Document:

Exhibit 4.1.11

 

ASSIGNMENT OF MEMBERSHIP
INTERESTS

(SECURITY AGREEMENT)

 

This ASSIGNMENT OF
MEMBERSHIP INTERESTS (SECURITY AGREEMENT) is made as of the 20th day of November, 2009 by MGP INGREDIENTS, INC.,
a Kansas corporation (the “Grantor”)  to and in favor of WELLS FARGO BANK, NATIONAL, acting
through its Wells Fargo Business Credit operating division (hereinafter,
together with its successors and assigns, referred to as “Lender”).

 

RECITALS

 

A.            Grantor is a member of Illinois Corn Processing, LLC, a Delaware limited
liability company (“Issuer”).  Lender is contemporaneously with the
execution of this Assignment and/or may in the future make loans (the “Loans”) to Grantor pursuant to a Credit and Security
Agreement dated as of even date herewith (as the same may be amended or
otherwise modified from time to time, the “Credit Agreement”).

 

B.            As a condition precedent to Lender making the Loans, Lender has further
required that Grantor execute and deliver this Assignment to Lender to secure
the prompt and complete performance all of the obligations and payment of all
of the indebtedness under the Credit Agreement (all such obligations and
indebtedness are hereinafter referred to collectively as the “Liabilities”).

 

NOW, THEREFORE, in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

1.     Defined Terms.  As used in this Assignment, the following
terms shall have the following meanings:

 

“Assignment”
shall mean this Assignment of Membership Interests (Security Agreement), as the
same may from time to time be amended or supplemented.

 

“Code”
shall mean the Uniform Commercial Code as the same may from time to time be in
effect in the State of Minnesota.

 

“LLC
Agreement” shall mean that certain Limited Liability Company
Agreement of Illinois Corn Processing, LLC, dated approximately as of November 20,
2009, as such agreement may be hereafter amended from time to time in accordance
with the terms of this Assignment.

 

“Loan
Documents” shall have the meaning specified in the Credit Agreement.

 

“Proceeds”
shall mean “proceeds”, as such term is defined in the Code and, in any event,
shall include, but not be limited to, (i) any and all payments (in any
form whatsoever) made or due and payable to Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the “Pledged Collateral” (as hereinafter
defined) by any governmental body, authority, bureau or agency (or any person

 

 

acting
under color of governmental authority), (ii) any and all amounts paid or
payable to Grantor for or in connection with any sale or other disposition of
Grantor’s interests in any Issuer and (iii) any and all other amounts from
time to time paid or payable under or in connection with any of the Pledged
Collateral.

 

“Security
Interest” shall mean the security interest granted pursuant to Section 2
hereof.

 

2.     Grant of Security Interest.  As security for the prompt and complete
payment and performance when due of the Liabilities, Grantor hereby grants to
Lender a security interest in and pledges to Lender all of the following (all
of which being herein collectively called the “Pledged Collateral”):

 

(a)   all of Grantor’s right,
title and interest as an Interest Holder (as defined in the LLC Agreement) or
as member in Issuer, as applicable, including without limitation, all of
Grantor’s right to receive distributions at any time or from time to time of
cash and other property, real, personal or mixed, from Issuer upon complete or
partial liquidation or otherwise;

 

(b)   all of Grantor’s right,
title, and interest in specific property of Issuer;

 

(c)   subject to the terms of the
LLC Agreement, all of Grantor’s right, title and interest, if any, to
participate in the management and voting of Issuer;

 

(d)   all of Grantor’s right,
title and interest in and to:

 

(i)            all rights, privileges, authority and power of
Grantor as owner and holder of the items specified in (a), (b), and (c) above,
including but not limited to, all contract rights related thereto;

 

(ii)           all options and other agreements for the purchase or
acquisition of any interests in Issuer;

 

(iii)          any document or certificate representing or
evidencing Grantor’s rights and interests in Issuer; and

 

(iv)          to the extent not otherwise included, all Proceeds
and products of any of the foregoing.

 

3.     Representations
and Warranties.  Grantor
represents and warrants that:

 

(a)   Grantor is the sole owner of
each item of the Pledged Collateral, free and clear of any and all liens and
claims whatsoever except for the security interest granted to Lender pursuant
to this Assignment.

 

(b)   Grantor’s interests in
Issuer consist of a fifty percent (50%) membership interest, including the same
percentage interests in all distributions by Issuer to its members of cash or
other property, whether in complete or partial liquidation or otherwise; provided, that Grantor’s interests in Issuer are subject to
dilution in accordance with the LLC Agreement.

 

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(c)   Grantor has all power,
statutory and otherwise, to execute and deliver this Assignment, to perform
Grantor’s obligations hereunder and to subject the Pledged Collateral to the
security interest created hereby, all of which has been duly authorized by all
necessary action.

 

(d)   No amendments or supplements
have been made to Issuer’s LLC Agreement since it was originally entered into;
the LLC Agreement remains in effect; and no party to the LLC Agreement is
presently in default thereunder.

 

(e)   No authorization, approval,
or other action by, and no notice to or filing with, any governmental authority
or regulatory body is required either (i) for Grantor’s granting of a
security interest in the Pledged Collateral pursuant to this Assignment for the
execution, delivery or performance of this Assignment by Grantor or (ii) for
the exercise by Lender of the rights provided for in this Assignment or the
remedies in respect of the Pledged Collateral pursuant to this Assignment
(except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally).

 

(f)    Upon the transfer of the
Pledged Collateral, or any portion thereof, to any party pursuant to Section 10
below, Issuer shall continue in existence and Issuer’s LLC Agreement provides
for such continuation.

 

4.     Covenants.  Grantor covenants and agrees that from and
after the date of this Assignment and until the Liabilities are fully
satisfied:

 

(a)   Further Documentation;
Pledge of Instruments.  At
any time and from time to time, upon the written request of Lender, and at the
sole expense of Grantor, Grantor will promptly and duly execute and deliver any
and all such further instruments and documents and take such further actions as
Lender may reasonably deem desirable to obtain the full benefits of this
Assignment and of the rights and powers herein granted, including, without
limitation, the execution and filing of any financing or continuation
statements under the Uniform Commercial Code in effect in any jurisdiction with
respect to the security interest granted hereby and, if otherwise required
hereunder, transferring Pledged Collateral to the possession of Lender (if a security
interest in such Pledged Collateral can be perfected by possession) or causing
Issuer to agree (in writing) that it will only comply with instructions
originated by the Lender without further consent by the Grantor.  Grantor also hereby authorizes Lender to file
any such financing or continuation statement without the signature of Grantor
to the extent otherwise permitted by applicable law.  If any amount payable under or in connection
with any of the Pledged Collateral shall be or become evidenced by any
promissory note or other instrument (other than an instrument which constitutes
chattel paper under the Code), such note or instrument shall be immediately
pledged hereunder and a security interest therein hereby granted to Lender and
shall be duly endorsed without recourse or warranty in a manner satisfactory to
Lender and delivered to Lender.  If at
any time Grantor’s right or interest in any of the Pledged Collateral becomes
an interest in real property, Grantor immediately shall execute, acknowledge
and deliver to Lender such further documents as Lender deems necessary or
advisable to create a first priority perfected mortgage lien in favor of Lender
in such real property interest.

 

(b)   Priority of Liens.  Grantor will defend the right, title and interest
hereunder of Lender, as a first priority security interest in the Pledged
Collateral, against the claims and

 

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demands of all persons
whomsoever, except that all or a portion of the Pledged Collateral may be
purchased by the Issuer or the other member(s) of the Issuer in accordance
with the LLC Agreement free and clear of the Security Interest so long as the
proceeds of such purchase are paid to Lender.

 

(c)   Continuous Perfection.  Grantor will not change Grantor’s name in any
manner which might make any financing or continuation statement filed hereunder
seriously misleading within the meaning of Section 9-507 of the Code (or
any other then-applicable provision of the Code), unless Grantor shall have
given Lender at least thirty (30) days prior written notice thereof and shall
have taken all action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such action in
advance) necessary or reasonably requested by Lender to amend such financing
statement or continuation statement so that it is not seriously
misleading.  Grantor will not sign or
authorize the signing on Grantor’s behalf of any financing statement naming
Grantor as debtor covering all or any portion of the Pledged Collateral, except
financing statements naming Lender as secured party.

 

(d)   Transfer of Assets.  Except as required to fulfill Grantor’s
obligation relating to the ICPH Option (as defined in the LLC Agreement)
Grantor will not directly or indirectly sell, pledge, mortgage, assign,
transfer, or otherwise dispose of or create or suffer to be created any lien,
security interest, charging order, or encumbrance on any of the Pledged
Collateral other than the liens relating to the Loans.

 

(e)   Performance of Obligations.  Grantor will perform all of Grantor’s
obligations under the LLC Agreement prior to the time that any interest or
penalty would attach against Grantor or any of the Pledged Collateral as a
result of Grantor’s failure to perform any of such obligations, and Grantor
will do all things necessary to maintain Issuer as a limited liability company
under the laws of the jurisdiction of organization and to maintain Grantor’s
interest as a member in Issuer in full force and effect without diminution.

 

(f)    LLC Agreement.  Grantor will not vote under the LLC Agreement
to cause Issuer to dissolve, liquidate, merge or consolidate with any other
entity or take any other action under the LLC Agreement that would adversely
affect the Security Interest, including, without limitation, the value or
priority thereof.

 

(g)   Securities. Grantor
shall, or shall permit Lender to, promptly take all action necessary or
appropriate to cause Lender to have sole and exclusive “control” over the
Pledged Collateral, as such term is defined in Article 9 of the UCC.  At all times Grantor shall take, or shall
permit Lender to take, all action necessary or appropriate to create, perfect
and maintain a first perfected priority security interest in the Pledged
Collateral in favor of Lender.  Without
limiting the foregoing, Grantor shall deliver any and all certificates that
evidence the Pledged Collateral together with assignments separate from
certificate executed in blank relating thereto.

 

5.     Grantor’s
Powers.

 

(a)   So long as an “Event of
Default” (as hereinafter defined) shall not then exist, Grantor shall be the
sole party entitled (1) to exercise for any purpose any and all (i) voting
rights and (ii) powers, and (2) to receive any and all distributions,
in each case arising from or relating to the Pledged Collateral; provided,
however, that Grantor shall not exercise such rights or

 

4

 

powers, or consent to any
action of either Issuer that would be in contravention of the provisions of, or
constitute an Event of Default under, this Assignment or any of the Loan
Documents.

