Exhibit
10.1


 


Guidelines
for Issuance of Fiscal 2005 Restricted Share Awards

Adopted by the Human Resources Committee of the Board of Directors

of MGP Ingredients, Inc.


 


RECITALS:


1.             MGP INGREDIENTS, INC. has adopted the Stock Incentive
Plan of 2004 (the “Plan”).


2.             Under the provisions of Section 5 of the Plan, the
Committee may grant Stock Incentives in the form of Stock Awards.


3.             Under the provisions of the Plan, the
Committee may provide for Stock Awards in the form of restricted shares (herein
“Restricted Shares”) to such eligible persons as may be selected by the
Committee in its discretion.


                Pursuant to the authority
granted to it under the provisions of Section 13(c) of the Plan, the Committee
adopts the following guidelines with respect to the issuance in 2004 of Stock
Awards in the form of Restricted Shares.


A.            Terms of Awards of Restricted Shares.  Restricted Shares awarded under the Plan in
2005 are subject to the following terms and conditions.


                                (i)            Number of Shares.  The number of shares issued to a Participant pursuant
to a Stock Award in the form of Restricted Shares shall be as determined by the
Committee.


                                (ii)           Vesting.  Subject to the provisions of paragraphs C and
D of these Guidelines, Restricted Shares issued as Stock Awards under the Plans
shall vest (i.e., become owned by the Participant without a substantial risk of
forfeiture) only upon either (a) the Participant’s completion of seven (7) full
years of employment with the Company, commencing on July 1, 2004 and ending on
June 30, 2011, or (b) (1) the Participant’s completion of three (3) full years
of employment, commencing on July 1, 2004 and ending on June 30, 2007 and (2) the
satisfaction by the Company of a Performance Measure, as specified below, established
by the Committee (the “Restriction Period”).


                                (c)           Performance Measure.  The Performance Measure shall be earnings per
share on a cumulative basis over the period beginning on July 1, 2004
and ending on June 30, 2007 in the amount established by the Committee on or
prior to the date of the 2005 Stock Awards.  The Company’s earnings per share shall be
determined by the independent accounting firm regularly engaged by the Company and,
except as follows,  shall be determined in
accordance with generally accepted accounting principles.  The Committee may determine whether the
calculation of earnings per share should include or exclude any unusual or non-





















 


recurring item or be adjusted to reflect any unusual or non-recurring
event, such as an acquisition, divestiture, change in accounting principles or
tax regulations. Without limiting the foregoing, in the event of a sale by the
Company of shares of its stock, a recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation, rights
offering, reorganization or liquidation, or any other change in the corporate
structure or shares of the Company, the Committee may make such equitable
adjustments, designed to protect against dilution or enlargement, as it may
deem appropriate with respect to the Performance Measure.


B.            Forfeiture.  Except as
provided in paragraph C, if the employment of the Participant to whom
Restricted Shares has been issued terminates for any reason prior to the end of
the Restriction Period, such Restricted Shares shall be immediately forfeited
by such Participant and cancelled by the Company.


C.            Further Conditions on Vesting and Forfeiture.


                                                (i)            In the event of a Participant’s
death, Disability, Retirement or, in the sole discretion of the Committee,
involuntary termination of employment without cause, in any such case after one
year from the date of grant specified in the agreement evidencing the Stock
Award but prior to June 30, 2007,  the
Restricted Shares issued to such Participant shall vest, on the date the
Committee determines that the Performance Measure has been met, as to the
number of Restricted Shares issued to such Participant multiplied by a
fraction, the numerator of which shall equal the number of months (including
fractional months as full months) that such Participant was employed by the
Company, commencing as of July 1, 2004 and ending on  the date of termination of employment, and the
denominator of which shall be thirty-six. 
The balance of Restricted Shares issued to such Participant shall be
forfeited by the Participant and cancelled by the Company. Pending
determination by the Committee that the Performance Measure has been met, the
provisions of paragraph E below shall continue to apply.


                                                (ii)           If the Performance Measure is not
attained, then, in the event of a Participant’s death, Disability, Retirement
or, in the sole discretion of the Committee, involuntary termination of employment
without cause, in any such case after three years from the date of grant
specified in the agreement evidencing the Stock Award but prior to June 30,
2011, the Restricted Shares issued to such Participant shall vest on the date
of termination as to the number of Restricted Shares issued to such Participant
multiplied by a fraction, the numerator of which shall equal the number of
months of employment (including fractional months as full months) that such Participant
was employed by the Company, commencing as of July 1, 2004 and ending on the
date of termination of employment, and the denominator of which shall be
eighty-four.  The balance of Restricted
Shares issued to such Participant shall be forfeited by the Participant and
cancelled by the Company.


                                                (iii)          Any Restricted Shares shall become
fully vested in the Participant in the event of a Change of Control, as defined
in the Plan.


