK, N.A.,

  
	
   

  	
   

  	
  as
  Agent, Issuing Bank, Swingline Lender and a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Wayne C. Lewis

  
	
   

  	
   

  	
   Name: Wayne
  C. Lewis

  
	
   

  	
   

  	
   Title: Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BMO
  CAPITAL MARKETS FINANCING, INC.,

  
	
   

  	
   

  	
  as
  a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Corey Noland

  
	
   

  	
   

  	
   Name: Corey
  Noland

  
	
   

  	
   

  	
   Title: Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NATIONAL
  CITY BANK,

  
	
   

  	
   

  	
  as a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Michael Leong

  
	
   

  	
   

  	
   Name: Michael Leong

  
	
   

  	
   

  	
   Title:Vice
  President

  

 

First Amendment to Credit
Agreement – Signature Page

 

 

Exhibit A

 

(Banks and Commitments)

 

	
  Bank

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Letter of Credit

  Commitment*

  	
   

  	
  Swingline Loan

  Commitment*

  	
   

  	
  Bank’s Total

  Commitment

  	
   

  
	
  Commerce Bank,
  N.A.

  	
   

  	
  $

  	
  21,175,000

  	
   

  	
  $

  	
  3,080,000

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  $

  	
  21,175,000

  	
   

  
	
  BMO Capital
  Markets Financing, Inc.

  	
   

  	
  $

  	
  16,912,500

  	
   

  	
  $

  	
  2,460,000

  	
   

  	
  0

  	
   

  	
  $

  	
  16,912,500

  	
   

  
	
  National City
  Bank

  	
   

  	
  $

  	
  16,912,500

  	
   

  	
  $

  	
  2,460,000

  	
   

  	
  0

  	
   

  	
  $

  	
  16,912,500

  	
   

  
	
  Totals:

  	
   

  	
  $

  	
  55,000,000

  	
   

  	
  $

  	
  8,000,000

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  $

  	
  55,000,000

  	
   

  

 

*                                         As more particularly described in the
Agreement, the Letter of Credit Commitment and the Swingline Loan Commitment
are each subcommitments under the Total Revolving Credit Commitment.  Accordingly, extensions of credit under the
Letter of Credit Commitment or the Swingline Loan Commitment act to reduce, on
a dollar-for-dollar basis, the amount of credit otherwise available under the
Total Revolving Credit Commitment.

 

 

Exhibit B

 

(Outstanding Balances)

 

	
  1.

  	
  Revolving Credit Loans

  

 

	
   

  	
  Principal:

  	
   

  	
  $

  	
  35,000,000.00

  	
   

  
	
   

  	
  Interest:

  	
   

  	
  $

  	
  99,104.16

  	
   

  

 

	
  2.

  	
  Swingline Loans

  

 

	
   

  	
  Principal:

  	
   

  	
  $

  	
  5,000,000.00

  	
   

  
	
   

  	
  Interest:

  	
   

  	
  $

  	
  10,766,62

  	
   

  

 

	
  3.

  	
  Term Loans

  

 

	
   

  	
  Principal:

  	
   

  	
  $

  	
  0

  	
   

  
	
   

  	
  Interest:

  	
   

  	
  $

  	
  0

  	
   

  

 

 

Exhibit C

 

(Leased Real Estate)

 

 

 

Exhibit F

 

[Form of Covenant Compliance
Certificate]

 

COVENANT
COMPLIANCE CERTIFICATE

(for the
month and, if applicable, fiscal quarter ended
              )

 

This Covenant Compliance Certificate (the “Certificate”)
is delivered pursuant to Section 6.1(b)(4) of the Credit Agreement,
dated as of May 5, 2008, as amended (the “Credit Agreement”), among
MGP Ingredients, Inc., a Kansas corporation, and Midwest Grain Pipeline, Inc.,
a Kansas corporation (collectively, the “Borrowers”), the Banks party
thereto, and Commerce Bank, N.A., as the Agent, the Issuing Bank and the
Swingline Lender, as the same may be amended from time to time.  Capitalized terms used but not defined in
this Certificate have the meanings given to them in the Credit Agreement.

