Document:

EXHIBIT 10.2

 

MGP INGREDIENTS, INC.

AGREEMENT AS TO AWARD OF RESTRICTED SHARES

GRANTED UNDER THE STOCK INCENTIVE PLAN OF 1996 AND THE 1998

STOCK INCENTIVE PLAN FOR SALARIED EMPLOYEES

 

	
  Date of
  Grant: March
  9, 2004

  	
   

  
	
  Time of
  Grant: 10:15 a.m. CST

  	
  23,600  Restricted
  Shares

  

 

In accordance with and subject to the terms and restrictions set forth
in the MGP Ingredients, Inc. (formerly Midwest Grain Products, Inc.) Stock
Incentive Plan of 1996 (the “1996 Plan”), as amended, and the 1998 Stock
Incentive Plan for Salaried Employees (the “1998 Plan” and together with the
1996 Plan, the “Plans” and each a “Plan”) and this Agreement, MGP INGREDIENTS,
INC., a Kansas corporation (the “Company”), hereby grants to the Employee named
below the number of Restricted Shares of Common Stock of the Company as set
forth below:

 

Employee: Laidacker M.
Seaberg

Number of
Restricted Shares under the 1998 Plan:  9,110

Number of
Restricted Shares under the 1996 Plan:  
14,490

 

NOW, THEREFORE, the Company and the Employee hereby agree to the
following terms and conditions:

 

1.             Issuance of
Restricted Shares.  The shares
described above are being issued by the Company to the Employee as Restricted
Shares pursuant to the terms and provisions of the 1996 Plan or the 1998 Plan,
as applicable, and of the Guidelines for Issuance of Fiscal 2004 Restricted
Share Awards (the “Guidelines”) adopted by the Human Resources Committee of the
Board of Directors of the Company, true copies of which are attached hereto as
Exhibits A, B and C and incorporated herein by reference.  Upon the execution of this Agreement, the
Company shall issue in the Employee’s name the aggregate number of Restricted
Shares described above, subject to the provisions of the Guidelines requiring
that such certificate or certificates be held in the custody of the Company.

 

2.             Vesting in
Restricted Shares.  Subject to the
provisions of the Guidelines, Restricted Shares shall vest in the Employee upon
the Employee’s completion of seven (7) full years of employment with the
Company commencing on July 1, 2003. 
However, in the event that the Performance Measure is achieved, the
Restricted Shares shall vest in the Employee upon completion of three (3) full
years of employment commencing on July 1, 2003.  The Performance Measure means that the Company has achieved
earnings per share on a cumulative basis for the period beginning on July 1,
2003 and ending on June 30, 2006 of $3.04 per share.  The Performance Measure is subject to adjustment, as provided in
the Guidelines,  and the inclusion or
exclusion of extraordinary items is subject to the discretion of the
Compensation Committee, as provided in the Guidelines.  Except as provided in the Guidelines, the
Restricted Shares issued to the Employee shall

 

 

be forfeited to the Company if the Employee’s
employment with the Company is terminated prior to the end of the applicable
Restriction Period.

 

3.             Restriction on
Transfer. The Employee shall not voluntarily sell, exchange, transfer,
pledge, hypothecate, or otherwise dispose of any Restricted Shares to any other
person or entity during the applicable Restriction Period.  Any disposition or purported disposition
made in violation of this paragraph shall be null and void, and the Company
shall not recognize or give effect to such disposition on its books and
records.

 

4.             Legend on
Certificates.  In order that all
potential transferees and others shall be put on notice of this Agreement and
so long as the risk of forfeiture exists under the Plan and Guidelines, each
certificate evidencing ownership of the Restricted Shares issued pursuant to
the Plan (and any replacements thereto) shall bear a legend in substantially
the following form:

 

“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.”

 

5.             Controlling
Provisions.  The provisions of the
Guidelines shall apply to the award made under this Agreement.  In the event of a conflict between the
provisions of this Agreement and the Guidelines, the provisions of the
Guidelines will control.

 

IN WITNESS WHEREOF, this Instrument has been executed as of this 9th
day of March 2004.

 

	
   

  	
  MGP INGREDIENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian T. Cahill

  	
   

  
	
   

  	
   

  	
  Brian T. Cahill

  
	
   

  	
   

  	
  Vice President and CFO

  
					

 

ACKNOWLEDGEMENT

 

I understand and agree that the Restricted Shares to be acquired by me
are subject to the terms, provisions and conditions hereof and of the Plan and
Guidelines, to all of which I

 

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hereby expressly assent.  This
Agreement shall be binding upon and inure to the benefit of the Company,
myself, and our respective successors and legal representatives.

