Document:

Exhibit 4.7

 

INTERCREDITOR AGREEMENT

 

THIS
INTERCREDITOR AGREEMENT (the “Intercreditor Agreement”
or “Agreement”) dated effective as of July 21,
2009, is by and among WELLS FARGO BANK, NATIONAL ASSOCIATION, acting through
its Wells Fargo Business Credit operating division (together with its
successors and/or assigns, “WFBC”), and UNION STATE
BANK OF EVEREST, d/b/a Bank of Atchison (“Bank of Atchison”) with respect to certain financing
arrangements with MGP INGREDIENTS, INC., a Kansas corporation (the “Borrower”).

 

BACKGROUND

 

A.            Pursuant to a certain Credit and
Security Agreement dated on or about the date hereof, by and between WFBC and
Borrower and certain instruments, documents and other agreements related
thereto, defined therein or contemplated thereby (the foregoing, together with all amendments,
modifications and restatements thereof now and from time to time hereafter
entered into between WFBC and Borrower are individually or collectively
referred to as the “WFBC Agreements”),
WFBC proposes to extend credit to the Borrower in an original principal amount
of up to $25,000,000.00.

 

B.            Pursuant to a certain (i) Promissory
Note dated as of March 31, 2009 and (ii) promissory note dated as of July 17
,2009, each by Borrower in favor of Bank of Atchison and certain agreements, instruments, documents and
other agreements related thereto, defined therein or contemplated thereby (the
foregoing, together with all amendments and modifications thereof now and from
time to time hereafter entered into between Bank of Atchison and Borrower are
individually or collectively referred to as the “Bank of
Atchison Agreements”), Bank of Atchison agreed to extend credit to
the Borrower in the aggregate original principal amount of $3,500,000.

 

C.            WFBC and Bank of Atchison desire to
agree to the relative priority of their respective security interests in and
liens on the Collateral (defined below) and certain other rights, priorities
and interests.

 

NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, and for other good and valuable consideration, it is hereby agreed
as follows:

 

1.             DEFINITIONS

 

1.1           Account, Chattel Paper,
Commercial Tort Claims, Deposit Accounts, Documents, Electronic
Chattel Paper, Equipment, Fixtures, General Intangibles,
Goods, Instruments, Inventory, Investment Property,
Letter-of-Credit Right, Proceeds, Supporting Obligations
and Tangible Chattel Paper have the respective meanings assigned to such
terms, as of the date of this Agreement, in the Minnesota Uniform Commercial
Code.

 

1.2           WFBC Claim shall mean all
obligations or indebtedness of the Borrower, now or in the future owing to
WFBC, as set forth in the WFBC Agreements, including but not 

 

 

limited to, all sums
loaned and advanced to or for the benefit of Borrower at any time under the
terms of the WFBC Agreements, any interest thereon, any future advances, any
costs of collection or enforcement, including reasonable attorneys’ and
paralegal costs, costs, fees, and any prepayment penalties.

 

1.3           Bank of Atchison Claim shall
mean all obligations or indebtedness of the Borrower now or in the future
owing, to Bank of Atchison as set forth in the Bank of Atchison Agreements,
including but not limited to, all sums loaned and advanced to or for the
benefit of Borrower at any time under the terms of the Bank of Atchison
Agreements, any interest thereon, any future advances, any costs of collection
or enforcement, including reasonable attorneys’ fees and paralegals’ costs,
fees and any prepayment penalties.

 

1.4           Collateral shall mean all of
the Borrower’s now owned or hereafter acquired interest in all assets of every
kind or nature, whether now owned or hereafter acquired, including without
limitation, all of Borrower’s real and personal property and specifically
including without limitation, the property or interests in all and any of the
property defined in paragraph 1.1 above, whether now owned or
hereafter acquired, and the proceeds and products thereof, and where
applicable, the proceeds of insurance or escrow accounts covering any such
property.

 

1.5           WFBC Senior Collateral shall
mean the Collateral in which WFBC has a senior lien or security interest as
described in and provided by paragraph 2.1(a).

 

1.6           Bank of Atchison Senior Collateral
shall mean the Collateral in which Bank of Atchison has a senior lien or
security interest as described in and provided by paragraph 2.1(b).  Bank of Atchison acknowledges and agrees that
except for the Bank of Atchison Senior Collateral, Bank of Atchison does not
claim or hold a security interest or lien of any kind on any of the assets of
Borrower.

 

1.7           Enforcement shall mean,
collectively or individually for one or both of WFBC and Bank of Atchison to
make demand for payment or accelerate the indebtedness of the Borrower,
repossess any material amount of Collateral or commence the judicial or
non-judicial enforcement of any of the rights and remedies under the WFBC
Agreements, the Bank of Atchison Agreements, any related agreements or
applicable law.

