Document:

Exhibit 4.4

 

SIXTH AMENDMENT TO CREDIT AGREEMENT

 

This
Sixth Amendment to Credit Agreement (the “Amendment”) is made as of March 26,
2009, by and among MGP Ingredients, Inc., a Kansas corporation (“MGP”),
Midwest Grain Pipeline, Inc., a Kansas corporation (“Midwest Grain”),
Commerce Bank, N.A., as Agent, Issuing Bank and Swingline Lender under the
Credit Agreement referred to below, and the Banks party to the Credit Agreement
referred to below.  MGP and Midwest Grain
are each referred to herein as a “Borrower” and are collectively
referred to herein as the “Borrowers.” 
The Banks, the Agent, the Issuing Bank and the Swingline Lender are each
referred to herein as a “Bank Party” and are collectively referred to
herein as the “Bank Parties.”

 

Preliminary Statements

 

(a)                                  The Borrowers
and the Bank Parties are parties to a Credit Agreement dated as of May 5,
2008, as amended by (i) a First Amendment to Credit Agreement dated as of September 3,
2008, and a letter agreement dated October 31, 2008, (ii) a Second Amendment
to Credit Agreement dated as of November 7, 2008, (iii) a Third
Amendment to Credit Agreement dated as of December 19, 2008, (iv) a
Fourth Amendment to Credit Agreement dated as of February 27, 2009, and a
letter agreement dated as of March 11, 2009, and (v) a Fifth
Amendment to Credit Agreement dated as of March 13, 2009 (as so amended,
the “Credit Agreement”). 
Capitalized terms used and not defined in this Amendment have the
meanings given to them in the Credit Agreement.

 

(b)                                 In the past the
Borrowers have defaulted on various obligations they have under the Credit
Agreement and have requested that the Bank Parties forebear — and, as an
accommodation to the Borrowers, the Bank Parties have been willing to forebear —
from exercising various rights and remedies otherwise available to the Bank
Parties because of such defaults.  The
Borrowers have now provided the Bank Parties certain business plans and
projections and advised the Bank Parties that the Borrowers anticipate
receiving by the dates provided herein additional financial resources from
other lenders or other funding sources and from the sale of certain fixed
assets owned the Borrowers.  In order to
provide the Borrowers the amount of time they’ve requested to implement such
business plans and obtain such funding and asset sale proceeds, the Borrowers
have requested that the Bank Parties extend the Revolving Credit Termination
Date and make certain other modifications to or concessions under the Credit
Agreement.

 

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

 

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

 

1.                                      Elimination
of Standstill Concept; New Revolving Credit Termination Date.

 

(a)                               No
Standstill Period.  Section 3.19
of the Credit Agreement is amended to read:

 

3.19                           [intentionally omitted]

 

(b)                               Waiver
of Designated Defaults.  The
Banks waive the Designated Defaults.

 

(c)                                Extended Revolving Credit
Termination Date.  The definition of “Revolving Credit
Termination Date” is amended to read as follows:

 

 

“Revolving Credit
Termination Date” means September 3, 2009; provided,
however, that, if such day is not a Business Day, the Revolving
Credit Termination Date shall be the immediately preceding Business Date.

 

2.                                      Reduction
and Step-Down in Commitments.

 

(a)                               New
Commitment Exhibits.  Exhibit A
to the Credit Agreement is replaced by Exhibits A-1, A-2 and A-3 to this
Amendment.

 

(b)                               Amended
Commitment-Related Defined Terms.  The following definitions in Section 1.1
of the Credit Agreement are amended to read as follows:

 

“Letter of Credit
Commitment” means, as to each Bank, and subject to the provisions of Section 3.22
of this Agreement, its obligation to participate in Letters of Credit, as
described in Section 2.3(f) hereof, in an aggregate amount not to exceed (1) from
the Sixth Amendment Closing Date through April 30, 2009, the amount set
forth opposite such Bank’s name on Exhibit A-1 hereto under the column
entitled “Letter of Credit Commitment,” (2) from May 1, 2009 through July 16,
2009, the amount set forth opposite such Bank’s name on Exhibit A-2 hereto
under the column entitled “Letter of Credit Commitment,” and (3) from and
after July 17, 2009, the amount set forth opposite such Bank’s name on Exhibit A-3
hereto under the column entitled “Letter of Credit Commitment.”

 

“Revolving Credit
Commitment” means, as to each Bank, and subject to the provisions of Section 3.22
of this Agreement, (1) from the Sixth Amendment Closing Date through April 30,
2009, the amount set forth opposite such Bank’s name on Exhibit A-1 hereto
under the column entitled “Revolving Credit Commitment,” (2) from May 1,
2009 through July 17, 2009, the amount set forth opposite such Bank’s name
on Exhibit A-2 hereto under the column entitled “Revolving Credit
Commitment,” and (3) from and after July 16, 2009, the amount set forth
opposite such Bank’s name on Exhibit A-3 hereto under the column entitled “Revolving
Credit Commitment.”

 

“Swingline Loan
Commitment” means, as to the Swingline Lender, and subject to the
provisions of Section 3.22 of this Agreement, its obligation to make
Swingline Loans pursuant to Section 2.2 of this Agreement, in an aggregate
principal amount outstanding not to exceed (1) from the Sixth Amendment Closing
Date through April 30, 2009, the amount set forth opposite such Bank’s
name on Exhibit A-1 hereto under the column entitled “ Swingline Loan
Commitment,” (2) from May 1, 2009 through July 16, 2009, the amount
set forth opposite such Bank’s name on Exhibit A-2 hereto under the column
entitled “ Swingline Loan Commitment,” and (3) from and after July 16,
2009, the amount set forth opposite such Bank’s name on Exhibit A-3 hereto
under the column entitled “Swingline Loan Commitment.”

 

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“Total Letter of Credit
Commitment” means, at any time, and subject to the provisions of Section 3.22
of this Agreement, the sum of each Bank’s Letter of Credit Commitment at such
time.

 

“Total Revolving Credit
Commitment” means, at any time, and subject to the provisions of Section 3.22
of this Agreement, the sum of each Bank’s Revolving Credit Commitment at such
time.

 

(c)                                Reductions
in Commitment Amounts.  A new
Section 3.22 is added to the Credit Agreement which reads as follows:

 

3.22                           Further
Commitment Reductions. 
Notwithstanding anything to the contrary in this Agreement (including,
without limitation, anything to the contrary in the definition of “Revolving
Credit Commitment” in this Agreement), each Bank’s Revolving Credit Commitment
at any time shall be reduced by amount equal to the sum of (a) such Bank’s
Pro-Rata Share of the Commitment Reduction Amount at such time, and (b) such
Bank’s Pro-Rata Share of the difference between (i) $3,500,000 and (ii) the
Overadvance Amount at such time.  If the
Total Commitment at any time is less than the aggregate amount of the Banks’
Letter of Credit Commitments at such time, each Bank’s Letter of Credit
Commitment shall be reduced in accordance with its Pro-Rata Share such that the
aggregate amount of the Banks’ Letter of Credit Commitments at such time equals
the Total Commitment at such time (and if the LC Exposure exceeds the Total
Letter of Credit Commitment after giving effect to such reduction, the
Borrowers shall pledge to the Agent, on behalf of the Banks, as additional
security for the Obligations, cash collateral in amount equal to 105% of the amount
of such excess, in such form and pursuant to such documents as the Agent may
reasonably require).  Similarly, if the
Total Commitment at any time is less than the Swingline Loan Commitment at such
time, the Swingline Loan Commitment shall be reduced to an amount that equals
the Total Commitment at such time.

 

(d)                               New
Conforming Definitions. Section 1.1 of the Credit Agreement is
further amended to add the following definitions in appropriate alphabetical
order:

 

“Commitment Reduction
Amount” means, at any time, the sum at such time of:

 

(1)                                  70% of the net
amount of proceeds received by or on behalf of any Borrower on or after March 11,
2009 from any sale or other disposition of real property or other non-ordinary
course asset dispositions (including, without limitation, the sale proceeds
received by MGP on or about March 11, 2009 resulting from the sale of the
Empty Lots and the Warehouse properties referred to in the letter of the same
date from the Borrowers to the Agent); and

 

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(2)                                  70% of the net
amount of proceeds of any Debt, equity interests or other securities incurred
or issued, as the case may be, by or on behalf of any Borrower on or after March 11,
2009, other than proceeds from Debt incurred or issued under (a) the
Credit Documents, or (b) Permitted Atchison Debt, Permitted Cray Debt
and/or Permitted ENB Debt.

 

For purposes of subpart (1) above, the “net”
amount of proceeds from an asset disposition shall be after the repayment of
any Permitted Debt  secured by such asset
that is required to repaid by the holder thereof as a result of such
disposition (other than Permitted Debt due the Banks under the Credit
Documents).

 

“Sixth Amendment Closing
Date” means March 26, 2009.

 

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

 

3.                                      Borrowing
Base; Overadvance Amount.

 

(a)                               Borrowing
Base Reduced by Commitment Reduction Amount; Collateral Valuation Timing.  The definition of “Borrowing Base” in Section 1.1
of the Credit Agreement is amended to read as follows:

 

“Borrowing Base” means, at any time (except
as otherwise provided below), an amount equal to the sum of:

 

(1)                                  85% of the face amount of
Eligible Accounts outstanding at such time;

 

(2)                                  65% of the
Value of Eligible Inventory consisting of flour;

 

(3)                                  75% of the
Value of Eligible Inventory consisting of corn;

 

(4)                                  75% of the
Value of Eligible Inventory consisting of wheat;

 

(5)                                  80% of the Value of Eligible
Inventory consisting of alcohol (food grade or ethanol);

 

(6)                                  75% of the
Value of Eligible Inventory consisting of feed;

 

(7)                                  65% of the Value of Eligible
Inventory consisting of protein (wheat gluten);

 

(8)                                  60% of the
Value of Eligible Inventory consisting of starch;

 

(9)                                  60% of the Value of Eligible
Inventory consisting of other finished goods; and

 

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(10)                            the Overadvance Amount;

 

less the sum of (i) the Commitment Reduction Amount
at such time, and (ii) the amount of taxes arising under 26 USC 5001 at
such time which the Borrowers and any Guarantor Subsidiaries reasonably
anticipate being payable by a Borrower or a Guarantor Subsidiary to a taxing
authority in connection with planned sales of taxable alcohol Inventory to
non-bonded warehouses.

 

For
purposes of determining the amount of the Borrowing Base at any time in a
month, the amount of Eligible Inventory as reflected in a weekly Borrowing Base
Certificate referred to in Section 6.1(b)(3) of this Agreement shall
be the amount of the Eligible Inventory at the end of the prior month.  Eligible Inventory shall be calculated at the
lower of cost or market value.

 

(b)                               Overadvance
Amount.  The definition of “Overadvance
Amount” in Section 1.1 of the Credit Agreement is amended to read as
follows:

 

“Overadvance Amount” means: (1) at any
time from the Sixth Amendment Closing Date through April 1, 2009, the
difference between (a) $3,500,000 and (b) the aggregate amount of
proceeds received by a Borrower from Permitted Atchison Debt, Permitted Cray
Debt and/or Permitted ENB Debt financings at such time; and (2) at any
time after April 1, 2009, zero; provided, however,
that in no event shall the Overadvance Amount be a negative number.

