Exhibit 4.2
*LOAN 1000*
MASTER SECURITY
AGREEMENT
dated as of
9/29/05(“Agreement”)
THIS AGREEMENT
is between General Electric Capital
Corporation (together with its successors and assigns, if any,
“Secured Party”) and MGP Ingredients, Inc.
(“Debtor”). Secured Party has an office at 16479
Dallas Parkway #300, Addison, TX 75001-2512. Debtor is a
corporation organized and existing under the laws of the state of
Kansas (“the State”). Debtor’s mailing
address and chief place of business is 1300 Main Street, Atchison,
KS 66002.
1.
CREATION OF SECURITY
INTEREST.
Debtor grants to Secured Party, its
successors and assigns, a security interest in and against all
property listed on any collateral schedule now or in the future
annexed to or made a part of this Agreement (“Collateral
Schedule”), and in and against all additions, attachments,
accessories and accessions to such property, all substitutions,
replacements or exchanges therefor, and all insurance and/or other
proceeds thereof (all such property is individually and
collectively called the “Collateral”). This
security interest is given to secure the payment and performance of
all debts, obligations and liabilities of any kind whatsoever of
Debtor to Secured Party, now existing or arising in the future,
including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral
Schedule (collectively “Notes” and each a
“Note”), and any renewals, extensions and modifications
of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the
“Indebtedness”).
2.
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF DEBTOR.
Debtor represents, warrants and
covenants as of the date of this Agreement and as of the date of
each Collateral Schedule that:
(a)
Debtor’s exact legal name is as set forth in the preamble of
this Agreement and Debtor is, and will remain, duly organized,
existing and in good standing under the laws of the State set forth
in the preamble of this Agreement, has its chief executive offices
at the location specified in the preamble, and is, and will remain,
duly qualified and licensed in every jurisdiction wherever
necessary to carry on its business and operations;
(b)
Debtor has adequate power and capacity to enter into, and to
perform its obligations under this Agreement, each Note and any
other documents evidencing, or given in connection with, any of the
Indebtedness (all of the foregoing are called the “Debt
Documents”);
(c)
This Agreement and the other Debt Documents have been duly
authorized, executed and delivered by Debtor and constitute legal,
valid and binding agreements enforceable in accordance with their
terms, except to the extent that the enforcement of remedies may be
limited under applicable bankruptcy and insolvency
laws;
(d)
No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the
entry into, or performance by Debtor of any of the Debt Documents,
except any already obtained;
(e)
The entry into, and performance by, Debtor of the Debt Documents
will not (i) violate any of the organizational documents of Debtor
or any judgment, order, law or regulation applicable to Debtor, or
(ii) result in any breach of or constitute a default under any
contract to which Debtor is a party, or result in the creation of
any lien, claim or encumbrance on any of Debtor’s property
(except for liens in favor of Secured Party) pursuant to any
indenture, mortgage, deed of trust, bank loan, credit agreement, or
other agreement or instrument to which Debtor is a
party;
(f)
There are no suits or proceedings pending in court or before any
commission, board or other administrative agency against or
affecting Debtor which could, in the aggregate, have a material
adverse effect on Debtor, its business or operations, or its
ability to perform its obligations under the Debt Documents, nor
does Debtor have reason to believe that any such suits or
proceedings are threatened;
(g)
All financial statements delivered to Secured Party in connection
with the Indebtedness have been prepared in accordance with
generally accepted accounting principles, and since the date of the
most recent financial statement, there has been no material adverse
change in Debtor’s financial condition.
(h)
The Collateral is not, and will not be, used by Debtor for
personal, family or household purposes;
(i)
The Collateral is, and will remain, in good condition and repair
and Debtor will not be negligent in its care and use;
(j)
Debtor is, and will remain, the sole and lawful owner, and in
possession of, the Collateral, and has the sole right and lawful
authority to grant the security interest described in this
Agreement;
(k)
The Collateral is, and will remain, free and clear of all liens,
claims and encumbrances of any kind whatsoever, except for (i)
liens in favor of Secured Party; (ii) liens for taxes not yet due
or for taxes being contested in good faith and which do not
involve, in the judgment of Secured Party, any risk of the sale,
forfeiture or loss of any of the Collateral; (iii) inchoate
materialmen’s, mechanic’s, repairmen’s and
similar liens arising by operation of law in the normal course of
business for amounts which are not delinquent; and (iv) liens in
favor of GE Public Finance, Inc. related specifically to the
Promissory Note and Collateral Schedule 001 dated September 24,
2004 (all of such liens are called “Permitted Liens”);
and
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(l)
Debtor is and will remain in full compliance with all laws and
regulations applicable to it including, without limitation, (i)
ensuring that no person who owns a controlling interest in or
otherwise controls Debtor is or shall be (Y) listed on the
Specially Designated Nationals and Blocked Person List maintained
by the Office of Foreign Assets Control (“OFAC”),
Department of the Treasury, and/or any other similar lists
maintained by OFAC pursuant to any authorizing statute, Executive
Order or regulation, or (Z) a person designated under Section 1(b),
(c) or (d) of Executive Order No. 13224 (September 23, 2001), any
related enabling legislation or any other similar Executive Orders;
and (ii) compliance with all applicable Bank Secrecy Act
(“BSA”) laws, regulations and government guidance on
BSA compliance and on the prevention and detection of money
laundering violations.
3.
COLLATERAL.