 

(b)   Upon the occurrence of an
Event of Default, unless Lender designates in writing to Grantor to the
contrary, all rights of Grantor provided in Section 5(a) hereof
shall cease, and subject to the terms of the LLC Agreement, all voting rights
and powers and rights to distributions included in the Pledged Collateral or
otherwise described in such Section 5(a) shall thereupon
become vested in Lender, and Lender shall thereafter have the sole and
exclusive right and authority to exercise such voting rights and powers.  Grantor shall execute such documents and
instruments, including but not limited to, statements that Grantor no longer
has the right to act as a member or otherwise relating to such change as Lender
may request.  Grantor agrees that Issuer
may rely conclusively upon any notice from Lender that Lender has the right and
authority to exercise all rights and powers of Grantor as a member under the
LLC Agreement.  Grantor irrevocably
waives any claim or cause of action against Issuer who deals directly with
Lender following receipt of such notice from Lender.

 

6.     Lender’s
Appointment as Attorney-in-Fact.

 

(a)   Grantor hereby irrevocably
constitutes and appoints Lender and each officer or agent of Lender with full
power of substitution, as Grantor’s true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and in the
name of Grantor or in such attorney-in-fact’s own name, from time to time in
the discretion of each such attorney-in-fact following the occurrence of and
during an Event of Default, for the purpose of carrying out the terms of this
Assignment, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Assignment and, without limiting the generality of the
foregoing, hereby gives each such attorney-in-fact the power and right, from
and after an Event of Default, on behalf of Grantor, without notice to or
assent by Grantor, to do the following:

 

(i)            to collect and otherwise take possession of and
title to any and all distributions of cash or other property due or distributable
at any time after the date hereof to Grantor as a member from Issuer, whether
in complete or partial liquidation or otherwise, and to prosecute or defend any
action or proceeding in any court of law or equity or otherwise deemed
appropriate by such attorney-in-fact for the purpose hereof;

 

(ii)           to ask, demand, collect, receive and give
acceptances and receipts for any and all moneys due and to become due under any
Pledged Collateral and, in the name of Grantor or such attorney-in-fact’s own
name or otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of moneys due
under any Pledged Collateral and to file any claim or to take any other action
or proceeding in any court of law or equity or otherwise deemed appropriate by
such attorney-in-fact for the purpose of collecting any and all such moneys due
under any Pledged Collateral whenever payable;

 

(iii)          to pay or discharge taxes, liens, security interests
or other encumbrances levied or placed on or threatened against the Pledged
Collateral, to

 

5

 

effect any repairs or any insurance called for with respect to any of
the Pledged Collateral by the terms of this Assignment and to pay all or any
part of the premiums therefor and the costs thereof; and

 

(iv)          (A) to direct any party liable for any payment
under any of the Pledged Collateral to make payment of any and all moneys due
and to become due thereunder directly to Lender or as such attorney-in-fact
shall direct; (B) to receive payment of and receipt for any and all
moneys, claims and other amounts due and to become due at any time in respect
of or arising out of any Pledged Collateral; (C) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Pledged Collateral or any portion thereof and to
enforce any other right in respect of any Pledged Collateral; (D) to
defend any suit, action or proceeding brought against Grantor with respect to
any Pledged Collateral; (E) to settle, compromise or adjust any suit,
action or proceeding described above and, in connection therewith, to give such
discharges or releases as such attorney-in-fact may deem appropriate; and (F) generally
to sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Pledged Collateral as fully and completely as though such
attorney-in fact were the absolute owner thereof for all purposes, and to do,
at the option of such attorney-in-fact at Grantor’s expense, at any time, or
from time to time, all acts and things which such attorney-in-fact reasonably
deems necessary to protect, preserve or realize upon the Pledged Collateral and
the security interest of Lender therein, in order to effect the intent of this
Assignment, all as fully and effectively as Grantor might do.

 

Grantor hereby ratifies, to
the extent permitted by law, all that said attorney shall lawfully do or cause
to be done by virtue hereof.  This power
of attorney is a power coupled with an interest and shall be irrevocable.

 

(b)   The powers conferred on each
attorney-in-fact hereunder are solely to protect the interest in the Pledged
Collateral of Lender and shall not impose any duty upon any such attorney-in-fact
to exercise any such powers.  Each such
attorney-in-fact shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, managers, employees or agents shall be responsible to
Grantor for any act or failure to act unless such action or failure to act
constitutes gross negligence.

 

(c)   Grantor also authorizes
Lender and each officer  or agent of
Lender at any time and from time to time upon the occurrence of any Event of
Default, to execute, in connection with the sale provided for in Section 10
of this Assignment, any endorsements, assignments or other instruments of
conveyance or transfer with respect to any of the Pledged Collateral.

 

7.     Distributions.  In the event Grantor receives any
distributions in respect of the Pledged Collateral that are made in violation
of the Credit Agreement, Grantor will hold the same in trust for Lender and
promptly transfer the property that was so distributed in the form that it was
received.

 

6

 

8.     Performance by Lender of Grantor’s
Obligations.  If Grantor fails to
perform or comply with any of Grantor’s agreements contained herein and Lender
as provided for by the terms of this Assignment shall itself perform or comply,
or otherwise cause performance or compliance, with such agreement, the expenses
of Lender incurred in connection with such performance or compliance, together
with interest thereon at the rate following a default specified in the Credit
Agreement in effect from time to time shall be payable by Grantor to Lender on
demand and shall constitute Liabilities secured hereby.

 

9.     Default.  Any of the following shall constitute an “Event
of Default” hereunder:

 

(a)   A failure by any Grantor to observe or
perform any obligation, covenant, condition, or agreement hereof to be
performed by Grantor which involves the payment of money;

 

(b)   A failure by any Grantor to observe or
perform any nonmonetary obligation, covenant, condition, or agreement hereof to
be performed by Grantor;

 

(c)   Any representation or warranty made by
Grantor in this Assignment is not true and correct when made in any material
respect; or

 

(d)   The occurrence of any “Event of Default”
under the Credit Agreement.

 

10.   Remedies, Rights Upon Default.

 

(a)   Upon the occurrence of any Event of Default,
Lender or Lender’s designee may, at Lender’s option, elect to become the an
Interest Holder (or a substituted member subject to the consent requirements
set forth in the LLC Agreement) in Issuer with respect to the Pledged Collateral
and Grantor shall execute or cause to be executed all documents necessary to
evidence Lender so becoming an Interest Holder (or substituted member).  If any Event of Default shall occur, Lender
or Lender’s designee may exercise in addition to all other rights and remedies
granted to them in this Assignment and in any other instrument or agreement
securing, evidencing or relating to the Liabilities, all rights and remedies of
a secured party under the Code.  Without limiting
the generality of the foregoing, Grantor expressly agrees that in any such
event Lender, without demand of performance or other demand, advertisement or
notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon Grantor or any other person (all and each of
which demands, advertisements and/or notices are hereby expressly waived), may
forthwith collect, receive, appropriate and realize upon the Pledged
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or sell or otherwise dispose of and deliver said
Pledged Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange or broker’s board
or at any of Lender’s offices or elsewhere at such prices as it may deem best,
for cash or on credit or for future delivery without the assumption of any
credit risk.  Grantor expressly
acknowledges that private sales may be less favorable to a seller than public
sales but that private sales shall nevertheless be deemed commercially
reasonable and otherwise permitted hereunder. 
In view of the fact that federal and state securities laws and/or other
applicable laws may impose certain restrictions on the method by which a sale
of the Pledged Collateral may be effected, Grantor agrees that upon the
occurrence of an Event of Default,

 

7

 

Lender may, from time to
time, attempt to sell all or any part of the Pledged Collateral by means of a
private placement, restricting the prospective purchasers to those who will
represent and agree that they are purchasing for investment only and not for
distribution.  In so doing, Lender may
solicit offers to buy the Pledged Collateral, or any part thereof, for cash,
from a limited number of investors deemed by Lender in its judgment, to be
financially responsible parties who might be interested in purchasing the
Pledged Collateral, and if Lender solicits such offers, then the acceptance by
Lender of the highest offer obtained therefrom shall be deemed to be a
commercially reasonable method of disposing of the Pledged Collateral.

 

Lender or Lender’s designee
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of said Pledged Collateral so sold, free of any right or equity of
redemption, which equity of redemption Grantor hereby releases.  Grantor further agrees, at the request of
Lender, to assemble the Pledged Collateral and make it available to Lender at
places which Lender shall reasonably select, whether at Grantor’s premises or
elsewhere.  Lender shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale as provided in Section 10(d) of this Assignment.  Only after so paying over such net proceeds
and after the payment by Lender of any other amount required by any provision
of law, including Section 9-608(1)(C) of the Code, need Lender
account for the surplus, if any, to Grantor. 
To the extent permitted by applicable law, Grantor waives all claims,
damages, and demands against Lender arising out of the repossession, retention
or sale of the Pledged Collateral except in each case such as arise out of the
gross negligence or willful misconduct of Lender.   Any notification of intended disposition of
any of the Pledged Collateral required by law will be deemed to be a reasonable
authenticated notification of disposition if given at least ten (10) days
prior to such disposition and such notice shall (i) describe Lender and
Grantor, (ii) describe the Pledged Collateral that is the subject of the
intended disposition, (iii) state the method of the intended disposition, (iv) state
that Grantor is entitled to an accounting of the Liabilities and state the
charge, if any, for an accounting and (v) state the time and place of any
public disposition or the time after which any private sale is to be made.  Lender may disclaim any warranties that might
arise in connection with the sale, lease or other disposition of the Pledged
Collateral and has no obligation to provide any warranties at such time.

 

(b)   Grantor also agrees to pay all costs of
Lender, including reasonable attorneys’ fees and expenses, incurred with
respect to the collection of any of the Liabilities or the enforcement of any
of Lender’s rights hereunder.

 

(c)   Grantor hereby waives presentment, demand, or
protest (to the extent permitted by applicable law) of any kind in connection
with this Assignment or any Pledged Collateral. 
Except for notices provided for herein, Grantor hereby waives notice (to
the extent permitted by applicable law) of any kind in connection with this
Assignment.

 

(d)   The proceeds of any sale, disposition or
other realization upon all or any part of the Pledged Collateral shall be
distributed by Lender in the following order of priorities:

 

first, to Lender in an amount sufficient to pay in full
the expenses of Lender in connection with such sale, disposition or other
realization, including all expenses, liabilities and advances incurred or made
by Lender in connection therewith, including reasonable attorneys’ fees and
expenses;

 

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second, to Lender until the other Liabilities are paid in
full; and

 

finally, upon payment in full of all of the Liabilities, to
Grantor, or its representative or as a court of competent jurisdiction or
Grantor may direct.

