<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Dated August 28, 1996
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12
MIDWEST GRAIN PRODUCTS, INC.
(Name of Registrant as Specified in Its Charter)
Midwest Grain Products, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(e)(1)(ii), 14a-6(i)(1),
OR 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which
transaction applies: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11: N/A (1)
(4) Proposed maximum aggregate value of transaction: N/A
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date of
its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
- ------------------
(1) Set forth the amount on which the filing fee is calculated
and state how it was determined.
<PAGE>
NOTICE OF 1996 ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT
[GRAPHIC OMITTED]
MIDWEST GRAIN PRODUCTS, INC.
- ------------------------ -------------------------------------------------
- ------------------------ -------------------------------------------------
<PAGE>
MIDWEST GRAIN PRODUCTS, INC.
1300 Main Street
Atchison, Kansas 66002
September 19, 1996
NOTICE OF ANNUAL MEETING
To the Stockholders:
The Annual Meeting of Stockholders of Midwest Grain Products, Inc. will be
held at the Presbyterian Community Center, 401 Santa Fe Street, Atchison, Kansas
66002, on Thursday, October 10, 1996, beginning at 10:00 a.m., local time, for
the following purposes:
1. To elect three directors each for a three year-term
expiring in 1999;
2. To act upon a proposal to approve the Midwest Grain Products,
Inc. Stock Incentive Plan of 1996;
3. To act upon a proposal to approve the Midwest Grain
Products, Inc. 1996 Stock Option Plan for Outside
Directors; and
4. To transact such other business as may properly come before
the meeting.
Holders of Common and Preferred Stock of record on the books of the Company
at the close of business on August 21, 1996, will be entitled to vote at the
meeting or any adjournment thereof.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, SIGN, DATE AND MAIL PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY SO THAT, IF YOU ARE UNABLE TO ATTEND
THE MEETING, YOUR SHARES MAY NEVERTHELESS BE VOTED.
By Order of the Board of Directors
s/Ladd M. Seaberg
Laidacker M. Seaberg
President and Chief Executive Officer
<PAGE>
PROXY STATEMENT
This Proxy Statement and the enclosed form of Proxy are being furnished in
connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders of Midwest Grain Products, Inc. (the "Company") to be held on
October 10, 1996, as set forth in the preceding Notice. It is expected that this
Proxy Statement and the enclosed form of Proxy will be mailed to Stockholders
commencing September 19, 1996.
GENERAL INFORMATION
The holders of outstanding shares of Common Stock and Preferred Stock of
the Company at the close of business on August 21, 1996, are entitled to notice
of and to vote at the Annual Meeting. The presence in person or by proxy of
persons entitled to vote a majority of the issued and outstanding stock of each
class of stock entitled to vote will constitute a quorum for the transaction of
business at the meeting. As of August 21, 1996, there were 9,765,172 shares of
Common Stock outstanding and 437 shares of Preferred Stock outstanding.
Generally, holders of Common and Preferred Stock each vote separately as a
class with respect to each matter that the class is authorized to vote on with
each share of stock in each class being entitled to one vote. In connection with
the election of directors the holders of Common Stock are entitled to vote on
the election of Group A directors and the holders of Preferred Stock are
entitled to vote on the election of Group B directors. The candidates for office
which receive the highest number of votes will be elected. Both classes of stock
are entitled to vote separately upon proposals for the approval of the Midwest
Grain Products, Inc. Stock Incentive Plan of 1996 (the "Stock Incentive Plan")
and the Midwest Grain Products, Inc. 1996 Stock Option Plan for Outside
Directors (the "Directors Stock Plan"). The affirmative vote of the holders of a
majority of the Preferred Stock and of a majority of the holders of Common Stock
represented at the meeting is required for approval of these proposals. Although
no other proposals are scheduled to come before the meeting, the affirmative
vote of the holders of a majority of the voting power represented at the meeting
(or such higher voting requirement as may be specified by law or the Company's
Articles of Incorporation) is required for approval of other proposals.
Abstentions and broker non-votes will be counted as present for purposes of
determining the existence of a quorum at the Annual Meeting. Abstentions will be
treated as shares present and entitled to vote for purposes of any matter
requiring the affirmative vote of a majority or other proportion of the shares
present and entitled to vote. With respect to shares relating to any proxy as to
which a broker non-vote is indicated on a proposal, those shares will not be
considered present and entitled to vote with respect to any such proposal. With
respect to any matter brought before the Annual Meeting requiring the
affirmative vote of a majority or other proportion of the outstanding shares of
a class, an abstention or non-vote will have the same effect as a vote against
the matter being voted upon.
<PAGE>
Any Stockholder giving a Proxy may revoke it at any time prior to its use
by executing a later dated Proxy or by filing a written revocation with the
Secretary of the Company. A Proxy may also be revoked by appearing at the
meeting and voting by written ballot. All shares represented by a Proxy in the
enclosed form that is properly executed and received in time for the meeting and
not revoked will be voted. If a choice is specified with respect to any matter
to be acted upon, the shares will be voted in accordance with the specification
so made. If no choice is specified, the Proxy will be voted FOR each of the
nominees named on the Proxy with respect to the election of directors.
The principal executive offices of the Company are located at 1300 Main
Street, Atchison, Kansas 66002 and the Company's telephone number at that
address is (913) 367-1480.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
One Group A Director and two Group B Directors are required to be elected
at the Annual Meeting. The holders of the Common Stock are entitled to vote for
the persons nominated for the Group A position. The holders of Preferred Stock
are entitled to vote for persons nominated for the Group B positions. Eleanor
Brantley Schwartz has been nominated by the Board of Directors for election to
the Group A position for a term expiring at the Annual Meeting in 1999.
Laidacker M. Seaberg and Randall Schrick have been nominated by the Board of
Directors for election to the Group B positions for terms expiring at the Annual
Meeting in 1999. Ms. Schwartz and Messrs. Seaberg and Schrick are now and have
been directors of the Company for more than the past three years. Each of the
nominees have consented to serve if elected. If for any reason any of the
nominees should not be available or able to serve, the Proxies will exercise
discretionary authority to vote for substitutes deemed by them to be in the best
interests of the Company.
GROUP A NOMINEE
(For term expiring in 1999)
ELEANOR B. SCHWARTZ, D.B.A. Dr. Schwartz, age 59, has been a
director since June 3, 1993. She is
also a member of the Audit Committee
and Chairman of the Nominating
Committee. She has been the
Chancellor of the University of
Missouri-Kansas City since May 1992,
was the Interim Chancellor from
September 1991 to May 1992, and was
previously the Vice Chancellor for
Academic Affairs. She is a Trustee
of Midwest Research Institute and a
director of ANNUHCO, Inc. and the
<PAGE>
Waddell, Reed, Torchmart and United
Funds Group,Inc.
2
GROUP B NOMINEES
(For terms expiring in 1999)
RANDALL M. SCHRICK Mr. Schrick, age 46, has been a
Group B director since 1987 . He
joined the Company in 1973 and has
been Vice President of Operations
since July, 1992. From 1984 to July
1992 he was Vice President and
General Manager of the Pekin plant.
From 1982 to 1984 he was the Plant
Manager of the Pekin Plant. Prior
to 1982, he was Production Manager
at the Atchison plant.
LAIDACKER M. SEABERG Mr. Seaberg, age 50, has been a
Group B director since 1979. He
joined the Company in 1969 and has
served as the President of the
Company since 1980 and as Chief
Executive Officer since September,
1988. He is the son-in-law of Mr.
Cray, Jr.
OTHER
GROUP A DIRECTORS
RICHARD J. BRUGGEN Mr. Bruggen, age 70, has been a
Group A director since 1976. His
present term expires in 1997. He is
also a member of the Audit and Human
Resources Committees. He was Senior
Vice President of Atchison Casting
Corporation from 1991 until his
retirement in July 1992. Previously
he was General Manager of Rockwell
International plants at Atchison,
Kansas and St. Joseph, Missouri.
F. D. "Fran" JABARA Mr. Jabara, age 71, has been a Group
A director since October 6, 1994.
His present term expires in 1997. He
is Chairman of the Human Resources
Committee and a member of the Audit
Committee. He is President of Jabara
Ventures Group, a venture capital
firm. From September 1949 to August
<PAGE>
1989 he was a distinguished
professor of business at Wichita
State University, Wichita, Kansas.
He is also a director of Commerce
Bank, Wichita, Kansas and NPC
International, Inc., an
operator of numerous Pizza
Hut and other quick service
restaurants throughout the
United States.
3
TOM MACLEOD, JR. Mr. MacLeod, age 48, has been a
director since 1986. His present
term expires in 1998. He is a
member of the Audit and Nominating
Committees. He has been the
President and Chief Operating
Officer of the Iams Company since
1989, a Dayton, Ohio manufacturer of
premium pet foods. Previously, he
was the President and Chief
Executive Officer of Kitchens of
Sara Lee, a division of Sara Lee
Corporation, a food products
company.
OTHER
GROUP B DIRECTORS
MICHAEL BRAUDE Mr. Braude, age 60, has been a Group B
director since 1991. His present term
expires in 1997. He is Chairman of the
Audit Committee and a member of the
Nominating Committee. He has been the
President and Chief Executive Officer of
the Kansas City Board of Trade, a
commodity futures exchange, since 1984.
Previously, he was Executive Vice
President and a Director of American Bank
& Trust Company of Kansas City. Mr.
Braude is a director of Country Club
Bank, Kansas City, Missouri and National
Futures Association, a member and
immediate Past Chairman of the National
Grain Trade Council and a trustee of the
University of Missouri-Kansas City and of
Midwest Research Institute.
CLOUD L. CRAY, JR. Mr. Cray, age 73, has been a
director since 1957, and has served
as Chairman of the Board since 1980.
His present term expires in 1998.
He served as Chief Executive Officer
from 1980 to September, 1988, and
has been an officer of the Company
and its affiliates for more than 30
years.
<PAGE>
ROBERT J. REINTJES Mr. Reintjes, age 64, has been a
director since 1986. His present
term expires in 1998. He is a
member of the Audit and Human
Resources Committees. He has served
as president of Geo. P. Reintjes
Co., Inc. of Kansas City, Missouri,
for the past 24 years. Geo. P.
Reintjes Co., Inc. is engaged in the
business of refractory construction.
He is a director of Butler
Manufacturing Company, a
manufacturer of pre-engineered
buildings, and Commerce Bank of
Kansas City.
4
<PAGE>
Certain information concerning the Board and its Committees
The Board has three standing committees: Audit, Nominating and Human
Resources. Non-employee directors are paid a retainer at the rate of $2,500
quarterly, $625 for attendance at each meeting of the Board, and $312.50 for
attendance at each meeting of a committee of the Board. Employee directors
receive a fee of $437.50 for attendance at each meeting of the Board of
Directors. During the fiscal year ending June 30, 1996, the Board reduced the
amount of the retainer and meeting fees from these levels by approximately 32%
in the aggregate.
During the fiscal year ended June 30, 1996, the Board met six times,
the Audit and Human Resources Committees met three times each and the Nominating
Committees met once. The attendance at Committee and Board meetings by all
Directors in the aggregate was 95% and each Director attended more than 80% of
the meetings of the Board and the Committees of which the Director was a member.
The Audit Committee recommends to the Board of Directors an independent
accountant to audit the books and records of the Company and its subsidiaries
for the year. It also reviews, to the extent it deems appropriate, the Company's
Employee Conduct Policy, litigation and pending claims, the scope, plan and
findings of the independent accountants' annual audit and internal audits,
recommendations of the auditor, the adequacy of internal accounting controls and
audit procedures, the Company's audited financial statements, non-audit services
performed by the independent auditor, and fees paid to the independent auditor
for audit and non-audit services.
The Human Resources Committee recommends to the Board of Directors the
compensation of all officers and employees who earn $60,000 per year or higher.
The Committee approves a bonus system for various key employees, and reviews the
scope and type of compensation plans for management personnel. The Committee
also administers the Company's Executive Stock Bonus Plan, Stock Incentive Plan
and Directors' Stock Option Plan and also serves as an executive search
committee.
The Nominating Committee recommends to the Board of Directors the
qualifications for new Director nominees, candidates for nomination, and
policies concerning compensation and length of service. The Committee considers
written recommendations from stockholders concerning these subjects and suggests
that they may be addressed to the Secretary of the Company. Recommendations for
director nominees should provide pertinent information concerning the
candidates' background and experience.
5
<PAGE>
PROPOSAL 2
PROPOSED STOCK INCENTIVE PLAN OF 1996
Proposal
The Board of Directors recommends a vote FOR the following resolution
which will be presented at the meeting:
RESOLVED that the Midwest Grain Products, Inc. Stock
Incentive Plan of 1996 as set forth in Exhibit A to the Midwest
Grain Products, Inc. Notice of 1996 Annual Meeting of Stockholders
and Proxy Statement dated September 19, 1996, is hereby approved.