 

4.                                      New
Permitted Debt.

 

(a)                               Permitted
Debt.  The definition of Permitted
Debt in Section 1.1 of the Credit Agreement is amended to read as follows:

 

“Permitted Debt”
means any of the following:

 

(1)                                  accrued
expenses and current trade account payables incurred in the ordinary course of
a Person’s business;

 

(2)                                  Debt under the
Credit Documents;

 

(3)                                  Swap
Obligations;

 

(4)                                  Debt described
in Schedule 5.1(h) of this Agreement, together with any refinancings of
such Debt, provided that any refinancing does not act to increase the principal
amount of the Debt outstanding at the time of the refinancing;

 

(5)                                  intercompany
Debt between or among any Borrower and/or any Guarantor Subsidiaries;

 

(6)                                  to the extent
the same constitute Debt by virtue of subparts (8) or (9) of the
definition thereof, any such Debt arising under 

 

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performance bonds or surety bonds incurred in
the ordinary course of business;

 

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

 

(8)                                  Permitted New
Debt;

 

(9)                                  Debt, other
than Debt described in subparts (1) through (8) above, provided that
such Debt is unsecured and the aggregate outstanding principal amount of such
Debt does not exceed $1,000,000 at any time; and

 

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

 

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

 

“Cray Trust” means
the Cloud L. Cray, Jr. Trust under agreement dated October 25, 1983.

 

“Permitted Atchison Debt”
means Debt of MGP to Bank of Atchison (Union State Bank) provided that (1) the
aggregate principal amount of such Debt outstanding at any time does not exceed
$1,500,000, less any payments or prepayments thereof after the date of its
incurrence, (2) such Debt is unsecured except for a Lien on (i) MGP’s
real property and improvements thereon located in Onaga, Kansas, (ii) MGP’s
real property and improvements thereon located in Atchison, Kansas and commonly
known as the “flour mill,” and (iii) equipment located at such real
property locations, (3) such Debt is subject to an intercreditor agreement
in favor of the Agent, on behalf of the Banks, which provides for the Agent, on
behalf of the Banks, to retain a subordinate Lien on such properties and
equipment and which restricts the holder of such Debt from obtaining judgment
liens on or taking other action against 
assets of MGP other than such properties and which is otherwise
reasonably acceptable to the Agent, and (4) the maturity, payment and
other terms of such Debt are reasonably acceptable to the Banks.

 

“Permitted Cray
Collateral” means: (1) Collateral consisting of personal property in
which the Agent, on behalf of the Banks, has been granted a Lien by a Borrower
pursuant to the Credit Documents, (2) Collateral consisting of MGP’s real
property and improvements thereon located in Pekin, Illinois and which are
subject to a prior Lien in favor of the Agent, on behalf of the Banks, pursuant
to a mortgage instrument from MGP to the Agent recorded September 8, 2008
as document number 200800019473 in the real property records of Tazewell
County, Illinois; and (3) Collateral consisting of MGP’s real property and
improvements thereon located in Atchison, Kansas and which are subject to a
prior Lien in favor of the Agent, on behalf of the Banks, pursuant to 

 

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a mortgage instrument from MGP to the Agent
recorded December 12, 2008 in Book 569, Page 19 in the real property
records of Atchison County, Kansas; provided, however,
that (a) Permitted Cray Collateral shall not include any Excluded Assets,
Excluded Real Estate or any Borrower’s Accounts or Inventory, in each case
whether now owned or existing or hereafter acquired or arising, and (b) in
no shall event any real or personal property constitute Permitted Cray
Collateral unless the Agent, on behalf of the Banks, has a prior perfected Lien
on such property as security for the Obligations.

 

“Permitted Cray Debt”
means Debt of MGP to the Cray Trust provided that (1) the aggregate
principal amount of such Debt outstanding at any time does not exceed
$2,000,000, less any payments or prepayments thereof after the date of its
incurrence, (2) such Debt is unsecured except for a Lien in favor of the
Cray Trust on Permitted Cray Collateral, (3) such Lien in favor of the
Cray Trust is subordinate in priority in all respects to the Agent’s Lien, on behalf
of the Banks, on the Permitted Cray Collateral, (4) the Cray Trust and MGP
have executed and delivered to the Agent a subordination agreement in respect
of such Debt and the Permitted Cray Collateral substantially in the form of Exhibit B
to the Sixth Amendment, and (5) the maturity, payment and other terms of
such Debt are as set forth in Exhibit C to the Sixth Amendment.

 

“Permitted ENB Debt”
means Debt of MGP to Exchange National Bank provided that (1) the aggregate
principal amount of such Debt outstanding at any time does not exceed
$3,000,000, less any payments or prepayments thereof after the date of its
incurrence, (2) such Debt is unsecured except for a Lien on (a) industrial
revenue or similar bonds issued by the City of Atchison, Kansas or an agency
thereof and which are owned by MGP and with respect to which MGP is the
ultimate obligor, and (b) a leasehold mortgage on MGP’s leasehold interest
and improvements thereon with respect to MGP’s property in Atchison, Kansas
commonly known as its “new office building” and its “research and development
building,” (3) if required by the Agent, such Debt is subject to an
intercreditor agreement in favor of the Agent, on behalf of the Banks, which
restricts the holder of such Debt from obtaining judgment liens on or taking
other action against assets of MGP other than such bonds or leasehold property
and improvements thereon and which is otherwise reasonably acceptable to the
Agent, and (4) the maturity, payment and other terms of such Debt are
reasonably acceptable to the Banks.

 

“Permitted New Debt”
means, collectively, (1) Permitted Cray Debt, (2) Permitted Atchison
Debt, (3) Permitted ENB Debt, and (4) Permitted USDA Debt.

 

“Permitted USDA Debt”
means Debt of MGP to one or more lenders, guaranteed in whole or in part by the
United States Department of Agricultural, provided that (1) the aggregate
principal amount of such Debt outstanding at any time does not exceed
$25,000,000, less any 

 

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payments or prepayments thereof after the
date of its incurrence, (2) such Debt is unsecured except for a Lien on
MGP’s real property and improvements thereon located in Atchison, Kansas (other
than MGP’s property in Atchison, Kansas commonly known as its “new office” and
its “research and development building”), and (3) the maturity, payment
and other terms of such Debt are reasonably acceptable to the Banks.

 

5.                                      New
Permitted Liens.

 

(a)                               Permitted
Liens.  The definition of Permitted
Liens in Section 1.1 of the Credit Agreement is amended to read as
follows:

 

“Permitted
Liens” means any of the following:

 

(1)                                  Liens for
taxes, assessments or governmental charges not delinquent or being contested in
good faith and by appropriate proceedings and for which adequate reserves are
maintained in accordance with GAAP;

 

(2)                                  Liens arising
out of deposits in connection with workers’ compensation, unemployment
insurance, old age pensions or other social security or retirement benefits
legislation;

 

(3)                                  deposits or
pledges to secure bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds, and
other obligations of like nature arising in the ordinary course of business;

 

(4)                                  Liens imposed
by law, such as mechanics’, workers’, materialmen’s, carriers’ or other like
Liens (excluding, however, any Lien in favor of a landlord) arising in the
ordinary course of a Borrower’s business which secure the payment of
obligations which are not more than 30 days past due or which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves are maintained in accordance with GAAP;

 

(5)                                  rights of way,
zoning restrictions, easements and similar encumbrances affecting real property
which do not materially interfere with the use of such property;

 

(6)                                  Liens existing
on the Closing Date and described on Schedule 5.1(m) of this
Agreement, and any renewals or refinancings thereof, provided that (a) the
Debt secured by such Liens is limited to the Debt owing to the related creditor
as described in Schedule 5.1(h), and any renewals or refinancings thereof, and (b) such
Liens do not encumber any Collateral (other than Collateral consisting of
Equipment, including proceeds thereof, with respect to which the Agent was
first granted a Lien pursuant to the Second Amendment);

 

(7)                                  [intentionally
omitted];

 

8

 

(8)                                  Liens in favor
of a Bank or its affiliate securing Swap Obligations, which Liens shall be pari
passu in priority with the Liens referred to in subpart (10) immediately
below;

 

(9)                                  in the case of
Inventory of a Borrower or a Subsidiary of a Borrower consisting of distilled
spirits, the Lien thereon arising under 26 USC 5004;

 

(10)                            Liens in favor
of the Agent (for the benefit of the Banks);

 

(11)                            Liens resulting
from any judgment or award, the time for the appeal or petition for rehearing
for which shall not have expired, or in respect of which a Borrower or a
Subsidiary of a Borrower shall in good faith be prosecuting on appeal or
proceeding for review and in respect of which a stay or execution pending such
appeal or preceding for review shall have been granted;

 

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

 

(13)                            Permitted New
Debt Liens; and

 

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

 

(b)                               Conforming
Definition. Section 1.1 of the Credit Agreement is further
amended to add the following definition in appropriate alphabetical order:

 

“Permitted New Debt Liens”
means, (a) in the case of Permitted Cray Debt, Liens described in the
definition thereof as being permitted to secure such Debt, (b) in the case
of Permitted Atchison Debt, Liens described in the definition thereof as being
permitted to secure such Debt, (c) in the case of Permitted ENB Debt,
Liens described in the definition thereof as being permitted to secure such
Debt, and (d) in the case of Permitted USDA Debt, Liens described in the
definition thereof as being permitted to secure such Debt.

 

6.                                      Reporting
Requirements.

 

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

 

(3)                                  Borrowing Base
Certificate.  As soon as
available and in any event within three Business Days after the end of each
week, a Borrowing Base Certificate dated as of the end of such week, which
certificate shall, in addition to any others requirements applicable thereto, (i)
break out Eligible Inventory by the applicable Borrowing 

 

9

 

Base inventory group at the previous
month-end cost figure, and (ii) include an accounts receivable customer
aging.

