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SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Dated September 16, 1998
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[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)
------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] 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: ___________________________________________
2) Aggregate number of securities to which transaction
applies: ___________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined): ______________________
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------
5) Total fee paid: ____________________________________
[ ] 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:____________________________________________
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NOTICE OF 1998 ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT
[GRAPHIC OMITTED]
MIDWEST GRAIN PRODUCTS, INC.
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MIDWEST GRAIN PRODUCTS, INC.
1300 Main Street
Atchison, Kansas 66002
September 17, 1998
NOTICE OF ANNUAL MEETING
To the Stockholders:
The Annual Meeting of Stockholders of Midwest Grain Products, Inc. will be
held at the Mount Conference Center, 710 South 9th Street, Atchison, Kansas
66002, on Thursday, October 8, 1998, beginning at 10:00 a.m., local time, for
the following purposes:
o To elect three directors each for a three year-term expiring in 2001;
o To act upon a proposal to approve the Midwest Grain Products, Inc. 1998
Stock Incentive Plan for Salaried Employees;
o To act upon a proposal to amend the Midwest Grain Products, Inc. Stock
Incentive Plan of 1996; and
o To act upon a proposal to approve amendments to the Midwest Grain
Products, Inc. 1996 Stock Option Plan for Outside Directors and options
granted thereunder.
o 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 19, 1998, 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/Laidacker 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 8, 1998, 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 17, 1998.
GENERAL INFORMATION
The holders of outstanding shares of Common Stock and Preferred Stock of
the Company at the close of business on August 19, 1998, 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 19, 1998, there were 9,700,172 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 to approve the Midwest Grain
Products, Inc. 1998 Stock Incentive Plan for Salaried Employees (the "Salaried
Plan") and amendments to the Midwest Grain Products, Inc. Stock Incentive Plan
of 1996 (the "Senior Plan") and the Midwest Grain Products, Inc. 1996 Stock
Option Plan for Outside Directors (the "Outside Directors' 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.
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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 the approval of
the Salaried Plan, FOR amendments to the Senior Plan and Outside Directors' Plan
and 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.
ELECTION OF DIRECTORS
Nominees
Two Group B Directors and one Group A Director 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 the persons nominated for the Group B positions. Cloud
L. Cray, Jr. and Robert J. Reintjes have been nominated by the Board of
Directors for election to the Group B positions for terms expiring at the Annual
Meeting in 2001. Tom MacLeod, Jr. has been nominated by the Board of Directors
for election to the Group A position for a term expiring at the Annual Meeting
in 2001. Messrs. Cray, Jr., Reintjes and MacLeod, Jr. are now and have been
directors of the Company for more than the past two 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.
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GROUP A NOMINEE
(For term expiring in 2001)
TOM MACLEOD, JR. Mr. MacLeod, age 50, 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
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.
GROUP B NOMINEES
(For terms expiring in 2001)
CLOUD L. CRAY, JR. Mr. Cray, age 75, 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.
ROBERT J. REINTJES Mr. Reintjes, age 66, has been a director since 1986.
His present term expires in 1998. He is Chairman of the
Nominating Committee and a member of the Audit
Committee. 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.
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OTHER
GROUP A DIRECTORS
F. D. "Fran" JABARA Mr. Jabara, age 73, has been a Group A director
since October 6, 1994. He is Chairman of the
Audit Committee and a member of the Nominating
Committee. He is President of Jabara Ventures
Group, a venture capital firm. From September
1949 to August 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.
ELEANOR B. SCHWARTZ, D.B.A. Dr. Schwartz, age 61, has been a director since
June 3, 1993. Her present term expires in
1999. She is also a member of the Audit
Committee and the Human Resources 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 each of the
funds in The United Group of Mutual Funds,
Target/The United Funds, Inc. and Waddell &
Reed Funds, Inc.
DARYL R. SCHALLER, Ph.D. Dr. Schaller, age 54, has been a director since
October, 1997. He is also Chairman of the Human
Resources Committee and a member of the Audit
Committee. He retired from Kellogg Co. in 1996
after 25 years of service. He served Kellogg as
its Senior Vice President -- Scientific Affairs
from 1994, and previously was Senior Vice
President - Research, Quality and Nutrition for
Kellogg. He is also a director of Iams Company,
a producer of pet foods, and of Cancer Research
Foundation of America.