General
The Board of Directors is submitting to the stockholders for approval
the Midwest Grain Products, Inc. Stock Incentive Plan of 1996 (the "Plan"). The
Plan was adopted by the Board on January 5, 1996, subject to subsequent approval
by the Stockholders. On the same date options covering 90,000 shares of the
Company's Common Stock were granted to officers of the Company, subject also to
subsequent approval of the plan by the Stockholders. Accordingly, if approved by
the stockholders, the Plan will authorize the implementation of the options
granted in January and permit the granting of additional stock options and other
stock and cash awards to key employees in the future. On August 26, 1996, the
Board amended the Plan to conform the same to recently adopted SEC rules under
Section 16 of the Securities Exchange Act of 1934.
The purposes of the Plan are to allow the Human Resources Committee of
the Board of Directors to provide stock incentives that will encourage close
identity of interests between stockholders and key employees and that will
assist the Company in continuing to attract and retain highly qualified
personnel. A copy of the Plan, as amended, is set forth as Exhibit A to this
Proxy Statement.
Shares Reserved under the Plan
The number of shares of common stock that may be issued under the Plan
for awards granted wholly or partly in stock during the term of the Plan is four
hundred fifty thousand (450,000). If any shares subject to a stock incentive are
not issued or transferred or cease to be issuable or transferable under the
incentive, or if any such shares are reacquired by the Company because of the
failure of a condition, such shares will not be charged against the 450,000
share limitation, and, only the net additional shares issued upon the exercise
of a stock incentive through the delivery or withholding of shares of Common
Stock in payment of the exercise price or withholding taxes will be counted
against the limitation. The limitation will also be increased by the number of
shares
6
subject to any Substitute Stock Options granted under Section 6(j).
However, shares will be charged against the limitation to the extent of the
number of shares covered by that portion of the related option or award which is
settled by the exercise of a Stock Appreciation Right or by a cash payment under
a Stock Award.
<PAGE>
The shares available, shares subject to outstanding incentives,
exercise prices and other limitations in the Plan are subject to adjustment in
the event of reorganization, reclassification, split-up, consolidation, merger,
and certain distributions or similar transactions.
The shares issuable under the Plan may be drawn from either authorized
but previously unissued shares of common stock or from reacquired shares of
common stock, including shares purchased by the Company on the open market and
held as treasury shares.
Material Features of the Plan
The following brief description of the material features of the Plan is
qualified in its entirety by reference to the full text of the attached copy of
the Plan.
The Plan will be administered by a committee of the Board of Directors
composed solely of two or more non-employee or "outside" directors as defined by
Section 162(m) of the Code and Rule 16b- 3(b)(3) of the Securities and Exchange
Commission ("Committee"). Currently the Human Resources Committee is serving as
the Committee. The Committee will have, among other powers, the power to
interpret the Plan and to establish, waive, amend, or suspend rules and
regulations under the Plan. Subject to the terms of the Plan, the Committee may
also authorize the amendment of outstanding Award Agreements so long as any
amendment would not adversely affect the rights of the Participant.
The Committee has the sole and complete authority to grant to eligible
participants ("Participants") one or more Incentives ("Incentives") consisting
of Stock Options, Stock Appreciation Rights, and Stock Awards or a combination
of any of these
Incentives.
Stock Options may be granted in the form of Incentive Stock Options
("ISOs") which may qualify for special tax treatment or as Nonqualified Stock
Options ("NQSOs"). Stock Options entitle the Optionee to purchase shares subject
to the option at not less than 100% of fair market value at the date of grant
during terms that may
not exceed ten years.
A Stock Appreciation Right is a right granted in connection with an
Option that entitles the holder to settle all or part of the Option for a
payment of the appreciation in the option in cash or in shares of common stock
having a fair market value equal to the appreciation.
Stock Awards generally provide for the grant of restricted stock with
full vesting generally conditioned on continued employment during a specified
period with or without additional conditions relating to the achievement of
performance objectives. Shares subject to a Stock Award may be
7
issued or transferred to a Key Employee when the Award is granted, or
subsequently, as the Committee shall determine. If the Award provides for a
subsequent issue, the Committee may provide for payment of amounts not
exceeding the cash dividends which would have been payable had the shares been
issued at the time of grant. Any amount payable in shares of Common Stock under
an Award may be paid in cash equal to the Fair Market Value of the shares. A
Stock Award may contain such
<PAGE>
terms and conditions as the Committee may determine with respect to transfer,
payment or forfeiture of all or any part of the Stock Award, except that shares
subject to Stock Awards must provide for restrictions on transfer and/or
ownership that continue for a period of at least one year from the date of grant
in the case of awards that are performance based and that continue for a period
of three years from the date of grant in the case of Stock Awards that are not
performance based. Each Stock Incentive will be evidenced by a written award
agreement that will specify the terms and conditions of the Stock Incentive and
any rules applicable thereto. The Committee has the sole discretion to determine
the number or amount of shares, units, cash or other rights to be awarded to any
participant; however, subject to adjustment, no Executive Officer of the Company
may receive Incentives under the Plan in any calendar year that relate to more
than fifty thousand (50,000) shares of common stock. Upon a change in control
(as defined in the Plan), and unless the Committee provides otherwise in the
award agreement, vesting requirements, provisions for forfeiture and
restrictions on transfer expire. Incentives are nontransferable unless the Award
Agreement provides otherwise. No Incentives may be granted under the Plan after
December 11, 2005.
Eligible Participants
Under the Plan the Committee may only grant Stock Incentives to
individuals who are or will be salaried, full-time employees who are deemed by
the Committee as persons that will contribute significantly to the growth and
successful operations of the Company ("Key Employees"). Stock Incentives may
also be granted in substitution for stock incentives held by employees of other
corporations who are about to become employees of the Company due to a merger or
acquisition.
Amendments to the Plan
At any time the Board may amend or terminate the Plan; provided that it
may not amend the Plan without an affirmative vote of the stockholders with
respect to any amendment that (i) increases the aggregate number of shares of
Common Stock that may be issued or transferred pursuant to Stock Incentives,
(ii) permits any person who is not determined to be a Key Employee to be granted
a Stock Incentive, (iii) amends the provisions of paragraph (b) of Section 6
relating to price, (iv) amends Section 9 to extend the term of the Plan, or (v)
amends the amendment provisions of the Plan.
8
New Plan Benefits and Participation
A total of 90,000 shares of common stock are subject to outstanding
stock options granted under the Plan. All of the options were granted on January
5, 1996, at exercise prices of $14 per share, which was the fair market value of
the stock at the date of grant.
The options are subject to shareholder approval of the plan and are otherwise
exercisable in four equal annual installments commencing on the first
anniversary of the date of grant. The options expire five years from the date of
grant. An aggregate of 62,250 of the options are "Incentive Stock Options" under
the Internal Revenue Code ("The Code"). For additional information as to such
outstanding options see "EXECUTIVE COMPENSATION."
<PAGE>
Except for the options granted with respect to 90,000 shares, described
in the preceding paragraph, no benefits or amounts have been allocated under
the Plan, nor are any such benefits or amounts now determinable and it is not
possible to predict the number or identity of future key employees of the
Company who may participate in the Plan, or except as set forth in the Plan, to
describe the terms and restrictions that may be included in specific award
agreements.
Discussion of Federal Income Tax Consequences
Set forth below is a brief description of certain significant United
Stated federal income tax consequences of the Plan, under existing law.
References to the "Company" shall mean the Company or any subsidiary of the
Company that employs the participating employee, as the case may be. In
addition, the discussion applies primarily to participating employees who are
citizens or resident aliens of the United States whose tax home or abode is in
the United States.
The discussion is based on the Code and applicable regulations
thereunder in effect on the date hereof. Any subsequent changes in the Code or
such regulations may affect the accuracy of this discussion. In addition, this
discussion does not consider any state, local or foreign tax consequences or any
circumstances that are unique to a particular participant that may affect the
accuracy or applicability of this discussion.
Incentive Stock Options
No taxable income is recognized by the optionee upon the grant or
exercise of an ISO that meets the requirements of Section 422 of the Code.
However, the exercise of an ISO may result in alternative minimum tax liability
for the optionee. If no disposition of shares issued to an optionee pursuant to
the exercise of an ISO is made by the optionee within two years from the date of
grant or within one year after the date of exercise, then, upon sale of the
shares, any amount realized in excess of the exercise price (the amount paid for
the shares) will be taxed to the optionee as a long-term capital gain and any
loss sustained will be a long-term capital loss, and no deduction will be
allowed to the Company for federal income tax purposes.
9
If shares of common stock acquired upon the exercise of an ISO are
disposed of prior to the expiration of the two-year and one-year holding periods
described above (a "disqualifying disposition"), generally the optionee will
recognize ordinary income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of the shares on the date of exercise
over the exercise price of the underlying options (the "Appreciation"), and the
Company will be entitled to deduct such amount. Any gain realized from the
shares in excess of the amount taxed as ordinary income will be taxed as capital
gain and will not be deductible by the Company.
An ISO will not be eligible for the tax treatment described above if it
is exercised more than three months following termination of employment, except
in certain cases where the ISO is exercised after the death or permanent and
total disability of the optionee. If an ISO is exercised at a time when it no
longer qualifies for the tax treatment described above, the option is treated as
a nonqualified stock option ("NQSO").
<PAGE>
Nonqualified Stock Options
No taxable income is recognized by the optionee at the time a NQSO is
granted under the Plan. Generally, on the date of exercise of a NQSO, ordinary
income is recognized by the optionee in the amount of the Appreciation and the
Company receives a tax deduction for the same amount. Upon disposition of the
shares acquired, an optionee generally recognizes the appreciation or
depreciation on the shares after the date of exercise as either short-term or
long-term capital gain or loss depending on how long the shares have been held.
If the stock received upon exercise of an option or stock appreciation
right is subject to a substantial risk of forfeiture, the income and deduction,
if any, associated with such award may be deferred in accordance with the rules
described below for restricted stock.
Stock Appreciation Rights
No income will be recognized by an optionee in connection with the
grant of a stock appreciation right ("SAR"). When the SAR is exercised, the
optionee will generally be required to include as taxable ordinary income in the
year of such exercise an amount equal to the amount of cash received and the
fair market value of any stock received. The Company will generally be entitled
to a deduction equal to the amount includable as ordinary income by the
optionee.
Restricted Stock
A recipient of restricted stock under a Stock Award generally will be
subject to tax at ordinary income rates on the excess of the fair market value
of the stock (measured at the time the stock is either transferable or is no
longer subject to forfeiture) over the amount, if any, paid for such stock.
However, a recipient who elects under Section 83(b) of the Code within 30 days
of the date of issuance of the restricted stock to be taxed at the time of
issuance of the restricted stock will recognize ordinary income on the date of
issuance equal to the fair market value of the shares of
10
restricted stock at that time (measured as if the shares were unrestricted
and could be sold immediately), minus any amount paid for the stock. If the
shares subject to the election are forfeited, the recipient will be entitled to
a capital loss for tax purposes only for the amount paid for the forfeited
shares, not the amount recognized as ordinary income as a result of the Section
83(b) election. The holding period to determine whether the recipient has
long-term or short-term capital gain or loss upon sale of shares begins when
the forfeiture period expires (or upon issuance of the shares, if the recipient
elected immediate recognition of income under Section 83(b) of the Code).
Limitation on Company Deductions for Certain Compensation
Under Section 162(m) of the Code, certain compensation payments in
excess of $1 million are subject to a limitation on deductibility for the
Company. This limitation on deductibility applies with respect to that portion
of a compensation payment for a taxable year in excess of $1 million to either
the chief executive officer of the Company or any one of the other four highest
paid executive officers who are employed by the Company on the last day of the
<PAGE>
taxable year. However, certain "performance- based compensation," the material
terms of which are disclosed to and approved by stockholders is not subject to
this limitation on deductibility. The Company has structured the stock option
and stock appreciation rights portions of the Plan with the intention that
compensation resulting therefrom would be qualified performance-based
compensation that would be deductible. To qualify, the Company is seeking
stockholder approval of the Plan. However, incentives that may be issued under
the Stock Awards feature of the plan may not necessarily satisfy the definition
of performance based compensation as defined by the Code unless the granting or
vesting of incentives are based upon performance goals that have been approved
by a further stockholder vote.