 

The undersigned hereby certifies that he or
she is the chief financial officer, treasurer or corporate controller of each
Borrower and, as such, is authorized to execute and deliver this Certificate on
behalf of the Borrowers, and that:

 

1.                                       Capital Expenditures (Quarterly). If the ending date above is the last day of
a fiscal quarter, the following amount reflects the consolidated financial
results of MGP and its consolidated subsidiaries, for purposes of Section 6.3(a) of
the Credit Agreement, for the four fiscal quarters ending on the last day of
such fiscal quarter:

 

	
  (a)

  	
   

  	
  Capital Expenditures

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance:

  	
  Is line 1(a) equal to or

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  less than $20,000,000?

  	
   

  	
  [yes/no]

  	
   

  

 

 

 

2.                                       Fixed Charge Coverage Ratio (Quarterly).  If
the ending date above is the last day of a fiscal quarter, the following
amounts reflect the consolidated financial results of MGP and its consolidated
subsidiaries, for purposes of Section 6.3(b) of the Credit Agreement,
for the four fiscal quarters ending on the last day of such fiscal quarter:

 

	
  (a)

  	
   

  	
  Adjusted EBITDA (from line
  6(j))

  	
   

  	
  $

  	
   

  	
   

  
	
  (b)

  	
   

  	
  minus dividends by MGP

  	
   

  	
  $

  	
   

  	
   

  
	
  (c)

  	
   

  	
  minus federal, state and local taxes

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  total adjustments

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  (sum of lines 2(b) and
  2(c))

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Modified Adjusted EBITDA

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
  (line 2(a) minus line 2(d))

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  Fixed Charges

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  ratio of line 2(e) to
  line 2(f)

  	
   

  	
   

  	
   

  	
  to
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance:

  	
  Is  line
  2(g) equal to or

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  greater than 1.5 to 1?

  	
   

  	
  [yes/no]

  	
   

  
									

 

 

3.                                       Working Capital (Quarterly). If the ending date above is the last day of
a fiscal quarter, the following amounts reflect the consolidated financial
results of MGP and its consolidated subsidiaries, for purposes of Section 6.3(c) of
the Credit Agreement, as of the last day of such fiscal quarter:

 

	
  (a)

  	
   

  	
  current assets

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  current liabilities
  (including balance of Revolving Credit Loans and Swingline Loans if not
  otherwise a current liability)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  line 3(a) minus line 3(b)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance:

  	
  Is  line
  3(c) equal to or

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  greater than $40,000,000?

  	
   

  	
  [yes/no]

  	
   

  

 

4.                                       Tangible Net Worth (Quarterly).  If
the ending date above is the last day of a fiscal quarter, the following
amounts reflect the consolidated financial results of MGP and its consolidated
subsidiaries, for purposes of Section 6.3(d) of the Credit Agreement,
as of the last day of such fiscal quarter:

 

	
  (a)

  	
   

  	
  GAAP
  net worth

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  minus
  goodwill

  	
   

  	
  $

  	
   

  	
   

  
	
  (c)

  	
   

  	
  minus intellectual property intangibles

  	
   

  	
  $

  	
   

  	
   

  
	
  (d)

  	
   

  	
  minus deferred assets

  	
   

  	
  $

  	
   

  	
   

  
	
  (e)

  	
   

  	
  [omitted]

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  minus amounts due from affiliates

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  adjustments

  (sum of lines 4(b) through 4(f))

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (h)

  	
   

  	
  Tangible
  Net Worth

  (line 4(a) minus line 4(g))

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i)

  	
   

  	
  baseline
  requirement

  	
   

  	
  $

  	
  135,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (j)

  	
   

  	
  plus 50% of cumulative net income (but not loss)
  for fiscal quarters ending on or after 6/30/08

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (k)

  	
   

  	
  minus cumulative stock purchases for fiscal
  quarters ending on or after 6/30/08

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (l)

  	
   

  	
  required
  Tangible Net Worth (line 4(i) plus line
  4(j) minus line 4(k))

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance:

  	
  Does
  line 4(h) exceed

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  line
  4(l)?