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OTHER
GROUP B DIRECTORS
MICHAEL BRAUDE Mr. Braude, age 62, has been a Group B director
since 1991. He is a member of the Audit and
Nominating Committees. 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 NPC International, Inc., an operator
of numerous Pizza Hut and other quick service
restaurants throughout the United States,
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.
RANDALL M. SCHRICK Mr. Schrick, age 48, has been a Group B director
since 1987. His present term expires in 1999.
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 52, has been a Group B director
since 1979. His present term expires in 1999.
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.
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. At the Annual
Meeting of Stockholders in 1996 the Stockholders approved the Midwest Grain
Products, Inc. 1996 Stock Option Plan for Outside Directors. Pursuant to that
Plan each non-employee director receives an automatic grant of an option to
purchase 1,000 shares of
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the Company's Common Stock on the first business day following each annual
meeting of stockholders at a price equal to the Fair Market Value of the Common
Stock on that date. Pursuant to the Plan each of the non-employee directors
received options on October 11, 1997, to purchase 1,000 shares of Common Stock,
at a price of $ 14.25 per share. Options become exercisable 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 following termination of the
Director's office due to death or (d) 90 days following the date of the
termination of the Director's term of office for any other reason. On September
4, 1998, the Board of Directors amended the Plan, subject to stockholder
approval, to increase the maximum term of the options from five years to ten
years. See "Proposal 4 APPROVAL OF AMENDMENT TO 1996 STOCK OPTION PLAN FOR
OUTSIDE DIRECTORS."
During the fiscal year ended June 30, 1998, the Board met five times,
the Audit Committee met three times, the Human Resources Committee met three
times and the Nominating Committee met once. The attendance at Committee and
Board meetings by all Directors in the aggregate was 92.5%. Each Director
attended at least 75% of the meetings of the Board and the Committees of which
the Director was a member, except for Mr. MacLeod, Jr., whose attendance at the
meetings was 56%.
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, the Salaried and
Senior Stock Incentive Plans 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.
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PROPOSAL 2
PROPOSED 1998 STOCK INCENTIVE PLAN FOR SALARIED EMPLOYEES
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. 1998 Stock Incentive Plan
For Salaried Employees as set forth in Appendix A to the Midwest Grain Products,
Inc. Notice of 1998 Annual Meeting of Stockholders and Proxy Statement dated
September 17, 1998, is hereby approved.
General
The Board of Directors is submitting to the stockholders for approval
the Midwest Grain Products, Inc.1998 Stock Incentive Plan For Salaried Employees
(the "Salaried Plan"). The Salaried Plan was adopted by the Board on March 5,
1998, subject to subsequent approval by the Stockholders. On the same date
options having maximum terms of five years covering 171,360 shares of the
Company's Common Stock were granted to all salaried employees of the Company
other than the Executive Officers of the Company at an exercise price of $13.50
per share, which was the fair market value of the Company's Common Stock on that
date. On September 4, 1998, the Human Resources Committee that administers the
Plan amended those options to increase the maximum terms from five years to ten
years. The grants and amendments have been made subject to subsequent approval
of the Salaried Plan by the Stockholders. Accordingly, if approved by the
stockholders, the Salaried Plan will authorize the implementation of the options
granted in March, the amendments in September and permit the granting of
additional stock options and other stock and cash awards to key employees in the
future.
The purposes of the Salaried 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 salaried
employees and that will assist the Company in continuing to attract and retain
highly qualified and motivated personnel. A copy of the Salaried Plan, as
amended, is set forth as Appendix A to this Proxy Statement.
Shares Reserved under the Salaried Plan
The number of shares of Common Stock that may be issued under the
Salaried Plan for awards granted wholly or partly in stock during the term of
the Salaried Plan is three hundred thousand (300,000). 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
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Company because of the failure of a condition, such shares will not be charged
against the 300,000 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 subject to any Substitute Stock Options granted under
Section 6(j) of the Salaried Plan. 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.