Change in Control
Under certain circumstances, accelerated vesting or exercise of options
or SARs, or the accelerated lapse of restrictions on restricted stock, in
connection with a "change in control" of the Company might be deemed an "excess
parachute payment" for purposes of the golden parachute tax provisions of
Section 280G of the Code. To the extent it is so considered, the optionee or
grantee may be subject to a 20% excise tax and the Company may be denied a tax
deduction.
Approval
Approval of the Plan requires the affirmative vote of the holders of a
majority of the shares of common stock and a majority of the shares of Preferred
Stock represented at the meeting. Broker non-votes will not be treated as shares
present or represented and entitled to vote at the Annual Meeting. The board of
Directors believes that the approval of this Plan is in the best interests of
the Company since it will facilitate the Company's attraction, motivation and
retention of key employees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
PLAN.
11
<PAGE>
PROPOSAL 3
PROPOSED 1996 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS
Proposal
The Board of Directors recommends a vote FOR the following resolution
which will be presented at the meeting:
RESOLVED that the Midwest Grain Products, Inc. 1996
Stock Option Plan for Outside Directors as set forth in
Exhibit B to the Midwest Grain Products, Inc. Notice of
1996 Annual Meeting of Stockholders and Proxy Statement
dated September 19, 1996, is hereby approved.
General
The Board of Directors is submitting to the stockholders for
approval the Midwest Grain Products, Inc. 1996 Stock Option Plan for
Outside Directors (the "Plan"). The Plan was adopted by the Board on
January 5, 1996, but will not become effective until approved by the
Stockholders.
The Plan is intended to promote the long-term success of the Company by
enhancing the long-term mutuality of interests between the non-employee
directors of the Company ("Outside Directors") and the stockholders of the
Company and to enhance the Company's ability to attract and to retain highly
qualified persons to serve as directors of the Company.
The current Outside Directors are those whose biographies appear under
Election of Directors other than Messrs. Seaberg and Schrick.
Material Features of the Plan
The following brief description of the material features of the Plan is
qualified in its entirety by reference to the full text of the attached copy of
the Plan.
The Plan provides that on the first business day following each annual
meeting of Stockholders, beginning with the 1996 Annual Meeting, each Outside
Director shall be granted a Nonqualified Stock Option to purchase 1,000 shares
of the Company's Common Stock at a price equal to Fair Market Value on that
date. Options become exerciseable on the 184th day following the date of grant
and expire on the sooner of (a) five years from the date of grant, (b) three
years following termination of the Director's office due to retirement following
age 70, (c) one year
12
following termination of the Director's office due to death
or (c) 90 days following the date of the termination of the Director's term of
office for any other reason.
<PAGE>
Subject to adjustments in the case of a merger, reorganization or
certain similar kinds of transactions specified in the Plan, the aggregate
number of shares of Stock that may be purchased under options granted under the
Plan may not exceed 10,000 shares as to any Outside Director nor 90,000 shares
in the aggregate. In addition, if any shares are not issued or cease to be
issuable or transferable under an Option, the shares will no longer be charged
against the 90,000 share limitation and may again be made subject to Stock
Options; and, only the net additional shares issued upon the exercise of a stock
option through the delivery or withholding of shares of Common Stock in payment
of the exercise price or withholding taxes will be counted against the number of
shares which are authorized for issuance under the 90,000 share limitation.
The Board may amend, alter, modify or discontinue the Plan at any time,
provided that the Board may not amend or alter the provisions of the Plan
without the approval of the stockholders if the amendment would materially
increase the number of securities that may be issued under the Plan.
The Plan will be administered by the Human Resources Committee of the
Board of Directors ("the Committee"). That Committee will have full power and
authority to construe and administer the Plan.
Except as otherwise provided in the option agreement, rights
under the Plan may not be transferred, assigned, pledged or hypothecated other
than by will or the laws of descent and distribution.
New Plan Benefits and Participation
Although the Plan provides for the allocation of annual options to
purchase 1,000 shares of the Company's Common Stock, no such benefits or amounts
have been allocated and will not be allocated unless the Plan is approved by the
Stockholders. Since the value of such options is dependent upon the future
market price of the Common Stock at the time of grant, the amount of benefits to
be derived by Outside Directors under the Plan is not now determinable.
Amendments to the Plan
The Board may amend, alter, modify or discontinue the Plan at any time,
provided that the Board may not amend or alter the provisions of the Plan
without the approval of the stockholders if the amendment would materially
increase the number of securities that may be issued under the Plan.
13
Discussion of Federal Income Tax Consequences
Set forth below is a brief description of certain significant United
Stated federal income tax consequences of the Plan, under existing law. The
discussion is based on the Code and applicable regulations thereunder in effect
on the date hereof. Any subsequent changes in the Code or such regulations may
affect the accuracy of this discussion. In addition, this discussion does not
consider any state, local or foreign tax consequences or any circumstances that
are unique to a particular participant that may affect the accuracy or
applicability of this discussion.
<PAGE>
The Plan provides only for the grant of Nonqualified Stock Options.
Accordingly, no taxable income will be recognized by an Outside Director at the
time of annual grants of NQSOs under the Plan. Generally, on the date of
exercise of a NQSO, ordinary income will be recognized by the Director in the
amount of any appreciation on the option and the Company will receive a tax
deduction for the same amount. Upon disposition of the shares acquired, the
Director will recognize the appreciation or depreciation on the shares after the
date of exercise as either short-term or long-term capital gain or loss
depending on how long the shares have been held.
Approval
Approval of the Plan requires the affirmative vote of the holders of a
majority of the shares of common stock represented at the meeting. Broker
non-votes will not be treated as shares present or represented and entitled to
vote at the Annual Meeting. The board of Directors believes that the approval of
this Plan is in the best interests of the Company since it will encourage close
identity of interests between shareholders and directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
PLAN.
OTHER MATTERS
At this time the Company has no knowledge of any matters to come before
the meeting for action by the stockholders other than the election of directors.
However, if any other matters come before the meeting, it is the intention of
the persons named in the accompanying Proxy to vote the Proxy in their best
judgment.
14
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning compensation for
each of the years ending June 30, 1994, 1995 and 1996 awarded to, earned by, or
paid to the five most highly compensated executive officers of the Company for
services rendered in each of those years:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
--------------------------- --------------
Other Securities
Annual Underlying All Other
Name and Salary Bonus Compensation Options Compensation
Principal Position Year ($)(1) ($)(1) ($)(2) (#) ($)(2)
- ------------------ ---- ------ ----- ------------ ----------- ------------
Laidacker M. Seaberg
President and Chief 1996 225,226 --- --- 24,000 ---
Executive Officer 1995 278,300 24,484 --- --- 13,513
1994 253,000 135,572 --- --- 40,055
Randy M. Schrick
Vice President of 1996 118,812 --- --- 12,000 ---
Operations 1995 127,000 6,052 --- --- 11,990
1994 118,000 65,930 --- --- 18,817
Robert G. Booe
Vice President-
Administration, 1996 118,812 --- --- 12,000 ---
Controller, and 1995 127,000 6,052 --- --- 11,990
Chief Financial 1994 116,000 70,493 --- --- 19,235
Officer
Sukh Bassi, Ph.D.
Vice President-
Wheat Gluten
Marketing and 1996 104,785 --- --- 7,000 ---
Research 1995 112,000 5,337 --- --- 10,567
and Development 1994 105,000 62,171 --- --- 16,953
Tony J. Petricola
Vice President-
Engineering 1996 105,314 --- --- 7,000 ---
1995 111,939 4,518 --- --- 10,508
1994 111,708 35,082 --- --- 13,344
- -----------------
(1) Includes amounts contributed by the Company to the Company's Executive
Stock Bonus Plan for the account of the executive as well as cash
bonuses. No amounts were contributed to any of the named Executive
Officers for 1996.
<PAGE>
(2) Consists of the amount of the Company's contributions to the Company's
Employee Stock Ownership Plans allocated to the accounts of each
executive officer for the years indicated.
15
Stock Options
The following table contains information concerning the grant of stock
options under the Company's Stock Incentive Plan of 1996 to the Named Executive
Officers. The grants will not become effective unless the Plan is approved by
the Stockholders at the annual meeting. See "PROPOSAL 2 Proposed Stock Incentive
Plan of 1996."
OPTION GRANTS IN 1996
Individual Grants
---------------------------------------
Potential
Realizable Value
Number of % of Total at Assumed
Securities Options Annual Rates of
Underlying Granted to Stock Price
Options Employees Exercise Appreciation for
Granted in Fiscal Price Expiration Option Term
---------------
Name (#) (1) Year ($/Sh) Date 5% ($) 10% ($)
---- ------- --------- -------- ---------- ------ -------
Laidacker M. Seaberg 24,000 26.7 14.00 1/5/01 $92,640 $204,960
Randy M. Schrick 12,000 13.4 14.00 1/5/01 46,320 102,480
Robert G. Booe 12,000 13.4 14.00 1/5/01 46,320 102,480
Sukh Bassi, Ph.D. 7,000 7.7 14.00 1/5/01 27,020 59,780
Tony J. Petricola 7,000 7.7 14.00 1/5/01 27,020 59,780
Option Exercises and Year End Holdings
The following table provides information, with respect to the Named
Executive Officers, concerning the exercise of options during the fiscal year
ended June 30, 1996, and unexercised options held as of the end of fiscal 1996:
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1996
AND FY-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise(#) ($) Unexercisable Unexercisable (1)
- --------------- --------------- -------------- ------------- ----------------
Laidacker M. Seaberg --- --- ---/24,000 ---
Randy M. Schrick --- --- ---/12,000 ---
Robert G. Booe --- --- ---/12,000 ---
Sukh Bassi, Ph.D. --- --- ---/ 7,000 ---
Tony J. Petricola --- --- ---/ 7,000 ---
16
Performance of the Company's Common Stock
The following performance graph compares the performance of the
Company's Common Stock during the period beginning June 30, 1991 and ending June
30, 1996, to the Center for Research in Security Prices of the University of
Chicago School of Business ("CRSP") index for the NASDAQ Stock Market (the
"NASDAQ COMPOSITE" index consisting of US companies) and a peer group CRSP index
consisting of 117 NASDAQ stocks of US processors of food and kindred products
having SIC codes between 2000 - 2099 (the "NASDAQ Food" index) for the same
period. The graph assumes a $100 investment in the Company's Common Stock and in
each of the indexes at the beginning of the period and a reinvestment of
dividends paid on such investments throughout the period.
VALUE OF $100 INVESTMENTS
ASSUMING REINVESTMENT OF DIVIDENDS AT JUNE 30, 1991
AND AT EACH SUBSEQUENT JUNE 30
[Performance Graph Omitted. Chart shown below
Describes information in Graph]
- -------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- -------------------------------------------------------------------------------
MWGP $100 $125 $139 $198 $105 $74
- -------------------------------------------------------------------------------
NASDA $100 $120 $151 $153 $204 $261
- -------------------------------------------------------------------------------
NASDA $100 $97 $106 $106 $114 $117
- -------------------------------------------------------------------------------
17
<PAGE>
Report of the Human Resources Committee
Human Resources Committee Interlocks and Insider Participation.
Executive compensation is based primarily upon recommendations made to the Board
of Directors by the Company's Human Resources Committee (the "Committee"). The
Committee for the year ended June 30, 1996 consisted of Michael J. Braude
(Chairman), Tom MacLeod, and Eleanor B. Schwartz. The Present Committee consists
of F.D. "Fran" Jabara (Chairman), Richard J. Bruggen and Robert J. Reintjes. All
of the members of the Committee are non-employee directors of the Company. The
Committee recommends to the Board of Directors compensation and compensation
plans for officers who are paid in excess of $60,000 per annum. The
recommendations are acted upon by the full board which includes Messrs. Seaberg
and Schrick, who are two of the five highest paid officers of the Company.
This report is provided by the Committee to assist stockholders in
understanding the Committee's philosophy in establishing the compensation of the
Chief Executive Officer and all other Executive Officers of the Company for the
year ended June 30, 1996 ("the Year").
Compensation Philosophy. Historically, executive compensation has been
designed to link rewards with business results and stockholder returns
consistent with (a) the executive's level of responsibility, (b) compensation
paid to the executive in the prior year, (c ) the Company's performance for the
Year and the prior year, (d) the executive's individual performance for the Year
and the prior year, (e) salary levels for executives in comparable positions in
comparable enterprises, (f) inflation and (g) a variety of other factors. The
components of Executive Compensation which reflect this philosophy consist of
(i) annual base salary, (ii) annual cash bonuses, (iii) annual stock bonuses,
(iv) stock options and (v) equity based retirement compensation which is
reflected in the Company's Employee Stock Ownership Plan. In formulating its
compensation recommendations the Committee considers information and
recommendations provided by management and by Hay Management Consultants, a
nationally known and recognized firm of management consultants.