 

1.8           Enforcement Notice shall mean
a written notice delivered, at a time when a “Default” or an “Event of Default”
(as defined in the WFBC Agreements or the Bank of Atchison Agreements,
respectively and if not so defined, the occurrence of any event or material
default under any of such agreements, giving rise to the exercise of any
Enforcement right or action by WFBC and Bank of Atchison, respectively) has
occurred and is continuing, by WFBC or Bank of Atchison, to another Party
hereto, specifying the relevant Default or Event of Default, stating the
current balance of the WFBC Claim or Bank of Atchison Claim, as appropriate,
and requesting the current balance of the other parties’ claims.

 

1.9           Insolvency
Proceeding means any receivership, conservatorship, general meeting of
creditors, insolvency or bankruptcy proceeding, assignment for the benefit of 

 

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creditors, or any proceeding or action by or against
the Borrower for any relief under any bankruptcy or insolvency law or other
laws relating to the relief of debtors, readjustment of indebtedness,
reorganizations, dissolution, liquidation, compositions or extensions, or the
appointment of any receiver, intervenor or conservator of, or trustee, or
similar officer for, the Borrower or any substantial part of its properties or
assets, including, without limitation, proceedings under the Bankruptcy Code,
or under other federal, state or local statute, laws, rules and
regulations, all whether now or hereafter in effect.

 

1.10         Parties shall mean WFBC and Bank
of Atchison, and Party shall mean either WFBC or Bank of Atchison as the
context indicates.

 

1.11         The word “senior”, when used in
conjunction with the words “Collateral”, “collateral”, “priority”, and/or “lien”
shall mean and refer to the relative perfection and priority of liens and
security interests among the Parties established by the agreement of the
Parties in Section 2.1 of this Agreement.

 

2.             INTERCREDITOR
AGREEMENT

 

2.1           Lien Priorities.  Notwithstanding the date, manner or order of
attachment or perfection of the security interests and liens granted to WFBC or
Bank of Atchison by Borrower and notwithstanding any provisions of the Uniform
Commercial Code, the United States Bankruptcy Code (the “Bankruptcy
Code”) or any applicable law or decision or the WFBC Agreements or
the Bank of Atchison Agreements, or whether WFBC or Bank of Atchison holds
possession of all or any part of the Collateral, the following, as between WFBC
and Bank of Atchison, shall be the relative priority of the security interests
and liens of WFBC and Bank of Atchison in the Collateral:

 

(a)           WFBC
shall have a first and prior security interest and lien in all property and
collateral described on Schedule 2.1(a) hereto (the “WFBC Senior Collateral”); and

 

(b)           Bank
of Atchison shall have a first and prior security interest in all property and
collateral described on Schedule 2.1(b) hereto (the “Bank of Atchison Senior Collateral”).

 

(c)           WFBC
shall have a second and junior security interest in all property and collateral
described on Schedule 2.1(c) hereto (“WFBC Junior
Collateral”).

 

(d)           The
priorities established hereunder are only as between WFBC and Bank of Atchison
and to the extent that the operation of the foregoing provisions would
otherwise entitle any other person (including a trustee in bankruptcy) to
either a priority over the parties herein or a right to avoid the lien of the
other Party, then (and only to such extent) this paragraph shall be null and
void and WFBC and Bank of Atchison shall, from the proceeds received from the
other Party’s senior Collateral, sell and/or purchase participation interests
in the WFBC Claim or the Bank of Atchison 

 

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Claim
to effectuate, to the maximum extent possible, the allocative purposes of this Section 2.1
and to maximize the recovery for WFBC with respect to WFBC Senior Collateral
and Bank of Atchison with respect to the Bank of Atchison Senior Collateral in
accordance with and pursuant to the other terms and provisions of this
Agreement.

 

(e)           Each
Party agrees it will execute any and all agreements and documents which the
other Party may reasonably request to evidence the subordination and priority
of liens and security interests as established by this Section 2.1
in this Agreement.

 

(f)            (g)Subject
only to the relative priorities set forth in this Section 2.1
(including without limitation, the provisions of subsection 2.1(d)),
each of the Parties agrees that it will not contest or challenge the validity,
legality, enforceability, perfection or avoidability of the respective security
interest in, rights or lien of the other Party as set forth in Sections
2.1(a), (b), and (c) above on the Collateral (or any
other collateral) of the other Party in any proceeding for any reason.  Each Party acknowledges that a breach of this
covenant is likely to cause irreparable harm to the other and shall be
specifically enforceable.