(a)
Until the declaration of any default, Debtor shall remain in
possession of the Collateral; except that Secured Party shall have
the right to possess (i) any chattel paper or instrument that
constitutes a part of the Collateral, and (ii) any other Collateral
in which Secured Party’s security interest may be perfected
only by possession. Secured Party may inspect any of the
Collateral during normal business hours after giving Debtor
reasonable prior notice. If Secured Party asks, Debtor will
promptly notify Secured Party in writing of the location of any
Collateral.
(b)
Debtor shall (i) use the Collateral only in its trade or business,
(ii) maintain all of the Collateral in good operating order and
repair, normal wear and tear excepted, (iii) use and maintain the
Collateral only in compliance with manufacturers recommendations
and all applicable laws, and (iv) keep all of the Collateral free
and clear of all liens, claims and encumbrances (except for
Permitted Liens).
(c)
Secured Party does not authorize and Debtor agrees it shall not (i)
part with possession of any of the Collateral (except to Secured
Party or for maintenance and repair), (ii) remove any of the
Collateral from the continental United States, or (iii) sell, rent,
lease, mortgage, license, grant a security interest in or otherwise
transfer or encumber (except for Permitted Liens) any of the
Collateral.
(d)
Debtor shall pay promptly when due all taxes, license fees,
assessments and public and private charges levied or assessed on
any of the Collateral, on its use, or on this Agreement or any of
the other Debt Documents. Notwithstanding the foregoing, so
long as there exists no default hereunder, Debtor may have up to
thirty (30) days to contest the assessment of any taxes, license
fee, assessment or public or private charge on or against the
Collateral; provided the contest is made in good faith, is
diligently pursued, and does not subject the Collateral to a
material risk of confiscation, forfeiture or seizure. At its
option, Secured Party may discharge taxes, liens, security
interests or other encumbrances at ay time levied or placed on the
Collateral and may pay for the maintenance, insurance and
preservation of the Collateral and effect compliance with the terms
of this Agreement or any of the other Debt Documents. Debtor
agrees to reimburse Secured Party, on demand, all costs and
expenses incurred by Secured Party in
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connection with
such payment or performance and agrees that such reimbursement
obligation shall constitute indebtedness.
(e)
Debtor shall, at all times, keep accurate and complete records of
the Collateral, and Secured Party shall have the right to inspect
and make copies of all of Debtor’s books and records relating
to the Collateral during normal business hours, after giving Debtor
reasonable prior notice.
(f)
Debtor agrees and acknowledges that any third person who may at any
time possess all or any portion of the Collateral shall be deemed
to hold, and shall hold, the Collateral as the agent of, and as
pledge holder for, Secured Party. Secured Party may at any
time give notice to any third person described in the preceding
sentence that such third person is holding the Collateral as the
agent of, and as pledge holder for, the Secured Party.
4.
INSURANCE.
(a)
Debtor shall at all times bear the entire risk of any loss, theft,
damage to, or destruction of, any of the Collateral from any cause
whatsoever.
(b)
Debtor agrees to keep the Collateral insured against loss or damage
by fire and extended coverage perils, theft, burglary, and for any
or all Collateral which are vehicles, for risk of loss by
collision, and if requested by Secured Party, against such other
risks as Secured Party may reasonably require. The insurance
coverage shall be in an amount no less than the full replacement
value of the Collateral, and deductible amounts, insurers and
policies shall be acceptable to Secured Party. Debtor shall
deliver to Secured Party policies or certificates of insurance
evidencing such coverage. Each policy shall name Secured
Party as a loss payee, shall provide for coverage to Secured Party
regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-insurance,
and shall provide that coverage may not be canceled or altered by
the insurer except upon thirty (30) days prior written notice to
Secured Party. Debtor appoints Secured Party as its
attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to receive payment of and execute or
endorse all documents, checks or drafts in connection with
insurance payments. Secured Party shall not act as
Debtor’s attorney-in-fact unless Debtor is in default.
Proceeds of insurance shall be applied, at the option of Secured
Party, to repair or replace the Collateral or to reduce any of the
Indebtedness.
5.
REPORTS.
(a)
Debtor shall promptly notify Secured Party of (i) any change in the
name of Debtor, (ii) any change in the state of its incorporation,
organization or registration, (iii) any relocation of its chief
executive offices, (iv) any relocation of any of the Collateral,
(v) any of the Collateral being lost, stolen, missing, destroyed,
materially damaged or worn out, or (vi) any lien, claim or
encumbrance other than Permitted Liens attaching to or being made
against any of the Collateral.
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(b)
Debtor will deliver to Secured Party Debtor’s complete
financial statements, certified by a recognized firm of certified
public accountants, within ninety (90) days of the close of each
fiscal year of Debtor. If Secured Party requests, Debtor will
deliver to Secured Party copies of Debtor’s quarterly
financial reports, certified by Debtor’s chief financial
officer, within ninety (90) days after the close of each of
Debtor’s fiscal quarter. Debtor will deliver to Secured Party
copies of all Forms 10-K and 10-Q, if any, within 30 days after the
dates on which they are filed with the Securities and Exchange
Commission.
6.
FURTHER ASSURANCES.
(a)
Debtor shall, upon request of Secured Party, furnish to Secured
Party such further information, execute and deliver to Secured
Party such documents and instruments (including, without
limitation, Uniform Commercial Code financing statements) and shall
do suc
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