Base Salary. The past practice of the Committee has been to establish
base salaries of all executives prior to the beginning of the Year based on the
various factors described in the preceding paragraph. However, due to severely
adverse economic conditions which had significant negative impacts on the
Company's earnings and cash flows, the Committee reduced base salaries for all
executive officers significantly during the first quarter of the fiscal year. In
January a portion of the reductions were restored and by the end of the year the
rates of base pay were returned to levels in effect at the beginning of the
prior year.
Annual Cash Bonuses. Annual cash bonuses are paid primarily
pursuant to a Cash Bonus Plan that has been utilized for the past
several years. Under the plan each executive, along with all other
nonunion personnel, become entitled to cash bonuses, payable semiannually, of up
to 25% of each employee's base salary. Due to the adverse economic situations
which prevailed in 1996 no cash bonuses were paid to any Executive Officer for
the year.
18
<PAGE>
The Committee has also authorized a $50,000 bonus pool that may be paid
at the discretion of the Chief Executive Officer to reward superior performance
during the Year by any employee of the Company other than the CEO. No awards
were made from the bonus pool during the Year.
Executive Stock Bonus Plan. Historically, the Company has made shares
of the Company's Common Stock available to key executive and managerial
employees on favorable terms in order to encourage stock ownership at those
management levels. The Company's Executive Stock Bonus Plan has been the vehicle
designed to achieve this objective since 1989. Under the plan key executives and
managerial employees are selected at the end of the year by the Committee to
receive stock bonuses based primarily upon recommendations received by the
Committee from Company management after an assessment of each participant's
individual performance for the Year and based upon the amount of stock
previously acquired by the participant from the Company under such plans in
prior years. Under the Plan, the aggregate amount contributed by the Company for
the purchase of stock under the Plan may not exceed 5% of the Company's
consolidated pretax income for the year. Due to the reduced profitability of the
Company for the Year, the Committee elected not to implement the Executive Stock
Bonus Plan for any employees in Fiscal 1996. The Committee also decided in 1996
to exclude participation by Senior Executives in the plan in the future due to
their inclusion in the newly adopted Stock Incentive Plan of 1996, as discussed
below.
Stock Incentive Plan of 1996. In January, 1996, the Board of Directors,
upon recommendation of the Committee, adopted the Stock Incentive Plan of 1996,
subject to subsequent approval of the stockholders at the Annual Meeting. The
Board and the Committee took this action due to a recognized need to provide
medium term incentives for the retention and motivation of Senior Executives
consistent with current needs to conserve cash. Concurrent with that action the
Committee granted options to nine Senior Executives to purchase a total of
90,000 shares of the Company's common stock at a price of $14 per share during
terms that expire on January 5, 2001. At the same time the Committee declared
its intent to exclude these optionees from participation in the Executive Stock
Bonus plan.
Employee Stock Ownership Plan. The final component of executive
compensation consists of participation in the Company's employee stock ownership
plans, which are available to all union and nonunion employees. Amounts
contributed by the Company are invested in shares of the Company's Common Stock.
Shares purchased are allocated to participant accounts in proportion to the
participant's eligible compensation (as defined). Generally, accounts are
distributed to participants who have completed at least ten years of service
upon death, permanent disability or retirement. The amount of the Company's
contribution to the nonunion ESOP's is determined by the Board each year based
upon the recommendation of the Committee. The Committee bases its
recommendation primarily upon Company performance for the Year. Due to the
Company's reduced profitability, the Committee elected to provide no
contributions to the nonunion ESOP for Fiscal 1996. In fiscal 1995, the Company
contributed an amount equal to 9% of eligible compensation.
Reduced Compensation Expense for the Year. Due to various measures
taken by the Committee and the Company, compensation expense for fiscal 1996 was
approximately $ 1.8 million less than compensation expense for fiscal 1995,
while the 1995 compensation expense was approximately $2.0 million less than
that for fiscal 1994.
19
<PAGE>
Compensation of the Chief Executive Officer for 1996. All of the
components of the 1996 compensation of the Chief Executive Officer were
determined in accordance with the criteria described above for other Senior
Executives.
This report is being made over the names of Michael Braude, Tom MacLeod
and Eleanor B. Schwartz, who were the members of the Committee which passed on
Executive Compensation for the Year.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of July 1, 1996, the number of shares
beneficially owned and the percentage of ownership of the Company's Preferred
Stock and Common Stock by (i) each person who is known by the Company to own
beneficially more than 5% of either class of the Company's capital stock
outstanding, (ii) each director of the Company, and (iii) all directors and
officers of the Company as a group.
Shares Beneficially Owned (a)
-----------------------------
Stockholder Common Stock Preferred Stock
----------- ------------ ---------------
No. of Shares % No. of Shares %
------------- - ------------- -
Richard J. Bruggen................. 8,496 .09
Michael Braude..................... 2,892 .03
Robert G. Booe (b)(c).............. 983,176 10.07
Brian Cahill (b)................... 919,099 9.41
Cloud L. Cray, Jr. (b)(d)(e)....... 2,317,974 23.74 333 76.2
Richard B. Cray (d)(f)............. 193,639 2.00 334 76.4
F. D. "Fran". Jabara............... 1,375 .01
Dave Rindom (b).................... 908,755 9.31
Tom MacLeod........................ 6,894 .07
Robert J. Reintjes (g)............. 16,193 .17
Randy M. Schrick (b)(h)............ 934,831 9.57
Laidacker M. Seaberg (b)(d)(I)..... 1,510,821 15.47 383 87.6
Eleanor B. Schwartz................ 866 .01
Cray Family Trust (d).............. 333 76.2
Trustees of the
Company's ESOPs................... 908,173 9.30
All Officers and Directors
as a Group of 18(j)............. 4,124,075 42.23 384 87.9
- ----------------------
20
(a) For the purposes of the table, a person is deemed to be a
beneficial owner of shares if the person has or shares the
power to vote or to dispose of them. Except as otherwise
indicated in the table or the footnotes below, each person had
sole voting and investment power over the shares listed in the
beneficial ownership table and all stockholders shown in the
table as having beneficial ownership of 5% or more of either of
<PAGE>
the classes of stock had business addresses at 1300 Main
Street, Atchison, Kansas 66002, as of June 30, 1996.
Stockholders disclaim beneficial ownership in the shares
described in the footnotes as being "held by" or "held for the
benefit of" other persons.
(b) The Company's Employee Stock Ownership Plans (ESOPs) hold for the
benefit of participants 908,173 shares of Common Stock, all of which
are attributed in the table to each of the five trustees, who are the
same for each Plan. The trustees are obligated to vote the shares
which are allocated to participants in accordance with instructions
given by such participants (all of the 908,173 were allocated at
July 1, 1996). Unallocated shares are voted by the trustees. The
trustees, and the number of shares allocated to their accounts are as
follows: Mr. Seaberg (63,665 shares); Mr. Booe (37,198 shares); Mr.
Cahill (7,487 shares); Mr. Rindom (4,832 shares); and Mr. Schrick
(18,208 shares). A total of 208,044 shares are allocated to the
accounts of all other officers and directors.
(c) Includes 45,000 shares held by Mr. Booe's wife.
(d) The Cray Family Trust holds 333 shares of Preferred Stock
which are attributed in the table to the trustees, who share
the power to vote and dispose of such shares. The trustees are
Mr. Cray, Jr., Mr. Seaberg and Mr. Richard B. Cray.
(e) Includes 137,944 shares of Common Stock held by the Cray
Medical Research Foundation with respect to which Mr. Cray, Jr.
is a director and 570,765 shares of Common Stock held by other
family trusts with respect to which Mr. Cray, Jr. or his spouse
is a trustee, and 50,000 shares held by the Cloud L. Cray
Foundation.
(f) Includes 333 shares of Preferred Stock held by the Cray Family Trust
and 50,000 shares of Common Stock held by a foundation with respect to
which Mr. Richard B. Cray is a Trustee.
(g) All but 2,853 of the shares are held by members of Mr.
Reintjes' family.
(h) Includes 9,025 shares held by members of Mr. Schrick's family.
(i) Includes 207,161 shares held by Mr. Seaberg's wife and other
family trusts with respect to which Mr. Seaberg or his wife is
a trustee or a custodian.
(j) Includes shares discussed under notes (a) through (i) as well as
shares held by members of the families of officers not listed in the
table.
21
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of Baird, Kurtz & Dobson as
independent certified public accountants to audit the books, records and
accounts of the Company for 1996. The selection was made upon the recommendation
of the Audit Committee, which consists of Mr. Braude, Chairman, and Messrs.
Bruggen, MacLeod, Jr., Jabara and Reintjes and Ms. Schwartz. Baird, Kurtz &
Dobson has audited the Company's books annually since 1958.
Representatives of Baird, Kurtz & Dobson will be present at the
stockholders meeting. They will have the opportunity to make a statement and
will be available to respond to appropriate questions.
PROXY SOLICITATIONS
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokers, banks or other persons for reasonable expenses in
sending proxy material to beneficial owners. Proxies may be solicited through
the mail and through telephonic or telegraphic communications to, or by meetings
with, stockholders or their representatives by directors, officers and other
employees of the Company who will receive no additional compensation therefor.
Stockholders who intend to present proposals for inclusion in the
Company's Proxy Statement for the next Annual Meeting of Stockholders on October
9, 1997, must forward them to the Company at 1300 Main Street, Box 130,
Atchison, Kansas 66002, Attention: Robert G. Booe, Chief Financial Officer, so
that they are received on or
before May 1, 1997.
By Order of the Board of Directors
s/Ladd M. Seaberg
Laidacker M. Seaberg
President and Chief Executive Officer
September 19, 1996
22
<PAGE>
Exhibit A
MIDWEST GRAIN PRODUCTS, INC.
STOCK INCENTIVE PLAN OF 1996
<PAGE>
TABLE OF CONTENTS
Section Page
------- ----
1. Purposes.................................................. 1
2. Definitions............................................... 1
3. Grants of Stock Incentives................................ 3
4. Stock Subject to the Plan................................. 4
5. Stock Awards.............................................. 5
6. Stock Options............................................. 5
7. Stock Appreciation Rights................................. 8
8. Adjustment Provisions..................................... 9
9. Term...................................................... 9
10. Administration.............................................. 10
11. General Provisions.......................................... 11
12. Amendment or Discontinuance of Plan......................... 12
13. Change In Control........................................... 13
14. Effective Date.............................................. 13
Approved by Board of Directors, subject to
Stockholder Approval: January 5, 1996.
Approved by Stockholders: October _, 1996.
Effective Date: January 5, 1996.
<PAGE>
MIDWEST GRAIN PRODUCTS, INC.
STOCK INCENTIVE PLAN OF 1996
1. PURPOSES
The purposes of the Plan are (a) to provide additional
incentive for Key Employees of the Company and its Subsidiaries by authorizing a
Committee of the Board of Directors to grant stock incentives to such Key
Employees, thereby furthering their identity of interest with the interests of
the Company's shareholders, and increasing their interest in and commitment to
the future growth and prosperity of the Company; and (b) to enable the Company
to induce the employment and continued employment of Key Employees and to
compete with other organizations in attracting and retaining the services of
highly-qualified personnel.
2. DEFINITIONS
Unless otherwise required by the context, the following terms,
when used in the Plan, shall have the meanings set forth in this Section 2.
Board of Directors or Board: The Board of Directors of the
Company.
Change in Control: A Change in Control shall be deemed to have
occurred upon
(i) the acquisition (other than from the Company) by any
person, entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act, (excluding, for this purpose, the Company or its subsidiaries,
any employee benefit plan of the Company or its subsidiaries, trustees of the
Cray Family Trust, or any person who acquires Common or Preferred Stock from
Cloud L. Cray, Jr. or from any trust controlled by or for the benefit of Cloud
L. Cray, Jr. prior to or as a result of his death) of beneficial ownership,
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of at
least 30% of the then outstanding shares of Common Stock and 50% of the then
outstanding shares of Preferred Stock or 30% of the combined voting power of the
Company's then outstanding voting securities entitled to vote generally in the
election of directors; or
(ii) approval by the stockholders of the Company of a
reorganization, merger, consolidation, in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own
collectively as a group more than 50% of the combined voting power entitled to
vote generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or a liquidation or
dissolution of the Company or of the sale of all or substantially all of the
assets of the Company.
<PAGE>
If any of the events enumerated in clauses (i) or (ii) occur,
the Board shall determine the effective date of the Change in Control resulting
therefrom, for purposes of the Plan.
The Code: The Internal Revenue Code of 1986 as now or hereafter
amended.
Committee: A committee of the Board of Directors of the Company
as provided in Section 10(a) of the Plan.