 

(g)           The
lien and security interest priorities (collectively, the “lien
priorities”) provided in this Agreement shall not be altered or
otherwise affected by any amendment, modification, supplement, extension,
renewal, restatement or refinancing of either the WFBC Agreements or the Bank
of Atchison Agreements, nor by any action or inaction which the WFBC, Bank of
Atchison or the Borrower may take or fail to take in respect of the Collateral,
nor by the institution or pendency of any Insolvency Proceeding.

 

(h)           The
undertakings and agreements set forth in this Agreement are solely for the
benefit of the Parties and there are no other parties (including, without
limitation, the Borrower and affiliates of Borrower) who are intended to be
benefited in any way by this Agreement. 
Except as otherwise expressly set forth in this Agreement, nothing
contained in this Agreement is intended to limit in any way the rights and
remedies of the WFBC or Bank of Atchison under the WFBC Agreements or Bank of
Atchison Agreements, respectively.

 

(i)            Until
the payment or satisfaction in full of the WFBC Claims and Bank of Atchison
Claims, respectively, each Party further agrees that it shall not make any
election, give any consent, commence any action or file any motion or take any
other action in any case by or against the Borrower under the Bankruptcy Code
which would result in the payment or distribution of the Collateral or other
assets of the Borrower contrary to the express provisions of this Agreement,
without the prior written consent of the other Party, which consent may be
withheld in each others Party’s sole and absolute discretion, provided,
however, that the notifying Party shall have the right, at any time and in its
sole discretion, to file a proof of claim and defend or refute any objection to
such claim in any Insolvency Proceeding.

 

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(j)            Notwithstanding
anything to the contrary contained herein, Bank of Atchison represents and
warrants that if does not have any UCC filings against Borrower which cover, in
whole or in part, the WFBC Senior Collateral, other than those filings listed
on Schedule 2.1(j) hereof (the “Bank of
Atchison Filings”).

 

2.2           Distribution of Proceeds of
Collateral.  At any time (whether or
not following an Enforcement Notice), all proceeds of Collateral shall be
distributed in accordance with the following procedure:

 

(a)           The
WFBC Senior Collateral and all proceeds of the WFBC Senior Collateral shall be
applied to the WFBC Claim.

 

(b)           The
Bank of Atchison Senior Collateral and all proceeds of the Bank of Atchison
Senior Collateral shall be applied to the Bank of Atchison Claim.  After the Bank of Atchison Claim is
indefeasibly paid in full and the Bank of Atchison Agreements are terminated
and indefeasibly fully paid or otherwise satisfied in Bank of Atchison’s sole
discretion, any remaining proceeds of the Bank of Atchison Senior Collateral
shall be applied to the WFBC Claim in accordance with their lien priorities set
out in 2.1(a) and 2.1(b), as appropriate.

 

After the WFBC Claim and the Bank of Atchison Claim
have been paid or satisfied in full, the balance of proceeds of Collateral, if
any, shall be paid to Borrower or as otherwise required by applicable law.

 

2.3           Enforcement Actions. Bank of
Atchison agrees not to commence Enforcement until one hundred eighty (180) days
after an Enforcement Notice has been given to WFBC (“Bank of
Atchison Standstill Period”). 
WFBC agrees not to commence Enforcement against the Bank of Atchison
Senior Collateral until an Enforcement Notice has been given to Bank of
Atchison.  Subject to the foregoing, WFBC
and Bank of Atchison agree that from and after the receipt of an Enforcement
Notice, and until such time as Borrower has cured such Default or an Event of
Default (if permitted to do so by the relevant document), or Bank of Atchison
or WFBC, as applicable, has waived such Default or Event of Default, and any
and all conditions to such waiver have been satisfied:

 

(a)           WFBC
may, at its option, take any action to accelerate payment of the WFBC Claim and
to foreclose or realize upon or enforce any of its rights with respect to the WFBC
Senior Collateral, without the prior written notice to or consent of Bank of
Atchison, and with Bank of Atchison hereby waiving any rights (to the extent it
has such rights) to a “commercially reasonable sale” under the Uniform
Commercial Code; and further provided, that Bank of Atchison shall not take any
action to foreclose or realize upon or to enforce any of their rights with
respect to any of the Collateral in which they have a lien or security interest
junior to WFBC or without WFBC’s prior written consent.

 

(b)           Bank
of Atchison may, following the Bank of Atchison Standstill Period, at its
option, take any action to accelerate payment of the Bank of Atchison Claim and
to foreclose or realize upon or enforce any of its rights with respect to the
Bank of 

 

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Atchison
Senior Collateral, without the prior written consent of WFBC, and with WFBC
hereby waiving any rights (to the extent it has such rights) to a “commercially
reasonable sale” under the Uniform Commercial Code; and further provided, that
WFBC shall not take any action to foreclose or realize upon or to enforce any
of its rights with respect to any of the Collateral in which it has a lien or
security interest junior to Bank of Atchison without Bank of Atchison’s prior
written consent.