 

Grantor agrees to indemnify
and hold harmless Lender, its directors, managers, officers, employees, agents
and parent, and subsidiary corporations, and each of them, from and against any
and all liabilities, obligations, claims, damages, or expenses incurred by any
of them arising out of or by reason of entering into this Assignment or the
consummation of the transactions contemplated by this Assignment and to pay or
reimburse Lender for the fees and disbursements of counsel incurred in
connection with any investigation, litigation or other proceedings (whether or
not Lender is a party thereto) arising out of or by reason of any of the
aforesaid.  Lender will promptly give
Grantor written notice of the assertion of any claim which it believes is
subject to the indemnity set forth in this Section 10 and will upon
the request of Grantor promptly furnish Grantor with all material in its
possession relating to such claim or the defense thereof to the extent that
Lender may do so without breach of duty to others.  Any amounts properly due under this Section 10
shall be payable to Lender immediately upon demand.

 

11.   Limitation on Lender’s Duty in Respect of
Pledged Collateral.  Except as
expressly provided in the Code, Lender shall have no duty as to any Pledged
Collateral in its possession or control or in the possession or control of any
agent or nominee of Lender or as to any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto.

 

12.   Notices.  Any notice or other communication required or
permitted to be given shall be in writing addressed to the respective party as
set forth below and may be personally served, telecopied or sent by overnight
courier or U.S. Mail and shall be deemed given: 
(a) if served in person, when served; (b) if telecopied, on
the date of transmission if before 3:00 p.m. (Chicago time) on a business
day; provided, that a hard copy of such notice is also sent pursuant to
clause (c) or (d) below; (c) if by overnight courier, on the
first business day after delivery to the courier; or (d) if by U.S. Mail,
on the fourth (4th) day after deposit in the mail, postage prepaid, certified
mail, return receipt requested.

 

	
  Notices
  to Grantor:

  	
   

  	
  MGP Ingredients, Inc.

  100 Commercial Street

  Atchison, KS 66002

  Attention: Dick Larson

  Telecopier: (913) 360-5661

  
	
   

  	
   

  	
   

  
	
  Notices to Lender:

  	
   

  	
  Wells Fargo Bank, National Association

  MAC N9312-040

  109 South 7th Street, 4th Floor

  Minneapolis, MN 55402

  Attention: Becky A. Koehler
 Telecopier: (612) 341-2472

  

 

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Any party may change its
respective address for the giving of notice to another address by giving at
least 10 business days’ notice of such change.

 

13.   Severability.  Any provision of this Assignment which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

14.   No Waiver; Cumulative Remedies.  Lender shall not, by any act, delay, omission
or otherwise, be deemed to have waived any of its rights or remedies
hereunder.  No waiver hereunder shall be
valid except to the extent therein set forth. 
A waiver of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which Lender would otherwise have
had on any future occasion.  No failure
to exercise nor any delay in exercising on the part of Lender any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege hereunder preclude any
other or future exercise thereof or the exercise of any other right, power or privilege.  Except to the extent that Lender has
specifically and expressly waived such remedies in this Assignment or
otherwise, the rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law.  Lender may
resort to and realize on the Pledged Collateral simultaneously with any acts or
proceedings initiated by Lender in its sole and conclusive discretion to resort
to or realize upon any other sources of repayment of the Liabilities,
including, but not limited to, collateral granted by other security agreements
and the personal liability of Grantor and any person or corporation which has
guaranteed repayment of the Liabilities. 
None of the terms or provisions of this Assignment may be waived,
altered, modified or amended except by an instrument in writing, duly executed
by Grantor and Lender.

 

15.   Successors and Assigns.  This Assignment and all obligations of
Grantor hereunder shall be binding upon the successors and assigns of Grantor,
except that Grantor shall not have the right to assign its rights hereunder or
any interest herein without the prior written consent of Lender and shall,
together with the rights and remedies of Lender hereunder, inure to the benefit
of Lender and its respective successors and assigns.  Neither this Assignment nor anything set
forth herein is intended to, nor shall it, confer any rights on any person or
entity other than the parties hereto and all third party rights are expressly
negated.

 

16.   Termination.  This Assignment, and the assignments, pledges
and security interests created or granted hereby, shall terminate when the
Liabilities shall have been fully paid and satisfied, at which time Lender
shall release and reassign (without recourse upon, or any warranty whatsoever
by, Lender), and deliver to Grantor all Pledged Collateral and related
documents then in the custody or possession of Lender, including termination
statements under the Code, all without recourse upon, or warranty whatsoever,
by Lender and at the cost and expense of Grantor.  The Security Interest shall also terminate
and be released with respect to 20% of the interests of Issuer upon
consummation of the sale by Grantor of such interest pursuant to the ICPH Option
(as defined in the LLC Agreement) upon payment of all sale proceeds to Lender.

 

10

 

17.   Injunctive Relief.  Grantor recognizes that in the event Grantor
fails to perform, observe or discharge any of Grantor’s obligations hereunder,
no remedy of law will provide adequate relief to Lender, and agrees that Lender
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.

 

18.   Waiver of Subrogation.  Grantor shall have no rights of subrogation
as to any of the Pledged Collateral until full and complete performance and
payment of the Liabilities.

 

19.   Severability.  Wherever possible, each provision of this
Assignment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Assignment shall be
prohibited by or be invalid under such law, such provision shall be severable,
and be ineffective to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Assignment.

 

20.   Governing Law; Jurisdiction; Consent to
Service of Process.

 

(a)           This Assignment shall be governed by,
and construed in accordance with, the laws of the State of Minnesota, without regard
to principles of conflicts of law. 
Grantor irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of the courts of the State of
Minnesota sitting in Hennepin County, Minnesota and of the United States
District Court for the District of Minnesota, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Assignment or any other Loan Document to which each is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such state courts or, to
the fullest extent permitted by applicable Law, in such Federal courts.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law.  Nothing in this
Assignment or in any other Loan Document shall affect any right that Lender may
otherwise have to bring any action or proceeding relating to this Assignment or
any other Loan Document against any Loan Party or any of its properties in the
courts of any other jurisdiction.

 

(b)           Grantor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Assignment or
the other Loan Documents in any court referred to in paragraph (1) of this
section.  The parties hereto hereby
irrevocably waive, to the fullest extent permitted by applicable law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

 

(c)           Grantor irrevocably consents to
service of process in the manner provided for notices in the Credit
Agreement.  Nothing in this Assignment
will affect the right of any party hereto to serve process in any other manner
permitted by applicable Law.

 

21.   WAIVER OF JURY TRIAL; OTHER
WAIVER.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
HERETO HEREBY WAIVE

 

11

 

THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM.  THE PARTIES HERETO REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL ON SUCH MATTERS.  IN THE EVENT OF LITIGATION, A COPY OF THIS
ASSIGNMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS ASSIGNMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

[signature page to follow]

 

12

 

IN
WITNESS WHEREOF, Grantor has executed this Assignment or has caused the same to
be executed by Grantor’s duly authorized representative(s) as of the date
first above written.

 

	
   

  	
  MGP INGREDIENTS, INC.

  
	
   

  	
  a Kansas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy W. Newkirk

  
	
   

  	
  Name:

  	
  Timothy W. Newkirk

  
	
   

  	
  Its

  	
  President

  

 

Signature Page
Assignment of Membership Interests

 

 

ACKNOWLEDGEMENT

 

The undersigned hereby (a) acknowledges
receipt of a copy of the foregoing Assignment of Membership Interests (Security
Agreement), (b) waives any rights or requirement at any time hereafter to
receive a copy of such Assignment of Membership Interests (Security Agreement)
in connection with the registration of any Pledged Collateral (as defined
therein) in the name of Wells Fargo Bank, National Association or its nominee
or the exercise of voting rights by Wells Fargo Bank, National Association, (c) consents
to Wells Fargo becoming an Interest Holder or the admission of Wells Fargo as a
member subject to the LLC Agreement and (d) agrees promptly to note on its
books and records the transfer of the security interest in the membership
interests of the undersigned as provided in such Assignment of Membership
Interests (Security Agreement), including the following legend:

 

PURSUANT TO THAT CERTAIN ASSIGNMENT OF MEMBERSHIP INTERESTS (SECURITY
AGREEMENT) DATED AS OF NOVEMBER       , 2009 (AS
FROM TIME TO TIME AMENDED, RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED),
GRANTOR HAS UNDER THE CIRCUMSTANCES SPECIFIED IN SUCH ASSIGNMENT AGREEMENT EMPOWERED
WELLS FARGO BANK, NATIONAL ASSOCIATION TO VOTE, SUBJECT TO THE CONSENT
REQUIREMENTS SET FORTH IN THE LLC AGREEMENT, THE MEMBERSHIP INTERESTS AND
EXERCISE ANY OTHER RIGHTS WITH RESPECT TO THE MEMBERSHIP INTERESTS OWNED BY
GRANTOR PURSUANT TO SUCH ASSIGNMENT OF MEMBERSHIP INTERESTS (SECURITY
AGREEMENT) WITHOUT FURTHER CONSENT BY GRANTOR.

 

 

	
  Dated:  November 20, 2009

  	
  ILLINOIS CORN PROCESSING, LLC

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Randy Schrick

  
	
   

  	
  Randy Schrick, President

  

 

 

	
  Acknowledged and Consented to:

  	
   

  
	
   

  	
   

  
	
  ILLINOIS CORN PROCESSING HOLDINGS, LLC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Peter Coxon

  	
   

  
	
  Name:

  	
  Peter Coxon

  	
   

  
	
  Its:

  	
  President

  	
   

  

 

Acknowledgment
Assignment of Membership InterestsExhibit 10.4

 

MARKETING AGREEMENT

 

THIS
MARKETING AGREEMENT (this “Agreement”) is  made and entered into this 20th day of
November, 2009 (the “Effective Date”), by and between MGP Ingredients, Inc., a Kansas
corporation (“MGPI”), and Illinois
Corn Processing, LLC, a Delaware limited liability company (“Manufacturer”).