 

This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof, and may not be modified, amended,
renewed or terminated, nor may any term, condition or breach of any term or
condition be waived, except in writing signed by the parties sought be bound
thereby.  Any waiver of any term,
condition or breach shall not be a waiver of any term or condition of the same
term or condition for the future or any subsequent breach.  In the event of the invalidity of any part
or provision of this Agreement, such invalidity shall not effect the
enforceability of any other part or provision of this Agreement.

 

Signed this 9th day of March, 2004.

 

	
   

  	
  /s/ Ladd M. Seaberg

  	
   

  
	
   

  	
  Signature of Employee

  

 

3EXHIBIT
10.01

 

SECURED PROMISSORY NOTE

 

	
  $750,000

  	
   

  	
  May
  14, 2004

  

 

FOR VALUE RECEIVED, the undersigned, ZAMBA CORPORATION, a Delaware
corporation (the “Maker”), hereby promises to pay to the order of Pandora
Select Partners L.P., a British Virgin Islands limited partnership, or its
assigns (the “Payee”), at such place as the Payee may designate in writing, the
principal sum of Seven Hundred Fifty Thousand Dollars ($750,000), under the
terms set forth herein.

 

1.             Interest.  The
unpaid principal balance hereof from time to time outstanding shall bear
interest from the date hereof at the rate of twelve percent (12%) per annum.

 

2.             Payment.  The
principal and interest hereof is payable as follows:

 

(a)           Payments in cash of interest only are payable in arrears on June 14,
July 14 and August 14, 2004; and

 

(b)           Commencing on September 14, 2004, and on the 14th day of each of the
following 14 months, Maker shall pay amortized principal and interest on this
Note of $54,092.84 (the “Monthly Scheduled Payment”).

 

3.             Optional Payment in Stock.

 

(a)           In lieu of making a cash payment under subsection 2(b) above, Maker may
pay the Monthly Scheduled Payment, or any portion thereof, but only to the
extent permitted by this subsection (a), by the issuance of shares of its $0.01
par value common stock (the “Common Stock”), the per share value of which is
computed as provided in Subsection (b) below. 
Despite the foregoing, the number of shares of Common Stock which may be
issued to pay all or any portion of a particular Monthly Scheduled Payment may
not exceed the lesser of (i) 10% of the aggregate number of traded shares of
Common Stock reported on the NASDAQ System (or if not then traded on the NASDAQ
System, on the OTC Bulletin Board as reported by bigcharts.com, or if this
service is discontinued, such other reporting service acceptable to Payee) for
the 30 trading days immediately preceding such Monthly Scheduled Payment due or
(ii) a number of shares of Common Stock which, when added to the number of
shares of Common Stock “Beneficially Owned” (within the meaning set forth in
subsection (d) below) by Payee, would not cause Payee to Beneficially Own more
than 4.99% of the Maker’s outstanding Common Stock.  In addition, in making the Monthly Scheduled Payments, the Maker
shall not be permitted to issue more than 10,000,000 shares of Common
Stock.   In computing under this
subsection (a) the aggregate number of traded shares during any time period,
the Maker shall exclude (i) shares sold by or for the account or at the
direction of the Maker, officers or directors

 

 

of Maker or any members of their immediate
families or any affiliates of Maker and (ii) shares determined solely by Payee
(for which Payee shall so inform the Maker in writing) to represent unlawful or
potentially unlawful sales.  Maker may
pay the Monthly Scheduled Payment, or any portion thereof, by the issuance of
Common Stock only if, at the time of such payment, Maker has in effect a
registration statement on Form S-2 or S-3 with the SEC and applicable state
securities laws covering the original issuance of such shares by the Maker or
the resale of such shares by the Payee (the “Registration Statement”).

 

(b)           The per share value of the Common Stock as of a specified Scheduled
Monthly Payment date for the purposes of this Section 3 is 88% (rounded to the
nearest $.01) of the average (rounded to the nearest $.01) of the high closing
bid prices of Maker’s Common Stock on the NASDAQ System (or if not then traded
on the NASDAQ System, then on the OTC Bulletin Board as reported by
bigcharts.com, or if this service is discontinued, such other reporting service
acceptable to Payee) for the 30 trading days immediately preceding the
particular Scheduled Monthly Payment date.

 

(c)           Payment by Common Stock shall be deemed to be made by Maker by giving
written notice to the Payee of the number of shares being issued in such
payment, and the Maker’s calculation of the per share market value under
subsection (b) above; provided that certificates representing those shares are
delivered to Payee within 20 days of the due date of the Scheduled Monthly
Payment.