Common Stock: The Common Stock of the Company, no par value,
or such other class of shares or other securities as may be subject to the Plan
as the result of an adjustment made pursuant to the provisions of Section 8.
Company: Midwest Grain Products, Inc., a Kansas corporation.
Fair Market Value of a Share of Common Stock: The fair market
value of a share of Common Stock on the date as of which fair market value is to
be determined shall be: (a) if the Common Stock is reported on the NASDAQ
National Market System of the National Association of Securities Dealers, Inc.,
the last reported sales price of a share of Common Stock as reported by NASDAQ;
or (b) if the Common Stock is listed on an established securities exchange or
exchanges, the highest reported closing price of a share of Common Stock on such
exchange or exchanges. The fair market value of the Common Stock if not so
reported or listed and the fair market value of any other property on the date
as of which fair market value is to be determined shall mean the fair market
value as determined by the Committee in its sole discretion.
Incentive Compensation: Bonuses, extra and other compensation
payable in addition to a salary or other base amount, whether contingent or not,
whether discretionary or required to be paid pursuant to an agreement,
resolution, arrangement, plan or practice, and whether payable currently or on a
deferred basis, in cash, Common Stock or other property.
Incentive Stock Option: A stock option granted hereunder which
satisfies the conditions of Section 6 of the Plan, and the requirements of
Section 422 of the Code.
Key Employee: A salaried, full-time employee of the Company or
of a Subsidiary, including an officer or director who is an employee, who in the
opinion of the Committee can contribute significantly to the growth and
successful operations of the Company or a Subsidiary. The determination by the
Committee that a Stock Incentive be granted to an employee shall be deemed a
determination by the Committee that such employee is a Key Employee.
Mature Stock: shall mean shares of Common Stock which have
been obtained through the exercise of an option under this Plan or any other
plan of the Company, which are delivered to the Company in order to exercise
an Option and which have been held continuously by an Optionee for six
months or more.
Option: An option to purchase shares of Common Stock or, where
the context so requires, the instrument which evidences such an option as
provided in paragraph (c) of Section 3 of the Plan.
2
<PAGE>
Plan: The Stock Incentive Plan of 1996 herein set forth as the
same may from time to time be amended.
Restricted Shares: Shares of Common Stock issued or
transferred subject to terms and conditions with respect to payment or
forfeiture as authorized by Section 5.
Stock Appreciation Right: A right to receive a number of
shares of Common Stock, cash, or a combination of the two based on the increase
in the Fair Market Value of shares of Common Stock subject to an Option, as set
forth in Section 7 of the Plan.
Stock Award: An issuance or transfer of shares of Common Stock
at the time a Stock Incentive is granted or as soon thereafter as practicable,
or an undertaking to issue or transfer such shares in the future, including,
without limitation, such an issuance, transfer or undertaking with respect to a
Stock Incentive that is contingent, in whole or in part, upon the attainment of
a specified objective or objectives.
Stock Incentive: A stock incentive granted under the Plan in one
of the forms authorized in Section 3.
Subsidiary: A corporation or other form of business
association of which shares (or other ownership interests) having 50% or more of
the voting power are owned or controlled, directly or indirectly, by the
Company.
3. GRANTS OF STOCK INCENTIVES.
(a) Eligibility. Subject to the provisions of the Plan, the
Committee may at any time grant Stock Incentives under the Plan to, and only to,
Key Employees who are not members of the Committee; provided that Incentive
Stock Options may only be granted to a key employee who is an employee of the
Company or of a subsidiary which is a corporation.
(b) Types of Stock Incentives. Stock Incentives may be granted
in the following forms:
(i) Stock Award, in accordance with Section 5, or
(ii) a Stock Option, in accordance with Section 6, or
(iii) a Stock Appreciation Right, in accordance with Section 7, or
(iv) a combination of any of the foregoing.
(c) Evidence of Grant. Each Stock Incentive shall be evidenced
by a written instrument in a form prescribed by the Committee, which instrument
shall be consistent with the Plan, shall incorporate the Plan by reference, and
shall be signed on behalf of the Company by a person authorized by the
Committee. Any such instrument may contain such additional provisions consistent
with the Plan as the Committee may deem advisable.
3
<PAGE>
(d) Amendments. The Committee may from time to time authorize
the amendment of outstanding stock incentives so long as such amendments are
consistent with the Plan, as amended. Without limiting the foregoing such
amendments may, in the case of any outstanding stock option not immediately
exercisable in full, accelerate the time in which the option may be exercised by
the removal or modification of installments imposed in the initial grant of such
option pursuant to Section 6(d). Any amendment shall be evidenced by a written
instrument in a form prescribed by the Committee, which instrument shall be
consistent with the Plan, and shall be signed on behalf of the Company by a
person authorized by the Committee. Any such amendment may contain such
additional provisions consistent with the Plan, as amended, as the Committee may
deem advisable.
4. STOCK SUBJECT TO THE PLAN.
(a) Number of Shares. Subject to the provisions of paragraph
(c) of this Section 4 and of Section 8, the aggregate number of shares of Common
Stock which may be issued or transferred pursuant to Stock Incentives granted
under the Plan shall not exceed four hundred and fifty thousand (450,000) shares
of Common Stock.
(b) Source of Shares. Subject to the requirements of
applicable Kansas law, authorized but unissued shares of Common Stock and shares
of Common Stock held in the treasury, whether acquired by the Company
specifically for use under the Plan or otherwise, may be used, as the Board of
Directors may from time to time determine, for purposes of the Plan; provided,
however, that any shares acquired or held by the Company for the purposes of the
Plan shall, unless and until transferred to a Key Employee in accordance with
the terms and conditions of a Stock Incentive, be and at all times remain
treasury shares of the Company, available for any corporate purpose,
irrespective of whether such shares are entered in a special account for
purposes of the Plan.
(c) Charges Against Plan Limit. If any shares of Common Stock
subject to a Stock Incentive shall not be issued or transferred or shall cease
to be issuable or transferable under such Stock Incentive, or if any such shares
shall, after issuance or transfer, be reacquired by the Company or Subsidiary
because of an employee's failure to comply with or meet the terms and conditions
of a Stock Incentive, such shares shall no longer be charged against the
limitation provided for in paragraph (a) of this Section 4 and may again be made
subject to Stock Incentives; and, only the net additional shares issued upon
the exercise of a stock incentive through the delivery or withholding of shares
of Common Stock in payment of the exercise price or withholding taxes shall
be counted against the number of shares which are authorized for issuance under
Section 3(a). The limitation provided for in paragraph (a) of this Section 4,
shall also be increased by the number of shares subject to any Substitute Stock
Options granted under Section 6(j). Notwithstanding the foregoing, shares
shall be deemed to have been issued pursuant to an Option or Stock Award and
shall be charged against the limitation provided for in paragraph (a) of this
Section 4, whether actually delivered, to the extent of the number of shares
covered by that portion of the related option or award granted under the Plan
which is settled by the exercise of a Stock Appreciation Right or by a cash
payment under a Stock Award.
(d) Certain Limitations on Grants. Notwithstanding any
provision herein to the contrary, and subject to adjustment as provided in
Section 8, no Executive Officer of the Company may receive Stock Incentives
under the Plan in any calendar year that relate to more than fifty thousand
4
<PAGE>
(50,000) shares of Common Stock. In addition, and subject to other provisions of
the plan permitting the expiration of restrictions under certain circumstances,
no Stock Award shall be granted under Section 5 unless the shares subject to the
Award (other than shares purchased for cash at fair market value on date of
purchase under a related Stock Purchase Right) are subject to restrictions on
transfer and/or ownership specified by the Committee and the restrictions
continue for a period of one year from the date of grant in the case of Awards
that are performance based and continue for a period of three years from the
date of grant in the case of Awards that are not performance based.
5. STOCK AWARDS
Stock Incentives in the form of Stock Awards shall be subject
to the following provisions:
(a) Consideration. A Stock Award shall be granted only in
payment of (i) Incentive Compensation that has been earned, (ii) as Incentive
Compensation to be earned, or (iii) a combination of (i) and (ii).
(b) General. Shares of Common Stock subject to a Stock Award
may be issued or transferred to a Key Employee at the time the Stock Award is
granted, or at any time subsequent thereto, or in installments from time to
time, as the Committee shall determine. With respect to a Stock Award providing
for issuance or transfer of shares subsequent to the time it is granted, the
Committee may provide for payment to the grantee of amounts not exceeding the
cash dividends which would have been payable in respect of such shares (as
adjusted under Section 8 of the Plan) if they had been issued or transferred at
the time the Stock Award was granted. Such payments may be made in cash, shares
of Common Stock or a combination of cash and shares. Such payments may be made
at the time the shares are issued or transferred, or at the time or times the
cash dividends would have been payable if the shares had been issued or
transferred at the time the Stock Award was granted. Any amount payable in
shares of Common Stock under the terms of the Stock Award may be paid in cash on
each date on which delivery of shares would otherwise have been made, in an
amount equal to the Fair Market Value on such date of the shares which would
otherwise have been delivered.
(c) Restrictions on Transfer, Forfeiture. A Stock Award may
contain such terms and conditions as the Committee may determine with respect to
transfer, payment or forfeiture of all or any part of the Stock Award.
(d) Other Terms. A Stock Award may be subject to such other
terms and conditions, including, without limitation, restrictions on sale or
other disposition of the Stock Award or of the shares issued or transferred
pursuant to the Stock Award, as the Committee may determine; provided, however,
that upon the issuance or transfer of shares pursuant to a Stock Award, the
recipient shall, with respect to such shares, be and become a shareholder of the
Company fully entitled to receive dividends, to vote and to exercise all other
rights of a shareholder except to the extent otherwise provided in the Stock
Award.
6. STOCK OPTIONS
Stock Incentives granted under the Plan in the form of Stock
Options shall be subject to the following provisions:
5
<PAGE>
(a) Date of Grant. The "Date of Grant" of an Option shall be the
date the action of the Committee providing for the grant of the Option is
taken, or such later date as the Committee may provide.
(b) Option Price. The price at which shares of Common Stock
may be purchased under an Option (the "Option Price") shall be specified in the
Option and shall be not less than 100% of the Fair Market Value of such stock on
the Date of Grant of the Option. In the case of options other than incentive
stock options, the Committee may grant options at a price equal to such
percentage of the Fair Market Value of the stock on the date of grant as the
Committee may specify, provided that in no case shall the price be less than
100% of such Fair Market Value.
(c) Term of Option. An Option shall be exercisable only during
a term (the "Term of the Option" or "Term") commencing not sooner than six
months and one day after the Date of Grant of the Option and ending (unless the
Option shall have terminated earlier under other provisions of the Plan) on a
date fixed by the Committee and stated in the Option, which date shall be an
anniversary of the Date of Grant of the Option and shall not be later than the
tenth anniversary. If an Option is granted for an original Term of less than ten
years, the Committee may, at any time prior to the expiration of the Option,
extend its Term for a period ending not later than the tenth anniversary of the
Date of Grant of the Option.
(d) Installments. An Option may provide that it shall be
exercisable in full or in part at any time during the Term of the Option, or
that it shall be exercisable in a specified series of installments. Unless
otherwise provided in the Option, installments or portions thereof not exercised
in earlier periods shall be cumulative and shall be available for exercise in
later periods. The Committee may, by so providing in an Option, require any
partial exercise thereof to be with respect to a specified minimum number of
shares.
(e) Termination of Employment other than by Death or
Retirement. If an optionee shall cease, for a reason other than his death or
retirement, to be employed by the Company or Subsidiary, the Option shall
terminate ninety (90) days after the cessation of employment if the option is an
Incentive Stock Option and not later than one year after the cessation of
employment with respect to other options, unless the Incentive or other option
terminates earlier by its terms or under other provisions of the Plan. Until the
Option terminates it may be exercised by the optionee, his estate or legal
representatives for all or a portion of the shares as to which the right of
purchase had accrued under the Plan at the time of cessation of employment,
subject to all applicable conditions and restrictions provided in the Plan and
the Option. In no event shall an Option be exercisable later than the date of
expiration of the Term of the Option, and in no event shall an Option be
exercisable for any shares as to which the right of purchase had not accrued at
the time of cessation of employment. Employment for the purposes of this
paragraph shall mean continuous full-time salaried employment. Vacations, sick
leaves and any approved absence on leave shall not constitute a termination of
employment or an interruption of continuous full-time salaried employment.
(f) Retirement. If an optionee shall retire, the Option shall
terminate on the third anniversary of such retirement, unless it terminates
earlier by its terms or under other provisions of the Plan. Until the Option
terminates it may be exercised by the optionee, his estate or legal
representatives
6
<PAGE>
for all or a portion of the shares as to which the right of
purchase had accrued as of the date of such exercise, subject to all applicable
conditions and restrictions provided in the Plan and the Option. In no event
shall an Option be exercisable later than the date of expiration of the Term of
the Option, and in no event shall an Option be exercisable for any shares as to
which the right of purchase had not accrued at the time of exercise.