 

(b)                               Additional
Reporting Requirements.  A new
Section 6.1(n) is added to the Credit Agreement which reads as follows:

 

(n)                                 Additional
Reporting Obligations. 
Without limiting the provisions of Section 6.1(b) or any other
provisions of this Agreement, the Borrowers shall also furnish to the Agent and
the Banks the following:

 

(1)                                  Customer List.  A list of all customers of each Borrower,
including the name, address, phone number and contact information for each
customer and such other information as the Agent may reasonably request, within
10 days after the end of each month;

 

(2)                                  Risk Management
Report.  A risk management report
regarding the Borrowers, substantially in the form as that being provided to
the Banks prior to the Sixth Amendment Closing Date and including in any event
information regarding the Borrowers’ purchase contracts, sales contracts and
net open positions; such report to be delivered within three Business Days
after the end of each week;

 

(3)                                  Commodity Hedge
Statement.  A daily
commodity hedge statement, substantially in the form as that being provided to
the Banks prior to the Sixth Amendment Closing Date; such statement to be
provided on each Business Day;

 

(4)                                  Cash Flow
Report; Reconciliation.  A
report (the “Cash Flow Report”) detailing the Borrowers’ projected cash
flow and actual cash flow on a week-to-week basis and a cumulative basis (since
the week beginning March 9, 2009), substantially in the form as (and using
the same methodology to compute projected cash flow and actual cash flow as in)
the Cash Flow Report attached to the Sixth Amendment as Exhibit D thereto;
and, in addition, a reconciliation of such projected cash flow to actual cash
flow on a week-to-week basis and on a cumulative basis (as provided above); in
each case within three Business Days after the end of each week;

 

(5)                                  Accounts
Payable Customer Aging.  An
aging of all accounts payable owing by each Borrower, substantially in the form
as that being provided to the Banks prior to the Sixth Amendment Closing Date;
such aging to be delivered within three Business Days after the end of each
week; and

 

(6)                                  Outstanding
Checks.  A report regarding each
Borrower’s outstanding checks and similar payment items, 

 

10

 

substantially in the form as that being
provided to the Banks prior to the Sixth Amendment Closing Date; such report to
be delivered within three Business Days after the end of each week.

 

7.                                      Additional
Covenants Relating to Inspections; Executive Compensation; Timing of Certain
Transactions; and Hedging.

 

(a)                               Inspections.  A new Section 6.1(o) is added to
the Credit Agreement which reads as follows:

 

(o)                                 Inspections.  Without limiting any other provisions of this
Agreement or any other Credit Document, the Borrowers agree that the Agent and
the Banks shall have the right at any time to inspect the Collateral and each
Borrower’s other properties for purposes of confirming the Borrowing Base and
for any other purposes permitted under the Credit Documents.  If the Agent employs one or more
third-parties to conduct any such inspections, the Borrowers agree to reimburse
the Agent on demand for all out-of-pocket costs and expenses incurred by the
Agent or such third-parties in connection with such inspections.

 

(b)                               Executive
Compensation Deferral.  A new
Section 6.1(p) is added to the Credit Agreement which reads as
follows:

 

(p)                                 Executive
Compensation.  Until the
earlier of (1) June 30, 2009, or (2) such time as the Total
Revolving Credit Commitment equals or is less than $7,500,000, the Borrowers
shall maintain in effect their executive compensation deferral agreements with
certain officers that were disclosed in writing by the Borrowers to the Agent
and the Banks prior to the Sixth Amendment Closing Date.

 

(c)                                Pekin
Sale; Closing on Permitted New Debt.  A new Section 6.1(q) is added to
the Credit Agreement which reads as follows:

 

(q)                                 Timing of
Certain Transactions.  The
Borrowers covenant to the Banks that:  (1)
on or before April 1, 2009, the Borrowers shall close on the financing
transactions described in the definitions of Permitted Atchison Debt and
Permitted Cray Debt in Section 1.1 of this Agreement in amounts and on
terms and conditions reasonably satisfactory to the Banks; (2) on or
before April 15, 2009, the Borrowers shall close on the financing
transactions described in the definition of Permitted ENB Debt in Section 1.1
of this Agreement in an amount and on terms and conditions reasonably
satisfactory to the Banks; and (3) on or before June 15, 2009, MGP
shall have received either (i) a written commitment letter or agreement
from a third-party buyer to purchase MGP’s Pekin, Illinois facility on or
before July 17, 2009 in an amount and on terms and conditions reasonably
satisfactory to the Banks, or (ii) a written commitment letter or
agreement by a bank or other institutional lender to provide the Permitted USDA
Debt on or before July 17, 2009 in an amount and on terms and conditions
reasonably satisfactory to the Banks.

 

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(d)                               Hedging.  A new Section 6.2(k) is added to
the Credit Agreement which reads as follows:

 

(k)                                  Hedging.  No Borrower shall enter into any commodity
hedge transaction, except for commodity hedges to “lock in” or protect a
Borrower from price movements associated with forward sales contracts the term
of which does not exceed six months from the date of the executed hedge
transaction.

 

(e)                                Possible
Section Numbering Errors. The parties acknowledge
that the Credit Agreement has been amended on numerous occasions and that, as a
result, various sections or subsections of the Credit Agreement have been added
or, in some cases, deleted.  Such
additions and deletions of section or subsections may lead to inadvertent
section or subsection numbering errors. 
In light of this, the parties agree that, if a “new” section or
subsection is added to the Credit Agreement and such section or subsection is
inadvertently assigned a section or subsection number that already exists under
the Credit Agreement, such new section or subsection shall not act to replace
(and instead shall be in addition to) such existing section or subsection,
unless the parties expressly agree that such new section or subsection is to “replace”
such existing section or subsection or unless the context otherwise clearly
requires that such replacement occur.

 

(f)                                   Material
Non-Monetary Defaults to Include All Affirmative Covenants.  Section 7.1(b) of the Credit
Agreement is amended to read as follows:

 

(b)                                 Material
Non-Monetary Default.  Any
Borrower fails to perform or observe any term, covenant or other provision
contained in Sections 6.1, 6.2 or 6.3 of this Agreement in accordance with the
terms thereof; or

 

8.                                      Weekly
Cash Flow.

 

(a)                               New
Financial Covenant.  A new Section 6.3(i) is
added to the Credit Agreement which reads as follows:

 

(i)                                     Cash Flow.  The Borrowers’ cumulative Actual Cash Flow at
the end of any week shall not vary negatively from  the
Borrowers’ cumulative Projected Cash Flow at the end of such week by an amount
that exceeds the greater of (i) 10% of the cumulative Projected Cash Flow
at the end of such week, or (ii) $200,000. 
Notwithstanding the foregoing, to the extent any such negative variance
is attributable solely to a Borrower’s failure to receive cash from a funding
source described in the “Other Funding Sources” section of the Borrower’s Cash
Flow Report delivered to the Banks pursuant to Section 6.1(n)(4) hereof,
the Borrowers shall be deemed to be in compliance with the foregoing covenant
for such week if such shortfall amount is received by a Borrower from such
funding source within 10 Business Days after the end of such week (provided, further, that, if such funding source is Permitted
ENB Debt, the Borrowers shall be deemed to be in compliance with such covenant
if such Permitted ENB Debt proceeds are received by MGP by April 15,
2009).  The “cumulative” Actual Cash Flow
and

 

12

 

Projected Cash Flow of the Borrowers shall be
computed as provided in Section 6.1(n)(4) of this Agreement.

 

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

 

“Actual Cash Flow”
means, for any period, the Borrowers’ actual cash flow, as reflected in the
Cash Flow Report for such period.

 

“Cash Flow Report”
has the meaning given to such term in Section 6.1(n)(4) of this
Agreement.

 

“Projected Cash Flow”
means, for any period, the Borrowers’ projected cash flow for such period as
reflected in the Cash Flow Report attached to the Sixth Amendment as Exhibit D
thereto.

 

9.                                      No Other Amendments; No Waiver; No Implied Duty.  Except as amended hereby, the
Credit Agreement and the other Credit Documents shall remain in full force and
effect and be binding on the parties in accordance with their respective terms.  Nothing in this Amendment shall constitute a
waiver by any of the Bank Parties of any Default or Event of Default which may
exist on the date hereof, and nothing herein shall require any Bank Party to
waive any Default or Event of Default which may arise hereafter.  Nothing herein shall act to, or obligate any
Person at any time to, release any Lien on any Collateral or limit the scope or
amount of the obligations secured thereby.

 

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

 

11.                               Representations and Warranties.  Each Borrower represents and warrants to the
Bank Parties as follows:  (a) it is a
validly existing corporation and has full corporate power and authority to
enter into this Amendment and any documents or transactions contemplated hereby
and to pay and perform any obligations it may have in respect of the foregoing;
(b) its execution, delivery and performance of this Amendment and any
documents or transactions contemplated hereby do not violate or conflict with,
or require any consent under, (1) its organizational documents or any
other agreement or document relating to its formation, existence or authority
to act, (2) any agreement or instrument by which it or any its properties
is bound, (3) any court order, judicial proceeding or any administrative
or arbitral order or decree, or (4) any applicable law, rule or
regulation; and (c) no authorization, approval or consent of or by, and no
notice to or filing or registration with, any governmental authority or other
Person is necessary for it to enter into this Amendment or any document or
transaction contemplated hereby or to perform any of its obligations with
respect to any of the foregoing.

 

12.                               Release
of Bank Parties.  Without
limiting any other provision of this Amendment, each Borrower, on behalf of
itself and any officers, directors, agents, attorneys, employees,
representatives, affiliates, successors and assigns it may have and anyone
claiming through or under it (collectively, with 

 

13

 

respect to all Borrowers, the “Releasing
Parties”), hereby releases, remises and acquits each Bank Party, and its
officers, directors, agents, attorneys, employees, representatives, affiliates,
successors and assigns and anyone claiming through or under it (collectively,
with respect to all Bank Parties, the “Released Parties”), from all
manners of action, causes of action, claims and demands of every kind and
nature whatsoever, whether known or unknown, fixed or contingent, liquidated or
unliquidated, as of the date of this Amendment, that any of the Releasing
Parties had or may have against any of the Released Parties.

 

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

 

(a)                               Amendment.  This Amendment;

 

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

 

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

 

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

 

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

 

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

 

18.                               Firebird Aircraft Financing; Commerce Only. 
Insofar as the Designated Defaults gave rise to a default or event of
default under the aircraft financing agreements between Commerce Bank, N.A. and
Firebird Acquisitions, LLC, Commerce Bank, N.A. waives any such default or
event of default.

 

[signature page(s) to follow]

 

14

 

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

 

 

	
   

  	
  MGP
  INGREDIENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Robert Zonneveld

  
	
   

  	
   

  	
  Name:
  Robert Zonneveld 

  
	
   

  	
   

  	
  Title:
  VP Finance & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MIDWEST
  GRAIN PIPELINE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/
  Robert Zonneveld

  
	
   

  	
   

  	
  Name:
  Robert Zonneveld 

  
	
   

  	
   

  	
  Title:
  VP Finance & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMMERCE
  BANK, N.A.,

  
	
   

  	
  as
  Agent, Issuing Bank, Swingline Lender and a Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/Wayne
  C. Lewis

  
	
   

  	
   

  	
  Name:
  Wayne C. Lewis

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
  BMO
  CAPITAL MARKETS FINANCING, INC.,

  
	
   

  	
  as
  a Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   /s/ Barry W. Stratton

  
	
   

  	
   

  	
  Name:
  Barry Stratton

  
	
   

  	
   

  	
  Title:Managing
  Director

  
	
   

  	
   

  
	
   

  	
  NATIONAL
  CITY BANK,

  
	
   

  	
  as
  a Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/:Michael
  Leong

  
	
   

  	
   

  	
  Name: Michael Leong

  
	
   

  	
   

  	
  Title:
  Vice President

  

 

Sixth
Amendment to Credit Agreement – Signature Page

 

 

Exhibit A-1

 

(Banks and Commitments*; Prior to April 30, 2009)

 

	
  Bank

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Letter of Credit

  Commitment**

  	
   

  	
  Swingline Loan

  Commitment**

  	
   

  	
  Bank’s Total

  Commitment

  	
   

  
	
  Commerce Bank,
  N.A.