 

(c)           If
WFBC and Bank of Atchison elect to proceed with Enforcement under the WFBC
Agreements and the Bank of Atchison Agreements, respectively, in each case, in
accordance with the terms of this Agreement, then each shall proceed with the
Enforcement of any security interests in or liens on any Collateral in which it
has a senior lien or security interest, but, except as otherwise provided in Section 2.4
below, not against that portion in which it has only a junior and inferior lien
and security interest.

 

(d)           Bank
of Atchison agrees to execute (as applicable) and deliver to WFBC, promptly
upon WFBC’s request, appropriate UCC termination statements or partial
releases, or satisfactions or discharges of liens, with respect to any of the
WFBC Senior Collateral being sold or otherwise disposed of in the ordinary
course of Borrower’s continuing business or in connection with the liquidation
of Borrower’s assets upon or after the declaration of a Default or an Event of
Default by WFBC pursuant to the WFBC Agreements and otherwise in accordance
with this Agreement.  The proceeds of any
WFBC Senior Collateral so sold or disposed of shall be applied, after the
deduction of any and all costs relating to such sale or disposition (including
attorneys’ fees, advertising costs and auctioneer’s fees) to any and all
outstanding WFBC Claims as WFBC may, in its discretion, determine and, only if
all WFBC Claims are indefeasibly paid in full, then to all or any part of the
Bank of Atchison Claim.

 

(e)           WFBC
agrees to execute and deliver to Bank of Atchison, promptly upon Bank of
Atchison’s request, appropriate UCC termination statements or partial releases,
or satisfactions or discharges of liens, with respect to any of the Bank of
Atchison Senior Collateral being sold or otherwise disposed of in the ordinary
course of Borrower’s continuing business or in connection with the liquidation
of Borrower’s assets upon or after the declaration of a Default or an Event of
Default by Bank of Atchison pursuant to the Bank of Atchison Agreements and
otherwise in accordance with this Agreement. 
The proceeds of any Bank of Atchison Senior Collateral so sold or
disposed of shall be applied, after the deduction of any and all costs relating
to such sale or disposition (including attorneys’ fees, advertising costs and
auctioneer’s fees) to any and all outstanding Bank of Atchison Claims as Bank
of Atchison may, in its discretion, determine and, only if all Bank of Atchison
Claims are indefeasibly paid in full, then to all or any part of the WFBC
Claim.

 

(f)            The
parties hereto shall execute and deliver such additional documents and take
such additional action as may be reasonably necessary to effectuate the
provisions and purposes of this Agreement. 
If requested, the parties shall authorize filings to be recorded in
accordance with Uniform Commercial Code provisions in the appropriate locations
reflecting the provisions of this Agreement.

 

6

 

(g)           If
WFBC or Bank of Atchison has any security interest in or lien on any of the
Collateral as security for payment of any indebtedness of Borrower or of any
other party, other than indebtedness incurred pursuant to the WFBC Agreements
or the Bank of Atchison Agreements, then WFBC or Bank of Atchison, as the case
may be, may not apply the proceeds of any of the Collateral to satisfy such
other indebtedness until the WFBC Claim and the Bank of Atchison Claim are paid
in full or otherwise satisfied.

 

2.4           Junior Lien Enforcement.  WFBC shall not participate in an Enforcement
against the WFBC Junior Collateral unless WFBC has previously commenced an
Enforcement against the WFBC Senior Collateral otherwise in accordance with the
terms hereof.

 

2.5           Additional Credit Extensions and
Agreements by Bank of Atchison; Modification of WFBC Agreements.

 

(a)           Bank
of Atchison shall not, unless it has first obtained the written consent of
WFBC, except as required (in the reasonable discretion of Bank of Atchison) for
the express limited purpose of preserving and protecting its security interest
in the Bank of Atchison Senior Collateral extend additional credit to Borrower
beyond the amounts advance to Borrower under the Bank of Atchison Agreements as
of the date hereof.

 

(b)           WFBC may at any
time and from time to time without the consent of or notice to Bank of
Atchison, without incurring liability to Bank of Atchison and without impairing
or releasing the obligations of Bank of Atchison under this Agreement, change
the manner or place of payment or extend the time of payment of or renew or
alter any of the terms of the WFBC Agreements, or amend in any manner any
agreement, note, guaranty or other instrument evidencing or securing or
otherwise relating to the WFBC Claim.

 

2.6           Accountings.  WFBC and Bank of Atchison each agree upon
request to provide information to the other reasonably sufficient to track and
demonstrate the application to the indebtedness of Borrower of payments
received by or on behalf of Borrower to the other Party hereto upon request,
giving effect to the application of proceeds of Collateral as hereinbefore
provided.