"Retirement" for purposes of paragraph 6(e) and (f) shall be defined by the
Committee with respect to age, service, and other requirements. Notwithstanding
the foregoing, if the option is an Incentive Stock Option, it may be exercised
as an incentive stock option by the retired optionee or his estate not later
than the day three months after the date of termination of his employment and by
his estate not later than the first anniversary of such termination of
employment if the optionee's death occurred prior to the day three months after
the termination of employment.
(g) Death. If an optionee shall die while in the employ of the
Company or a Subsidiary and if the Option was in effect at the time of his
death (whether or not its terms had then commenced), the Option may, until
the expiration of one year from the date of death of the optionee or until the
earlier expiration of the Term of the Option, be exercised as and to the extent
it could have been exercised by the optionee had he been living at the time, by
the legal representatives of the optionee or by any person, persons or entity to
whom his rights under the Option shall have been transferred pursuant to the
provisions of paragraph (g) of Section 11 of the Plan. Such exercise shall not
be limited to the shares as to which the right of purchase had accrued at the
date of death of the optionee, but shall be subject to all applicable conditions
and restrictions prescribed in the Plan and the Option, including any
installment provision.
(h) Exercise. To the extent that the right to purchase shares
has accrued under an Option, the Option may be exercised from time to time by
the optionee or by a person or persons entitled to exercise the Option, by
delivery to the Company of a written notice, in the manner and in such form as
may be prescribed by the Committee, stating the number of shares with respect to
which the Option is being exercised, and by making provision satisfactory to the
Company for the payment in full of the Option price of the shares prior to or in
connection with the delivery of certificates evidencing the shares. The
Committee may, in its discretion and upon request of the Participant, issue
shares of Common Stock upon the exercise of an Option directly to a brokerage
firm or firms to be approved by the Company, without payment of the purchase
price by the optionee but upon delivery of an irrevocable guarantee by such
brokerage firm or firms of the payment of such purchase price or upon the
participant's issuance to the brokerage firm of irrevocable instructions to sell
or margin a sufficient portion of the shares and deliver the sale or margin loan
proceeds directly to the Company to pay the exercise price and any withholding
taxes. Upon receipt of such notice and payment arrangement in form satisfactory
to the Company, the Company shall deliver to or upon the order of the optionee,
or such other person entitled to exercise the Option, at the General Office of
the Company, or at such place as shall be mutually acceptable, a certificate of
certificates evidencing such shares. An Option may not be exercised for
fractional shares of Common Stock. Payment in form satisfactory to the Company
may, at the option of the Company, include payment by transfer to the Company of
other shares of Mature Stock or other Common Stock which was not obtained
through the exercise of a stock option owned by the Optionee or by the
withholding of shares to be distributed in connection with the exercise of a
Stock Incentive. Common Stock transferred to the Company or withheld from shares
<PAGE>
to be distributed in payment of the option price or withholding taxes shall be
valued at the Fair Market Value of the Common Stock on the date of the exercise.
7
(i) No Rights Before Exercise. No person shall have any rights
of a stockholder by virtue of an Option except with respect to shares actually
issued to him, and issuance of shares shall not confer retroactive rights to
dividends.
(j) Substitute Options. Options may be granted under the Plan
from time to time in substitution for stock options held by employees of other
corporations who are about to become employees of the Company or a
Subsidiary as the result of a merger or consolidation of the employing
corporation with the Company or a Subsidiary, or the acquisition by the Company
or a Subsidiary of the assets of the employing corporation, or the acquisition
by the Company or a Subsidiary of stock of the employing corporation as the
result of which it becomes a Subsidiary. The terms and conditions of the
substitute options so granted may vary from the terms and conditions set forth
in this Section 6 to such extent as the Committee at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions of the options in
substitution for which they are granted.
(k) Certain Limits on Incentive Stock Options. In the case of
Incentive Stock Options, the amounts, terms and conditions of such grants shall
be subject to and comply with the requirements for Incentive Stock Options as
set forth in Section 422 of the Code, as from time to time amended, and any
regulations implementing such statute.
7. STOCK APPRECIATION RIGHTS.
(a) Grant. Stock Appreciation Rights may be granted in
connection with any Option granted under the Plan, either at the time of the
grant of such Option or at any time thereafter during the term of the Option. A
grant of Stock Appreciation Rights shall either be included in the instrument
evidencing the Option to which they relate or evidenced by a separate instrument
meeting the requirements of Section 3 of the Plan.
(b) Settlement. A person entitled to exercise an Option in
connection with which Stock Appreciation Rights shall have been granted shall be
entitled, at such time or times and subject to such terms and conditions as may
be stated in the granting instrument, to settle all or part of the Option by
requesting the Company to pay, in cancellation of the part of the Option to be
settled, consideration in an amount equal to the number of shares of Common
Stock subject to the canceled part of the Option times the amount by which the
fair market value of one share on the exercise date exceeds the Option Price
(the "Appreciation"). The election shall be made in a written instrument, in
form satisfactory to the Committee, delivered in the manner prescribed in
Section 6(h) for the exercise of options.
<PAGE>
(c) Form of Consideration. The form of the consideration to be
paid for the Appreciation shall either be cash, shares of Common Stock having an
aggregate market value on the exercise date equal to the Appreciation, or a
combination of cash and shares. Such form of consideration shall be specified
either by the Committee or, subject to the approval of the Committee, by the
person exercising the Stock Appreciation Right, provided that such form of
consideration shall in no event include fractional shares of Common Stock.
(d) Provisions in a Related Option. An Option in connection
with which Stock Appreciation Rights are granted may prescribe or limit the
period or periods of time during which the
8
Stock Appreciation Rights may be exercised as provided in paragraph (b) of this
Section 7, and may prescribe such additional terms and conditions applicable to
the exercise of the Stock Appreciation Rights as may be determined by the
Committee and as are consistent with the Plan. In no event may Stock
Appreciation rights be exercised at a time when the Option in connection with
which they were granted is not exercisable.
8. ADJUSTMENT PROVISIONS
In the event of a reorganization of the Company, an equitable
adjustment shall be made in: (a) the number and class of shares or other
securities that may be issued or transferred pursuant to Stock Incentives in the
aggregate or to any individual, (b) the number and class of shares or other
securities which have not been issued or transferred under outstanding Stock
Incentives, (c) the purchase price to be paid per share under outstanding
Options, and (d) the price to be paid per share by the Company or a subsidiary
for shares or other securities issued or transferred pursuant to Stock
Incentives which are subject to a right of the Company or a Subsidiary to
reacquire such shares or other securities. For this purpose, a "reorganization"
shall be deemed to have occurred in the event:
(i)any recapitalization, reclassification, split-up or
consolidation of shares of Common Stock shall be effected;
(ii)the outstanding shares of Common Stock are, in connection
with a merger or consolidation of the Company or the acquisition by another
corporation of Common Stock or of all or part of the assets of the Company,
exchanged for a different number or class of shares of stock or other securities
of the Company or for shares of the stock or other securities of another
corporation;
(iii)new, different or additional shares or other securities of
the Company or of another corporation are received by the holders of Common
Stock with respect to such stock; or
(iv)any distribution other than a cash dividend is made to the
holders of Common Stock.
The Committee may also unilaterally amend outstanding stock
incentives to remove restrictions or otherwise change the terms of outstanding
stock incentives to permit such incentives to be substituted for comparable
incentives to be provided by any entity which assumes the Company's obligations
with respect to such outstanding stock incentives upon terms and conditions
approved by the Board of Directors or Stockholders.
<PAGE>
In the event of any other change in the capital structure or
in the capital stock of the Company, the Committee shall be authorized to make
such appropriate adjustments in the maximum number of shares of Common Stock
available for issuance under the Plan in the aggregate or to any individual and
any adjustments and/or modifications to outstanding Stock Incentives as it deems
appropriate.
9
The action of the Committee in approving any adjustment or
change contemplated by this Section 8 shall be conclusively deemed to be
equitable, appropriate, fair and/or comparable and shall be binding on all
persons holding rights under the Plan.
9. TERM
(a) Effective Date. The Plan shall be effective as of January
5, 1996, subject to approval by the affirmative vote of the holders of a
majority of the shares of the Company's Common Stock present or represented, and
entitled to vote at a meeting duly held in accordance with applicable law within
one year after such effective date.
(b) Expiration Date. No Stock Incentives shall be granted
under the Plan after January 4, 2006. Unless otherwise expressly provided in the
Plan or in an applicable award agreement, any Stock Incentive granted hereunder
may, and the authority of the Board or the Committee to amend, alter, adjust,
suspend, discontinue, or terminate any such Award or to waive any conditions or
rights under any such Stock Incentive shall, continue after the authority for
grant of new Stock Incentives hereunder has been exhausted.
10. ADMINISTRATION.
(a) Composition of Committee. The Plan shall be administered
by the Committee which shall be composed solely of two or more non-employee or
"outside" directors as defined by Section 162(m) of the Code and the regulations
promulgated thereunder and Rule 16b-3(b)(3) of the Securities and Exchange
Commission (or any successor rule or statute at the time in effect). Any member
of the Committee shall automatically cease to be a member of the Committee at
such time as such person ceases to qualify as a "non-employee" or "outside"
director as so defined and any vote cast by such person while so disqualified to
act shall be deemed a nulity and shall not adversely affect any vote cast or
action taken pursuant to the affirmative votes of a majority of the remaining
members of the Committee who at such time were not so disqualified.
(b) Delegation of Board Authority. The Board of Directors may
delegate to the Committee any or all its authority under the Plan, including
the authority to award Stock Incentives, but excluding the authority to
amend or discontinue the Plan.
(c) Rules, etc. The Committee may establish such rules and
regulations and may construe, interpret and further define terms used in the
Plan so long as such rules, regulations and other actions are not inconsistent
with the provisions of the Plan and are otherwise believed to be necessary or
appropriate to promote the purposes of the Plan, and may amend or revoke the
<PAGE>
same. All such rules, regulations, determinations, definitions and
interpretations shall be binding and conclusive upon all persons granted stock
incentives under the Plan, the Company, its Subsidiaries, its stockholders and
all employees; upon their respective legal representatives, beneficiaries,
successors and assigns, and upon all other persons claiming under or through
any of them.
10
(d) Limited Liability. No member of the Board or of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Stock Incentive granted under the Plan, and
shall incur no liability except for willful misconduct in the performance of
their duties.
11. GENERAL PROVISIONS
(a) No right to Continued Employment. Nothing in the Plan nor
in any instrument executed pursuant thereto shall confer upon any employee any
right to continue in the employ of the Company or a Subsidiary or shall affect
the right of the Company or of a Subsidiary to terminate the employment of any
employee with or without cause.
(b) Legal Requirements for Transfers. No shares of Common
Stock shall be issued or transferred pursuant to a Stock Incentive unless the
Company is satisfied that there has been compliance with all legal requirements
applicable to the issuance or transfer of such shares. In connection with any
such issuance or transfer, the person acquiring the shares shall, if requested
by the Company, give assurances satisfactory to the Company that the shares are
being acquired for investment and not with a view to resale or distribution
thereof and assurances in respect of such other matters as the Company may deem
desirable to assure compliance with all applicable legal requirements.
(c) No Rights in shares Before Issue or Transfer. No employee
(individually or as a member of a group), and no beneficiary or other person
claiming under or through him, shall have any right, title or interest in or to
any shares of Common Stock allocated or reserved for the purposes of the Plan or
subject to any Stock Incentive, except as to such shares of Common Stock, if
any, as shall have been issued or transferred to him.
(d) Grants to Prospective Key Employees. The Company or
Subsidiary may, with the approval of the Committee, enter into an agreement or
other commitment to grant a Stock Incentive in the future to a person who is or
will be at the time of grant a Key Employee, and, notwithstanding any other
provision of the Plan, any such agreement or commitment shall not be deemed the
grant of a Stock Incentive until the date on which the Committee takes action to
implement such agreement or commitment, which date shall for the purpose of the
Plan be the date of grant.
(e) Implementation by subsidiary. In the case of a grant of a
Stock Incentive to any employee of a Subsidiary, such grant may, if the
Committee so directs, be implemented by the Company issuing or transferring the
shares, if any, covered by the Stock Incentive to the Subsidiary, for such
lawful consideration as the Committee may specify, upon the condition or
<PAGE>
understanding that the Subsidiary will transfer the shares to the employee in
accordance with the terms of the Stock Incentive. Notwithstanding any
other provision hereof, such Stock Incentive may be issued by and in the name
of the Subsidiary and shall be deemed granted on the date it is approved by the
Committee or on such later date as the Committee shall specify.
