Exhibit 4.1
Drafted by and when recorded
mail to:
Mark Ovington, Esq.
Stinson Morrison Hecker LLP
1201 Walnut Street, Suite 2900
Kansas City, Missouri 64106
MORTGAGE, SECURITY
AGREEMENT,
ASSIGNMENT OF LEASES AND
RENTS
AND FIXTURE FILING
(secures future advances and
future obligations, but Maximum Amount Secured, as defined in and
subject to the provisions of Section 1 below, equals
$700,000)
This Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Filing (the “
Mortgage ”) is given as of December 23, 2008, by
MGP INGREDIENTS, INC., a Kansas corporation (the “
Borrower ”), with an office located at Cray Business
Plaza, 100 Commercial Street, Atchison, Kansas 66002, to COMMERCE
BANK, N.A., a national banking association, as Agent for the Banks
from time to time party to the Credit Agreement referred to below
(in such capacity, the “ Agent ”), with an
office located at 1000 Walnut Street, Kansas City, Missouri
64105.
WHEREAS, Borrower is the owner of
the real property and improvements thereon legally described on
Exhibit A attached hereto;
WHEREAS, Borrower has incurred and
may hereafter incur indebtedness under the Credit Agreement, dated
as of May 5, 2008, among Borrower, certain other
borrower(s) thereunder (collectively, whether one or more, the
“ Other Borrower ”), Commerce Bank, N.A., as
Agent, Issuing Bank and Swingline Lender, and the Banks party
thereto, as amended by a First Amendment to Credit Agreement dated
as of September 3, 2008, a letter agreement dated
October 31, 2008, a Second Amendment to Credit Agreement dated
as of November 7, 2008, and a Third Amendment to Credit
Agreement dated as of December 19, 2008 (as so amended and as
otherwise amended, renewed, restated, replaced, consolidated or
otherwise modified from time to time, the “ Credit
Agreement ”), pursuant to which the Banks have agreed or
may elect, in each case subject to the terms and conditions thereof
and as of the
date hereof, to extend credit to or for the
benefit of Borrower and/or Other Borrower in an aggregate
outstanding principal amount not to exceed $55,000,000 at any
time;
WHEREAS, Borrower’s and Other
Borrower’s obligations to the Banks under the Credit
Agreement are evidenced by the following promissory notes:
(a) an Amended and Restated Revolving Credit Note, dated on or
about September 3, 2008, from Borrower and Other Borrower, as
makers, to Commerce Bank, N.A., as payee, in the stated principal
amount of $21,175,000; (b) an Amended and Restated Revolving
Credit Note, dated on or about September 3, 2008, from
Borrower and Other Borrower, as makers, to BMO Capital Markets
Financing, Inc., as payee, in the stated principal amount of
$16,912,500; (c) an Amended and Restated Revolving Credit
Note, dated on or about September 3, 2008, from Borrower and
Other Borrower, as makers, to National City Bank, as payee, in the
stated principal amount of $16,912,500; and (d) a Swingline
Note, dated on or about May 5, 2008, from Borrower and Other
Borrower, as makers, to Commerce Bank, N.A., as payee, in the
stated principal amount of $5,000,000;
WHEREAS, the foregoing promissory
notes and any other promissory notes issued on or after the date
hereof under the Credit Agreement — whether payable to the
above specifically identified Banks or their respective permitted
assignees under the Credit Agreement or to other lenders who may
hereafter become Banks under the Credit Agreement or their
respective permitted assignees under the Credit Agreement —
as any of the foregoing may be amended, renewed, restated,
replaced, consolidated or otherwise modified from time to time, are
collectively referred to herein as the “ Notes ”
and are individually referred to herein as a “ Note
”;
WHEREAS, Borrower’s and Other
Borrower’s obligations under the Credit Agreement, the Notes,
this Mortgage and any other Credit Documents (as defined in the
Credit Agreement), whether monetary, nonmonetary, direct, indirect,
acquired, joint, several, joint and several, existing, future,
contingent or otherwise, and any replacements, renewals, extensions
and other modifications of any of the above, together with all
principal, premium, interest, fees, expenses and other amounts and
charges relating thereto, and any amounts expended by or on behalf
of Agent or any Bank for the protection and preservation of the
mortgage lien and security interest granted herein, are hereinafter
sometimes collectively called the “ Obligations
”; and
WHEREAS, any agreements, documents
or instruments evidencing, securing or otherwise relating to any of
the Obligations (including, without limitation, any of the Credit
Documents, as defined in the Credit Agreement), and any amendments,
restatements, replacements, consolidations and other modifications
of any of the foregoing are hereinafter sometimes collectively
called the “ Credit Documents .”