 

2.7           Notices of Defaults.  Bank of Atchison agrees to give WFBC copies
of any notice of the occurrence or existence of an Event of Default sent to
Borrower simultaneously with the sending of such notice to Borrower.  The sending of such notice shall give WFBC
the right but not the obligation to cure such Event of Default.

 

2.8           Agency for Perfection.  WFBC and Bank of Atchison each hereby appoint
each other as agent solely for purposes of perfecting the respective security
interests and liens on the Collateral. 
To the extent that any Party obtains possession of the other Party’s
senior Collateral, the Party having possession shall notify the other Party of
such fact and shall deliver such Collateral to the senior Party upon request of
the senior Party.

 

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2.9           Actions Upon Repayment of Claims.  If the WFBC Claim or the Bank of Atchison
Claim is paid in full, but the Claims of the other Party has not been paid in
full, then each Party whose Claim is thus fully paid shall transfer any
Collateral (but not any guaranties given to WFBC or Bank of Atchison) or
proceeds therefrom held by it to the other Party, unless otherwise required to
remit the proceeds according to law, and shall assign its security interest and
all of its rights under financing statements to the other Party hereto, unless
otherwise agreed to in writing by the other Party.  Any such transfer or assignment shall be
without recourse or warranty.

 

2.10         Insurance.  Notwithstanding anything to the contrary
herein, Borrower shall obtain satisfactory lender’s Loss Payable Endorsement(s) naming
WFBC and Bank of Atchison, as their interests may appear, with respect to
policies which insure Collateral hereunder, or with such other designation as
the parties hereto may agree.  The Party
having a senior security interest or lien in the Collateral shall, subject to
such parties rights under its agreements with Borrower, have the sole and
exclusive right, as against the other parties, to adjust settlement of such
insurance policy in the event of any loss. 
All proceeds of such policy for any portion of Collateral shall be paid
to the Party having the senior priority with respect to such Collateral under
this Agreement. After payment of such senior Party’s Claim and all expenses of
collection, including reasonable attorneys’ and costs, fees and expenses, any
remaining proceeds shall be promptly remitted to the other Party or parties
hereto for application on their Claim(s).

 

2.11         UCC Notices.  In the event that WFBC or Bank of Atchison
shall be required by the Uniform Commercial Code or any other applicable law to
give notice to the other of intended disposition of Collateral, such notice
shall be given in accordance with paragraph 3.1 hereof and
ten (10) days’ notice shall be deemed to be commercially reasonable.

 

2.12         Insolvency
Proceeding.  In the event of an
Insolvency Proceeding, no Party shall (i) object to or oppose any efforts
by the other Party to obtain relief from the automatic stay under Section 362
of the Bankruptcy Code, (ii) seek to cause the Borrower’s bankruptcy
estate to abandon that portion of the Collateral (or any portion thereof) in
which the other Party has a first and senior priority position under Section 2.1
above; (iii) vote in any Insolvency Proceeding in favor of any plan of
reorganization or liquidation that contains any provision inconsistent with the
priority as provided in Section 2.1 of this Agreement; or (iv) seek
the substantive consolidation of the assets of the Borrower with the assets of
any affiliate of the Borrower; provided that nothing in this clause (iv) shall
prohibit the other Party from exercising its remedies under the Bank of Atchison
Agreements and WFBC Agreements against any guarantor in the event of any
Insolvency Proceeding.

 

In the event a Party is required, under the Bankruptcy
Code or any similar bankruptcy or insolvency law, to return to the Borrower,
the estate in bankruptcy thereof, any trustee, receiver or other similar
representative of the Borrower, any payment or distribution of assets, whether
in cash, property or securities previously received by such Party on account of
any portion of the Collateral in which it holds a first and senior priority
under Section 2.1 (a “Reinstatement Distribution”),
then to the maximum extent permitted by law, this Agreement and the priority
and subordination provisions of Section 2.1 and any lien or security
interest

 

8

 

securing it shall be reinstated with respect to any
such Reinstatement Distribution.

 

2.13         Liquidations.  In the event of any distribution of the
assets or readjustments of the obligations and indebtedness of the Borrower whether
by reason of sale, liquidation, bankruptcy, arrangement, receivership,
assignment for the benefit of creditors or any other similar action or
proceeding, or the application of the assets of the Borrower to the payment or
liquidation thereof, WFBC shall not be entitled to any proceeds of the WFBC
Junior Collateral unless and until the Bank of Atchison Claims have been paid
and performed in full; provided, however, that each Party shall be
entitled to retain all assets (including cash, securities, notes or other
properties) that it receives pursuant to a confirmed plan of reorganization
under Chapter 11 of the United States Bankruptcy Code or liquidation of the
Borrower.  In the event that a Party
shall have received in any such proceedings any payment or distribution of
assets in violation of the preceding sentence, such payment or distribution
shall be held in trust for the other Party and shall promptly be paid or given
over to such Party by the other Party in exactly the form received.

