Exhibit 10.3

 

TRANSITION SERVICES AGREEMENT

 

This Transition Services Agreement (“Agreement”) is entered into as of
December 3, 2013 (the “Effective Date”), by and between MGP Ingredients, Inc., a
Kansas corporation (the “Company”), and Timothy W. Newkirk (“Consultant”).

 

In consideration of the mutual covenants contained in this Agreement and other
good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the Company and Consultant agree as follows:

 

1.                                      Services.  The Company is retaining
Consultant to provide certain transition services to the Company in connection
with the engagement by the Company of a new Chief Executive Officer or new
co-Chief Executive Officers (the “Services”).  The Company may alter or expand
the Services only upon the mutual agreement of the parties.  Consultant shall be
required only to report to the Chief Executive Officer or co-Chief Executive
Officers of the Company, and shall be required only to perform such actions as
are reasonably requested by such person or persons, all in accordance with the
terms hereof.  Subject to the foregoing, Consultant shall consult with the board
of directors of the Company (or its designated advisors) upon the reasonable
request of the Chief Executive Officer or co-Chief Executive Officers of the
Company.

 

2.                                      Relationship of the Parties.

 

(a)                                 An independent contractor relationship shall
exist between the Company and Consultant.  Consultant is neither an agent nor an
employee of the Company.  Consultant has the authority to control and direct the
performance of the details of the Services, as governed by his own independent
judgment and discretion.  In a manner that meets the business needs of the
Company, Consultant shall: (i) determine when, and how the Services are
performed; (ii) be responsible for hiring, training, assigning work to,
compensating, and supervising his own employees or agents; (iii) determine his
hours or days of work; (iv) determine the location from which the Services are
performed (except that such location will not be the premises of the Company
unless specifically requested by the Co-CEOs (or, following the retention of a
permanent CEO by the Company, by the CEO); (v) determine the order or sequence
in which tasks are performed related to the Services; and (vi) maintain his own
work facility.  Consultant shall not: (1) be required to undergo training of any
nature, including the training the Company provides its employees; (2) have any
right or authority to make any contracts or commitments for, or on behalf of,
the Company; and/or (3) represent himself to be an employee or agent of the
Company.  The Company shall reimburse Consultant for his expenses reasonably
incurred in his performance of the Services to the extent such expenses are
approved in advance by the Co-CEOs (or, following the retention of a permanent
CEO by the Company, by the CEO).

 

(b)                                 The Company does not agree to use Consultant
exclusively.  Consultant is not exclusively engaged by the Company and remains
free to perform services for other persons and entities, and to make himself
available to the public for such purposes.

 

--------------------------------------------------------------------------------

 

3.                                      Compensation.  In return for all
Services provided by Consultant, the Company shall pay Consultant (a) on the
Effective Date, One Hundred Thousand Five Hundred and No/100 Dollars
($100,500.00) and (b) on the date that is three months after the Effective Date,
One Hundred Thousand Five Hundred and No/100 Dollars ($100,500.00), which
amounts shall compensate Consultant for the Services rendered hereunder.  On the
Effective Date, the Company shall reimburse Consultant for his reasonable
third-party expenses, up to a maximum aggregate cap of Forty-Five Thousand and
No/100 Dollars ($45,000.00), incurred in connection with the preparation of this
Agreement, the termination of his employment with the Company (including without
limitation the mutual release between Consultant and the Company), and other
expenses related to the foregoing.  Consultant agrees that he will make himself
available to provide Services hereunder for up to ten (10) hours during each
week that this Agreement remains in effect.  The Company will issue an IRS
Form 1099 to Consultant for all compensation paid under this Agreement. 
Consultant shall be responsible for paying any taxes related to this
compensation, and Consultant shall indemnify and hold the Company harmless from
any tax liability, penalties and/or interest relating to this compensation. 
Consultant shall not be entitled hereunder to participate in any benefits
programs of the Company, and Consultant’s payments as described in this
Section 3 shall be Consultant’s sole compensation for the Services provided
hereunder.