  	
   

  	
  $

  	
  12,897,500

  	
   

  	
  $

  	
  3,080,000

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  $

  	
  12,897,500

  	
   

  
	
  BMO Capital
  Markets Financing, Inc.

  	
   

  	
  $

  	
  10,301,250

  	
   

  	
  $

  	
  2,460,000

  	
   

  	
  0

  	
   

  	
  $

  	
  10,301,250

  	
   

  
	
  National City
  Bank

  	
   

  	
  $

  	
  10,301,250

  	
   

  	
  $

  	
  2,460,000

  	
   

  	
  0

  	
   

  	
  $

  	
  10,301,250

  	
   

  
	
  Totals:

  	
   

  	
  $

  	
  33,500,000

  	
   

  	
  $

  	
  8,000,000

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  $

  	
  33,500,000

  	
   

  

 

*                                         Commitments
subject to reduction as provided in Section 3.22 of the Agreement.

 

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

 

1

 

Exhibit A-2

 

(Banks and Commitments*; May 1, 2009 through July 16, 2009)

 

	
  Bank

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Letter of Credit

  Commitment**

  	
   

  	
  Swingline Loan

  Commitment**

  	
   

  	
  Bank’s Total

  Commitment

  	
   

  
	
  Commerce Bank, N.A.

  	
   

  	
  $

  	
   9,625,000

  	
   

  	
  $

  	
   3,080,000

  	
   

  	
  $

  	
   5,000,000

  	
   

  	
  $

  	
   9,625,000

  	
   

  
	
  BMO Capital Markets Financing, Inc.

  	
   

  	
  $

  	
   7,687,500

  	
   

  	
  $

  	
   2,460,000

  	
   

  	
  0

  	
   

  	
  $

  	
   7,687,500

  	
   

  
	
  National City Bank

  	
   

  	
  $

  	
   7,687,500

  	
   

  	
  $

  	
   2,460,000

  	
   

  	
  0

  	
   

  	
  $

  	
   7,687,500

  	
   

  
	
  Totals:

  	
   

  	
  $

  	
   25,000,000

  	
   

  	
  $

  	
   8,000,000

  	
   

  	
  $

  	
   5,000,000

  	
   

  	
  $

  	
   25,000,000

  	
   

  

 

*                                         Commitments
subject to reduction as provided in Section 3.22 of the Agreement.

 

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

 

2

 

Exhibit A-3

 

(Banks and Commitments*; After July 17, 2009)

 

	
  Bank

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Letter of Credit

  Commitment**

  	
   

  	
  Swingline Loan

  Commitment**

  	
   

  	
  Bank’s Total

  Commitment

  	
   

  
	
  Commerce Bank, N.A.

  	
   

  	
  $

  	
   2,887,500

  	
   

  	
  $

  	
   2,887,500

  	
   

  	
  $

  	
   1,000,000

  	
   

  	
  $

  	
   2,887,500

  	
   

  
	
  BMO Capital Markets Financing, Inc.

  	
   

  	
  $

  	
   2,306,250

  	
   

  	
  $

  	
   2,306,250

  	
   

  	
  0

  	
   

  	
  $

  	
   2,306,250

  	
   

  
	
  National City Bank

  	
   

  	
  $

  	
   2,306,250

  	
   

  	
  $

  	
   2,306,250

  	
   

  	
  0

  	
   

  	
  $

  	
   2,306,250

  	
   

  
	
  Totals:

  	
   

  	
  $

  	
   7,500,000

  	
   

  	
  $

  	
   7,500,000

  	
   

  	
  $

  	
   1,000,000

  	
   

  	
  $

  	
   7,500,000

  	
   

  

 

*                                         Commitments
subject to reduction as provided in Section 3.22 of the Agreement.

 

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

 

3

 

Exhibit B

 

(form of Subordination Agreement )

 

SUBORDINATION AGREEMENT

 

This Subordination Agreement
(the “Agreement”) is made as of March     ,
2009, among Commerce Bank, N.A, a national banking association, in its capacity
as Agent under the Credit Agreement referred to below (in such capacity, the “Agent”),
Cloud L. Cray, Jr. Trust under agreement dated October 25, 1983 (the
“Junior Creditor”), MGP Ingredients, Inc., a Kansas corporation (“MGP”),
and Midwest Grain Pipeline, Inc., a Kansas corporation (“Midwest Grain”
and, together with MGP, the “Borrowers”).

 

ARTICLE I

DEFINITIONS

 

1.1                               Definitions.  Terms used but not defined in this Agreement
have the meanings given to them in the Credit Agreement.  In addition, the following terms have the
meanings specified below (terms defined in the singular to have the same
meaning when used in the plural and vice versa):

 

“Agent” means the Agent referred to in the introductory
paragraph hereof and any successor Agent under the Credit Agreement.

 

“Bank” has the meaning specified in the Credit Agreement.

 

“Credit Agreement” means the Credit Agreement dated as of
May 5, 2008, among the Borrowers, Commerce Bank, N.A., as the Agent,
Issuing Bank and Swingline Lender, and the Banks from time to time party
thereto and any amendments, replacements, restatements, consolidations and
other modifications thereof from time to time.

 

“Credit Documents” means all instruments (including, without
limitation, the Notes), documents and agreements which now or hereafter
evidence, secure, guarantee or otherwise relate to the Borrowers’ Obligations
under the Credit Agreement, the Notes and/or the other Credit Documents and any
renewals, replacements, consolidations, amendments and other modifications of
any of the foregoing from time to time.

 

“Default” means any Default or Event of Default specified in the
Credit Agreement.

 

“Insolvency Event” has the meaning specified in
Section 3.2(a) hereof.

 

“Junior Creditor” means the Junior Creditor referred to in the
introductory paragraph hereof and any other holder from time to time of any
Junior Debt, as appropriate.

 

“Junior Debt” means all Obligations of each Borrower to, or
acquired by, the Junior Creditor. 
Without limiting the generality of the foregoing, Junior Debt includes
the Junior Note and all other Obligations of each Borrower of any nature
whatsoever to the Junior Creditor, irrespective of whether such Obligations are
evidenced by any written instrument or agreement, whether now existing or hereafter
arising or acquired, or however arising.

 

“Junior Liens” has the meaning specified in Section 3.6
hereof.

 

 

“Junior Lien Documents” has the meaning specified in
Section 2(a)(ii) hereof.

 

“Junior Note” means the promissory note, dated
March     , 2009, from the Borrowers, as makers, to
the Junior Creditor, as payee, in the original principal amount of
$2,000,000.00, as the same may be amended, renewed, restated, consolidated,
replaced and otherwise modified from time to time.

 

“Notes” has the meaning specified in the Credit Agreement.

 

“Obligations” means all debts and other liabilities of each
Borrower of any nature whatsoever whether now existing or hereafter incurred or
arising and whether matured or unmatured, liquidated or unliquidated, contractual
or non-contractual, joint, several or joint and several, fixed or contingent,
disputed or undisputed, direct or indirect.

 

“Senior Creditors” means, collectively, the Banks and any other
holder from time to time of any Senior Debt, as appropriate.

 

“Senior Debt” means: (a) all Obligations of each Borrower
under the Credit Agreement, the Notes and the other Credit Documents, whether
for principal, interest (including interest accruing after the occurrence of an
Insolvency Event whether or not the same is allowed as a claim), premium, fees,
expenses, indemnification obligations or otherwise; and (b) all
indebtedness of each Borrower, the proceeds of which are used to refinance any
of the foregoing.

 

“Senior Liens” has the meaning specified in Section 3.6 hereof.

 

ARTICLE II

REPRESENTATIONS OF JUNIOR CREDITOR

 

2.1                               Representations
and Warranties.

 

(a)                                The Junior Creditor represents and warrants to the
Agent as follows:

 

(i)            This Agreement has
been duly executed and delivered by the Junior Creditor, and is the valid and
binding obligation of the Junior Creditor, enforceable against the Junior
Creditor in accordance with its terms.

 

(ii)           The Junior Creditor
does not have any lien or other security interest on any existing or future
assets of any Borrower, whether real, personal or otherwise, except for any
such lien or security interest arising under or evidenced by (collectively, the
“Junior Lien Documents”): (1) the Junior Note; (2) one Uniform
Commercial Code financing statement, from MGP, as debtor, to the Junior
Creditor, as secured party, relating to the collateral described in the Junior
Note, to be filed in the Kansas Secretary of State’s Office; (3) one
Uniform Commercial Code financing statement from Midwest Grain, as debtor, to
the Junior Creditor, as secured party, to be filed in the Kansas Secretary of
State’s Office; (4) the Mortgage, Assignment of Leases, Security Agreement
and Fixture Filing Financing Statement, dated on or about the date hereof, made
by MGP, as mortgagor, to the Junior Creditor, as mortgagee, encumbering certain
real property of MGP located in Pekin, Illinois and more particularly described
in the definition of Permitted Cray Collateral in the Credit Agreement; and
(5) the Mortgage, Assignment of Leases, Security Agreement and Fixture
Filing Financing Statement, dated on or about the date hereof, made by MGP, as
mortgagor, to the Junior Creditor, as mortgagee, 

 

 

encumbering
certain real property of MGP located in Atchison, Kansas and more particularly
described in the definition of Permitted Cray Collateral in the Credit
Agreement.

 

(iii)          The Junior Creditor
is the holder of the Junior Debt and has not encumbered, hypothecated or
otherwise transferred any Junior Debt or any interest of the Junior Creditor
therein to any other person or entity. 
Similarly, the Junior Creditor has not assigned or otherwise transferred
the Junior Liens or any rights of the Junior Creditor under any of the Junior
Lien Documents to any other person or entity.

 

(iv)          No person or entity
has guaranteed the payment or performance of any Junior Debt or agreed to
purchase or otherwise acquire any Junior Debt.

 

(v)           A true and complete
copy of the Junior Note is attached hereto as Exhibit A hereto.

 

(b)                               Each Borrower represents and warrants to the Agent
as follows:

 

(i)            This Agreement has
been duly executed and delivered by such Borrower, and is the valid and binding
obligation of such Borrower, enforceable against such Borrower in accordance
with its terms.

 

(ii)           Such Borrower has not
encumbered (and has not agreed to encumber at any time) any of its existing or
future properties in any respect to secure its obligation to pay any Junior
Debt, except as provided in the Junior Lien Documents.

 

(iii)          To such Borrower’s
knowledge, after making due inquiry, the Junior Creditor is (1) the holder
of the Junior Debt and has not encumbered, hypothecated or otherwise
transferred any Junior Debt or any interest of the Junior Creditor therein to
any other person or entity, and (2) the only person or entity entitled to
enforce any rights under the Junior Lien Documents or otherwise with respect to
any Junior Liens.

 

(iv)          No person or entity
has guaranteed the payment or performance of any Junior Debt or agreed to
purchase or otherwise acquire any Junior Debt.

