Exhibit 10.1


 


Guidelines for Issuance of Fiscal 2004
Restricted Share Awards

Adopted by the Human Resources Committee of the Board of Directors

of MGP Ingredients, Inc.


 


RECITALS:


 


1.             MGP INGREDIENTS, INC., formerly MIDWEST
GRAIN PRODUCTS, INC. (the “Company”), has adopted the Stock Incentive Plan of
1996 (the “1996 Plan”) and the 1998 Stock Incentive Plan for Salaried Employees
(the “1998 Plan”), collectively the “Plans.”


 


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


 


3.             Under
the provisions of the Plans, the Committee may provide for Stock Awards in the
form of 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 10(c) of the Plans, 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 Plans in
2004  are subject to the following terms
and conditions.


 


(i)            Number
of Shares.  The number of shares
issued to an Employee 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 Employee without a substantial risk
of forfeiture) only upon either (a) the Employee’s completion of seven (7) full
years of employment with the Company, commencing on July 1, 2003 and ending on
June 30, 2010, or (b) (1) the Employee’s completion of three (3) full years of
employment, commencing on July 1, 2003 and ending on June 30, 2006 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, 2003 and
ending on June 30, 2006 in the amount established by the Committee on or prior
to the date of the 2004 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 extraordinary item or be adjusted to reflect any
extraordinary 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
Employee 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 Employee and cancelled by the Company.


 


C.            Further Conditions on Vesting and Forfeiture.


 


(i)            In the event of an Employee’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, 2006,  the Restricted
Shares issued to such Employee 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 Employee multiplied by a fraction, the numerator of which
shall equal the number of months of employment (including fractional months as
full months) that such Employee was employed by the Company, commencing as of
July 1, 2003 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 Employee shall be
forfeited by the Employee 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 an Employee’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, 2010, the
Restricted Shares issued to such Employee shall vest on the date of termination
as to the number of Restricted Shares issued to such Employee multiplied by a
fraction, the numerator of which shall equal the number of months of employment
(including fractional months as full months) that such Employee was employed by
the Company, commencing as of July 1, 2003 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 Employee shall be forfeited by the Employee and cancelled
by the Company.


 


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(iii)          Solely in the case of Restricted Shares
issued under the 1996 Plan, any Restricted Shares shall become fully vested in
the Employee in the event of a Change of Control, as defined in the Plan.


 


(iv)          As used herein,  the term “Disability” shall mean the inability of an Employee to
perform substantially such Employee’s duties and responsibilities due to a
physical or mental condition that would entitle such Employee 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) and the term “Retirement” means
the attainment by the Employee 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
Employee’s name and may bear substantially the following legend:


 


“The shares evidenced by this
Certificate have been issued pursuant to the [name of plan] 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 Employee’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 applicable
Plan, until they have vested, Restricted Shares may not, by operation of law or
otherwise,


 


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be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of by the holder thereof or be subject to
execution, attachment or other legal process.


 


G.            Provisions of Plans Apply.  Even though not set forth herein or in any related
grant agreement, the provisions of the related 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 Plans) 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
Plans) or other Stock which was not obtained through the exercise of a stock
option 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.


 


(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.


 


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(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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