NOW, THEREFORE, to secure the full
and prompt payment and performance of the Obligations, Borrower
hereby mortgages and warrants to Agent, on behalf of the Banks, and
grants to Agent on behalf of the Banks, a security interest in, all
of Borrower’s right, title and interest in and to the
following property, whether such property or interest therein is
now owned or existing or hereafter acquired or arising
(collectively, the “ Property ”): (a) all
of the tracts, parcels or other units of land described in
Exhibit A attached hereto (the “ Premises
”); (b) all of the buildings, structures and other
improvements now or hereafter situated on the Premises, together
with any alterations, additions and improvements thereto and all
restorations and replacements thereof made from time to time
(collectively, the “ Building ”); (c) all
machinery, apparatus, equipment and fixtures of every kind and
nature whatsoever now or hereafter located in, on or about the
Building or upon the Premises, or attached to or used or usable in
connection with the operation or maintenance of the Premises or the
Building or in connection with any construction being conducted on
the Premises, including, but not limited to, all heating, lighting
and power equipment, engines, plumbing, electrical, mechanical,
refrigeration, ventilating and
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air-conditioning equipment and apparatus,
elevators, cranes, fittings, tools, ducts and compressors
(collectively, the “ Building Equipment ”),
which Building Equipment shall, to the fullest extent permitted by
law, be deemed to constitute fixtures and part of the real property
encumbered by this Mortgage; (d) all easements, tenements,
hereditaments, appurtenances, rights and rights of way, public or
private, pertaining, belonging or otherwise relating to the
Premises or the Building; (e) all insurance proceeds and any
judgments, settlements, awards and other payments, including
interest thereon, which may be made in respect of the Property as a
result of damage to or destruction of the Property, the exercise of
the right of condemnation or eminent domain over any interest in
the Property, the closing of, or the alteration of the grade of,
any street on or adjoining the Premises, or any other injury to or
decrease in the value of the Property; (f) all franchises,
permits, licenses and other rights therein respecting the use,
occupation or operation of the Property or the activities conducted
thereon or thereabout; (g) all rents, income and other
benefits arising out of or otherwise related to the Property and
all leases on or affecting the Property, and any security deposits,
contract rights, general intangibles, actions, rights of action,
and unearned insurance premiums relating to such leases or the
Property; and (h) all accessions to, substitutes for, and all
modifications, replacements, renewals, products and proceeds of any
of the foregoing; provided, however, that the Property shall
not include any Excluded GE Equipment Collateral (as defined in the
Credit Agreement).
Borrower covenants, represents and
warrants to Agent as follows:
1.
Indebtedness Secured . This Mortgage has been given
and is intended to secure the full and prompt payment and
performance of the Obligations and constitutes a future advance
mortgage under K.S.A. §58-2336. This Mortgage secures
future advances from the Banks to Borrower or Other Borrower and
other future obligations of Borrower and/or Other Borrower to the
Banks and the Agent pursuant to the Credit Documents;
provided, however, that, notwithstanding anything to the
contrary in this Mortgage, (i) the maximum aggregate principal
balance secured hereby shall not exceed $700,000 (the “
Maximum Amount Secured ”) , and (ii) payments
made on account of the obligations secured hereby or any portion
thereof, whether in the ordinary course, as prepayments or
otherwise, shall not reduce the Maximum Amount Secured unless the
aggregate principal amount of obligations secured hereby is less
than the Maximum Amount Secured. The priority of the lien hereunder
securing such future advances and future obligations shall relate
back to the date this Mortgage was recorded. In addition, the
Mortgage shall secure unpaid balances of advances made by Agent or
any Bank with respect to the Property, for the payment of
Impositions, as hereinafter defined, insurance premiums and costs
incurred for the protection of the Property and any charges,
expenses and fees, including, without limitation, attorneys’
fees, which, by the terms hereof, shall be added to and increase
the Obligations. Borrower agrees that all of the duties and
obligations imposed on it hereunder, whether absolute or
contingent, due or to become due, are for the reasonable protection
of the lien of this Mortgage. This Mortgage shall remain in
full force and effect with respect to all of the Property until all
Obligations shall have been paid and performed in full. If
the Obligations are paid and performed in accordance with the terms
of the applicable Credit Documents, including, without limitation,
the observance of all the agreements contained in this Mortgage,
this Mortgage shall be released at the expense of Borrower.