 

RECITALS

 

WHEREAS, MGPI has entered
into a Limited Liability Company Agreement of Manufacturer dated as of the
Effective Date (the “LLC Agreement”) with Illinois Corn Processing
Holdings LLC (“Holdings”), in accordance with the requirements of that
certain LLC Interest Purchase Agreement dated the Effective Date (the “Purchase
Agreement”) between MGPI and Holdings whereby Holdings acquired a 50%
interest in Manufacturer; and

 

WHEREAS, MGPI and Holdings
will operate the alcohol production facility located at 1301 S. Front Street,
Pekin, Illinois 61554 (the “Plant”), which Plant is capable of producing
both the Products (as defined herein) and also fuel ethanol alcohol; and

 

WHEREAS, this Agreement is
the “Food Grade Alcohol Off-Take Agreement” (as such term is defined in the LLC
Agreement and the Purchase Agreement).

 

MGPI and Manufacturer,
intending to be legally bound, hereby agree as follows:

 

1.             Manufacture and
Sale of the Products.  Subject to
the terms and conditions of this Agreement, Manufacturer will manufacture and
deliver food-grade and industrial-use alcohol products (the “Products”)
in accordance with the specifications (the “Specifications”), each as
described in Exhibit A, for MGPI, and MGPI will purchase,
transport, market and sell the Products pursuant to the terms and conditions
set forth in this Agreement.

 

2.             Term.  Subject to the terms and conditions of this
Agreement,

 

(a)           The initial term of this
Agreement will commence on the Effective Date and continue for one year (the “Initial
Term”).  This Agreement will
automatically renew for successive one (1) year terms thereafter (together
with the Initial Term, the “Term”) unless and until (i) MGPI
provides written notice of its intent to terminate this Agreement not less than
ninety (90) days prior to the end of the then current Term or (ii) MGPI or
its Affiliates cease to be a member of Manufacturer.

 

(b)           The material terms of this
Agreement shall be reviewed by the parties approximately thirty (30) days prior
to each anniversary of the Effective Date (each, a “Contract Year”), and
either party may propose in writing changes or modifications determined in good
faith by such party to be necessary or desirable to further the purposes of the
parties’ respective expectations of the economic benefits arising from this
Agreement and their limited liability company interests in Manufacturer.  In the event that the parties are unable to
mutually agree upon any such changes or modifications

 

 

within sixty (60) days after such modifications are first proposed, the
Term shall be shortened such that  this
Agreement shall terminate at the end of the following Contract Year unless the
party proposing such changes or modifications agrees to continue with the then
current terms of this Agreement.

 

(c)           In any event, this Agreement
may be terminated by the parties prior to the end of the then current Term in
accordance with Section 21.

 

3.             Purchase
Requirements.

 

(a)           Both parties
recognize that Product(s) will be sold under contracts that may span a
variety of time periods and may contain customer specific delivery terms that
will require flexibility and planning among Manufacturer, MGPI, and the
customer.  This Section 3 is not
intended to preclude arrangements not specifically addressed herein provided
that Manufacturer and MGPI mutually agree, in writing, to those arrangements.

 

(b)           MGPI in
fulfilling its role as marketer will solicit and identify market opportunities
for Product(s) and will present each such opportunity, together with MGPI’s
commercial recommendations, to Manufacturer for approval.  Manufacturer will approve of, or provide
specific guidelines that allow MGPI to conclude negotiations relating to, the
applicable opportunity.  When a sale is
completed that relates to Product(s) to be shipped from the Plant, those
sales will be added to the forward contract obligations of the Plant (the “Forward
Contract Obligations”).  The Forward
Contract Obligations shall be all completed sales of Plant Product(s)).

 

(c)           As part of the
process for booking fixed priced Forward Contract Obligations, MGPI and
Manufacturer will agree on a margin management strategy that relates to that
sale that will include items such as Raw Material origination and hedging
strategies, Product hedging strategies, 
inventory management, fixing/locking in transfer prices, and any other
items that the parties need to consider.

 

(d)           MGPI will
maintain regular communications with its customers to determine as soon as
possible the delivery/shipping schedule to meet the Forward Contract
Obligations and customer needs.

 

(e)           On or before
the 5th of each month during the Term, MGPI will furnish to Manufacturer an
updated three (3) month rolling delivery schedule forecast, that sets forth
MGPI’s best estimation, based upon Forward Contract Obligations and customer
requirements, for the Products by SKU during following three (3) month
period.  Each rolling forecast will set
forth:

 

(i)            The quantity,
by SKU, and desired shipping dates for Forward Contract Obligations with firm
delivery dates.

 

(ii)           The quantity,
by SKU, and forecast delivery dates for Forward Contract Obligations that
reflects best information from the customer as well as any variability in
deliveries permitted in the contract terms.

 

(iii)          A projection of
whether Manufacturer and MGPI will not be able to fulfill all deliveries during
the period and need to limit allocations of Product(s) to customers.

 

2

 

(iv)          Present any value
creating arbitrage opportunities for shifting deliveries between MGPI’s
Atchison, Kansas plant and Manufacturer’s Plant.

 

(v)           Propose to
Manufacturer the quantity of Product(s) MGPI suggests marketing in the
spot market during the forecast period. 
The first month of each three month forecast (the “Nearby Month”)
will include a forecast volume by SKU to be marketed in the spot market (the “Proposed
Spot Volume”).  Proposed Spot Volumes
shall not exceed 25% of the Nearby Month Forward Contract Obligations unless
specifically agreed by Manufacturer.

 

(f)            MGPI will
provide a special quarterly forecast 45 days prior to the commencement of each
calendar quarter to assist Manufacturer in determining its overall production
allocations between fuel grade ethanol and Product(s).

 

(g)           MGPI shall be
required to purchase and accept delivery of all approved Forward Contract
Obligations in accordance with the delivery terms of those contracts.

 

(h)           Manufacturer
will accept or reject allocation of all or a portion of the applicable Proposed
Spot Volume set forth in a forecast not less than ten (10) days prior to
the commencement of the Nearby Month, it being the clearly understood objective
of Manufacturer to maximize overall Plant profit.

 

4.             Purchase Orders.

 

(a)           MGPI will submit to
Manufacturer written purchase orders as appropriate for the Products (each a “Purchase
Order”).  Upon acceptance or
confirmation of a Purchase Order by Manufacturer, such Purchase Order and this
Agreement will comprise all the terms which govern the manufacture, supply and
purchase of the specific Product(s) ordered.  Any terms and conditions on any Purchase
Order, acknowledgement, invoice, Bill of Lading or other document that are
inconsistent with or additional to the terms and conditions in this Agreement,
are hereby expressly rejected and will have no force or effect, unless
otherwise agreed to by the parties.  Each
Purchase Order will set forth:

 

(i)            Quantities and SKUs of the Products,

 

(ii)           Desired delivery dates consistent with the applicable
Delivery/Load Schedule (as defined herein) established by the parties,

 

(iii)          Shipping and billing instructions,

 

(iv)          Shipping and billing address(es), and

 

(v)           Any other information regarding the Products as
mutually agreed to between the parties.

 

(b)           Manufacturer will provide
MGPI with timely notification if it is unable to complete all aspects of a
Purchase Order.

 

5.             Delivery.

 

(a)           MGPI and
Manufacturer shall work together to establish a mutually agreeable
delivery/load out schedule for the Product(s) purchased pursuant to the
Forward Contract Obligations and accepted Spot Volume (the “Delivery/Load

 

3

 

Schedule”).  The Delivery/Load Schedule shall be agreed to
by the parties on a monthly basis prior to the commencement of any Nearby Month
during the Term and it shall be effective for the Nearby Month, adjusted as
mutually agreed to by the parties.

 

(b)           MGPI shall make
available to Manufacturer, a sufficient number of trucks, railcars, marine barges,
as applicable, to receive and transport the Product(s) being delivered by
Manufacturer hereunder at the times such Product(s) are ready to be
delivered by Manufacturer. MGPI shall assure that all such trucks, railcars,
marine vessels are properly maintained, in proper working condition, free from
leaks and contamination and meet all applicable federal, state and local laws
and regulations, as well as all requirements instituted by the applicable
common carrier(s).

 

(c)           Title to and
all risk loss of or damage to Product(s) delivered hereunder shall pass as
follows:  when by or into any marine
vessel, at the flange between the vessel’s permanent hose connection and the
shore line; when into any truck or tank car, as the product enters the
receiving equipment, or, if received by a common carrier, when accepted by the
carrier for shipment; when into storage (other than from vessels), as the
product enters the tank; and when by in tank transfer, on the effective date of
the transfer.  Delivery shall be deemed
to be complete when title to and all risk of loss is transferred to MGPI as
specified herein.

 

(d)           All Purchase Orders will be delivered to MGPI FOB (as defined in Incoterms
2000) Plant within the scheduled delivery window as set forth on the applicable
Delivery/Load Schedule, or as otherwise agreed to by the parties.  The Marine Terms set forth in Exhibit D
shall apply for deliveries to marine vessel. 
Manufacturer shall provide MGPI with all necessary and customary
shipping documents, including, without limitation, Bill of Lading, Certificate
of Analysis (“COA”), Certificates of Quantity.

 

(e)           Manufacturer shall provide current Material Safety Data Sheets to all
carriers and to MGPI for all delivered Product.

 

(f)            MGPI will arrange for shipment of all Product(s).  Manufacturer will load Product(s) into
MGPI provided equipment for shipment during regular hours established by
Manufacturer for such deliveries and in accordance with reasonable instructions
from MGPI accompanying an accepted and confirmed Purchase Order.  MGPI shall ensure that equipment and Product
is removed from the Plant property as soon as possible after loading is
complete.  Manufacturer reserves the
right to impose surcharges on deliveries request outside its regular hours.

 

(g)           Manufacturer and MGPI will furnish each other
reasonably sufficient information to verify shipment of the Products in a
manner of communication that will be mutually acceptable to both Manufacturer
and MGPI.  Manufacturer will maintain
reasonably detailed records of all Products loaded and shipped for a minimum of
three (3) years, or such longer period as required under Alcohol and
Tobacco Tax and Trade Bureau regulations.

 

(h)           All agents and employees of MGPI, when on Plant
property, will adhere to such rules and regulations as may be established
by Manufacturer, including those concerning safety and routing procedures.

 

4

 

6.             Pricing; Payment and
Commissions.

 

(a)           Payment:

 

(i)            Unless otherwise specified in the applicable
Purchase Order, MGPI shall make payment via wire transfer of immediately
available federal funds or ACH payment to Manufacturer in U.S. dollars upon
comparable terms as MGPI’s customers for the Products, but in any event terms
shall not exceed thirty (30) days after receipt of a legible, unaltered copy of
the invoice and supporting documents.  If
the invoice is received after noon of any one date, such invoice will be deemed
received on the next day.