 

3.             MISCELLANEOUS

 

3.1           Notices.  All notices hereunder shall be effective upon
receipt, and shall be in writing and sent by either certified mail, return
receipt requested, or overnight courier of national reputation,, to the
addresses as set forth above, but to the attention of the following at the
addresses set forth herein:  (a) Wells
Fargo Bank, National Association, Attention: 
Tom Hedberg, MAC-N9312-040 4th Floor, 109 S. 7th St, Roanoke Bldg,
Minneapolis, Minnesota 55479; with a copy to Bryan Cave LLP, Attn: Christopher
Fisher, 1200 Main Street, Suite 3500, Kansas City, Missouri 64105, and (b) Bank
of Atchison, 701 Kansas Avenue, Atchison, Kansas 66002, Attn: Jeff Caudle, or
to such other address or person as any of the parties hereto may designate in
writing to the other parties.  Notice
shall be deemed received upon actual receipt.

 

3.2           Contesting Liens or Security
Interests.  WFBC and Bank of Atchison
shall not contest the validity, perfection, priority or enforceability of any
lien or security interest granted to any other Party hereto and each Party
agrees to cooperate in the defense of any action contesting the validity,
perfection, priority or enforceability of such liens or security interest.

 

3.3           No Additional Rights for Borrower
Hereunder.  If any Party hereto shall
enforce its rights or remedies in violation of the terms of this Agreement,
Borrower (and each party designated a Borrower) agrees that it shall not use
such violation as a defense to the Enforcement by any Party hereto under the
WFBC Agreements and/or the Bank of Atchison Agreements nor assert such
violation as a counterclaim or basis for setoff or recoupment against any Party
hereto provided only that such lender who fails to give such notice may, if
required by the other two lenders entitled to receive such notice, be liable to
such other lender(s) to the extent of any actual monetary damages suffered
by reason of such failure to give such notice and opportunity to cure.

 

3.4           Independent Credit Investigations.  None of the parties hereto nor any of their
respective directors, officers, agents, attorneys or employees shall be
responsible to any other or to any other person, firm or corporation, for
Borrower’s solvency, financial condition or

 

9

 

ability to repay the WFBC Claim or the Bank of Atchison Claim, or for
statements of Borrower, oral or written, or for the validity, sufficiency or
enforceability of the WFBC or the Bank of Atchison Claim, the WFBC Agreements
and the Bank of Atchison Agreements, or any liens or security interests granted
by Borrower to the parties hereto in connection therewith.  Each Party hereto has entered into its
respective financing agreements with Borrower based upon its own independent
investigation, and makes no warranty or representation to any other Party
hereto nor does it rely upon any representation of any other Party hereto with
respect to matters identified or referred to in this paragraph.

 

3.5                                 Limitation on Liability of Parties to
Each Other.  Except as provided in this Agreement, none of
the Parties shall have any liability to the other Party except for gross
negligence or willful misconduct.

 

3.6                                 Amendments to Financing Arrangements or
to this Agreement.  WFBC and Bank of Atchison shall use their
best efforts to notify the other Party hereto of any amendment or modification
in the WFBC Agreements or the Bank of Atchison Agreements, but the failure to
do so shall not create a cause of action against the Party failing to give such
notice or create any claim or right on behalf of any third party.  WFBC and Bank of Atchison shall, upon request
of the other Party, provide copies of all such modifications or amendments and
copies of all other documentation relevant to the Collateral hereunder.  All modifications or amendments of this
Agreement must be in writing and duly executed by an authorized officer of each
Party to be binding and enforceable.

 

3.7                                 Marshalling of Assets. 
WFBC hereby waives any and all rights to have the Bank of Atchison
Senior Collateral, or any part hereof, marshaled upon any foreclosure of any of
the Bank of Atchison liens.  Bank of
Atchison hereby waives any and all rights to have the WFBC Senior Collateral,
or any part thereof, marshaled upon any foreclosure of any of the WFBC liens.

 

3.8                                 Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of all of the Parties hereto, but does not
otherwise create, and shall not be construed as creating, any rights
enforceable by any person not a party to this Agreement.

 

3.9                                 Governing Law, Jurisdiction, Jury Trial
Waiver, Etc.  This Agreement shall be governed by and
construed in accordance with the substantive laws (other than conflict laws) of
the State of Minnesota. The parties hereto hereby (i) consent to the
personal jurisdiction of the state and federal courts located in the State of
Minnesota in connection with any controversy related to this Agreement; (ii) waive
any argument that venue in any such forum is not convenient, (iii) agree
that any litigation initiated by WFBC or Bank of Atchison in connection with
this Agreement may be venued in either the State or Federal courts located in
Hennepin County, Minnesota; and (iv) agree that a final judgment in any
such suit, action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.