 

(v)           A true and complete
copy of the Junior Note is attached hereto as Exhibit A hereto.

 

ARTICLE III

SUBORDINATION TO SENIOR DEBT

 

3.1                               Subordination.

 

(a)           General. 
Notwithstanding anything to the contrary in any document evidencing any
Junior Debt, the Junior Creditor agrees and covenants that the Junior Debt is
and shall be subordinate in right of payment to the prior payment in full of
the Senior Debt.  The Senior Debt shall
not be deemed to have been paid in full until all obligations of the Agent and
the Senior Creditors under the Credit Agreement shall have been terminated and
the Agent and the Senior Creditors shall have received indefeasible payment in
full of the Senior Debt in cash.

 

 

(b)           Payment of Junior Debt.  Until all obligations of the Agent and the
Senior Creditors under the Credit Agreement shall have been terminated and the
Agent and the Senior Creditors shall have received indefeasible payment in full
of the Senior Debt in cash, the Junior Creditor shall not be entitled to
receive any payments of principal, interest, fees or any other amounts payable
in respect of any Junior Debt.

 

3.2                               Priority
and Payment Over of Proceeds in Certain Events.

 

(a)           Insolvency or Dissolution of the Borrowers.  Upon any payment or distribution of all or
any of the assets or securities of a Borrower of any kind or character, whether
in cash, property or securities, upon any dissolution, winding up, liquidation,
reorganization, arrangement, adjustment, protection, relief or composition of a
Borrower or its debts, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership, arrangement, reorganization, relief or other
proceedings, or upon any assignment for the benefit of creditors or any other
marshaling of the assets and liabilities of a Borrower or otherwise (any such
event being an “Insolvency Event”), all Senior Debt shall first be
indefeasibly paid in full before the Junior Creditor shall be entitled to
receive any payment of any Junior Debt from or on account of such
Borrower.  Upon the occurrence of any Insolvency
Event, any payment or distribution of assets or securities of a Borrower of any
kind or character, whether in cash, property or securities, to which the Junior
Creditor would be entitled except for the provisions of this Article III,
shall be made by such Borrower or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
directly to the Agent for application (in the case of cash) to, or as
collateral (in the case of non-cash property or securities) for, the payment or
prepayment in full of all Senior Debt after giving effect to any concurrent
payment or distribution to the Agent on the Senior Debt.

 

(b)           Certain Payments Held in Trust.  In the event that, notwithstanding the
foregoing provisions prohibiting such payment or distribution, the Junior
Creditor shall have received any payment or distribution in respect of any
Junior Debt contrary to such provisions, then and in such event such payment or
distribution shall be received and held in trust for the Senior Creditors and
shall be paid over or delivered to the Agent for application (in the case of
cash) to, or as collateral (in the case of non-cash property or securities)
for, the payment or prepayment of all Senior Debt in full after giving effect
to any concurrent payment or distribution to the Agent in respect of the Senior
Debt.

 

3.3           Suspension of
Remedies.  Prior to the indefeasible
payment in full of the Senior Debt and the termination of the Credit Agreement
in accordance with its terms, the Junior Creditor shall not (a) ask,
demand or sue for any payment or distribution or exercise any other remedy in
respect of any Junior Debt or with respect to any Junior Liens, in each case
whether arising under contract, by law or in equity (including, without
limitation, any action to enforce any guaranty or other credit enhancement in
respect of any Junior Debt) or (b) commence, or join with any other
creditor (other than the Agent) in commencing, any Insolvency Event.

 

3.4           Rights of the
Agent Not to be Impaired; Modification of Senior Debt.  No right of the Agent to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act in good faith by the Agent or any Senior
Creditor, or by any noncompliance by any Borrower, with the terms and
provisions and covenants herein, regardless of any knowledge thereof the Agent
or any Senior Creditor may have or otherwise be charged with.  The provisions of this Article III are
intended to be for the benefit of, and shall be enforceable directly by, the
Agent.  Without limiting the generality
of Section 3.8(a) or any other provision of this Agreement, the Junior
Creditor agrees that the Agent, the Banks and the Borrowers may from time to
time modify the terms of any Senior Debt, 

 

 

including,
without limitation, extending or otherwise modifying the payment terms thereof;
increasing or otherwise modifying the interest rates or fees payable under the
Credit Agreement, the Notes and the other Credit Documents; or extending the
maturity thereof.  The Junior Creditor
agrees that the Agent, the Banks and the Borrowers may so modify the terms of
any Senior Debt from time to time without obtaining the consent of, or giving
notice to, the Junior Creditor and that the right of the Agent and the Senior
Creditors to receive prior payment in full of the Senior Debt, as so modified,
and all other rights of the Agent hereunder, shall not be impaired or otherwise
affected by any such modification or modifications.

 

3.5                               Actions
to Effectuate Subordination.

 

(a)           Authorization to Senior Creditors to Act.  In the event of an Insolvency Event, the
Agent is irrevocably authorized and empowered (in its own name or in the name
of the Junior Creditor or otherwise), but shall have no obligation, to demand,
sue for, collect and receive every payment or distribution referred to in
Section 3.2(a) above and to file and vote claims and proofs of claim with
respect to the Junior Debt in any bankruptcy or other insolvency proceeding, and
in each case to apply any payment or other distribution of assets or securities
in the manner and to the extent provided in Section 3.2(a) above.  In furtherance of the rights granted to the
Agent herein, Junior Creditor hereby grants to the Agent a power of attorney to
vote claims and proof of claims for, on behalf of and in the name of, the
Junior Creditor.  The power of attorney
granted by Junior Creditor to the Agent hereunder is acknowledged by Junior
Creditor and the Agent to be coupled with an interest and shall be
irrevocable.  Junior Creditor further
grants and assigns to the Agent a beneficial interest in the Junior Creditor’s
claims solely for the purpose and to the extent required to vest in the Agent an
interest in the Junior Creditor’s claims sufficient under applicable provisions
of the Bankruptcy Code to enable the Agent to direct Junior Creditor to vote
claims and proofs of claims on behalf of the Junior Creditor as provided
herein.

 

(b)           Specific Performance.  The Agent is hereby authorized to demand
specific performance of the provisions of this Agreement, at any time when the
Junior Creditor shall have failed to comply with any of the provisions of this
Agreement.  The Junior Creditor hereby
irrevocably waives any defense based on the adequacy of a remedy at law that
might be asserted as a bar to such remedy of specific performance.  The Junior Creditor hereby acknowledges that
the provisions of this Article are intended to be enforceable at all times,
whether before or after the commencement of an Insolvency Event.

 

(c)           Notice of Subordination; Further Assurances.  The Junior Creditor will cause the Junior
Note and any other writing evidencing or securing any Junior Debt to provide a
legend on such writing or to otherwise conspicuously note in such writing that
that the Junior Debt evidenced or secured thereby is subordinate to the Senior
Debt (or, as applicable, the Senior Liens) to the extent provided in this
Agreement.  The Junior Creditor will further
mark the Junior Creditor’s books of account, if any, in such a manner as shall
be effective to give proper notice of the effect of this Agreement, and will,
in the case of any Junior Debt which is not evidenced by any instrument, upon
the Agent’s request cause such Junior Debt to be evidenced by an appropriate
instrument or instruments that comply with the provisions of this
Agreement.  The Junior Creditor will, at
the Junior Creditor’s expense and at any time and from time to time, promptly
execute and deliver all further instruments and documents, and take all
commercially reasonable further action, that may be necessary or desirable, or
that the Agent may request, in order to protect any right or interest granted
or purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder.

 

 

3.6                               Security
Interest of Junior Creditor.

 

(a)           Subordination of Security Interests and Other Liens.  Each Borrower has granted to the Junior
Creditor certain security interests in and liens upon certain of its property
as security for certain of the Junior Debt. 
All such security interests and liens, and any other security interests
and liens now or hereafter granted by any Borrower in favor of the Junior
Creditor, are collectively referred to as the “Junior Liens”.  The Junior Creditor agrees that until all
obligations of the Agent and the Senior Creditors under the Credit Agreement
shall have been terminated and the Agent and the Senior Creditors shall have
received indefeasible payment in full of the Senior Debt in cash, the Junior
Liens shall be subject, junior and subordinate to all security interests and
liens granted or purported to be granted by any Borrower in favor of the Agent
for the benefit of the Banks (all such security interests and liens, and any other
security interests and liens granted or purported to be granted, now or
hereafter, by any Borrower in favor of the Agent for the Benefit of the Banks
are collectively referred to as the “Senior Liens”), irrespective of
(i) the order or method of attachment or perfection of any Senior Liens
and any Junior Liens (including, without limitation, the order of filing or
recording of any financing statements, deeds of trust or other security
documents evidencing any such liens and any rights the Junior Creditor may have
as the holder of a purchase money security interest or similar lien right), or
(ii) the failure of the Agent to perfect, or to maintain the perfection
of, any security interests or liens comprising any of the Senior Liens.

 

(b)           Release
of Junior Liens.  In the event of any
sale or disposition of any asset that is subject to a Junior Lien, the Junior
Creditor shall execute and deliver to the Agent and the applicable Borrower all
such consents, releases, assignments and other instruments with respect to such
assets (including, without limitation, a partial releases, termination
statements or mortgage satisfactions, as the Agent may request in order to
effect such sale or disposition free of any Junior Lien.

 

(c)           Insurance for Collateral.  Prior to indefeasible payment in full of the
Senior Debt and termination of the Credit Agreement in accordance with its
terms, the Agent shall have the sole right, in the exercise of its reasonable
credit judgment, to adjust and compromise any claims under any insurance
maintained by any Borrower insuring any Collateral, to collect and receive the
proceeds thereof, and to execute and deliver all proofs of loss, receipts,
vouchers and releases in connection with such claims.  Upon request, the Junior Creditor will deliver
to the Agent or any such insurer such releases, consents or other instruments
as the Agent may reasonably request to implement the provisions of this
subsection (c).  Any insurer shall be
entitled to rely on a copy of this Agreement as its irrevocable authorization
to deal solely with the Agent as hereinabove described, notwithstanding the
designation of the Junior Creditor as loss payee, mortgagee, additional insured
or the like on any such policy of insurance.

 

3.7                               No
Contest; Insolvency Proceedings.

 

(a)           The Junior Creditor shall have no right to contest any of
the procedures or actions taken by the Agent to foreclose or liquidate any
assets subject to a Senior Lien (including, without limitation, any price or
other terms of the sale of such assets) or to otherwise enforce any of the
Agent’s rights and remedies with respect to such assets.

 

(b)           The
Junior Creditor agrees that it shall not (and hereby waives any right to)
contest or support, directly or indirectly, any other Person in contesting, in
any proceeding (including any relating to an Insolvency Event), the priority,
validity or enforceability of the Senior Debt or Senior Liens.