 

(ii)           In the event the payment due date falls on a Saturday
or a New York banking holiday other than a Monday, then payment shall be made
on the nearest preceding New York banking day. 
If the payment due date falls on a Sunday or a Monday that is a banking
holiday in New York, then payment shall be made on the next New York banking
day.

 

(iii)          If MGPI does not timely pay an undisputed invoice
and does not cure such non-payment within five (5) New York banking days
following Manufacturer’s written notice thereof, MGPI shall be deemed in
default of this Agreement and such unpaid amounts will incur interest at the
lesser of (i) one and a half percent per month (18% per annum) or (ii) the
maximum rate allowed by law.  MGPI shall
pay all of Manufacturer’s costs (including attorneys’ fees and court costs) of
collecting past due amount.  Either party
may change its invoice address and/or fax number upon notice to the other party
given at latest ten (10) days in advance of the effective date of the
change

 

(b)           Manufacturer shall invoice
MGPI for **** delivery at the **** Cost defined in Exhibit B.  ****

 

(c)           Manufacturer shall present
its calculation of the **** Cost ****.

 

(d)           MGPI shall remit ****
Payments due Manufacturer within **** during the Term.  In connection with such payment, MGPI shall
present its calculation of the ****.

 

7.             Audit.

 

(a)           Each party will permit the
other party, at its sole expense, upon reasonable prior notice and during
normal business hours, to audit its accounting records and other documents
which specifically relate to the calculation of **** Cost in accordance with Exhibit B
and **** Payment in accordance with Exhibit C of this Agreement,
and shall have the right to audit such records at any reasonable time or times
within two (2) years after the delivery of Product(s) pursuant to
this Agreement; provided, however, a party may only conduct
one (1) audit per calendar year, and records pertaining to a year
previously audited may not be re-audited.

 

**** 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.

 

5

 

(b)           If any such audit determines
that there was an error in the calculations made and reported pursuant to Section 6,
the management of each of MGPI and Manufacturer will make a good faith effort
to resolve any differences between the parties with respect to the results of
the audit.  If within thirty (30) days
after the audit results are provided to the audited party, the managements of
MGPI and Manufacturer are unable to resolve all differences, either party may
seek damages and any other equitable or legal relief from a court of competent
jurisdiction.

 

(c)           Within thirty days of
resolution of any audit differences either by agreement or by a final,
non-appealable judgment of a court of competent jurisdiction, MGPI or
Manufacturer, as applicable, shall remit to the other party any amount shown to
be due by it under such audit resolution.

 

8.             Financial
Responsibility.  If either
party’s payments or deliveries to the other party shall be in arrears, or the
financial responsibility of either party becomes impaired or unsatisfactory in
the reasonable opinion of the other party, advance cash payment or satisfactory
security shall be given upon demand, and deliveries may be withheld until such
payment or security is received.  If such
payment or security is not received within five (5) New York banking days
from demand thereof, the party demanding such payment or security, in addition
to any other rights which it may have, may cancel this Agreement, may
accelerate payment of any amounts owed but not yet due and payable to be
immediately due and payable, or both. 
Each party grants to the other party and its domestic affiliates the
right to set off and to apply any money, accounts payable, or product balance
owed by the other party and its domestic affiliates to the other party or any
collateral of every description held by the other party and its domestic
affiliates to secure any indebtedness or obligation owed by the granting party
to the other party and its domestic affiliates against any unpaid money or
accounts receivable owed to the other party and its domestic affiliates by the
granting party.  In the event either
party becomes insolvent, makes an assignment to any general arrangement for the
benefit of creditors or if there are instituted by or against either party
proceedings in bankruptcy or under any insolvency law or law for
reorganization, receivership or dissolution, the other party may withhold
deliveries or cancel this Agreement.  The
exercise by either party of any right reserved under this paragraph shall be
without prejudice to any claim for damages or any other right of such party
under this Agreement or applicable law.

 

9.             Taxes.

 

(a)           The parties recognize that
transactions involving the transfer of Product(s) between Distilled
Spirits Plant permit holders are generally not taxable.

 

(b)           Any and all taxes, fees, or
other charges imposed or assessed by governmental or regulatory bodies, the
taxable incidence of which is the transfer of title or the delivery of the
Product(s) hereunder, or the receipt of payment therefor, regardless of
the character, method of calculation, or measure of the levy or assessment,
shall be paid by the party upon whom the tax, fee or charge is imposed by law,
except that MGPI shall reimburse Manufacturer for all federal, state, and local
taxes, fees, or charges which are imposed by law on Manufacturer or required to
be remitted and paid by the Manufacturer. 
If MGPI claims exemption from any of the aforesaid taxes, fees, or other
charges, then MGPI must furnish Manufacturer with a properly completed and
executed

 

6

 

exemption certificate in the form prescribed by the appropriate taxing
authority in lieu of payment of such taxes or reimbursement of such taxes to
Manufacturer.  Notwithstanding anything
to the contrary contained herein, each party shall be responsible for its own
income, franchise and ad valorem taxes.

 

(c)           MGPI hereby acknowledges and
agrees to maintain its status as a “Distilled Spirits Plant” pursuant to the
applicable regulations of the Alcohol and Tobacco Tax and Trade Bureau of the
U.S. Department of the Treasury.

 

10.           Production Facilities.

 

(a)           Manufacturer will
manufacture the Products at the Plant in accordance with the Specifications and
provide a valid COA for all Product delivered under this Agreement.

 

(b)           Manufacturer will maintain
the Plant and the equipment used in the manufacture of the Products in good
working order and condition necessary to produce the quantities and qualities
of the Products ordered by MGPI under this Agreement.

 

(c)           The Plant will at all times
be in compliance with any laws, regulations or other requirements applicable to
the manufacture and sale of the Products.

 

11.           Materials; Handling and Storage.

 

(a)           Unless otherwise agreed between
the parties in writing, Manufacturer is responsible for (i) obtaining
suitable raw materials necessary for the manufacture of the Products under this
Agreement (“Raw Materials”) in accordance with the Specifications, and (ii) manufacturing,
processing, storing, and loading of the ordered Products for delivery into MGPI
provided equipment.

 

(b)           Manufacturer will furnish
MGPI with a copy of its recall policy and procedures.  Manufacturer will further notify MGPI as soon
as practicable by phone (with written confirmation to follow) if it knows of

 

(i)            any recall or other action or scheduled inspection
by any regulatory agency against the Plant or Products covered under this
Agreement,

 

(ii)           any violations reported or recorded during any such
inspection and/or any analytical results obtained from regulatory agencies
which adversely and materially impact the Products or the ability to acquire
the Raw Materials or Packaging Materials, and

 

(iii)          any significant manufacturing process deviation that
compromises the safety and/or quality of the Products.

 

(c)           In addition, without
limiting the generality of the foregoing:

 

(i)            MGPI shall provide Manufacturer with a designated
party and designated phone number for the purpose of providing the
notifications to MGPI under this Section 11.  Manufacturer shall not be responsible for the
failure of MGPI to monitor its designated phone number.

 

7

 

(ii)           Manufacturer will not use Raw Materials if they (A) do
not reasonably appear to conform to the Specifications, or (B) exhibit
apparent quality defects.

 

(iii)          Manufacturer will reasonably maintain the quality of
Raw Materials from the time it receives the Raw Materials at the Plant until it
manufactures the Raw Materials into the Products.  Thereafter, Manufacturer will maintain the
quality of Products until such Products are delivered to MGPI.

 

(iv)          Manufacturer will credit, replace, and re-bill
without cost to MGPI all Products sold to MGPI under this Agreement that do not
meet the Specifications unless the failure to meet Specifications is caused by (A) MGPI
or others after title to the Products has passed to MGPI, (B) any
instruction or direction received by Manufacturer from MGPI directing
Manufacturer to manufacture the Products in a manner not consistent with the
Specifications or (C) MGPI’s failure to comply with any of  its obligations under this Agreement.  Manufacturer will promptly credit, replace,
and re-bill such Products when MGPI notifies it of same.

 

12.           Inspections, Measurement, Testing and Acceptance.

 

(a)           Quality.

 

(i)            Quality of the Product shall be determined and
certified from samples taken prior to or at the time and place of loading or
transfer of the Product by a mutually agreed laboratory.  The cost of such inspection shall be borne
equally by MGPI and Manufacturer unless MGPI and Manufacturer agree that
Manufacturer may conduct testing.

 

(ii)           Quality of the Product shall be based upon laboratory
analysis of a representative composite sample taken from storage tank(s) of
the entire lot to be loaded and a valid COA shall be provided by the testing
laboratory to MGPI for all delivered Products.

 

(b)           Measurement.

 

(i)            Meters and
other measuring devices belonging to the Manufacturer or its agents or
suppliers and used hereunder shall be deemed conclusive of the quantities of
Product delivered to MGPI by Manufacturer hereunder, unless either party
notifies the other of any errors in measurement.

 

(ii)           Manufacturer
shall be responsible for the accuracy of its measuring equipment at the loading
location, including all gauges and meters, and shall ensure that such equipment
complies in all respects with applicable laws, rules, and regulations and will
be certified at least every three months or 10,000,000 gallons or per TTB
requirements, whichever occurs first. 
MGPI shall have the right, but not the obligation, during the Term to
have a representative inspect Manufacturer’s measurement equipment for
suitability and accuracy and be present for proving and calibration.  Such MGPI inspection, testing, or additional
certification shall be at MGPI’s expense. 
MGPI shall be given access to all transaction and meter proving
records.  All custody meters shall be
proved and calibrated with the latest API MPMS. 
All calibration equipment shall be certified

 

8

 

and
traceable to NIST.  Meters shall be
proved on a NET basis unless otherwise required by regulatory agencies.

 

(iii)          All volumes or
quantities of Product shall be net volumes or quantities as adjusted per
ASTM/API standards.  Product shall be
measured and billed on a per gallon basis. 
The term “gallon” as used herein shall mean a U.S. gallon or 231 cubic
inches.  All quantities delivered shall
be adjusted to a temperature of 60 degrees Fahrenheit in accordance with the
latest applicable ASTM standards

 

(iv)          Truck/Rail
Car.  Quantities of Product
delivered pursuant to this Agreement into or from tank trucks/cars or rail cars
shall be measured using calibrated meters located at or near the delivery point
or, if such meters are unavailable, by certified calibrated scales or
applicable calibration tables.

 

(v)           Marine
Vessel.  Unless otherwise agreed,
inspection and measurement of Product delivered pursuant to this Agreement into
or from marine vessels shall be made by a mutually licensed independent
inspector, the cost of which shall be born equally by MGPI and
Manufacturer.  Said inspector’s
determinations shall be reported to MGPI and Manufacturer and shall serve as
the basis for the invoice, except in cases of manifest error or fraud.