  	
   

  	
  [yes/no]

  	
   

  

 

5.                                       Leverage Ratio (Quarterly).  If
the ending date above is the last day of a fiscal quarter, the following
amounts reflect the consolidated financial results of MGP and its consolidated
subsidiaries, 

 

 

for
purposes of Section 6.3(e) of the Credit Agreement, for the four
fiscal quarters ending on the last day of such fiscal quarter:

 

	
  (a)

  	
   

  	
  Senior
  Funded Debt

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Adjusted
  EBITDA (line 6(j))

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  ratio
  of line 5(a) to line 5(b)

  	
   

  	
   

  	
   

  	
  to
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance:

  	
  Is  line 5(c) less than or

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  equal
  to 3.0 to 1?

  	
   

  	
   

  	
  [yes/no]

  	
   

  
									

 

6.                                       Calculation of Adjusted EBITDA (Quarterly and
Monthly).  For purposes of lines 2(a) and 5(b) above
(if applicable) and for purposes of line 7(a) below, Adjusted EBITDA is
calculated as follows:

 

	
   

  	
   

  	
   

  	
   

  	
  This Quarter

  	
   

  	
  Last 4 Quarters

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  net
  income

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  (b)

  	
   

  	
  plus interest expense

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  (c)

  	
   

  	
  plus federal, state and local taxes

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  (d)

  	
   

  	
  plus depreciation and amortization

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  total
  adjustments

  (sum of lines 6(b) through 6(d))

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  EBITDA

  (line 6(a) plus line 6(e))

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  plus other non-cash losses

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  (h)

  	
   

  	
  minus other non-cash gains

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
  (i)

  	
   

  	
  plus or minus
  extraordinary items

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (j)

  	
   

  	
  Adjusted
  EBITDA

  (line 6(f), plus line 6(g), minus line 6(h), plus or minus line 6(i))

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
											

 

Note:                  If the period ending above is not
a fiscal quarter or fiscal year, the column above entitled “This Quarter” shall
be re-labeled “This Month” and the column above entitled “Last 4 Quarters”
shall be omitted.

 

7.                                       Adjusted EBITDA (Monthly). The following amount reflects the
consolidated financial results of MGP and its consolidated subsidiaries, for
purposes of Section 6.3(f) of the Credit Agreement, for the last day
of the month noted above:

 

	
  (a)

  	
   

  	
  Adjusted
  EBITDA (from line 6(j))

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance:

  	
  Is  line 7(a) equal to or greater than the applicable minimum
  Adjusted EBITDA

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  set
  forth in Section 6.3(f) of the Credit Agreement?

  	
   

  	
  [yes/no]

  	
   

  

 

 

8.                                       Tangible Net Worth (Monthly).  The
following amounts reflect the consolidated financial results of MGP and its
consolidated subsidiaries, for purposes of Section 6.3(g) of the
Credit Agreement, as of the last day of the month noted above:

 

	
  (a)

  	
   

  	
  GAAP
  net worth

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  minus
  goodwill

  	
   

  	
  $

  	
   

  	
   

  
	
  (c)

  	
   

  	
  minus intellectual property intangibles

  	
   

  	
  $

  	
   

  	
   

  
	
  (d)

  	
   

  	
  minus deferred assets

  	
   

  	
  $

  	
   

  	
   

  
	
  (e)

  	
   

  	
  [omitted]

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  minus amounts due from affiliates

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  adjustments
  (sum of lines 8(b) through 8(f))

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (h)

  	
   

  	
  Tangible
  Net Worth

  (line 8(a) minus line 8(g))

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance:

  	
  Is  line 8(h) equal to or greater than the applicable minimum
  Tangible Net Worth set forth in Section 6.3(g) of the Credit Agreement?