 

 

(c)           If a Borrower becomes the subject of an insolvency or
bankruptcy proceeding the Junior Creditor will not (i) seek adequate
protection of, or relief from the automatic stay with respect to the Junior
Liens without the prior written consent of the Agent, (ii) oppose or
object to any court order in such insolvency or bankruptcy proceeding to the
extent it allows such Borrower to use the proceeds of any assets of such
Borrower that are subject to the Junior Liens and that is consented to by the
Agent in writing or (iii) oppose or object to any post-petition financing
that any of the Senior Creditors elect, in their sole and absolute discretion,
to extend to such Borrower as a debtor-in-possession in any such proceeding,
and any such post-petition financing will be considered “Senior Debt” for
purposes of this Agreement.

 

3.8                               Miscellaneous.

 

(a)           All rights and interests of the Agent under this
Article III, and all agreements and obligations of the Junior Creditor
under this Article III, shall remain in full force and effect irrespective
of:  (i) any lack of validity or
enforceability of the Credit Agreement, the Notes or any of the other Credit
Documents or any other documents or agreements evidencing or otherwise relating
to any Senior Debt; (ii) any change in the time, manner or place of
payment of, or in any other term of, any Senior Debt, or any other amendment or
waiver of or any consent to departure from the Credit Agreement, the Notes or
any of the other Credit Documents or any other documents or agreements
evidencing or otherwise relating to any Senior Debt; (iii) any exchange,
release or non-perfection of any collateral, any release of any person or
entity liable in whole or in part, or any release or amendment or waiver of or
consent to departure from any guaranty, for any Senior Debt; (iv) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any of the Borrowers, a surety or a subordinate creditor.

 

(b)           The provisions of this Article III shall continue to
be effective or be reinstated, as the case may be, if at any time any payment
of any Senior Debt is rescinded or must otherwise be returned by a Senior
Creditor upon the insolvency, bankruptcy or reorganization of any Borrower or
otherwise, all as though such payment had not been made.

 

(c)           The Junior Creditor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any Senior Debt and
this Article III and any requirement that the Agent protect, secure,
perfect or insure any security interest or lien or any property subject thereto
or exhaust any right or take any action against all or any Borrower or any
other person or entity or any collateral.

 

(d)           No failure on the part of the Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.

 

(e)           The provisions of this Article III constitute a
continuing agreement and shall (i) remain in full force and effect until
all obligations of the Agent and the Senior Creditors under the Credit
Agreement shall have been terminated and the Agent and the Senior Creditors
shall have received indefeasible payment in full of the Senior Debt in cash,
(ii) be binding upon the Junior Creditor and the Junior Creditor’s
successors and assigns, and (iii) inure to the benefit of and be
enforceable by the Agent, the Senior Creditors and their respective successors,
assigns and transferees.  Without
limiting the generality of the foregoing clause (iii), a Senior Creditor may
assign or otherwise transfer any Notes or any part of the indebtedness
evidenced thereby, or grant any participation in any of its rights or
obligations under the Credit Agreement or any of the other Credit Documents, or
may transfer any interest it has in any other Senior Debt, to any other 

 

 

person or entity, and such other person or entity
shall thereupon become vested with all the rights in respect thereof granted to
such Senior Creditor herein or otherwise.

 

ARTICLE IV

COVENANTS

 

4.1                               Covenants
of Junior Creditor.  The
Junior Creditor covenants and agrees with the Agent that, unless the Agent
shall otherwise agree in writing, prior to the termination of the Credit
Agreement and indefeasible payment in full of the Senior Debt:

 

(a)           The Junior Creditor will not cancel or otherwise discharge
any Junior Debt (except upon payment in full thereof to the extent permitted by
Article III).

 

(b)           The Junior Creditor will not sell, assign, pledge,
encumber or otherwise dispose of any Junior Debt or any Junior Liens held by
the Junior Creditor unless each such sale, assignment, pledge, encumbrance or
disposition is made expressly subject to this Agreement.

 

(c)           The Junior Creditor will not permit the terms of any
Junior Debt held by the Junior Creditor to be amended or otherwise modified in
any respect without obtaining the prior written consent of the Agent.  Similarly, the Junior Creditor will not
permit any documents evidencing any Junior Liens to be amended or otherwise
modified in any respect without obtaining the prior written consent of the
Agent.

 

(d)           Except as set forth in the Junior Lien Documents, the
Junior Creditor will not secure the payment of any Junior Debt, or obtain a
lien, security interest or other charge or encumbrance of any nature whatsoever
against the property of any Borrower, whether now owned or hereafter acquired.

 

(e)           The Junior Creditor will not accept or be the beneficiary
under any guaranty, debt purchase agreement or similar assurance of payment or
performance from any person or entity who has guaranteed or hereafter
guarantees or who otherwise assures payment of any Senior Debt without
obtaining the prior written consent of the Agent, and then only upon first
entering into a subordination agreement with the Agent whereby the Junior
Creditor’s payment and other rights in respect of such guarantor are
subordinated in substantially the same manner as the Junior Creditor’s payment
and other rights in respect of the Borrowers under this Agreement.

 

ARTICLE V

MISCELLANEOUS

 

5.1           Amendments;
Waiver.  No amendment or waiver of
any provision of this Agreement or consent to any departure by the Junior
Creditor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Agent, and then such waiver or consent shall be
effective only in the specific instance and the specific purpose for which
given.

 

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

 

 

5.3           Execution in Counterparts;
Facsimile Signatures.  This Agreement
may be executed in any number of counterparts and by different parties thereto
in separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument. 
A signature of a party to this Agreement sent by facsimile or other
electronic transmission shall be deemed to constitute an original and fully
effective signature of such party.

 

5.4           Addresses for Notices.  All demands, notices and other communications
provided for hereunder shall be in writing and shall be delivered, or sent by
facsimile or other electronic transmission, to the parties as follows:

 

If to the Agent:

 

Commerce Bank, N.A.

1000 Walnut Street

Kansas City, Missouri 64106

Attn:  Wayne Lewis

Fax No.:  (816) 234-7290

 

If to the Junior Creditor:

 

Cloud L. Cray, Jr. Trust under agreement dated October 25,
1983

20045 266th Road

Atchison, Kansas 
66002

Attention:

Fax No.:

 

If to a Borrower:

 

[Name of Borrower]

c/o Cray Business Plaza

100 Commercial Street

Atchison, Kansas 66002

Attention:

Fax No.:

 

5.5           Third Parties.  This Agreement is among the Agent, the Junior
Creditor and the Borrowers only and (except as provided in the next sentence)
is not intended to confer any benefits or rights on any other persons or
entities. Notwithstanding the preceding sentence, the Junior Creditor and each
Borrower agrees that (a) the Senior Creditors are express third-party beneficiaries
of this Agreement, (b) each representation or warranty the Junior Creditor
or any Borrower makes to the Agent in this Agreement is made to the Agent, for
its benefit and for the benefit of the Senior Creditors, and (c) each
covenant, undertaking, waiver, release, indemnification and other term and
provision of this Agreement that is agreed to or given by the Junior Creditor
or any Borrower in favor of the Agent is agreed to or given in favor of the
Agent, for its benefit and for the benefit of the Senior Creditors.  Nothing in this Agreement is intended to
affect the rights and obligations of the Borrowers, the Agent, the Senior
Creditors (including the Banks) under the Credit Documents and all references
to the rights and obligations of those parties are qualified in their entirety
by the relevant provisions of the Credit Documents.

 

 

5.6           Entire Agreement.  This Agreement constitutes the entire
agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes all prior negotiations, understandings and
agreements among such parties with respect to such subject matter.

 

5.7           Governing Law.  This Agreement shall be governed by the laws
of the State of Missouri without regard to any choice of law rule thereof
giving effect to the laws of any other jurisdiction.

 

5.8           Consent to Forum.  As part of the consideration for new value
this day received, the Junior Creditor hereby consents to the jurisdiction of
any state or federal court located within Jackson County, Missouri, and waives
personal service of any and all process upon the Junior Creditor and consents
that all such service of process be made by certified or registered mail
directed to the Junior Creditor at the address provided in Section 5.4
hereof and service so made shall be deemed to be completed upon actual receipt
thereof.  The Junior Creditor waives any
objection to jurisdiction and venue of any action instituted against the Junior
Creditor as provided herein and agrees not to assert any defense based on lack
of jurisdiction or venue.  The Junior
Creditor further agrees not to assert against the Agent or any Senior Creditor
(except by way of a defense or counterclaim in a proceeding initiated by the
Agent or any Senior Creditor) any claim or other assertion of liability with
respect to this Agreement, the conduct of the Agent or any Senior Creditor or
otherwise in any jurisdictions other than the foregoing jurisdictions.  Nothing in this Section shall affect the
right of the Agent to serve legal process in any other manner permitted by law
or affect the right of the Agent to bring any action or proceeding against the
Junior Creditor in the courts of any other jurisdictions.

 

5.9           Waiver of Jury Trial.  To the fullest extent permitted by law, and
as separately bargained for consideration to the Agent, the Junior Creditor
hereby waives any right to trial by jury (which the Agent also waives) in any
action, suit, proceeding or counterclaim of any kind arising out of or relating
to this Agreement or the actions or inactions of the Agent or any Senior
Creditor in respect thereof. To effectuate the foregoing, the Agent is hereby
granted an irrevocable power of attorney to file, as attorney-in-fact for the
Junior Creditor, a copy of this agreement in any Missouri court pursuant to
Mo.Rev.Stat. § 510.190 and rule 69.01, V.A.M.R. and/or any other
applicable law, and the copy of this Agreement so filed shall conclusively be
deemed to constitute the Junior Creditor’s waiver of trial by jury in any
proceeding arising out of or otherwise relating to this Agreement or the
conduct of the Agent or any Senior Creditor in respect thereof.

 

[signature page(s) to follow]

 

 

IN WITNESS WHEREOF, the Agent, the Junior
Creditor and the Borrowers have duly executed and delivered this Agreement as
of the date first above written.

 

 

	
   

  	
  COMMERCE BANK, N.A.,

  
	
   

  	
  in its capacity as Agent
  under the Credit Agreement

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CLOUD L. CRAY, JR. TRUST

  
	
   

  	
  under agreement dated
  October 25, 1983

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Cloud L. Cray, Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MGP INGREDIENTS, INC.,

  
	
   

  	
  a Kansas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  MIDWEST GRAIN PIPELINE, INC.,

  
	
   

  	
  a Kansas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

Exhibit A
to Subordination Agreement

 

(see
attached copy of Junior Note)

 

 

Exhibit C

 

(form of Cray Trust note)

 

SUBORDINATED
secured promissory note

 

	
  $2,000,000.00

  	
   

  	
  March       ,
  2009

  
	
   

  	
   

  	
  Atchison, Kansas

  

 

FOR VALUE RECEIVED, the undersigned, MGP INGREDIENTS, INC., a Kansas corporation and MIDWEST GRAIN PIPELINE, INC., a Kansas corporation (each a “Borrower” and collectively the Borrowers), each jointly and
severally promises to pay to the order of the CLOUD L.
CRAY, JR. TRUST under agreement dated October 25, 1983, whose
address is 20045 266th Road, Atchison, Kansas 
66002 (together with his successors and assigns, the “Lender”) the principal amount of TWO MILLION
DOLLARS ($2,000,000.00) (the “Principal Amount”),
together with interest upon the principal balance remaining outstanding from
time to time as set forth below, in payments as set forth below.  The indebtedness evidenced by this
Subordinated Secured Promissory Note (the “Note”) is
referred to herein as the “Loan.”.