 

The
quantity of Product shall be determined by proven meters, in the immediate
vicinity of the berth located at the designated point of custody and title
transfer.  If meters are unavailable, not
proven, not functioning correctly, or determined by the independent inspector
to be inaccurate or otherwise not to represent the volume delivered to or from
the vessel, then the quantity shall be shall be based on static shore tank
measurements.  If the shore tank(s) is/are
active, or a shore tank, before receipt or after delivery, contains less than
one (1) foot of product, or the independent inspector cannot verify the
shore tank measurements prior to or after delivery, or the independent
inspector determines that the shore tank measurements are inaccurate or
otherwise not representative of the volume quantities delivered to or from the
vessel, then the quantity shall be determined by the vessel less any OBQ
(on-board quantity) or ROB (remaining on board) adjusted for vessel load VEF
(vessel experience factor) if available. 
If no vessel load VEF is available, the quantity shall be determined by
the various quantities adjusted for OBQ or ROB.

 

(c)           Testing and Acceptance:

 

(i)            Manufacturer or the designated laboratory shall issue a COA
confirming the results of the tests of the quality of the Product obtained
pursuant to Section 12(a) above.

 

(ii)           MGPI will not accept, and Manufacturer shall not load into
MGPI equipment, Product not conforming to the Specifications.

 

(iii)          any claims that the Product(s) delivered
hereunder do not conform to the Specifications are waived unless presented in
writing by MGPI to Manufacturer within fourteen (14) days after delivery of
Product(s).  Except as set

 

9

 

forth in this Section 12(c)(iii),
no claim shall be made or honored for Product not meeting the Specifications (“Non-conforming
Products”) after delivery to MGPI.

 

(iv)          Manufacturer’s liability regarding the condition,
quality, or fitness of Non-conforming Product(s) delivered to MGPI is
strictly limited, at Manufacturer’s sole option, to 1) a refund by Manufacturer
to MGPI an amount equal to the difference between the market value as of the
date title transferred of the Non-conforming Products and the price paid
therefor by MGPI, or 2) Manufacturer may replace the Non-conforming Products
upon the return of the Non-conforming Products by MGPI.

 

13.           Confidentiality.

 

(a)           General Obligation. All
information provided by one party (the “Disclosing Party”) to the other
party (the “Recipient”) will be governed by this Section 13.  The term “Confidential Information”
will mean (i) all information contained in any reports delivered pursuant
to this Agreement, (ii) the Product Know-How and (iii) all other
trade secrets or confidential or proprietary information designated as such in
writing by the Disclosing Party, whether by letter or by the use of an
appropriate proprietary stamp or legend, before or when any such trade secret
or confidential or proprietary information is disclosed by the Disclosing Party
to the Recipient. Confidential Information will also include information that
the Disclosing Party discloses to the Recipient (whether orally, visually or in
writing without an appropriate letter, proprietary stamp or legend) if the
Disclosing Party notifies the Recipient in writing and describes the
information disclosed, references the place and date of the disclosure, and the
names of the employees or officers of the Recipient to whom the disclosure was
made. The parties also agree to treat any information or materials jointly
developed as proprietary and as Confidential Information.

 

(b)           Disclosure.  The Recipient will hold in confidence, and
will not disclose to any person outside its organization, any Confidential
Information during the term of this Agreement and for two (2) years
thereafter. The Recipient will use Confidential Information only for the
purpose of producing the Products for the Disclosing Party or fulfilling its
contractual obligations under this Agreement; it will not use or exploit
Confidential Information for any other purpose or for its own benefit or the
benefit of another without the prior written consent of the Disclosing
Party.  Recipient will disclose Confidential
Information received by it under this Agreement only to persons within its
organization or suppliers and/or third party vendors who have a need to know
such Confidential Information in the course of the performance of their duties
and who are directed to protect the confidentiality of the Confidential
Information in accordance with the terms of this Agreement.  In particular, the parties agree to take
reasonably appropriate steps to ensure suppliers and third party vendors
receiving Confidential Information maintain the confidentiality of such
Confidential Information.

 

(c)           Limitation on Obligations.  The obligations of the Recipient under this Section will
not apply to, and Confidential Information does not include, information that:

 

10

 

(i)            Is
generally known to the public before the disclosure by the Disclosing Party or
becomes generally known to the public through no wrongful act on the part of
the Recipient in violation of this Agreement;

 

(ii)           Is
in the Recipient’s possession at the time of disclosure by the Disclosing Party
other than as a result of Recipient’s breach of any legal obligation;

 

(iii)          Becomes
known to the Recipient through disclosure by sources other than the Disclosing
Party having the legal right to disclose the Confidential Information;

 

(iv)          Is
independently developed by the Recipient without reference to or reliance upon
the Confidential Information; or

 

(v)           Must
be disclosed by the Recipient pursuant to applicable law or governmental
regulations; provided, however, that the Recipient notifies the Disclosing
Party in writing, to the extent not prohibited by law, before disclosing the
Confidential Information and reasonably cooperates with the Disclosing Party to
avoid and/or minimize the extent of the disclosure.

 

(d)           Ownership of Confidential
Information.  The
Disclosing Party is and will remain the exclusive owner of Confidential
Information and all rights embodied in it. 
Without limiting the generality of the foregoing, the Specifications
will constitute Confidential Information owned by or provided under license to
MGPI and may not be used by Manufacturer for any purpose except in connection
with its performance of this Agreement.

 

(e)           Return of Documents. Upon the
request of the Disclosing Party, Recipient will, at its option, destroy or
return to the Disclosing Party all drawings, documents and other tangible
manifestations of Confidential Information received by the Recipient under this
Agreement, including all copies and reproductions.

 

14.           Intellectual
Property License; Misappropriation.

 

(a)           MGPI grants to Manufacturer
a non-exclusive manufacturing license to utilize the Specifications and any
related Confidential Information (“Product Know-How”) to manufacture
Products in accordance with this Agreement. 
Manufacturer acknowledges that Product Know-How may include the
Confidential Information of MGPI customers and that Manufacturer will not
misappropriate any such Confidential Information.

 

(b)           MGPI represents, warrants
and covenants that it has the right to disclose to Manufacturer under
confidentiality the Product Know-How for Manufacturer’s use while manufacturing
Products under this Agreement.

 

(c)           MGPI represents and warrants
that it will not knowingly request Manufacturer to produce Product or provide
to Manufacturer Product-Know-How that infringes on any rights of third parties.

 

11

 

15.           Manufacturer’s Warranties and Representations.

 

(a)           Manufacturer
warrants and represents that:

 

(i)            Manufacturer
has and will deliver good and marketable title to the Product(s),

 

(ii)           Manufacturer
has full right and authority to transfer such title to the Product(s) to
MGPI,

 

(iii)          The
Product(s) will conform to the Specifications set forth on the face of the
applicable Purchase Order,

 

(iv)          The
Product(s) shall be delivered free and clear of any and all security
interests, liens, encumbrances, pledges, and charges.

 

(v)           Manufacturer
is or will be at all relevant times registered with the IRS as may be required
to engage in transactions with respect to ethanol, and possess all federal,
state and local registrations as may be required by law in the state where
title passes.

 

(vi)          The
manufacture and delivery of all Products will be conducted in strict compliance
with any laws or regulations applicable to the manufacture and sale of the
Products, including without limitation, operating under basic and operating
permits from the Alcohol and Tobacco Tax and Trade Bureau of the U.S.
Department of Treasury and maintaining any bonds required thereunder.

 

(b)           Warranty Disclaimers.  THE EXPRESS WARRANTIES IN THIS SECTION 15
ARE IN LIEU OF, AND MANUFACTURER DISCLAIMS, ALL OTHER WARRANTIES,
REPRESENTATIONS AND CONDITIONS, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR
PURPOSE.

 

16.           MGPI’s
Warranties and Representations.  MGPI
warrants and represents that:

 

(a)           The purchase, transportation, and marketing of all Product
will be conducted in strict compliance with any laws or regulations applicable
to the purchase, transportation and sale of the Products, including without
limitation holding required permits and licensing from the Alcohol and Tobacco
Tax and Trade Bureau of the U.S. Department of Treasury;

 

(b)           MGPI has instituted its own quality control and delivery
protocols, including with its customers, that will prevent the contamination or
use of Product that may become contaminated or be put “off specification” after
delivery; and

 

(c)           The Product(s) and their Specifications are suitable
for their intended purpose and will not be used by MGPI alone or as a component
in manufacturing another product that is injurious to persons, the environment,
equipment, or property.

 

17.           Liquidation and Close-out:

 

(a)           Notwithstanding any other
provision of this or any other commodity contract between the parties, if
either party (the “Non-Performing Party”) shall (i) default in the
payment or performance of any other material obligation to the other party
under

 

12

 

this or any other agreement between the parties and fails to cure such
payment default within five (5) New York banking days after receipt of
notice of such failure, (ii) file a petition or otherwise commence or
authorize the commencement of  a
proceeding or case under any bankruptcy, reorganization, or similar law for the
protection of creditors or have any such petition filed or proceeding commenced
against it, (iii) otherwise become bankrupt or insolvent (however evinced),
(iv) be unable to pay its debts as they fall due, or (v) fail to give
adequate security for or assurance of its ability to perform its obligations
hereunder or thereunder within two (2) New York banking days after receipt
of a reasonable request therefor, the other party (the “Performing Party”)
shall have the right, immediately and without liability, to liquidate and close
out any or all forward contracts, including, without limitation, Purchase
Orders, then outstanding between the parties.

 

(b)           In the event of the
foregoing, the Performing Party, may, but shall not be obligated to, (i) close
out each such forward contract at its market value as reasonably determined by
the Performing Party at such time (so that a settlement payment in an amount
equal to the difference, if any, between the then prevailing market value and
the value specified in such contract shall be due to MGPI under that forward
contract if such market value is greater than such contract value and shall be
due to Manufacturer under that forward contract if the opposite is the case), (ii) set
off all market damages so determined and payable by each of the parties to the
other and (iii) set off all margin held by either to secure the
obligations of the other party (including all payments due to the other party
with respect to deliveries received from such other party, which payments,
prior to payment, shall be deemed to held by each as margin to secure the other
party’s obligations from time to time incurred); whereupon all such amounts shall
be aggregated or netted to a single liquidated amount payable within (1) business
day by the party owing the greater such amount to the other.