 


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                                                (iv)          As used herein,  the term “Disability” shall mean the inability
of a Participant to perform substantially such Participant’s duties and
responsibilities due to a physical or mental condition that would entitle such Participant
to benefits under the Company’s Long-Term Disability Plan (or any successor to
the plan in effect on the date of adoption of these Guidelines) or, if no such
plan is in effect, such condition as would enable the Participant to receive an
award for permanent and total disability from the Social Security Administration,
and the term “Retirement” means the attainment by the Participant of age 62.


                                                (v)           The Committee’s determinations to
permit vesting in the event of involuntary terminations of employment without
cause need not be uniform and may be made selectively among participants,
whether or not such participants are similarly situated.


D.            Issuance of Restricted Shares.  A certificate or certificates representing
the number of shares awarded as a Stock Award in the form of Restricted Shares
shall be issued from the Company’s treasury shares and registered in the Participant’s
name and may bear substantially the following legend:


                                “The
shares evidenced by this Certificate have been issued pursuant to the MGP
Ingredients, Inc. Stock Incentive Plan of 2004 and a related agreement (the “Agreement”)
between the Company and the registered holder. 
The holder’s rights are subject to the restrictions, terms and conditions
of the Plan and to the Agreement, which restricts the transfer of the shares
and subjects them to forfeiture to the Company under the circumstances referred
to in the Agreement.  This legend may be
removed when the holder’s rights to the shares vest under the Agreement.”


All
certificates so registered in the Participant’s name shall be deposited with
the Company, together with stock powers or other instruments of assignment,
each endorsed in blank with a guarantee of signature deemed appropriate by the
Company which would permit transfer to the Company of all or a portion of the
Restricted Shares in the event such award is forfeited in whole or in
part.  Upon vesting and provision for
taxes required to be withheld, such certificate or certificates evidencing unrestricted
ownership of the requisite number of shares of Common Stock shall be delivered
to the holder of such Stock Award.


E.             Rights with Respect to Restricted Shares.  The holder of an award of Restricted Shares
shall have the following rights of a stockholder of the Company: voting rights
and the right to receive dividends during any applicable Restriction Period.


F.             Non-Assignability.  Except as may be permitted by the Plan, until
they have vested, Restricted Shares may not, by operation of law or otherwise,
be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of
by the holder thereof or be subject to execution, attachment or other legal
process.


 


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G.            Provisions of Plan Apply.  Even
though not set forth herein or in any related grant agreement, the provisions
of the Plan applicable to Stock Awards, including those relating to adjustment
of Stock Awards, shall apply to Restricted Shares.


H.            Taxes.    No
certificates evidencing ownership of shares shall be delivered to the holder of
a Stock Award upon vesting until the holder makes such provision as the Company
deems appropriate for the payment of any taxes which the Company may withhold
in connection with the vesting of such Stock Award.   Withholding taxes resulting from vesting of
Stock Awards may be settled with cash or shares of the Company’s Common Stock
in accordance with the following guidelines.


                                                (i)            Holders may deliver to the Company a
personal check satisfactory to the Company in the amount of the tax liability.


                                (ii)           Holders may elect to pay the tax
liability in shares of the Company’s Common Stock  by directing the Company to withhold from the
number of shares to be delivered upon vesting that number of shares equal to
the amount of the tax liability divided by the fair market value (as defined by
the Plan) of one share of the Company’s common stock on the date  the tax to be withheld is to be determined
(the “Tax Date”); or


                                                (iii)          Holders may elect to pay the
tax liability in shares of the Company’s Common Stock by delivering to
the Company good and marketable title to that number of shares of Mature Stock
(as defined in the Plan) owned by the holder as shall equal the amount of the
tax liability divided by the fair market value of one share of the Company’s
common stock on the Tax Date.


                                                (iv)          If a holder does not notify the
Company on or before the Tax Date as to the manner the holder wishes to provide
for withholding taxes, the Company may, without notice to the holder, satisfy
its withholding obligations as provided in clause (ii) above or any other
manner permitted by law.


                                                (v)           No fractional shares will be issued
in connection with any election to satisfy a tax liability by paying in
shares.  The balance of any tax liability
representing a fraction of a share will be settled in cash by the Participant.


                                                (vi)          The amount of tax which may be
paid  pursuant to a stock payment
election under clause (ii), (iii) or (iv) above 
will be the Company’s minimum required federal (including FICA and FUTA)
and state withholding amounts at the time of the election to pay the taxes with
surrendered or withheld shares.


                                                (vii)         The foregoing provisions  relating to the use of stock to satisfy
obligations may be unilaterally revised by the Committee from time to time to
conform the same to any applicable laws or regulations


 


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The undersigned Secretary of MGP Ingredients Inc. does hereby certify
that the foregoing Guidelines were adopted by the Human Resources Committee of
the Board of Directors of the Company on December 1, 2005.


 


	
   

  	
  /s/
  Marta Myers

  
	
   

  	
  Marta
  Myers, Secretary

  



 


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