(f) Taxes. The Company or a Subsidiary may make such
provisions as it may deem appropriate for the withholding and payment of any
taxes which the Company or Subsidiary determines it is required to withhold or
which the employee deems to be payable in connection with any Stock
11
Incentive. Such provisions may include a requirement that all or part of the
amount of such taxes be paid to the Company or Subsidiary, in cash or by
transfer to the Company of shares of Mature Stock or other Stock which was not
obtained through the exercise of a stock option owned by the employee, or by
the withholding of cash or shares of Common Stock payable to the employee
under the stock incentive, or by any combination of the foregoing. To the
extent that tax provisions are satisfied with shares of the Company's Common
Stock, such stock shall be valued at Fair Market Value on the appropriate
transaction date.
(g) No Assignments. No Stock Incentive and no rights under a
Stock Incentive or under the Plan, contingent or otherwise, shall, by operation
of law or otherwise, be transferable or assignable or subject to any
encumbrance, pledge, hypothecation or charge of any nature, or to execution,
attachment or other legal process, except that, in the event of the death of the
holder of a Stock Incentive, the holder's rights under the Stock Incentive may
pass, as provided by law, to the legal representatives of the holder, and such
legal representatives may transfer any rights in respect of such Stock Incentive
to the person or persons or entity (including a trust) entitled thereto under
the will of the holder of such Stock Incentive, or in the case of intestacy,
under the applicable laws relating to intestacy. During the life of a holder of
a Stock Incentive, the Stock Incentive shall be exercisable only by such holder.
Notwithstanding the foregoing, a Stock Incentive may be transferable, to the
extent set forth in the applicable award agreement.
(h) No Restriction on Other Plans. Nothing in the Plan is
intended to be a substitute for, or shall preclude or limit the establishment or
continuation of, any other plan, practice or arrangement for the payment of
compensation or fringe benefits to employees generally, or to any class or group
of employees, which the Company or any Subsidiary now has or may hereafter
lawfully put into effect, including, without limitation, any retirement,
pension, profit-sharing, insurance, stock purchase, incentive compensation or
bonus plan.
(i) Applicable Law. The place of administration of the Plan
shall conclusively be deemed to be within the State of Kansas and the validity,
construction, interpretation and administration of the Plan and of any rules and
regulations or determinations or decisions made thereunder, and the rights of
any and all persons having or claiming to have any interest therein or
thereunder, shall be governed by and be determined exclusively
<PAGE>
and solely in accordance with, the laws of the State of Kansas. Without limiting
the generality of the foregoing, the period within which any action arising
under or in connection with the Plan, or any payment or award made or
purportedly made under or in connection therewith, must be commenced, shall be
governed by the laws of the State of Kansas, irrespective of the place where the
act or omission complained of took place and of the residence of any party to
such action and irrespective of the place where the action may be brought.
12. AMENDMENT OR DISCONTINUANCE OF PLAN
(a) Amendments. The Plan may be amended by the Board of
Directors at any time, provided that without the affirmative vote of the holders
of a majority of the shares of the Company's Common Stock and a vote of the
holders of a majority of the Company's Preferred Stock present or represented,
and entitled to vote at a meeting duly held in accordance with applicable law,
no amendment shall be made which (i) increases the aggregate number of shares of
Common Stock that may be issued
12
or transferred pursuant to Stock Incentives as provided in paragraph (a) of
Section 4, (ii) permits any person who is not determined to be a Key Employee
to be granted a Stock Incentive, (iii) amends the provisions of paragraph (b)
of Section 6, (iv) amends Section 9 to extend the term of the Plan, or (v)
amends this Section 12.
(b) Plan Termination. The Board of Directors may by resolution
adopted by a majority of the entire Board of Directors discontinue the Plan.
(c) Effect of Amendment or Termination. No amendment or
discontinuance of the Plan by the Board of Directors or the shareholders of the
Company shall adversely affect, without the consent of the holder thereof, any
Stock Incentive theretofore granted.
13. CHANGE IN CONTROL.
Unless the Committee shall otherwise provide in the award
agreement relating to a Stock Incentive granted under the Plan, upon the
occurrence of a Change in Control:
(a) In the case of Stock Options and Stock Appreciation Rights
granted under the Plan (i) each outstanding option or right that is not then
fully exercisable shall automatically become fully exercisable until the
termination of the option exercise period of the option or right [as modified by
subsection (ii) that follows], and (ii) in the event the Participant's
employment is terminated within two years after a Change in Control, his or her
outstanding options or rights at that date of termination shall be immediately
exercisable for a period of three months following such termination, provided,
however, that, to the extent the option or right by its terms otherwise permits
a longer option exercise period after such termination, such longer period shall
govern, and provided further that in no event shall such option or right be
exercisable more than ten years after the date of grant; and
(b) Any restrictions and provisions for forfeiture on all
outstanding Stock Awards shall automatically expire and immediately lapse and
all such awards shall be immediately and fully vested.
<PAGE>
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on its adoption by the Board,
provided, however, the Plan shall be submitted for approval by the holders of a
majority of the shares of the Company's Common Stock and by the holders of a
majority of the shares of the Company's Preferred Stock, present or represented
and entitled to vote at a meeting duly held in accordance with applicable law
prior to the first anniversary of such adoption by the Board. Any Stock
Incentive granted prior to stockholder approval of the Plan shall become null
and void if such approval is not obtained before the first anniversary of the
effective date. Such grants shall also contain provisions for the return or
cancellation of benefits if such stockholder approval is not obtained.
13
CERTIFICATIONS
The undersigned Secretary of Midwest Grain Products, Inc.,
hereby certifies that the foregoing Plan reflects the Plan as duly adopted by
the Board of Directors at a regular meeting of the Board duly called, noticed,
convened and held on January 5, 1996, and as amended by similar action taken by
the Board on August 26, 1996, all in accordance with the Certificate of
Incorporation, Bylaws and applicable laws of the State of Kansas.
Dated August 26, 1996.
s/Norma C. Ewbank
--------------------------------
Norma C. Ewbank, Secretary
The undersigned Secretary of Midwest Grain Products, Inc.,
hereby certifies that the foregoing Plan was duly approved by the holders of a
majority of the Common and Preferred Stock present or represented and entitled
to vote at the Annual Meeting of Stockholders duly called, noticed, convened and
held on October 10, 1996, in accordance with the Certificate of Incorporation,
Bylaws and applicable laws of the State of Kansas.
Dated October __, 1996.
-------------------------------
Norma C. Ewbank, Secretary
14
<PAGE>
Exhibit B
MIDWEST GRAIN PRODUCTS, INC.
1996 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS
<PAGE>
MIDWEST GRAIN PRODUCTS, INC.
1996 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS
1. Name; Purposes; Definitions.
The name of this plan is the Midwest Grain Products, Inc. 1996 Stock
Option Plan for Outside Directors (the "Plan").
The purposes of the Plan are to promote the long-term success of the
Company by enhancing the long-term mutuality of interests between the
non-employee directors of the Company and the stockholders of the Company and by
providing incentives that will enhance the Company's ability to attract highly
qualified persons to serve as directors of the Company.
For purposes of this Plan, the following terms shall be defined as set
forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor thereto.
(c) "Committee" means the Human Resources Committee of the Board,
or any other committee the Board may subsequently appoint to
administer the Plan pursuant to Section 2.
(d) "Company" shall mean Midwest Grain Products, Inc., a corporation
organized under the laws of the State of Kansas (or any successor
corporation).
(e) "Effective Date" shall mean the date the plan is approved by the
stockholders of the Company.
(f) "Fair Market Value" of a share of Common Stock on the date as of
which fair market value is to be determined shall be: (a) if the Common
Stock is reported on the NASDAQ National Market System of the National
Association of Securities Dealers, Inc., the last reported sales price
of a share of Common Stock as reported by NASDAQ; or (b) if the Common
Stock is listed on an established securities exchange or exchanges, the
highest reported closing price of a share of Common Stock on such
exchange or exchanges.
(g) "Mature Stock" shall mean Stock which was obtained through the
exercise of an option under this Plan or any other plan of the Company,
which is delivered to the Company in order to exercise an Option and
which has been held continuously by an Optionee for six months or more.
(h) "Nonqualified Stock Option" means any Stock Option that by its
terms is designated as not being an "incentive stock option" within the
meaning Section 422 of the Code.
(i) "Optionee" means the recipient of a Stock Option.
<PAGE>
(j) "Stock" means the Company's presently authorized Common Stock, par
value $1.00 per share, except as this definition may be modified
pursuant to Section 3 hereunder.
(k) "Stock Option" means any nonqualified option to purchase
shares of Stock granted pursuant to Section 5.
2. Administration.
The Plan shall be administered by a Committee of not less than two
Directors, who shall be appointed by the Board and who shall serve at the
pleasure of the Board. Until otherwise specified by the Board, the Plan shall be
administered by the Human Resources Committee of the Board. If at any time no
Committee shall be in office, then the functions of the Committee shall be
exercised by the Board.
3. Stock Subject to Plan.
(a) The total number of shares of Stock reserved and available for
issuance under the Plan shall be 90,000. Such shares may consist, in whole or in
part, of authorized and unissued shares or treasury shares.
(b) In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, or other change in corporate structure
affecting the Stock, a substitution or adjustment shall be made in (i) the
aggregate number of shares reserved for issuance under the Plan, (ii) the number
of options to be granted automatically each year to non-employee directors of
the Company, (iii) the limits on the number of options that may be granted to
each non-employee director under the plan and (iv) the number and option price
of shares subject to outstanding Stock Options granted under the Plan as may be
determined by the Board, provided that the number of shares subject to any award
shall always be a whole number.
(c) If any shares of Common Stock subject to a Stock Option shall not
be issued or transferred or shall cease to be issuable or transferable under
such Stock Option, such shares shall no longer be charged against the limitation
provided for in paragraph (a) of this Section 3 and may again be made subject to
Stock Options; and, only the net additional shares issued upon the exercise of a
stock option through the delivery or withholding of shares of Common Stock in
payment of the exercise price or withholding taxes shall be counted against the
number of shares which are be authorized for issuance under Section 3(a).
2
4. Eligibility.
Each non-employee member of the Board shall receive Nonqualified Stock
Options in accordance with the provisions of Section 5.
5. Stock Options.
<PAGE>
(a) On the first business day after the 1996 Annual Meeting of
Stockholders of the Company, and on the first business day after each annual
stockholders' meeting of the Company thereafter during the term of the Plan,
each non-employee member of the Board shall be granted a Nonqualified Stock
Option to purchase 1,000 shares of Stock.
(b) Stock Options granted under the Plan shall be subject to the
following terms and conditions:
(1) The exercise price per share of Stock purchasable under
such Stock Options shall be 100% of the Fair Market Value of the Stock on the
date of grant.
(2) Each Stock Option shall be exercisable on the 184th day
following the date of grant by written notice to the Company of the election to
exercise and of the number of shares elected to be purchased in such form as the
Committee has prescribed or approved, together with payment in full of the
purchase price in cash, personal check, wire transfer, certified or cashier's
check, or delivery of Stock certificates for Mature Stock or other Stock which
was not obtained through the exercise of a stock option, endorsed in blank or
accompanied by executed stock powers with signatures guaranteed by a national
bank or trust company or a member of a national securities exchange.
(3) If an Optionee resigns or does not stand for election
(prior to retirement from the Board of Directors upon reaching age 70) or is
removed from his or her position as a Director or is not re-elected to his or
her position as a Director, any unexercised portion of any Stock Option granted
to him or her under the terms of the Plan shall terminate ninety (90) days
following the date of such resignation, removal or end of the term of such
position. If an Optionee dies while a Director, any unexercised portion of any
Stock Option granted to him or her under the terms of the Plan shall terminate
one year from the date of death. If an Optionee does not stand for re-election
due to retirement from the Board of Directors upon reaching age 70, any
unexercised portion of any Stock Option granted to him or her under the terms of
the Plan shall terminate three years from the date of the end of his or her
term. It is understood, however, that such right to exercise any outstanding
Options during any period following a terminating event shall only exist to the
extent such Options were exercisable immediately preceding the terminating
event.
(4) Each Stock Option shall cease to be exercisable on the
date that is five years following the date of grant.
3
(5) The aggregate number of shares of Stock that may be
granted to any non-employee member of the Board pursuant to the Plan may not
exceed 10,000 shares.
(6) Except as otherwise provided in the option agreement,
Options shall not be transferable by the Optionee otherwise than by will or by
the laws of decent and distribution.