  	
   

  	
   

  	
  [yes/no]

  	
   

  
								

 

9.                                       Financial Statements (Monthly and Quarterly)  The
financial statements described in Section 6.1(b) of the Credit
Agreement for the Borrowers for the end of the month or fiscal period referred
to above, which are attached hereto and are incorporated herein by this reference,
fairly present the consolidated financial condition and results of operations
of the Borrowers in accordance with GAAP consistently applied, as at the end
of, and for, such month or other period (subject, in the case of interim
statements, to normal year-end audit adjustments and to the absence of footnote
disclosures).

 

10.                                 Other Compliance.  A
review of the activities of the Borrowers during the period since the date of
the last Covenant Compliance Certificate has been made at my direction and
under my supervision with a view to determining whether the Borrowers have
kept, observed and performed all of their obligations under the Credit
Agreement and all other Credit Documents to which they are a party, and to the
best of my knowledge after due inquiry and investigation, (a) each
Borrower has kept, observed and performed all of its obligations under the
Credit Agreement and all other Credit Documents to which it is a party, (b) no
Default or Event of Default (other than, if applicable, a Designated Default)
has occurred and is continuing, and (c) all representations and warranties
made by each Borrower in the Credit Agreement and the other Credit Documents to
which it is a party are true and correct as of the date of this Certificate.

 

11.                                 Reliance.  This Certificate is delivered
to and may be conclusively relied upon by the Agent and each Bank.

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the
undersigned has executed this certificate on behalf of the Borrowers on                                 ,
20    .

 

	
   

  	
  MGP
  INGREDIENTS, INC.

  
	
   

  	
  MIDWEST
  GRAIN PIPELINE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit 4.1.2

 

FIRST
AMENDMENT TO SECURITY AGREEMENT

 

This
First Amendment to Security Agreement (the “Amendment”) is made as of September 3,
2008, among MGP Ingredients, Inc., a Kansas corporation (“MGP”),
and Midwest Grain Pipeline, Inc., a Kansas corporation (“Midwest Grain”)
(each a “Borrower” and, collectively, the “Borrowers”), and
COMMERCE BANK, N.A., a national banking association, in its capacity as Agent
under the Credit Agreement referred to below (in such capacity, the “Agent”).

 

Preliminary
Statements

 

(a)           The Borrowers have
entered into a Credit Agreement, dated as of May 5, 2008, with Commerce
Bank, N.A., as the Agent, Issuing Bank and Swingline Lender, and the Banks from
time to time party thereto (the “Original Credit Agreement”), which Original
Credit Agreement has been amended pursuant to a First Amendment to Credit
Agreement dated on or about the date hereof (as so amended, and as otherwise
amended, renewed, restated, replaced or otherwise modified from time to time,
the “Credit Agreement”).

 

(b)           In connection with the
Original Credit Agreement, the Borrowers and the Agent entered into a Security
Agreement, dated as of May 5, 2008, pursuant to which each Borrower
granted to the Agent, for the benefit of the Banks, as security for the Obligations,
a security interest in certain of its existing and future personal property
(the “Security Agreement”).

 

(c)           Pursuant to the
above-referenced First Amendment to Credit Agreement, the Borrowers have agreed
to amend the Security Agreement to provide the Agent, on behalf of the Banks, a
security interest in all existing and future equipment of each Borrower and all
proceeds thereof, as additional security for the Obligations, all as more
particularly described below.

 

NOW, THEREFORE, in
consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties agree as
follows:

 

1.             Definitions.  Terms used and not defined in this Amendment
have the meanings given to them in the Credit Agreement.