 

4.                                      Term.  The Term of this Agreement shall
begin on the Effective Date and shall continue until the earlier of: (a) six
months from the Effective Date; and (b) the date this Agreement is terminated
earlier by the Company or Consultant in accordance with the terms hereof. 
Subject to the terms hereof, either the Company or Consultant may terminate this
Agreement on thirty (30) days’ notice.

 

5.                                      Effect of Termination.  If the Company
terminates this Agreement without Cause prior to the date that is six months
from the Effective Date, the Company shall provide the compensation set forth
above in accordance with the terms hereof.  If, prior to the date that is six
months from the Effective Date, Consultant terminates this Agreement for any
reason or if the Company terminates this Agreement for Cause, the Company shall
only be obligated to provide the compensation set forth above actually accrued
through Consultant’s last day worked (with the amount accrued for each day in
the period equal to $1,116.67).  For purposes of this Agreement, “Cause” shall
mean the substantial and repeated failure of Consultant to follow the direction,
policies and/or procedures of the Company as reasonably directed by the board of
directors of the Company, which failure is not cured within thirty (30) days
following Consultant’s receipt of written notice from the Company identifying
the nature of such failure.

 

6.                                      Confidentiality.  Only to the extent
that Consultant actually has access to the Company’s Proprietary Information or
Customer Information (in each case as defined below):

 

(a)                                       Consultant acknowledges that, during
his engagement, he may have access to and use Proprietary Information and
Customer Information.  Consultant further acknowledges that the Company’s
Proprietary Information was or will be designed and developed by the Company or
any Affiliate with considerable effort and at great expense, is unique, secret
and confidential, and constitutes the exclusive property and trade secrets of
the Company or such Affiliate.  Consultant further acknowledges that an integral
part of the Company’s business involves the receipt of Customer Information. 
Consultant

 

2

--------------------------------------------------------------------------------

 

further acknowledges that any unauthorized use of the Proprietary Information or
Customer Information by Consultant, or any disclosure of the same to any third
parties, would be wrongful and may cause irreparable injury to the Company, its
customers, suppliers, employees, clients and/or Affiliates.

 

(b)                                       Accordingly, Consultant covenants and
agrees that, during his engagement hereunder and for a period of one (1) year
thereafter, he will (i) hold the Proprietary Information and Customer
Information in strictest confidence; (ii) not disclose such information to any
person, firm, corporation or other entity; and (iii) not use such information
for any purpose not expressly authorized in writing by the Company.  Consultant
also agrees that, upon request of the Company, he will return all Company
documents and property in his possession or under his control, including but not
limited to business records in any way relating to the Company or its business,
its Proprietary Information or Customer Information (without retaining copies of
any of the foregoing).  Consultant agrees to indemnify and hold the Company
harmless from any loss, claim or damages, including attorneys’ fees and costs,
arising out of or relating to Consultant’s unauthorized disclosure or use of the
Company’s Proprietary Information or Customer Information.

 

(c)                                        For the purposes of this Agreement,
the term “Customer Information” shall mean, whether verbal, written or stored
electronically, provided that such information is marked “confidential”:
(i) confidential product or technology information of any customer of the
Company, as indicated by such customer; (ii) confidential information regarding
the business of any customer or its clients learned in the course of providing
service and/or products to the customer on behalf of the Company; (iii) other
confidential information submitted from time to time by a customer to the
Company; and (iv) the identity of the customer as the source of such data or
information provided to Consultant by the Company.  Customer Information shall
in all events, however, exclude information that is (1) available to or known by
the public; (2) is or becomes available to the Consultant on a non-confidential
basis from a source not known by the Consultant to be bound by a requirement
that such source not share such information with Consultant, or (3) has been
independently acquired or developed by the Consultant without violating any of
his obligations under this Agreement.