Borrower acknowledges that nothing in this Section 1 obligates
Agent or any Bank to make future advances to Borrower or any other
Person.
2.
Title to Property and Other Representations and Warranties
. Borrower represents, warrants and covenants to Agent
that: (a) Borrower owns the Premises and the
improvements thereon in fee simple absolute and has good and
marketable title to the remainder of the Property; (b) the
Property is free of all liens, encumbrances, adverse claims and
other defects of title whatsoever, except for Permitted Liens (as
defined in the Credit Agreement) and the matters set forth on
Exhibit B hereto (collectively, together with Permitted Liens
as defined in the Credit Agreement, “ Permitted Liens
”); (c) Borrower does hereby and shall forever warrant
and defend its title to and interest in the Property (and the
validity and
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priority of the lien of this Mortgage) to Agent
against all claims and demands whatsoever of any Person;
(d) the Building presently on the Premises complies in all
material respects with all applicable zoning and building codes,
ordinances and regulations, and such compliance is based solely
upon Borrower’s owning the Property and not upon
Borrower’s title to or interest in any other property;
(e) any Building hereafter constructed on the Premises shall
comply in all material respects with all applicable zoning and
building codes, ordinances and regulations and shall lie wholly
within the boundaries of the Premises; (f) there are no
actions, suits or proceedings pending or, to Borrower’s
knowledge, threatened against or affecting the Property; and
(g) Borrower has the good and unrestricted right, full power
and lawful authority to subject the Property to this
Mortgage.
3.
Maintenance . Borrower shall maintain the Property in
good order, condition and repair, excepting ordinary wear and
tear. Borrower shall make, as and when the same shall become
necessary, all structural and non-structural repairs, whether
exterior or interior, ordinary or extraordinary, foreseen or
unforeseen. Borrower shall not commit or suffer any waste of
the Property. Borrower shall not construct any new or
additional buildings on the Premises without the prior written
consent of Agent, which consent shall not be unreasonably withheld
so long as no Default or Event of Default exists.
Notwithstanding the foregoing, if Borrower is required by
applicable law to undertake any such alterations to the Building or
the Building Equipment, Borrower may do so without obtaining
Agent’s consent thereto. In such event, Borrower shall
promptly give Agent written notice of any such legal requirement
and, prior to undertaking such alterations, shall notify Agent in
writing of any such alterations that Borrower proposes to
undertake. Agent and each of the Banks, and their respective
agents, contractors and representatives, may enter upon and inspect
the Property at all reasonable times until this Mortgage is
released. Without limiting the generality of the foregoing,
Agent, each of the Banks, and their respective agents, contractors
and representatives, may from time to time enter upon the Property
and conduct upon the Property inspections and tests to determine
the extent to which any hazardous substances, wastes or other
environmentally unsound materials have been placed or discharged
upon or otherwise affect the Property, all at the sole expense of
Borrower.
4.
Restoration . If any of the improvements or equipment
comprising the Property is damaged or destroyed, in whole or in
part, by fire or other casualty (whether or not covered by
insurance), or by any taking in condemnation proceedings or the
exercise of any right of eminent domain, Borrower shall promptly
restore, replace or rebuild the same to as nearly as possible the
value, quality and condition they were in immediately prior to such
fire or other casualty or taking, with such alterations or changes
as may be approved in writing by Agent, which approval shall not be
unreasonably withheld; provided, however, that Borrower
shall be under no duty to so restore, rebuild or replace such
property to the extent that Agent receives and applies any
insurance, condemnation or similar proceeds relating to such
casualty to satisfy any part of the Obligations. Borrower
shall give prompt notice to Agent of any material damage to the
Property.
5.
Compliance with Laws; Use of Property . Borrower shall
comply in all material respects with all present and future laws,
statutes, ordinances, rules, regulations and other requirements
(including, without limitation, applicable zoning and building
requirements) of all governmental and quasi-governmental
authorities whatsoever having jurisdiction with respect to the
Property. Borrower shall promptly perform and observe all of
the terms, covenants and conditions of all instruments of record
affecting the Property, non-compliance with which may affect the
security of this Mortgage, or which shall impose any duty or
obligation upon Borrower or any tenant or other occupant of the
Premises, and Borrower shall do all things necessary to preserve
intact and unimpaired any and all easements, appurtenances and
other interests and rights in favor of or constituting any portion
of the Property. Borrower shall not use or permit the use of
the Property in any manner which would tend to impair the value of
the Property or materially increase the risk of fire or other
casualty.