 

10

 

3.10                           Schedules.  The terms and
conditions of all Schedules attached hereto and described herein are, by this
reference incorporated herein as if fully set forth.

 

3.11                           Schedules Attached. 
The following Schedules are attached hereto and by this reference
incorporated herein:

 

Schedule 2.1(a)

Schedule 2.1(b)

Schedule 2.1(c)

Schedule 2.1 (j)

 

3.12                           Bankruptcy Survival. 
This Agreement shall remain in full force and effect notwithstanding the
filing of any petition by or against the Borrower under the federal Bankruptcy
Code, and the priority of payments as between the Parties shall continue to be
made on the same basis that payments were to be applied prior to the date of
filing the petition.

 

3.13                           No Fiduciary Duties. 
Except as expressly set forth in this Agreement, neither Party shall
have any duty or obligation to the other Party, and neither Party shall have a
fiduciary relationship in respect of the other Party.

 

3.14                           Miscellaneous.

 

a.                                       The section titles contained in this
Agreement are and shall be without substance or meaning and are not a part of
the agreement between the Parties.  This
Agreement contains the entire agreement between the Parties with respect to the
matters set forth herein and may not be altered, modified or amended in any
respect, nor may any right, power or privilege of any Party be waived, released
or discharged except in a writing executed by all Parties.

 

b.                                      This Agreement will be binding upon and
inure to the benefit of the Parties and their respective successors and
assigns.

 

c.                                       This Agreement is the entire agreement of
the Parties and may not be amended or modified except by an instrument in
writing signed by WFBC and Bank of Atchison.

 

d.                                      If any provision of this Agreement or the
application thereof is held invalid or unenforceable, the remainder of this
Agreement will not be affected thereby.

 

e.                                       If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced because of any law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any Party hereto. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible.

 

11

 

f.                                         This Agreement may be executed in one or
more counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.  Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

 

g.                                      The exchange of copies of this Agreement
and of signature pages by PDF through email or facsimile transmission
shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all
purposes.  Electronic signatures of the
parties transmitted as set forth herein shall deemed to be original signatures
for all purposes.

 

h.                                      THE PARTIES EACH KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT.

 

[Remainder of page intentionally
left blank.]

 

12

 

IN WITNESS WHEREOF, the lender parties have executed
this Agreement as of the day and year first above written.

 

	
   

  	
  WELLS FARGO BANK,

  
	
   

  	
  NATIONAL
  ASSOCIATION

  
	
   

  	
  acting through its Wells Fargo Business Credit
  operating division

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Becky A. Koehler

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Becky A. Koehler

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNION STATE BANK OF EVEREST,
  D/B/A BANK OF ATCHISON USB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven J. Handke

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Steven J. Handke

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President, CEO

  

 

13

 

(WFBC/BANK OF
ATCHISON)

(Intercreditor
Agreement)

 

Acknowledgment of
Borrower

 

The undersigned acknowledges and agrees to the
foregoing terms and provisions of the Intercreditor Agreement as they relate
solely to the rights, duties and obligations of WFBC and Bank of Atchison as
between such parties.  By executing this
Agreement, the undersigned agrees to be bound by the provisions of such
Intercreditor Agreement as they relate to the relative rights of WFBC and Bank
of Atchison as between such parties; provided, however, that nothing in the
Intercreditor Agreement shall amend, modify, change or supersede the respective
terms of the WFBC Agreements or the Bank of Atchison Agreements (or any other
document to which the undersigned may be a party) as between the parties and
the undersigned, and in the event of any conflict or inconsistency between the
terms of this Intercreditor Agreement and the WFBC Agreements or the Bank of
Atchison Agreements (or any such other documents as the case may be), the terms
of the WFBC Agreements and the Bank of Atchison Agreements (and such other
documents) shall govern.  The undersigned
further agrees that the terms of the Intercreditor Agreement shall not give the
undersigned any substantive rights vis-à-vis WFBC or Bank of Atchison and shall
not give WFBC or Bank of Atchison any substantive rights vis-à-vis the
undersigned.