 

(c)           The Performing Party’s
rights under this Section shall be in addition to, and not in limitation
or exclusion of, any other rights which the Performing Party may have (whether
by agreement, operation of law, or otherwise), including any rights and
remedies under the Uniform Commercial Code. 
The Non-Performing Party shall indemnify and hold the Performing Party
harmless from and against all costs and expenses (including reasonable
attorneys’ fees) incurred in the exercise of any remedies hereunder.  If a default occurs, the Performing Party,
without limitation of its rights hereunder, may set off amounts which the
Non-Performing Party owes to it against any amount which it owes to the
Non-Performing Party (whether hereunder, under a forward contract, or otherwise
and whether or not then due).  The
parties acknowledge that this Agreement constitutes a forward contract for the
purposes of Section 556 of the U.S. Bankruptcy Code.

 

18.           Indemnities.

 

(a)           Manufacturer will indemnify,
defend and will hold harmless MGPI (including its parent, affiliate, and
subsidiary companies) for, and will pay to MGPI the amount of, any loss,
liability, claim, damage, expense (including costs of investigation and defense
and reasonable attorneys’ fees) (collectively, “Damages”), arising,
directly or indirectly, from or in connection with: (i) any breach of any
representation or warranty made by Manufacturer in this Agreement or (ii) any
breach by Manufacturer of any

 

13

 

covenant or obligation of Manufacturer in this Agreement. In addition, notwithstanding any other provision
contained in this Agreement, MGPI shall not be responsible for loss of or
damage to the property of Manufacturer or of its contractors, sub-contractors
or customers (other than MGPI) (herein “Manufacturer Group”), or for
personal injury or death of the employees of any entity in the Manufacturer
Group, arising out of or in any way connected with the performance of this
Agreement, and even if such loss, damage, injury or death is caused wholly or
partially by the negligence of any entity in the MGPI Group (as defined below)
(but excluding gross negligence or willful misconduct of the MGPI Group), and
Manufacturer shall indemnify, protect, defend and hold harmless MGPI Group from
any and all claims, costs, expenses, actions, proceedings, suits, demands and
liabilities whatsoever arising out of or in connection with such loss, damage,
personal injury or death.  Manufacturer
will confer with MGPI and its insurance carrier before settling any claims for
which Manufacturer is responsible under this Agreement.

 

(b)           MGPI will indemnify, defend
and will hold harmless Manufacturer for, and will pay to Manufacturer the
amount of, any Damages arising, directly or indirectly, from or in connection
with: (i) any breach of any representation or warranty made by MGPI in
this Agreement or (ii) any breach by MGPI of any covenant or obligation of
MGPI in this Agreement.  In addition, notwithstanding any other provision
contained in this Agreement, excepting Section 12(c), Manufacturer shall
not be responsible for loss of or damage to the property of MGPI or of its
contractors, sub-contractors or customers (herein “MGPI Group”),
including the Product(s) after title has passed to MGPI, or for personal
injury or death of the employees of any entity in the MGPI Group, arising out
of or in any way connected with the performance of this Agreement, and even if
such loss, damage, injury or death is caused wholly or partially by the
negligence of any entity in the Manufacturer Group (but excluding gross
negligence or willful misconduct of the Manufacturer Group), and MGPI shall
indemnify, protect, defend and hold harmless the Manufacturer Group from any
and all claims, costs, expenses, actions, proceedings, suits, demands and
liabilities whatsoever arising out of or in connection with such loss, damage, personal
injury or death.  MGPI will
confer with Manufacturer and its insurance carrier before settling any claims
for which MGPI is responsible under this Agreement.

 

(c)           Limitation of Liability.  IN NO EVENT WILL EITHER PARTY BE LIABLE TO
THE OTHER FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES (INCLUDING LOSS OF USE, DATA, BUSINESS OR PROFITS) OR FOR COSTS OF
PROCURING SUBSTITUTE SERVICES, ARISING OUT OF, RELATING TO, OR IN CONNECTION
WITH THIS AGREEMENT OR THE SERVICES OR ANY PRODUCTS PROVIDED BY MANUFACTURER,
HOWEVER CAUSED AND REGARDLESS OF THE THEORY OF LIABILITY, EVEN IF THE PARTIES
HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

19.           Third
Party Claims.  Promptly after service
of notice of any claim or of process by any third person in any matter in
respect of which indemnity may be sought from an indemnifying party under this
Agreement, the indemnified party will notify the indemnifying party after being
served.  The indemnifying party will have
the right to participate in, or assume and control, at its own expense, the
defense of any such claim or process or settlement.  After

 

14

 

notice from the indemnifying party of its election to assume the
defense of the action, the indemnifying party will not be liable to the
indemnified party for any legal or other expense incurred by the indemnified
party in connection with such defense. 
Such defense will be conducted expeditiously (but with due regard for
obtaining the most favorable outcome reasonably likely under the circumstances,
taking into account costs and expenditures) and the indemnified party will be
advised promptly of all developments.

 

Notwithstanding the foregoing, with respect
to any matter which is the subject of any such claim and as to which the
indemnified party fails to give the indemnifying party notice, and this failure
adversely affects the ability of the indemnifying party to defend the claim or
materially increases the amount of indemnification which the indemnifying party
is obligated to pay under this Agreement, the amount of indemnification which
the indemnified party will be entitled to receive will be reduced to an amount
which the indemnifying party would have been entitled to receive had such notice
been timely given.  No settlement of any
such claim as to which the indemnifying party has not elected to assume the
defense thereof will be made without the prior written consent of the
indemnifying party, which consent will not be unreasonably withheld or delayed.

 

20.           Insurance.

 

(a)           Each party agrees to provide
and maintain at all times during this contract such minimum insurance coverage
as set forth in this paragraph 20(a) and to otherwise comply with the
provisions that follow.  Without limiting
in any way the scope of any obligations and/or liabilities assumed hereunder by
each party, each party shall procure, or cause to be procured from reputable
insurance companies with at least an A+ or AA rating and maintain, at all times
while conducting operations under this Agreement, the following minimum levels
of insurance:

 

(i)            Workers’ compensation insurance for
the full statutory limits and Employers’ Liability Insurance or its equivalent
with a limit of not less than Five Million Dollars ($5,000,000.00) per
occurrence, applicable to all persons employed by such party;

 

(ii)           Commercial General Liability
insurance (on an occurrence basis not a claims made basis) including
contractual liability and products-completed operations liability coverage,
covering all operations by or on behalf of such Party against bodily injury
(including death) and property damage (including loss of use) having a combined
single limit of not less than Twenty-Five Million Dollars ($25,000,000.00) per
Occurrence;

 

(iii)          Automobile liability insurance with a
combined single limit of not less than Five Million Dollars ($5,000,000.00) for
bodily injury and property damage per occurrence for all owned, hired and
non-owned vehicles;

 

(iv)          As
to MGPI, cargo and loss insurance in an amount not less than that covers the
actual value of Product as to which title has transferred but not yet paid
for.  Any such insurance shall name
Manufacturer as the Loss Payee for distribution as the parties’ interest may
appear.

 

15

 

All limits as required above
may be met by the use of primary and excess liability insurance, where any
excess insurance shall be excess to the underlying primary liability limits,
terms and conditions for each category of liability insurance, shall be written
on a following form basis of underlying coverages (including on an occurrence
basis and not a claims made basis), and if there are aggregate limits, such
aggregate limits shall apply separately to each annual policy period. All
insurance policies to be maintained by each party, except Workers’
compensation, shall include coverage for contractual liability, extending to
and including (but not in any way limit) all indemnities given by each party
hereunder and shall be primary to the extent of liabilities assumed by each
party to any policies held by or providing coverage to the other party and
coverage afforded to each party under the other party’s policies shall delete
any excess clause or co-insurance clause that requires sharing or renders
primary any other insurance covering the other. 
Furthermore, all insurance policies shall be endorsed to: (i) name
the other party as an additional insured; (ii) provide for a waiver of
subrogation or equivalent endorsement in favor of the other party; and (iii) provide
a Severability of Interests or Cross Liability Clause.

 

In no event shall the amount
or scope of the insurance required herein limit the liability of either party
assumed by it in this Agreement nor shall the failure to collect under any
policy for any reason relieve such party of any of its obligations. Any and all
deductibles or self-insured retentions in the above described policies shall be
assumed by, for the account of, and at the sole risk of such party.

 

(b)           Each party will furnish the
other party with certificates of insurance evidencing the above coverage before
beginning any production under this Agreement, and afterwards from time to time
upon the expiration of any certificate of insurance.  The certificates delivered by each party will
contain a clause specifying that the other party will be notified in writing no
less than 30 days before there is a cancellation or material change in
coverage.

 

21.           Termination by the Parties.

 

(a)           MGPI may terminate this
Agreement upon written notice to Manufacturer:

 

(i)            If Manufacturer breaches or violates any of the
warranties, representations, agreements, covenants, or conditions that this
Agreement contains or requires and Manufacturer fails to remedy the breach or
violation within thirty (30) days after receipt from MGPI of written notice of
the breach or violation; or

 

(ii)           If
Manufacturer makes an assignment for the benefit of its creditors, commits any
act of bankruptcy, has a receiver appointed, or otherwise admits of its inability
to pay its debts as they mature.

 

(b)           Manufacturer may terminate
this Agreement upon written notice to MGPI:

 

(i)            If
MGPI breaches or violates any of the warranties, representations, agreements,
covenants, or conditions that this Agreement contains or requires and MGPI
fails to remedy the breach or violation within thirty (30) days after receipt
from Manufacturer of written notice of the breach or violation; or

 

16

 

(ii)           If
MGPI makes an assignment for the benefit of its creditors, commits any act of
bankruptcy, has a receiver appointed, or otherwise admits of its inability to
pay its debts as they mature; or

 

22.           Effect
of Termination.

 

(a)           For the six (6) months
immediately following the expiration or termination of this Agreement,
Manufacturer will provide to MGPI reasonable cooperation and assistance
(including without limitation knowledge transfer, materials sourcing, transfer
of unused materials and unfinished inventory) to transition production of the
Products to a third party designated by MGPI. 
Manufacturer may invoice MGPI for actual charges, including without
limitation, man hours paid for by Manufacturer, it incurs for the provision of
transition services provided to MGPI pursuant to this Section 22.  This paragraph (a) will survive
termination or expiration of the Agreement.

 

(b)           Termination of this
Agreement will be without prejudice to any rights that may have accrued to
Manufacturer or MGPI at the date of termination.  The obligations of the parties under Sections
13, 14, 15, 16, 18, 21, 22, 23, and 24 will survive any termination.