 

2.             Collateral to Include
all Equipment.  Section 2 of the
Security Agreement is amended to read as follows:

 

2.             Security Interest.  Each Borrower grants to the Agent (for the
benefit of the Banks) a security interest in all of such Borrower’s right,
title and interest and in to the following property, whether such property or
such Borrower right, title or interest therein or thereto is now owned or
existing or hereafter acquired or arising, and wherever such property may be
located (collectively, the “Collateral”):

 

(1)           all Accounts;

 

(2)           all
Chattel Paper, to the extent arising out of or otherwise relating to the sale
or other transfer of Inventory or the furnishing of services;

 

 

(3)           all
Instruments, to the extent arising out of or otherwise relating to the sale or
other transfer of Inventory or the furnishing of services;

 

(4)           all
Inventory;

 

(5)           all
General Intangibles;

 

(6)           all
Investment Property (other than MGP’s equity interest in D.M. Ingredients
GmbH);

 

(7)           all
fixtures located on MGP’s real property located in or near Pekin, Illinois;

 

(8)           all
Equipment, including, without limitation, all Refinanced Equipment Collateral
(but excluding Excluded Equipment);

 

(9)           all
Deposit Accounts maintained with the Agent or any Bank;

 

(10)         all
books, journals and other records (in each case whether electronic or
otherwise) relating in whole or in part to any of the foregoing; and

 

(11)         all
Proceeds of the foregoing.

 

3.             No Other Amendments. 
Except as amended hereby, the Security Agreement shall remain in full
force and effect and be binding on the parties in accordance with its
terms.  All references in the Security
Agreement to the Security Agreement shall be deemed to refer to the Security
Agreement as amended hereby.

 

4.             Expenses.  The Borrowers shall pay the
reasonable out-of-pocket legal fees and expenses incurred by the Agent in
connection with the preparation and closing of this Amendment and any other
documents referred to herein and the consummation of any transactions referred
to herein or therein.

 

5.             Joint and Several Liability.  All
representations, warranties and covenants of the Borrowers under this Amendment
shall be joint and several.

 

6.             Governing Law.  This
Amendment shall be governed by the same law that governs the Security
Agreement.

 

7.             Counterparts; Fax
Signatures.  This Amendment may be executed in one or more
counterparts and by different parties thereto, all of which counterparts, when
taken together, shall constitute but one agreement.  This Amendment may be validly executed and delivered
by fax, e-mail or other electronic means and any such execution or delivery
shall be fully effective as if executed and delivered in person.

 

8.             Miscellaneous.  No amendment or waiver of any provision of
this Amendment nor consent to any departure by any Borrower herefrom shall be
effective unless the same shall be in writing and signed by the Agent, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. 
The section headings herein are solely for convenience and shall not be
deemed to limit or otherwise affect the meaning or scope of any part of this
Amendment.

 

2

 

This document shall be
construed without regard to any presumption or rule requiring construction
against the party causing such document or any portion thereof to be
drafted.  If any provision of this
Amendment shall be unlawful, then such provision shall be null and void, but
the remainder of this Amendment shall remain in full force and effect and be
binding on the parties.

 

[signature page(s) to
follow]

 

3

 

IN WITNESS WHEREOF, the
parties have executed and delivered this Amendment as of the date first written
above.

 

 

	
   

  	
  MGP
  INGREDIENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Zonneveld

  
	
   

  	
  Name:
  Robert Zonneveld

  
	
   

  	
  Title:
  VP Finance & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MIDWEST
  GRAIN PIPELINE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Robert
  Zonneveld

  
	
   

  	
  Name:
  Robert Zonneveld

  
	
   

  	
  Title:
  VP Finance & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMMERCE BANK, N.A., as
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Wayne C.
  Lewis

  
	
   

  	
  Name:
  Wayne C. Lewis

  
	
   

  	
  Title:
  Vice President

  

 

First
Amendment to Security Agreement – Signature Page

 

4

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