 

BORROWER:

 

MGP INGREDIENTS, INC.,

a Kansas corporation

 

	
  By:

  	
  /s/ Timothy W. Newkirk

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name:

  	
  Timothy W. Newkirk

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President & CEO

  	
   

  

 

14

 

Schedule 2.1(a)

 

WFBC Senior Collateral

 

All of Borrower’s assets, real and personal
of every kind or nature whether now owned or hereafter acquired, including
without limitation, all of the Borrower’s Accounts, Chattel Paper, Tangible
Chattel Paper, Investment Property, Deposit Accounts, Documents, Equipment,
General Intangibles, Goods, Instruments, Inventory, Investment Property,
Letter-of-Credit rights, letters of credit, Proceeds, Supporting Obligations,
all sums on deposit in any collateral account, and any items in any lockbox;
together with (i) all substitutions and replacements for and products of
any of the foregoing; (ii) in the case of all Goods, all accessions; (iii) all
accessories, attachments, parts, equipment and repairs now or hereafter
attached or affixed to or used in connection with any goods; (iv) all
warehouse receipts, bills of lading and other documents of title now or
hereafter covering such goods; (v) all collateral subject to the lien of
any Security Document (as defined in the WFBC Agreements); (vi) any money,
or other assets of the Borrower that now or hereafter come into the possession,
custody, or control of WFBC; (vii) all sums on deposit in the Special
Account (as defined in the WFBC Agreements); (viii) any life insurance
policies to which Borrower is a beneficiary; (ix)  proceeds of any
and all of the foregoing; (x) books and records of the Borrower, including
all mail or electronic mail addressed to the Borrower (subject to Borrower’s
normal and customary retention procedures); and (xi) all of the foregoing,
whether now owned or existing or hereafter acquired or arising or in which the
Borrower now has or hereafter acquires any rights, EXCEPT that the Bank of Atchison Senior
Collateral described on Schedule 2.1(b) of this Agreement is
expressly excluded from the WFBC Senior Collateral.

 

15

 

Schedule 2.1(b)

 

Bank of Atchison Senior
Collateral

 

1.                                       Real Estate
Mortgage dated March 31, 2009, recorded April 1, 2009 in Book 571, Page 782
of the office of the Register of Deeds of Atchison County, Kansas, covering
certain premises and fixtures commonly known as the Borrower’s Flour Mill
located in Atchison County, Kansas (the “Flour Mill  Real Estate”).

 

2.                                       Real Estate Mortgage
dated March 31, 2009, recorded April 9, 2009 in Book 553, Page 100
of the office of the Register of Deeds of Pottawatomie County, Kansas, covering
certain premises and fixtures on certain property commonly known as the
Borrower’s Onaga Plant located in Pottawatomie County, Kansas (the “Onaga  Real Estate”).

 

3.                                       Real Estate
Mortgage dated July 17, 2009, recorded July     ,
2009 in Book
            , Page                     
of the office of the Register of Deeds of Atchison County, Kansas, covering certain
premises and fixtures on certain property commonly known as the Borrower’s
Atchison Plant located in Atchison County, Kansas (the “Atchison
Plant Real Estate”).

 

4.                                       All Equipment,
parts, accessories, repairs, replacements, substitutions and improvements of
and to such Equipment and all proceeds of the foregoing located upon the Flour
Mill Real Estate, Onaga Real Estate and Atchison Plant Real Estate.

 

For purposes of clarity, Bank of Atchison
expressly acknowledges and agrees that the Bank of Atchison Senior Collateral
expressly excludes any and all of (i) Borrower’s Accounts, Goods and
Inventory and (ii) Borrower’s Equipment other than Equipment located upon
the Flour Mill Real Estate, Onaga Real Estate or the Atchison Plant Real
Estate.

 

16

 

Schedule 2.1(c)

 

WFBC Junior Collateral

 

The WFBC Junior Collateral is the Bank of Atchison Senior Collateral.

 

17

 

Schedule 2.1(j)

 

	
  Jurisdiction

  	
   

  	
  Date
  Filed

  	
   

  	
  Filing Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  State of Kansas

  	
   

  	
  4/2/2009

  	
   

  	
  6582787

  	
   

  

 

18Exhibit
4.8

 

SUBORDINATED SECURED PROMISSORY
NOTE

 

	
  $2,000,000.00

  	
  March 27, 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.

 

1

 

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.

 

2

 

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.

 

3

 

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:

 

4

 

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.

 

5

 

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 

 

6

 

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]

 

7

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  MGP INGREDIENTS, INC., a Kansas
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy W. Newkirk

  
	
   

  	
  Name: Timothy W. Newkirk

  
	
   

  	
  Title: President and CEO

  
	
   

  	
   

  
	
   

  	
  MIDWEST GRAIN PIPELINE, INC., a Kansas
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy W. Newkirk

  
	
   

  	
  Name: Timothy W. Newkirk

  
	
   

  	
  Title: President and CEO

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  c/o Cray Business Plaza

  
	
   

  	
  100 Commercial Street

  
	
   

  	
  Atchison, Kansas 66002

  

 

 

	
   

  	
  ACKNOWLEDGED AND AGREED TO BY LENDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Cloud L. Cray, Jr. TTEE

  	
   

  
	
   

  	
  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

  

 

8

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