 

1.     PROMISE TO PAY PRINCIPAL.

 

Subject to the terms of the subordination agreement
(as defined below), the borrowers promise to pay to the lender the outstanding
principal of the Loan under this note in full on the maturity date of this
Note.

 

2.                                      MATURITY
DATE.

 

The “Maturity Date” of this Note shall
be the earlier of: (a) the date that is 1 year
from the date hereof; or (b) the acceleration of the Loan by the Lender
upon the occurrence of an Event of Default (as defined below).

 

3.                                      INTEREST.

 

The applicable interest rate (the “Applicable Interest Rate”)
shall be interest at a rate per annum equal to seven
percent (7%).  Interest on
this Note shall be calculated on the actual number of days elapsed, on the
basis of a calendar year.

 

4.                                      PAYMENTS.

 

The Borrowers shall make payments to Lender at his address or as later
communicated to Borrowers, in immediately payable U.S. funds.  Payments shall be applied first to unpaid
fees, costs, and expenses which are reimbursable under the terms of this Note,
then to accrued unpaid interest, then to principal.  If any payment due date is a Saturday,
Sunday, or holiday generally observed by banks in Atchison, Kansas, the due
date of the payment shall automatically be extended to the next following
banking business day.

 

4.1          Interest and Principal Payments.  Subject to the terms of the Subordination
Agreement, the Borrowers shall pay interest in a single lump sum payment on the
Maturity Date.  Principal payments of the
Loan will be paid in accordance with Section 1.

 

 

4.2          Final Payment.  Subject to the terms of the Subordination
Agreement, all accrued and unpaid interest, late payment charges, outstanding
principal, and all other amounts chargeable under the Loan Documents shall be
due and payable in full on the Maturity Date.

 

5.                                      BUSINESS
LOAN.

 

The purpose of the Loan is to fund the Borrowers’ general corporate
purposes.  The Borrowers agree that the
funds the Borrowers receive under the terms of the Loan will be used only for
these purposes.  The Borrowers agree that
this is a business loan and that none of the Loan proceeds have been or will be
used for any personal, consumer, family, or household purpose.

 

6.                                      SECURITY.

 

6.1          Grant of Security Interest.  Each Borrower hereby grants to Lender a
security interest in, and a lien on, all of such Borrower’s right, title and
interest in the following property (together with any property subject to a
lien in favor of the Lender pursuant to any other Loan Document, the “Collateral”) wherever located and whether now owned or
hereafter acquired or arising (capitalized terms used in this Section 6 and not otherwise defined in this Note shall
have the meaning assigned to such terms in the Uniform Commercial Code as
adopted by the State of Kansas):

 

(a)           all Equipment;

 

(b)           all General Intangibles (including, without limitation,
patents, trademarks and trade names and applications for patents, trademarks
and trade names);

 

(c)           all Chattel Paper;

 

(d)           all Documents;

 

(e)           all Instruments;

 

(f)            all Investment Property;

 

(g)           all Deposit Accounts;

 

(h)           all Fixtures;

 

(i)            all As - Extracted Collateral;

 

(j)            all books, records, ledger cards, data processing
records, Software, and other property at any time evidencing or relating to
Collateral;

 

(k)           all monies, securities, and other property now or
hereafter held, or received by, or in transit to, Lender, from or for the
Borrower;

 

(l)            all parts, accessories, attachments, special tools,
additions, replacements, substitutions, and accessions to or for all of the
foregoing; and

 

(m)          All Proceeds and products of all of the foregoing in any
form, including, without limitation, amounts payable under any policies of
insurance insuring the foregoing against loss or damage, and all increases and
profits received from all of the foregoing.

 

 

6.2          Excluded Assets.  Notwithstanding anything in this Note to the
contrary the Collateral shall not include the Excluded Assets.

 

“Excluded
Assets” means:

 

(1)                                  all Accounts;

 

(2)           all Inventory;

 

(3)           the Excluded GE Equipment Collateral;

 

(4)           the Excluded Real Estate; and

 

(5)           MGP’s equity interest in D.M. Ingredients GmbH.

 

“Excluded GE
Equipment Collateral” means Equipment of the Borrowers so long as
such Equipment is encumbered by a the lien in favor of GE Capital Public
Finance, Inc. set forth in Schedule 5.1(m) of the Senior Credit
Agreement; provided, however, that, upon the
repayment or other satisfaction of the debt secured by any such lien, the
related Equipment shall no longer constitute Excluded GE Equipment Collateral.

 

“Excluded
Real Estate” means (1) MGP’s “new” office building and
laboratory located in Atchison, Kansas and which has been conveyed to, and
leased back from, the City of Atchison in connection with an industrial revenue
bond financing transaction (including, without limitation, the Borrower’s
leasehold interest in such property), and (2) MGP’s plant located in
Kansas City, Kansas (i.e., the KCIT Facility), so long as such plant is
encumbered by a lien which secures “Permitted Debt” under the Senior Credit
Agreement.

 

6.3          Real Estate Collateral.  The obligations of the Borrowers to the
Lender are also secured by certain liens on certain parcels of the Borrowers’
real property in Pekin, Illinois and Atchison, Kansas granted to the Lender by
the Borrowers pursuant to those certain Mortgage, Assignment of Leases,
Security Agreements and Fixture Filing Financing Statements (the “Mortgages”) entered into as of the date of this Note.

 

6.4          Secured Obligations.  The security interests granted by Borrowers
pursuant to this Section 6 secure payment of
any and all indebtedness, and performance of all obligations and agreements, of
the Borrowers to Lender pursuant to this Note. 
The Borrowers authorize the Lender to file any UCC financing statements
the Lender deems necessary or desirable to perfect the lien granted pursuant to
this Section 6 including with a
description of the collateral as “all assets” or a substantially similar
description; provided that such description shall expressly exclude the
Excluded Assets.

 

6.5          Subordination to Senior Obligations.  The security interest granted pursuant to
this Note and the Lender’s rights and remedies with respect to the Collateral
are subordinated to certain other security interests and liens pursuant to, and
to the extent provided in, that certain Subordination Agreement dated as of March     ,
2009 (the “Subordination Agreement”) in favor of
Commerce Bank, N.A, a national banking association, in its capacity as Agent
under the Credit Agreement referred to in such Subordination Agreement, as the
same may be amended, restated, consolidated, replaced or otherwise modified
from time to time.

 

 

7.                                      CONDITIONS
PRECEDENT TO OBLIGATIONS

 

The
Borrowers and the Lender shall have
delivered or caused to be delivered the following this Note, the Mortgages, and
the Intercreditor Agreement, in each case duly executed by Borrowers and the
Lender party thereto (as amended, restated, supplemented or otherwise modified
from time to time, the “Loan Documents”).

 

8.                                      CONTINUING
REPRESENTATIONS AND WARRANTIES

 

To induce Lender to enter into this note, and make
Loan to the Borrowers as herein provided, each Borrower represents and warrants
as follows:

 

8.1          Existence.  Each Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Kansas and is duly licensed or qualified to do business and in good standing in
every state in which the failure to be so licensed or qualified would
materially adversely affect the property, assets, financial condition, or
business of the Borrower or materially impair the right or ability of the
Borrower to carry on its operations substantially as conducted on the date of
this Note.

 

8.2          Power and Authority.  The execution, delivery, and performance of
this Note and the other Loan Documents to which each Borrower is a party are
within each Borrower’s corporate powers, have been duly authorized by all necessary
and appropriate corporate and shareholder action, and are not in contravention
of any law or the terms of the Borrower’s Articles of Incorporation or Bylaws
or any amendment thereto, or of any indenture, agreement, undertaking, or other
document to which each Borrower is a party or by which each Borrower or any of
the Borrowers’ property is bound or affected.

 

8.3          Title to Collateral.  (i) Borrower is the owner of the
Collateral free of all security interests, liens, and other encumbrances except
for liens in favor of Lender and the Senior Lenders; (ii) each Borrower
has the authority to grant the security interest and liens under this Note and
the other Loan Documents to Lender; and (c) Lender has an enforceable lien
on all Collateral subject to the liens of the Senior Lenders.

 

8.4          Validity.  This Note and the other Loan Documents
constitute the legal, valid, and binding obligations of Debtors party thereto,
enforceable in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy and insolvency laws and laws affecting
creditors’ rights generally.

 

8.5          No Consents.  No consent, license, approval, or
authorization of, or registration, declaration, or filing with, any court,
governmental body or authority, or other person is required: (i) in
connection with the valid execution, delivery, or performance of this Note of
the other Loan Documents by Debtors (other than filings and recordings to
perfect security interests in or liens on the Collateral in connection with the
Loan Documents), or (ii) for the conduct of any Debtor’s business as now
conducted, except ordinary business licenses or permits which such Debtor has
obtained; in each case except to the extent already obtained.

 

9.                                      EVENTS
OF DEFAULT.

 

The following
shall be “Events of Default” under this Note in
addition to any events of default defined in the Loan Documents:

 

9.1          Payment Default.  A failure to pay within 5 business days of
when due any principal, interest, fee, expense reimbursement, or escrow
payment.

 

 

9.2          Breach of Covenant; Default Under Loan Documents.  The Borrower’s breach of any other
obligation, covenant, representation, warranty, or agreement under the terms of
any Loan Document in strict accordance with the terms and provisions thereof,
and with respect to any such breach that is capable of being cured, Borrower’s
failure to cure such breach within 30 days of receiving written notice (which
may be sent by e-mail, facsimile or other electronic transmission) of such
breach from Lender.

 

9.3          Bankruptcy; Insolvency; Debtor Relief.  A Borrower: 
a) making an assignment for the
benefit of creditors; b) filing
a voluntary proceeding seeking protection from creditors under any bankruptcy
or other law; c) becoming the subject of an
involuntary proceeding under any bankruptcy or other similar law (provided,
such filing shall not constitute a default for sixty (60) days following the
date of any such filing as long as the Borrower is at all times diligently
pursuing proceedings to discuss any such bankruptcy filing); or d) making any admission of its inability to pay its
debts generally as they become due.

 

9.4          Senior Credit Agreement Cross Acceleration.  The Senior Lenders providing notice to the
Borrowers demanding immediate payment of all obligations of the Borrowers under
the Senior Credit Agreement.

 

10.                               REMEDIES.

 

Subject to the terms of the Subordination Agreement, upon the
occurrence of an Event of Default, Lender shall have the right to demand
payment in full of the Loans and all other obligations under this Note and any
other Loan Document, to enforce its liens and security interests and exercise
any rights under the Loan Documents, applicable law, and/or principles of
equity.

 

11.                               COSTS
AND EXPENSES.

 

Promptly upon Lender’s demand (but subject to the terms of the
Subordination Agreement), the Borrowers shall reimburse Lender for any
reasonable costs, including but not limited to, attorneys’ costs and fees
(based upon time actually expended and at a reasonable hourly rate) incurred
in:  a) collecting
any sums due under the Loan Documents; b) enforcing or
defending any lien on or security interest related to the Collateral or the
Loan Documents; c) pursuing or defending any
litigation based on, arising from, or related to any Loan Document; and d) connection with the custody, preservations, use,
operation, or sale of the Collateral.