 

(d)                                       For the purposes of this Agreement,
the term “Proprietary Information” shall mean, whether verbal, written or stored
electronically, provided that such information is marked “confidential”: all
customer lists, prospective customer lists, trade secrets, databases, processes,
computer programs, software, object codes, source codes, passwords, entry codes,
inventions, improvements, business data, prospective employee lists, business
contact information of the Company or developed for the Company or any of the
Company’s Affiliates or customers, information relating to the Company’s or any
of its Affiliate’s business contracts, marketing strategies, any other secret or
confidential matter relating or pertaining to the products, services, sales or
other business of the Company, or any Affiliate, and shall include Customer
Information that was developed or enhanced by the Company or any Affiliate
including data furnished by or on behalf of the customer.  Proprietary
Information shall in all events, however, exclude information that is
(i) available to or known by the public; (ii) is or becomes available to the
Consultant on

 

3

--------------------------------------------------------------------------------

 

a non-confidential basis from a source not known by the Consultant to be bound
by a requirement that such source not share such information with Consultant, or
(iii) has been independently acquired or developed by the Consultant without
violating any of his obligations under this Agreement.

 

(e)                                        Notwithstanding anything herein to
the contrary, neither the term “Customer Information” nor the term “Proprietary
Information” shall include information that Consultant is requested or required
to disclose under law, rule, regulation, order or in any civil, governmental,
regulatory or judicial process, and nothing herein shall restrict Consultant
from complying with such request or requirement, provided, however, that
Consultant shall give the Company notice of such request or requirement prior to
making any disclosure thereunder (in each case, as is practicable and not
prohibited by law) so that the Company may seek an appropriate protective order,
at its sole cost and expense, and/or, in its sole discretion, waive compliance
by Consultant with the applicable provisions of this Section 6(e).

 

7.                                      Company’s Remedies.

 

(f)                                   Consultant acknowledges and agrees that
the covenants and undertakings contained in Section 6 of this Agreement relate
to matters which are of a special, unique, extraordinary, managerial and
intellectual character which gives them a peculiar value, and that a violation
of any of the terms of such Section may cause irreparable injury to the Company,
the amount of which may be difficult, if not impossible, to estimate or
determine and which may not be adequately compensated.  Therefore, Consultant
agrees that the Company, in addition to any other available remedies under
applicable law, shall be entitled, as a matter of course, to seek an injunction,
restraining order or other equitable relief from any court of competent
jurisdiction, restraining any violation or reasonably-perceived threatened
violation of any such terms by Consultant and such other persons as the court
shall order.

 

(g)                                        Consultant agrees that the
restrictions contained in Section 6 of this Agreement are reasonable in all
respects and are to be interpreted in light of all the facts and circumstances
existing at the time enforcement is sought.  However, should any court or other
body of competent jurisdiction determine that all or any portion of the
agreement set forth herein is invalid or unenforceable for any reason, such
agreement (or portion thereof) shall be restricted and deemed amended to the
minimum extent necessary so as to preserve and establish its validity and
enforceability.

 

(h)                                       Termination of Consultant’s engagement
under this Agreement, by either the Company or Consultant, or expiration of this
Agreement, shall not affect either party’s rights and obligations under
Section 6, of this Agreement, and such rights and obligations shall continue and
survive the termination or expiration of this Agreement.

 

8.                                      Return of Documents.  Upon termination
of Consultant’s engagement with the Company for any reason, all documents,
procedural manuals, guides, specifications, plans, drawings, diskettes, designs,
software and similar materials, diaries, records, customer lists, notebooks, and
similar repositories of or containing Proprietary Information, or Customer

 

4

--------------------------------------------------------------------------------

 

Information, including all copies thereof, then in Consultant’s possession or
control, whether prepared by Consultant or others, shall be left with, or
forthwith returned by Consultant to, the Company.