 

23.           Force
Majeure. In the event either party is rendered unable, wholly or in part,
to perform its obligations under this Agreement (other than to make payments due
hereunder) because of acts of God; floods; fires; explosions; extreme heat or
cold, extreme storms, or other extreme adverse weather; earthquakes; power
shortages; transportation difficulties; strikes, lockouts, or other industrial
disturbances; wars, acts of terrorism, or sabotage; accident or breakage of
equipment or machinery; failure of transporters to furnish transportation;
failure of suppliers to furnish supplies, fuel, or raw materials; or any newly
enacted law, rule, order, or action of any court or instrumentality of the
federal, state or local government; or any other material cause or material
causes beyond the affected party’s reasonable control, it is agreed that on
such party’s giving notice and full particulars of such force majeure event or
condition to the other party, the obligations of the party giving such notice
shall be suspended from the date of the other party’s receipt of such notice
and for the continuance of any inability so caused, but for no longer period;
and such cause shall, so far as possible, be remedied with all reasonable
dispatch.  Events of force majeure shall
not extend the Term.  If an event of
force majeure continues for a period in excess of 90 days, the party not
affected by the force majeure may terminate this Agreement at any time
thereafter during the continuance of the force majeure effective upon the
giving of written notice to the party which is subject to the force majeure
event.

 

24.           Independent
Contractors.  The parties are
independent contractors and engage in the operation of their own respective
businesses.  Neither Manufacturer nor
MGPI will be considered the agent of the other for any purpose whatsoever.  Neither Manufacturer nor MGPI has any
authority to enter into any contracts or assume any obligations for the other
or to make any warranties or representations on behalf of the other, except as
may be provided in a written agreement between the parties specifically
authorizing such party to do so.  Nothing
in this Agreement will establish a relationship of co-partners or joint
venturers between Manufacturer and MGPI. 
Under no circumstances will MGPI be liable for the debts or obligations
of Manufacturer or for the wages, salaries, or benefits of Manufacturer’s
employees, nor will Manufacturer be liable for the wages, salaries, or benefits
of MGPI’s employees, except as may

 

17

 

be provided in a written agreement between the parties specifically
stating that such party assumes such liability.

 

25.           Severability.  If any section or portion of this Agreement
violates any applicable law, such section or portion will be inoperative.  If a court of competent jurisdiction rules that
any provision set forth in this Agreement is unenforceable, then such provision
will (if possible) be deemed modified to the extent that, in the court’s
opinion, is necessary to make it enforceable. 
The remainder of the Agreement will remain valid and will continue to
bind the parties.

 

26.           Successors
and Assigns.  This Agreement will be
binding and inure to the benefit of each of the parties and its successors and
assigns.

 

27.           Notices.  Except as provided otherwise, each party will
give in writing by personal delivery, confirmed facsimile transmission or
overnight courier any notice or communication that such party may or must give
under this Agreement or regarding it. 
This notice will be deemed to have been given or made when personally
delivered, upon the date received by facsimile if received by 5 pm local time
(and if not, the following business day) and upon the date the overnight
courier delivers such notice or communication as evidenced by the overnight
courier’s delivery confirmation.

 

Either party may advise the other of changes of address or additional
addresses for giving notice from time to time by notice given according to this
Section.

 

28.           Waiver.  No waiver by either party of any breach,
default, or violation of this Agreement will constitute a waiver of any
subsequent breach, default, or violation of the same or other term, warranty,
representation, agreement, covenant, condition, or provision.

 

29.           Assignments,
Successors, and No Third Party Rights. 
Neither party may assign any of its rights under this Agreement without
the prior consent of the other party. 
Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.

 

30.           Entire
Agreement.  This Agreement, together
with the Exhibits attached and incorporated by reference, contains all of the
terms, warranties, representations, agreements, covenants, conditions, and
provisions the parties have agreed upon with respect to the subject matter of
this Agreement and merges and supersedes all prior agreements, understandings,
and representations relating to such subject matter.  This Agreement will not be altered or changed
except by a writing that an authorized officer or representative of each party
signs.  This Agreement may be executed in
one or more counterparts and by electronic or facsimile signatures, all of which
together will be considered one document and will serve as an original for all
purposes.

 

31.           Governing
Law; Interpretation.  This Agreement
will be governed by New York law without regard to its conflicts of law rules.

 

18

 

32.           Currency.  All amounts set forth in this Agreement and
all business conducted pursuant to this Agreement are and will be denominated
and conducted in US dollars.

 

33.           Terms
and Conditions.  The terms and
conditions of purchase and sale of Products are set forth in this Agreement, as
amended or modified in writing signed by both parties, and neither party’s
standard terms and conditions will apply. 
In the event of any conflict between this Agreement and terms of any
documents delivered pursuant to this Agreement, including without limitation
any Purchase Order and any invoices sent by Manufacturer, this Agreement will
control.

 

[SIGNATURE PAGE FOLLOWS]

 

19

 

IN WITNESS WHEREOF, each party has executed
this Agreement on the day and year first above written.

 

	
   

  	
  MGP Ingredients, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy W. Newkirk

  
	
   

  	
   

  	
  Timothy W. Newkirk,
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Illinois Corn Processing, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randy Schrick

  
	
   

  	
   

  	
  Randy Schrick, President

  

 

 

EXHIBIT
A — PRODUCTS AND SPECIFICATIONS

 

ASTM 4806 specifications
current at the time of delivery or any successor specifications thereof with
sulfates not to exceed 4 ppm and denaturant not to exceed the Internal Revenue
Service volume maximum so that the Product qualifies for the full blender’s
credit.

 

 

EXHIBIT B ****

 

**** [3 pages 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.

 

 

EXHIBIT C ****

 

**** [ 2 pages 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.

 

 

EXHIBIT D — MARINE TERMS

 

1.               Nominations

 

(a)           MGPI shall nominate a marine
vessel acceptable to Manufacturer (the “Vessel”), such acceptance shall not be
unreasonably withheld. For the avoidance of doubt, Manufacturer shall be
entitled to reject MGPI’s nominated Vessel if it does not pass Manufacturer’s
internal safety vetting procedure or that of any of Manufacturer’s facility.

 

(b)           Where practicable or unless
otherwise agreed, MGPI shall nominate the Vessel at least three (3) days
before the first day of the agreed arrival window.

 

(c)           All nominations shall be in
writing and MGPI shall include, to the extent known:

 

Contract Reference

Vessel Name

Product Grade

Quantity

Agreed Loading Date Range / Arrival Date Range (as
applicable)

Estimated Time of Arrival (ETA)

Independent inspector

Product and Quality Specifications (as applicable)

Comments / Instructions (as applicable)

 

(d)           Manufacturer shall give
notice accepting or rejecting any Vessel nomination within one (1) banking
day after receipt of such nomination.

 

2.               Estimated Time of Arrival (“ETA”):

 

(a)           Where practicable, MGPI
shall provide Vessel’s ETA no later than 48 hours prior to the Vessel’s
arrival.

 

(b)           The terminal operator at the
Manufacturer’s facility shall be further notified 6 hours in advance of the
Vessel’s arrival.

 

(c)           After the six-hour notice,
when a scheduled arrival time changes by more than two hours, all reasonable
efforts shall be made to notify the terminal operator at the discharge port of
such change.

 

3.               Notice of Readiness:  After the Vessel has arrived at the customary
place of waiting, is otherwise in all respects ready to load cargo.

 

4.               Laytime:

 

(a)           Unless otherwise agreed,
barge laytime (“Laytime”) shall be 3,000 barrels/hour plus three hours
freetime.

 

(b)           If the Vessel arrives before
the agreed arrival date range, tenders a valid NOR, and is in all respects
ready to load its cargo, Laytime shall not commence until

 

 

00:01
hours on the first day of the agreed arrival date range, unless Manufacturer
elects to accept the Vessel earlier, in which case Laytime shall begin when the
Vessel is all fast.

 

(c)           If the Vessel arrives within
its agreed arrival date range, tenders a valid NOR, and is in all respects
ready to load its cargo, Laytime shall commence upon the Vessel’s NOR being
tendered, berth or no berth, or when the Vessel is all fast, whichever occurs first.

 

(d)           If the Vessel arrives after
the last day of the agreed arrival date range, tenders a valid NOR, and is in
all respects ready to load its cargo, Laytime shall commence when the Vessel is
all fast.

 

(e)           Time consumed due to any of
the following shall not count as used Laytime or if the Vessel is on demurrage,
for demurrage:

 

(i)            Any delay due to the Vessel’s
condition, breakdown, or any other causes attributable to the Vessel;

 

(ii)           Any delay due to prohibition of
discharging at any time by the owner or operator of the Vessel or by the port
authorities, unless the prohibition is caused by Manufacturer or Manufacturer’s
facility’s failure to comply with applicable laws, rules, and regulations;

 

(iii)          Any delay due to pollution or threat
thereof caused by any defect in the Vessel or any act or omission to act by the
master or crew of the Vessel;

 

(iv)          Any delay due to the Vessel’s
violation of the operating or safety rules and/or regulations,
noncompliance with: (i) federal or state laws, (ii) U.S. Coast Guard
regulations, (iii) any other applicable regulations, (iv) or failure
to obtain or maintain required certification;

 

(v)           Any delays caused by strike, lockout,
stoppage or restraint of labor of master, officers or crew of the Vessel
or of tugboats;

 

(vi)          Any delay, not being first caused by
the negligence of Manufacturer or Manufacturer’s facility, by reason of fire,
explosion, storm, strike, lockout, stoppage or restraint of labor,
breakdown of machinery or equipment in or about the facilities of Manufacturer
or Manufacturer’s facility, adverse weather, civil unrest, Act of War, riot,
arrest or restraint of princes, rulers or peoples, or “Act of God” shall be
paid for at one-half (1/2) the rate otherwise provided for demurrage.

 

(f)            Laytime shall cease after
all Product has been loaded and when the hoses have been disconnected from the
Vessel and the Vessel has been released by Manufacturer or Manufacturer’s
facility.

 

(g)           A declaration of Force
Majeure Event shall not relieve the Manufacturer from the obligation to pay
demurrage under this Agreement.

 

4.         Demurrage:

 

(a)           Demurrage Rate:  Manufacturer shall pay demurrage, at the
Charter Party rate for all time that used Laytime exceeds the Laytime
allowance.

 

 

(b)           For demurrage purposes, all
inland barges or tows operating as a unit shall be considered collectively as
one unit.

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