 

12.                               USURY.

 

All provisions of this Note which call for the payment of interest are
intended to comply with all applicable usury statutes and regulations.  If the terms of this Note would require the
payment of interest in excess of the amount permitted by any applicable law or
regulation, the terms of this Note shall be deemed to be modified to comply
with all such applicable laws or regulations without any action by either party.  If Lender receives interest in excess of the
amount permitted by any applicable law or regulation, the excess portion of the
interest received shall be deemed to be a prepayment of principal without
premium as of the date received.

 

13.                               WAIVER.

 

To the fullest extent permitted by law, Borrower and all endorsers,
sureties, and guarantors irrevocably: 
a) waive presentment for payment, notice of dishonor, notice of
nonpayment, protest, notice of protest, demand, other notices of every kind,
and all rights to plead any statute of limitations as a defense to any action
hereunder; b) consent that the time of payment of any installment may be
extended

 

 

from time to time, that all or any part of the Collateral may be
released, and that any person liable under this Note may be released, all
without notice, and all without affecting the liability of any person or the
lien on that portion of the Collateral not expressly released; and
c) agree that no delay in enforcing any remedy under this Note or any Loan
Document shall be construed to be a waiver of that or any other remedy.  Lender’s failure to exercise any of its
rights, remedies, or powers set forth herein or in the Loan Documents or Lender’s
acceptance of partial payments or performance shall not constitute a waiver of
any Event of Default, but any such right, remedy, or power shall remain
continually in force.  A waiver of one
Event of Default shall not be construed as continuing or as a bar to or waiver
of:  x) such Event of Default at a
later date; y) any other Event of Default; or z) any other right,
remedy, or power.

 

14.                               NOTICES.

 

All communications required hereunder or in the
Loan Documents shall be given to Borrower and Lender at their respective
addresses set forth underneath their respective signatures hereto or at such
other addresses as either party may designate by notice given in accordance
with the terms of this section.  All
communications required or permitted pursuant to this Note shall be legible and
shall be deemed to have been properly given and received:  a) if sent
by hand delivery, then upon such delivery; b) if sent
by nationally known overnight courier, then on the next business day after
dispatch; and c) if mailed by registered or
certified U.S. Mail, postage prepaid and return receipt requested, then 3 days
after deposit in the mail.

 

15.                               MISCELLANEOUS.

 

15.1        This Note shall be binding on Borrower and Borrower’s
heirs, successors, and assigns, as applicable, and shall inure to the benefit
of Lender and Lender’s successors and assigns. 
Borrower may not assign its obligations under this Note without Lender’s
prior written consent.  Lender may assign
its rights and obligations under this Note with notice to the Borrower.

 

15.2        This Note may not be
modified, nor any of its provisions waived, without Lender’s prior written
consent.

 

15.3        Time shall be of the essence
of this Note.

 

15.4        The provisions of this Note
are separable.  If any judgment is
hereafter entered holding any provision of this Note to be invalid or
unenforceable, then the remainder of this Note shall not be affected by such
judgment, and the remaining terms of this Note shall be carried out as nearly
as possible according to its original terms.

 

15.5        No inference in favor of, or
against, any person shall be drawn from the fact that such person has drafted
all or any part of this Note or any other Loan Document.

 

15.6        If there is a conflict
between or among the terms of this Note or any Loan Document, Lender may elect
to enforce from time to time those provisions that would afford Lender the
maximum financial benefits and security for the obligations evidenced and
secured by the Loan Documents and/or provide Lender the maximum assurance of
payment and performance of such obligations in full.

 

16.                               STATUTORY
NOTICE.  THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS CONSTITUTE THE COMPLETE AND FINAL EXPRESSION OF THE “CREDIT
AGREEMENT” (AS DEFINED IN K.S.A. § 16-117(A)) BETWEEN DEBTORS AND SECURED
PARTY AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR ORAL CREDIT
AGREEMENT OR OF ANY CONTEMPORANEOUS ORAL

 

 

CREDIT AGREEMENT BETWEEN DEBTORS AND SECURED PARTY.  DEBTORS AGREE THAT ALL NONSTANDARD TERMS AND
ALL PRIOR ORAL CREDIT AGREEMENTS AND CONTEMPORANEOUS ORAL CREDIT AGREEMENTS
BETWEEN DEBTORS AND SECURED PARTY ARE SUFFICIENTLY SET FORTH IN THE TRANSACTION
DOCUMENTS EXCEPT AS FOLLOWS (IF NONE, STATE “NONE” OR LEAVE BLANK): NONE.

 

DEBTORS ALSO AGREE THAT
THE ABOVE SPACE IS SUFFICIENT FOR THE DISCLOSURE OF TERMS AND AGREEMENTS NOT
OTHERWISE SET FORTH IN THE TRANSACTION DOCUMENTS.  BY SIGNING THIS AGREEMENT, DEBTORS AND
SECURED PARTY AFFIRM THAT NO UNWRITTEN ORAL CREDIT AGREEMENT BETWEEN THEM
EXISTS.

 

	
  Please initial:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MGP

  	
   

  	
  Midwest Grain

  	
   

  

 

17.                               CHOICE OF LAW;
VENUE

 

This Note shall be deemed to have been
executed and shall be performed in the State of Kansas and shall be governed by
its laws.  Borrower irrevocably agrees
that Lender may bring suit, action, or other legal proceedings arising out of
the Loan Documents in courts located in Atchison County, Kansas, whether local,
state, or federal.  Borrower hereby
submits to the jurisdiction of such court(s) and waives any right Borrower may
have to request a change of venue or a removal to another court.

 

[The remainder of this page intentionally left
blank]

 

 

	
   

  	
  BORROWERS:

  
	
   

  	
  MGP
  INGREDIENTS, INC., a Kansas corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  MIDWEST
  GRAIN PIPELINE, INC., a Kansas corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   c/o Cray Business Plaza

  
	
   

  	
  100
  Commercial Street

  
	
   

  	
  Atchison,
  Kansas 66002

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACKNOWLEDGED
  AND AGREED TO BY LENDER:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Cloud L. Cray, Jr., as Trustee
  of the CLOUD L. CRAY, JR. TRUST under
  agreement dated October 25, 1983

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
  20045 266th Road

  	
   

  
	
  Atchison, Kansas  66002

  	
   

  

 

 

Exhibit D

 

[The following has been
extracted from Exhibit D of the foregoing agreement and sets forth the
cumulative Projected Cash Flow requirement referred to in Section 8(a) of
the foregoing agreement.]

 

	
   

  	
   

  	
  YTD Cumulative Weekly Operating

  	
   

  
	
  Week Ended (2009)

  	
   

  	
  Net Cash Flow Target [In(out)]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 9

  	
   

  	
  $

  	
  (410,456

  	
  )

  
	
  March 16

  	
   

  	
  $

  	
  (3,452,748

  	
  )

  
	
  March 23

  	
   

  	
  $

  	
  (4,256,515

  	
  )

  
	
  March 30

  	
   

  	
  $

  	
  (3,518,860

  	
  )

  
	
  April 6

  	
   

  	
  $

  	
  (1,425,324

  	
  )

  
	
  April 13

  	
   

  	
  $

  	
  (1,902,056

  	
  )

  
	
  April 20

  	
   

  	
  $

  	
  1,940,354

  	
   

  
	
  April 27

  	
   

  	
  $

  	
  3,681,324

  	
   

  
	
  May 4

  	
   

  	
  $

  	
  2,817,358

  	
   

  
	
  May 11

  	
   

  	
  $

  	
  2,695,919

  	
   

  
	
  May 18

  	
   

  	
  $

  	
  (193,757

  	
  )

  
	
  May 25

  	
   

  	
  $

  	
  (148,950

  	
  )

  
	
  June 1

  	
   

  	
  $

  	
  (1,823,277

  	
  )

  
	
  June 8

  	
   

  	
  $

  	
  (1.011,523

  	
  )

  
	
  June 15

  	
   

  	
  $

  	
  (3,250,706

  	
  )

  
	
  June 22

  	
   

  	
  $

  	
  (1,950,805

  	
  )

  
	
  June 29

  	
   

  	
  $

  	
  (3,234,753

  	
  )

  
	
  July 6

  	
   

  	
  $

  	
  (2,196154

  	
  )

  
	
  July 13

  	
   

  	
  $

  	
  (2,404,122

  	
  )

  
	
  July 20

  	
   

  	
  $

  	
  (153,487

  	
  )

  
	
  July 27

  	
   

  	
  $

  	
  511,300

  	
   

  
	
  August 3

  	
   

  	
  $

  	
  (1,840,860

  	
  )

  
	
  August 10

  	
   

  	
  $

  	
  (2,670,863

  	
  )

  
	
  August 17

  	
   

  	
  $

  	
  (4,189,076

  	
  )

  
	
  August 24

  	
   

  	
  $

  	
  (4,148,342

  	
  )

  
	
  August 31

  	
   

  	
  $

  	
  (5,472,292

  	
  )

  
	
  September 7

  	
   

  	
  $

  	
  (4,651,710

  	
  )Exhibit 4.5

 

May 1, 2009

 

MGP
Ingredients, Inc.

Midwest
Grain Pipeline, Inc.

100
Commercial Street

Atchison,
KS  66002

 

Re:          Waiver of Borrowers’ Obligation to
Comply with Certain Financial Covenants

 

Ladies
and Gentlemen:

 

This letter concerns the
Credit Agreement dated as of May 5, 2008, among MGP Ingredients, Inc.,
Midwest Grain Pipeline, Inc., Commerce Bank, N.A., as Agent, Issuing Bank and
Swingline Lender, and the Banks party thereto, as amended (as so amended, the “Credit
Agreement”).  Capitalized terms used
and not defined in this letter have the meanings given to them in the Credit
Agreement.

 

The Agent, at the direction
and with the consent of the Required Banks, (1) waives the Borrowers’
obligation to comply, now or hereafter, with the financial covenants set forth
in Sections 6.3(b), 6.3(c), 6.3(d) and 6.3(e) of the Credit Agreement, and (2) waives
any Default or Event of Default arising solely out of the Borrowers’ failure to
comply with any of the foregoing financial covenants for the fiscal quarter
ending March 31, 2009.

 

Nothing in this letter shall
constitute a waiver by the Agent or any Bank of any other obligation of any
Borrower or a waiver of any other Default or Event of Default which may exist
on the date hereof; and nothing in this letter shall require the Agent or any
Bank to waive any Default or Event of Default which may arise in the future.

 

[next page follows]

 

 

This letter may be validly
executed and delivered by fax, e-mail or other electronic means.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  COMMERCE
  BANK, N.A.,

  
	
   

  	
  as
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Craig D, Buckley

  
	
   

  	
   

  	
  Name:  Craig D. Buckley

  
	
   

  	
   

  	
  Title:    Vice President

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