 

9.                                      Assignment.  The Company shall not be
required to make any payment under this Agreement to any assignee or creditor of
Consultant, other than to Consultant’s legal representative on death. 
Consultant’s obligations under this Agreement are personal and may not be
assigned, delegated or transferred in any manner and any attempt to do so shall
be void.  Consultant, or his legal representative, shall have no rights by way
of anticipation or otherwise to assign or otherwise dispose of any right of
Consultant under this Agreement.  The Company may assign this Agreement without
Consultant’s written consent to any successor to or purchaser of the Company’s
business or any portion thereof.  This Agreement shall be binding upon, and
shall inure to the benefit of, the Company, Consultant and their permitted
successors and assigns.

 

10.                               Notices.  Any notice required or permitted to
be given under this Agreement must be in writing and shall be deemed
conclusively to have been delivered (a) when personally delivered; (b) one
(1) Business Day after being sent by reputable overnight express courier
(charges prepaid); or (c) three (3) Business Days following mailing by certified
or registered mail, postage prepaid and return receipt requested.  Unless
another address is specified in writing, notices, requests, demands and
communications to the parties shall be sent to the addresses indicated below:

 

To Company:

 

MGP Ingredients, Inc.

100 Commercial Street

Atchison, KS 66002

Attn: Chief Executive Officer

 

To Consultant:

 

Timothy W. Newkirk
[                                              ]

[                                              ]

[                                              ]

 

With a copy to:

 

[                                              ]

[                                              ]

[                                              ]

[                                              ]

 

11.                               Amendments.  This Agreement shall not be
amended, in whole or in part, except by an agreement in writing signed by the
Company and Consultant.

 

5

--------------------------------------------------------------------------------

 

12.                               Entire Agreement.  This Agreement constitutes
the entire agreement between the parties with respect to the Services provided
hereunder.  All prior agreements or understandings related to the Services, oral
or written, are merged in this Agreement and are of no further force or effect. 
The parties acknowledge that they are not relying on any representations,
express or implied, oral or written, in entering into this Agreement, except for
those stated in this Agreement.

 

13.                               Captions.  The captions of this Agreement are
included for convenience only and shall not affect the construction of any
provision of this Agreement.

 

14.                               Governing Law.  This Agreement shall be
governed by, and interpreted in accordance with, the laws of the State of
Kansas.

 

15.                               Severability.  All provisions, agreements, and
covenants contained in this Agreement are severable, and in the event any of
them shall be held to be illegal, void or invalid by any competent court or
under any applicable law, such provision shall be changed to the minimum extent
reasonably necessary to make the provision, as so changed, legal, valid and
binding.  If any provision of this Agreement is held illegal, void or invalid in
its entirety, the remaining provisions of this Agreement shall not in any way be
affected or impaired, but shall remain binding in accordance with their terms.

 

16.                               No Waiver.  No waiver of any provision of this
Agreement shall be valid unless in writing and signed by the party against whom
enforcement of the waiver is sought.  The waiver by either party of any breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach.

 

17.                               Consultation with Counsel.  Consultant
acknowledges that he has been given the opportunity to consult with his personal
legal counsel concerning all aspects of this Agreement and the Company has urged
Consultant to so consult with such counsel.

 

18.                               Counterparts.  This Agreement may be executed
in any number of counterparts, each of which, when taken together, shall
constitute one and the same agreement.

 

(signature page follows)

 

6

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Company and Consultant have duly executed this Agreement
as of the date and year first above written.

 

 

“THE COMPANY”

 

“CONSULTANT”

 

 

 

MGP INGREDIENTS, INC.

 

TIMOTHY W. NEWKIRK

 

 

 

 

 

 

Signed:

/s/ Donald P. Tracy

 

Signed:

/s/ Timothy W. Newkirk

 

 

 

Name:

Donald P. Tracy

 

 

 

 

 

Its:

Chief Financial Officer

 

 

 

[Signature Page to Transition Services Agreement]

 

--------------------------------------------------------------------------------