 

(d)           The limitations on the right to exercise
a warrant for 1,339,286 shares of Common Stock being issued to Payee in
connection with this Note, as provided by such warrant (the “Warrant”), shall
first reduce Payee’s Beneficial Ownership of Maker’s Common Stock before
limiting the number of shares that Maker may issue to Payee as payment
hereunder pursuant to Section 3(a) above. 
The Payee will, at the request of Maker, from time to time, notify Maker
of Payee’s computation of Payee’s Beneficial Ownership.  The parties shall compute Payee’s
“Beneficial Ownership” of Maker’s Common Stock in accordance with U.S.
Securities and Exchange Commission (“SEC”) Rule 13d-3.

 

4.             Contingent Additional Interest. 
In the event that Maker fails by November 15, 2004 (the “Registration
Deadline”) to obtain effectiveness under the Securities Act of 1933, as
amended, and applicable state securities laws of the Registration Statement (as
required by the terms of a Registration Rights Agreement between Maker and
Payee of this date) covering all of the shares of Common Stock issuable as
payment under this Note or upon exercise of the Warrant, then for each full
month thereafter (prorated for partial months) that this failure continues (the
“Failure Term”), Maker shall pay in arrears in cash, with the next otherwise
Scheduled Monthly Payment under Sections 2 or 3(a) above (or if the last
Scheduled Monthly Payment has been made, then on the same day of each succeeding
month), additional interest (the “Contingent Additional Interest”) equal to the
greater of $1,000 or 1% of the outstanding principal balance on this Note as of
the last day of the prior month. 
However, if the Failure Term runs for more than three months, the
additional monthly cash interest payable thereafter

 

2

 

shall increase to the greater of $2,000
or 2% of the outstanding principal balance on this Note as of the last day of
the prior month.  Despite the foregoing,
if the Payee consents (as provided under the Registration Rights Agreement) to
an extension of the effective date of the Registration Statement beyond
November 15, 2004, then the Registration Deadline hereunder shall be extended
by a like period.

 

5.             Security.  The
full and timely payment of this Note (together with the Maker’s obligations
under a Purchase Agreement of this date between Maker and Payee) shall be
secured by a Security Agreement of this date (the “Security Agreement”) covering
all of Maker’s assets.  The security
interest granted under the Security Agreement shall be subordinate only to the
secured rights of Silicon Valley Bank, as the senior lender to Maker (the
“Senior Debt”).

 

6.             Optional Prepayments.  The
Maker may prepay this Note, in whole or in part, and in cash, without penalty
by Maker upon fifteen days written notice to Payee.  Prepayments shall be applied first to accrued but unpaid interest
and then to principal.

 

7.             Default.  The
occurrence of any one or more of the following events shall constitute an event
of default, upon which Payee may declare the entire principal amount of this
Note, together with all accrued but unpaid interest, to be immediately due and
payable in cash (despite provisions otherwise for payment with Common Stock):

 

(a)           The Maker shall fail to make any required payment of principal or
interest (including Contingent Additional Interest) when due, and in its proper
form (i.e., in cash, in stock or by a combination thereof), and such failure shall
continue for 10 days after the due date thereof.

 

(b)           The Maker shall be in default of any term or provision of the Security
Agreement.

 

(c)           The Maker shall become insolvent or any bankruptcy, reorganization,
debt arrangement or other proceeding under any bankruptcy or insolvency law
shall be instituted by or against the Maker.

 

(d)           The Maker shall be in default of any term or provision relating to the
Senior Debt.

 

Without limiting the above,
the Maker acknowledges that payments on the various scheduled due dates in
Sections 2 and 3(c) are of essence and that any failure to timely pay any
installment of principal or interest (whether as permitted by cash, with stock
or by a combination thereof and within any permitted grace period above)
permits Payee to declare this Note immediately due in cash in its entirety
without any prior notice of any kind to Maker.

 

8.             Applicable Law.  THE
VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THE NOTE SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF 

 

3

 

MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT
OF LAWS PRINCIPLES THEREOF.

 

9.             Waivers.  The Maker hereby waives presentment for
payment, notice of dishonor, protest and notice of payment and all other
notices of any kind in connection with the enforcement of this Note.

 

10.           No Setoffs.  The
Maker shall pay principal and interest under the Note without any deduction for
any setoff or counterclaim.

 

10.           Costs of Collection.  If
this Note is not paid when due, the Maker shall pay Payee’s reasonable costs of
collection, including reasonable attorney’s fees.

 

	
   

  	
  ZAMBA CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
       /s/
  Michael H. Carrel

  	
   

  
	
   

  	
   

  	
  Michael H. Carrel,
  Treasurer

  

 

 

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