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6.
Impositions . Borrower shall pay when the same shall
become due and payable all real estate taxes, assessments, water
and sewer rates and charges, license fees and all other
governmental levies and charges of every kind and nature
whatsoever, general and special, ordinary and extraordinary,
foreseen and unforeseen, which shall be assessed, levied,
confirmed, imposed or become a lien upon or against the Property or
which shall become payable with respect thereto (collectively,
“ Impositions ”). Notwithstanding the
foregoing, Borrower may contest any Imposition by appropriate and
timely proceedings, provided that on or before the due date for
payment of such Imposition Borrower shall establish an escrow or
other provision for payment of such Imposition satisfactory to
Agent in an amount estimated by Agent to be adequate to pay such
Imposition and any interest or penalties that may result from its
nonpayment on the due date. In all such cases of contest,
Borrower shall pay the contested Imposition within 10 days after
the dismissal of said proceedings or the final and unappealable
determination of Borrower’s or the Property’s liability
therefor, as the case may be. So long as any Event of Default
exists, however, Borrower shall, upon demand by Agent, pay the
whole of any assessment for local improvement which may be payable
in installments, notwithstanding that such installments may not be
due and payable at the time of such demand by Agent. Borrower
shall deliver to Agent, within 10 days after the request of Agent
therefor, the original or a photocopy of the official receipt
evidencing such payment or other proof of payment satisfactory to
Agent.
7.
Insurance . (a) Borrower, at Borrower’s
sole expense, shall insure the Property for the benefit of Agent
against loss or damage thereto and shall keep in effect, for
Agent’s benefit, comprehensive general public liability
insurance against claims for bodily injury, death or property
damage. The policies of insurance required by this
Section shall be in companies, forms and amounts, and for such
periods and with such deductibles, as shall be customary for
property similar in use, location and condition to the Property,
and shall insure the respective interests of Borrower and
Agent. The insurance proceeds from all such policies of
insurance (other than the proceeds in respect of any liability
insurance policy) shall be payable to Agent pursuant to a
noncontributing first mortgagee endorsement satisfactory in form
and substance to Agent. Upon request by Agent, Borrower shall
promptly furnish evidence of satisfactory insurance on the Property
and that Borrower has complied with the other provisions of this
Section. In addition to the other policies of insurance
required hereunder, Borrower shall cause a title insurer reasonably
acceptable to Agent to insure, in favor of Agent, Borrower’s
ownership of, and Agent’s first priority lien on, the
Property, subject only to Permitted Liens, in an amount equal to
not less than $700,000 in such form, and with such affirmative
coverage and endorsements as Agent may reasonably
request.
(b)
Borrower irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent) as
Borrower’s true and lawful attorney-in-fact and agent, with
full power of substitution, for the purpose of making and adjusting
claims the policies of insurance referred to herein, endorsing the
name of Borrower on any check, draft, instrument or other item or
payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such
policies of insurance or to pay any premium in whole or in part
relating thereto. Agent, without waiving or releasing any
obligation or default by Borrower hereunder, may (but shall be
under no obligation to do so) at any time maintain such action with
respect thereto which Agent deems advisable. All sums
disbursed by Agent in connection therewith, including
attorneys’ fees, court costs, expenses and other charges
relating thereto, shall be payable, on demand, by Borrower to Agent
and shall be additional Obligations hereunder secured by this
Mortgage. Notwithstanding the foregoing, so long as no
Default or Event of Default exists, Borrower may make and settle
any insurance claims relating to the Property provided that
Borrower first obtains Agent’s written consent thereto, which
consent shall not be unreasonably withheld.