<PAGE>
(7) Any withholding taxes required to be paid to the Company
in connection with the exercise of any option shall be paid, at the election of
the director, in cash or by the Company's withholding of shares of Common Stock
issuable to the director under the stock option, or by any combination of the
foregoing. To the extent that tax provisions are satisfied with shares of the
Company's Common Stock, such stock shall be valued at Fair Market Value on the
appropriate transaction date.
(c) Each Optionee shall enter into a stock option agreement with the
Company, which agreement shall set forth, among other things, the exercise price
of the option, the term of the option and provisions regarding exercisability of
the option granted thereunder, which provisions shall not be inconsistent with
the terms set forth herein.
6. Amendment and Termination.
The Board may amend, alter, modify or discontinue the Plan at any time,
provided that the Board may not amend or alter the provisions of the Plan
without the approval of the stockholders if the amendment would materially
increase the number of securities that may be issued under the Plan.
7. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments not yet made to a recipient by the
Company, nothing contained herein shall give any such recipient any rights that
are greater than those of a general creditor of the Company.
8. General Provisions.
(a) If necessary to effect compliance with applicable securities laws,
each person purchasing shares pursuant to a Stock Option must represent to and
agree with the Company in writing that such person is acquiring the shares
without a view to the distribution thereof.
(b) All certificates for shares of Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock is then listed, and any applicable
federal or state securities law, and a legend or legends may be put on any such
certificates to make appropriate reference to any required restriction on
transfer.
(c) Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required;
4
and such arrangements may be either generally applicable or applicable only
in specific cases. The adoption of the Plan shall not confer upon any member of
the Board any right to continued membership on such Board.
<PAGE>
(d) No member of the Board or the Committee, nor any officer or
employee of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination, or interpretation taken or made
in good faith with respect to the Plan, and all members of the Board and the
Committee and any officer or employee of the Company acting on their behalf
shall, to the extent permitted by law, be fully indemnified and protected by the
Company in respect to any such action, determination or interpretation.
9. Term of Plan.
No stock Option shall be granted pursuant to the Plan on or after the
tenth anniversary of the Effective Date, but awards theretofore granted may
extend beyond that date.
CERTIFICATIONS
The undersigned Secretary of Midwest Grain Products, Inc.,
hereby certifies that the foregoing Plan reflects the Plan as duly adopted by
the Board of Directors at a regular meeting of the Board duly called, noticed,
convened and held on January 5, 1996, and as amended by similar action taken by
the Board on August 26, 1996, all in accordance with the Certificate of
Incorporation, Bylaws and applicable laws of the State of Kansas.
Dated August 26, 1996.
s/Norma C. Ewbank
--------------------------------
Norma C. Ewbank, Secretary
The undersigned Secretary of Midwest Grain Products, Inc.,
hereby certifies that the foregoing Plan was duly approved by the holders of a
majority of the Common and Preferred Stock present or represented and entitled
to vote at the Annual Meeting of Stockholders duly called, noticed, convened and
held on October __, 1996, in accordance with the Certificate of Incorporation,
Bylaws and applicable laws of the State of Kansas.
Dated October __, 1996.
--------------------------------
Norma C. Ewbank, Secretary
5
<PAGE>
MIDWEST GRAIN PRODUCTS, INC PROXY
1300 Main street, Atchison, Kansas 66002 COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Cloud L. Cray, Jr., Laidacker M. Seaberg and
Robert G. Booe, or any of them, each with full power to appoint his substitute,
proxies to vote, in the manner specified on the reverse hereof, all of the
shares of Common Stock of Midwest Grain Products, Inc., held by the undersigned
at the Annual Meeting of stockholders to be held on October 10, 1996, or at any
adjournment thereof.
The undersigned has received the Company's Annual Report for 1996, and
its Proxy Statement. This Proxy is revocable and it shall not be voted
if the undersigned is present and voting in person.
-------------------------------------
Stockholder's Signature
-------------------------------------
Stockholder's Signature
Dated
--------------------------------
Please sign exactly as your name(s)
appear above. Joint owners should
each sign. Executors, trustees,
custodians, etc., should indicate
the capacity in which they are signing.
PLEASE RETURN THIS PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.
<PAGE>
(Continued from other side)
The Board of Directors Recommends a vote FOR the following proposals:
1. Election of one Group A Director for a term expiring in 1999. The Board of
Directors has nominated Eleanor B. Schwartz, D.B.A.
|_| FOR the Nominee. |_| AUTHORITY WITHHELD from the Nominee.
2. Approval of the Stock Incentive Plan of 1996:
|_| FOR |_| AGAINST |_| ABSTAIN
3. Approval of the 1996 Stock Option Plan for Outside Directors:
|_| FOR |_| AGAINST |_| ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, THE SHARES
WILL BE VOTED "FOR" THE NOMINEE UNDER PROPOSAL 1. AND "FOR" PROPOSALS 2 AND 3.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD.
<PAGE>
[GRAPHIC OMITTED] MIDWEST GRAIN PRODUCTS, INC. PROXY
1300 Main Street, Atchison, Kansas 66002 PREFERRED STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Cloud L. Cray, Jr., Laidacker M. Seaberg and
Robert G. Booe, or any of them, each with full power to appoint his substitute,
proxies to vote, in the manner specified on the reverse hereof, all of the
shares of Preferred Stock of Midwest Grain Products, Inc., held by the
undersigned at the Annual Meeting of stockholders to be held on October 10,
1996, or at any adjournment thereof.
The undersigned has received the Company's Annual Report for 1996, and
its Proxy Statement. This Proxy is revocable and it shall not be voted
if the undersigned is present and voting in person.
--------------------------------------
Stockholder's Signature
--------------------------------------
Stockholder's Signature
Dated
---------------------------------
Please sign exactly as your name(s)
appear above. Joint owners should each
sign. Executors, trustees, custodians,
etc., should indicate the capacity in
which they are signing.
PLEASE RETURN THIS PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.
<PAGE>
(Continued from other side)
The Proxies are hereby given the following authority:
1. Election of the following nominees as Group B Directors for terms to expire
in 1999:
RANDALL M. SCHRICK AND LAIDACKER M. SEABERG
|_| FOR all Nominees. |_| AUTHORITY WITHHELD from all Nominees.
|_| FOR all Nominees, except vote withheld from the following Nominee:
------------------------------.
2. Approval of the Stock Incentive Plan of 1996:
|_| FOR |_| AGAINST |_| ABSTAIN
3. Approval of the 1996 Stock Option Plan for Outside Directors:
|_| FOR |_| AGAINST |_| ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, THE SHARES
WILL BE VOTED "FOR" THE NOMINEES UNDER PROPOSAL 1. AND "FOR" PROPOSALS 2 AND 3.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD.
<PAGE>
September 19, 1996
TO: Participants in the
Employee Stock Ownership Plan
Provisions of the Employee Stock Ownership Plan (the "Plan") entitle
participants to instruct the Trustees of the Plan as to the voting of Midwest
Grain Products, Inc. Common Stock allocated to the accounts of participants.
Accordingly, please find enclosed a form of instruction card that will permit
you to direct the Trustees as to the voting of Common Stock allocated to your
accounts in the Plan with respect to proposals to be acted upon at the Annual
Meeting of Stockholders of the Company to be held on October 10, 1996.
We are also enclosing a copy of the Company's Annual Report for 1996
and its Proxy Statement, unless you are being mailed one as a record holder of
Common Stock.
Please promptly complete and sign the instruction card and return it in
the enclosed envelope.
Thank you.
Very truly yours,
s/Ladd M. Seaberg
Laidacker M. Seaberg
President and
Chief Executive Officer
<PAGE>
MIDWEST GRAIN PRODUCTS, INC. EMPLOYEE STOCK OWNERSHIP PLAN
C/O Midwest Grain Products, Inc.
1300 Main Street, Atchison, Kansas 66002
INSTRUCTIONS FOR THE VOTING OF MIDWEST GRAIN PRODUCTS, INC. COMMON STOCK
The undersigned hereby instructs Laidacker M. Seaberg, Robert G. Booe, Brian
Cahill, Dave Rindom and Randy Schrick, as Trustees of the Employee Stock
Ownership Plan indicated below (the "ESOP"), or any of them, to vote, in the
manner specified on the reverse hereof, all of the shares of Common Stock of
Midwest Grain Products, Inc., held by the ESOP and allocated to the account of
the undersigned at the Annual Meeting of stockholders to be held on October 10,
1996, or at any adjournment thereof.
The undersigned has received the Company's Annual Report for 1996 and its Proxy
Statement.
Name of ESOP:
--------------------------
----------------------------
Accountholder's Signature
Accountholder Dated:
----------------------
Number of Shares Allocated to Account:
----------------------
PLEASE RETURN THIS INSTRUCTION CARD PROMPTLY IN THE ACCOMPANYING ENVELOPE.
<PAGE>
(Continued from other side)
The Board of Directors of Midwest Grain Products, Inc. Recommends a vote FOR the
following proposals:
1. Election of one Group A Director for a term expiring in 1999. The Board of
Directors has nominated Eleanor B. Schwartz, D.B.A.
|_| FOR the Nominee. |_| AUTHORITY WITHHELD from the Nominee.
2. Approval of the Stock Incentive Plan of 1996:
|_| FOR |_| AGAINST |_| ABSTAIN
3. Approval of the 1996 Stock Option Plan for Outside Directors:
|_| FOR |_| AGAINST |_| ABSTAIN
4. In its discretion, the Trustees are authorized to vote upon such other
business as may properly come before the meeting.
IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED INSTRUCTION CARD IS RETURNED,
THE SHARES WILL BE VOTED "FOR" THE NOMINEE UNDER PROPOSAL 1. AND "FOR"
PROPOSALS 2 AND 3.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD.
<PAGE>
September 19, 1996
TO: Participants in the Midwest Grain Products, Inc.
Employee Stock Purchase Plan
Provisions of the Midwest Grain Products, Inc. Employee Stock Purchase
Plan (the "Plan") entitle participants to instruct the Trustee of the Plan as to
the voting of Midwest Grain Products, Inc. Common Stock allocated to the
accounts of participants. Accordingly, please find enclosed a form of
instruction card that will permit you to direct the Trustee as to the voting of
Common Stock allocated to your accounts in the Plan with respect to proposals to
be acted upon at the Annual Meeting of Stockholders of the Company to be held on
October 10, 1996.
We are also enclosing a copy of the Company's Annual Report for 1996
and its Proxy Statement, unless you are being mailed one as a record holder of
Common Stock.
Please promptly complete and sign the instruction card and return it in
the enclosed envelope.
Thank you.
Very truly yours,
s/Ladd M. Seaberg
Laidacker M. Seaberg
President and
Chief Executive Officer
<PAGE>
MIDWEST GRAIN PRODUCTS, INC. EMPLOYEE STOCK PURCHASE PLAN
C/O Midwest Grain Products, Inc.
1300 Main Street, Atchison, Kansas 66002
INSTRUCTIONS FOR THE VOTING OF MIDWEST GRAIN PRODUCTS, INC. COMMON STOCK
The undersigned hereby instructs UMB Bank, n.a. as Trustee of the Midwest
Grain Products, Inc. Employee Stock Purchase Plan (the "ESPP"), or any of
them, to vote, in the manner specified on the reverse hereof, all of the shares
of Common Stock of Midwest Grain Products, Inc., held by the ESPP and allocated
to the account of the undersigned at the Annual Meeting of stockholders to be
held on October 10, 1996, or at any adjournment thereof.
The undersigned has received the Company's Annual Report for 1996 and its Proxy
Statement.
-----------------------------------
Accountholder's Signature
Accountholder Dated:
-----------------------------
Number of Shares Allocated to Account:
-----------------------------
PLEASE RETURN THIS INSTRUCTION CARD PROMPTLY IN THE ACCOMPANYING ENVELOPE.
<PAGE>
(Continued from other side)
The Board of Directors of Midwest Grain Products, Inc. Recommends a vote FOR the
following proposals:
1. Election of one Group A Director for a term expiring in 1999. The Board of
Directors has nominated Eleanor B. Schwartz, D.B.A.
|_| FOR the Nominee. |_| AUTHORITY WITHHELD from the Nominee.
2. Approval of the Stock Incentive Plan of 1996:
|_| FOR |_| AGAINST |_| ABSTAIN
3. Approval of the 1996 Stock Option Plan for Outside Directors:
|_| FOR |_| AGAINST |_| ABSTAIN
4. In its discretion, the Trustee is authorized to vote upon such other business
as may properly come before the meeting.
IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED INSTRUCTION CARD IS RETURNED,
THE SHARES WILL BE VOTED "FOR" THE NOMINEE UNDER PROPOSAL 1. AND "FOR"
PROPOSALS 2 AND 3.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD.
<PAGE>