(c)
All proceeds of the insurance obtained by Borrower hereunder (other
than those relating to any liability insurance policy), shall be
paid to Agent, and Agent may deduct from such
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proceeds any expenses, including, without
limitation, legal fees, incurred by Agent in connection with
adjusting and obtaining such proceeds (the balance remaining after
such deduction being hereinafter referred to as the “ Net
Insurance Proceeds ”). If an Event Default exists at the
time Agent receives the Net Insurance Proceeds, Agent may apply the
Net Insurance Proceeds in reduction or satisfaction of all or any
part of the Obligations, whether then matured or not, in which
event Borrower shall be relieved of its obligation under Sections 3
and 4 above to maintain and restore the Property relating to such
proceeds to the extent that Agent so applies the Net Insurance
Proceeds. If no Event of Default exits at such time (or if an
Event of Default exists and Agent elects not to apply the Net
Insurance Proceeds as provided in the previous sentence), Agent
shall release the Net Insurance Proceeds to Borrower; provided,
however, that, if the amount of the Net Insurance Proceeds
exceeds $50,000, Agent may condition the release of all or any part
of the Net Insurance Proceeds on such escrow or other disbursement
conditions as Agent may reasonably require to ensure that Borrower
uses the Net Insurance Proceeds to maintain and the restore the
Property as required under this Agreement and to ensure that the
Property remains free of all mechanics’ and other liens
except for Permitted Liens.
(d)
In the event of a foreclosure under this Mortgage, the purchaser of
the Property shall succeed to all of the rights of Borrower,
including any right to unearned premiums, in and to all policies of
insurance which Borrower is required to maintain under this
Section and to all proceeds of such insurance.
8.
Deposits for Impositions and Insurance . Upon notice
from Agent (which notice shall not be given unless an Event of
Default exists), Borrower shall deposit with Agent on the first day
of each month an amount equal to one-twelfth of (i) the
aggregate annual payments for the Impositions, and (ii) the
annual insurance premiums on the policies of insurance required to
be obtained and kept in force by Borrower under this
Mortgage. In addition, upon notice from Agent (which notice
shall not be given unless an Event of Default exists), Borrower
shall deposit with Agent such sum of money which, together with
such monthly installments, shall be sufficient to pay all the
Impositions and insurance premiums at least 30 days prior to the
due date thereof. If the amounts of any Impositions are not
ascertainable at the time any deposit is required to be made, the
deposit shall be made on the basis of the amounts of the
Impositions for the prior tax year and, upon the amounts of the
Impositions being fixed for the then current year, Borrower shall,
upon notice from Agent, deposit any deficiency with Agent. If
the amount of the insurance premiums is not ascertainable at the
time any deposit is required to be made, the deposit shall be made
on the basis of the amount of the insurance premiums for the prior
year of the policy or policies, and, upon the amount of the
insurance premiums being fixed for the then current year of the
policy or policies, Borrower shall, upon notice from Agent, deposit
any deficiency with Agent. If on a date 30 days prior to the
due date for the payment of any of the Impositions or the insurance
premiums there shall be insufficient funds on deposit with Agent to
pay the same, Borrower shall, upon notice from Agent, forthwith
make a deposit with Agent in the amount of such deficiency.
The funds so deposited with Agent shall be held by Agent without
interest, and may be commingled with other funds of Agent, and
provided that an Event of Default exists, such funds shall be
applied in payment of the Impositions and insurance premiums when
due to the extent that Borrower shall have deposited funds with
Agent for such purpose. If an Event of Default exists, the
funds deposited with Agent may, at the option of Agent, be retained
and applied toward the payment of any or all of the Obligations,
but no such application shall be deemed to have been made by
operation of law or otherwise until actually made by Agent.
Borrower shall furnish Agent with a bill for each of the
Impositions and insurance premiums and such other documents
necessary for their payment at least 30 days prior to the date they
first become due. Upon an assignment of this Mortgage prior
to any default hereunder by Borrower, Agent shall have the right
and obligation to pay over the balance of such deposits in its
possession to the assignee, and thereupon Agent shall be completely
released from all liability with respect to such deposits and
Borrower shall look solely to the assignee in reference
thereto. The provisions of the preceding sentence shall apply
to each and every assignment or transfer of such deposits to a new
assignee.
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9.
Condemnation . (a) Borrower shall give immediate
notice to Agent upon Borrower’s learning of (i) any
interest on the part of any Person possessing or who has expressed
the intention to possess the power of eminent domain to purchase or
otherwise acquire the Property, or (ii) the commencement of
any action or proceeding to take the Property by exercise of the
right of condemnation or eminent domain or of any action or
proceeding to close or to alter the grade of any street on or
adjoining the Premises. Agent may participate in any such
actions or proceedings in the name of Agent or, whenever necessary,
in the name of Borrower, and Borrower shall deliver to Agent such
instruments as Agent shall request to permit such
participation. Borrower shall not settle any such action or
proceeding, whether by voluntary sale, stipulation or otherwise, or
agree to accept any award or payment without the prior written
consent of Agent, which consent shall not be unreasonably
withheld