The shares available, shares subject to outstanding incentives,
exercise prices and other limitations in the Salaried 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 Salaried 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 Salaried Plan
The following brief description of the material features of the
Salaried Plan is qualified in its entirety by reference to the full text of the
attached copy of the Salaried Plan.
The Salaried 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 Salaried Plan and to establish, waive, amend, or suspend rules
and regulations under the Salaried Plan. Subject to the terms of the Salaried
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.
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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 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
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 Salaried Plan in any calendar year that relate
to more than fifty thousand (50,000) shares of Common Stock. Incentives are
nontransferable unless the Award Agreement provides otherwise. No Incentives may
be granted under the Salaried Plan after March 4, 2008.
Eligible Participants
The Committee may grant Stock Incentives only to full time salaried
employees who are not members of the Committee. In this respect, the Committee
may exercise complete discretion with respect to (a) the amount of stock
incentives to be granted, (b) the timing of any grant, and (c) the
identification of salaried employees to receive grants. In exercising that
discretion, the Committee may take into account all legally cognizable factors
such as the participant's performance and length of service, recommendations of
supervisors, management and other superiors, the performance of business units,
departments or divisions within which the participant is employed, and the
financial condition and performance of the Company as a whole. The Committee may
also grant options individually or to specified classes or groups of persons and
thereby exclude other individuals, classes or groups that may otherwise be
eligible to participate in an option grant. Nothing contained in the Salaried
Plan is intended to provide any salaried employee with any right to receive any
stock incentive simply by virtue of such person's being or achieving the status
of a salaried employee
Amendments to the Salaried Plan
At any time the Board may amend or terminate the Salaried Plan;
provided that it may not amend the Salaried 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
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full time salaried 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 Salaried Plan, or (v) amends the amendment
provisions of the Salaried Plan.
New Plan Benefits and Participation
A total of 171,360 shares of Common Stock are subject to outstanding
stock options granted under the Salaried Plan. All of the options were granted
on March 5, 1998, at an exercise price of $13.50 per share, which was the fair
market value of the stock at the date of grant. All of the Company's full time
salaried employees on March 5, 1998, were included in the grant other than eight
executive officers who received grants under the Senior Plan in December 1997.
The options are subject to shareholder approval of the Salaried Plan and are
otherwise exercisable in four equal annual installments commencing on the first
anniversary of the date of grant. The March 5, 1998, options have maximum terms
of five years. On September 4, 1998, the Committee amended those options to
extend the maximum terms to ten years from the date of grant. All of the options
are "Incentive Stock Options" under the Internal Revenue Code ("The Code").
Except for the options granted with respect to 171,360 shares,
described in the preceding paragraph, no benefits or amounts have been allocated
under the Salaried Plan, nor are any such benefits or amounts now determinable
and it is not possible to predict the number or identity of future salaried
employees of the Company who may participate in the Salaried Plan, or except as
set forth in the Salaried 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
States federal income tax consequences of the Salaried 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
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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.
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").
Nonqualified Stock Options
No taxable income is recognized by the optionee at the time a NQSO is
granted under the Salaried 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.
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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 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
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 Salaried 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 Salaried Plan. However, incentives that may be
issued under the Stock Awards feature of the Salaried 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.
Approval
Approval of the Salaried 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 Salaried 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
SALARIED PLAN.
12
<PAGE>
PROPOSAL 3
PROPOSED AMENDMENT TO 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 Section 4(a) of the Midwest Grain
Products, Inc. Stock Incentive Plan of 1996 be amended to increase the
aggregate number of shares of Common Stock of the Company which may be
issued or transferred pursuant to stock incentives granted under the
plan from 450,000 to 600,000.
General
In 1996 the Stockholders approved the Midwest Grain Products, Inc.
Stock Incentive Plan of 1996 (the "Senior Plan"). The Senior Plan is essentially
the same as and has the same purpose as the Salaried Plan described above,
except that it only permits grants of stock incentives to "Key Employees" while
the Salaried Plan permits grants to all full time salaried employees. As a
consequence, the Human Resources Committee (the "Committee"), which administers
both Plans, has limited participation in the Senior Plan to senior executives
and has extended the Salaried Plan to all salaried employees other than the
senior executives who are participating in the Senior Plan. A copy of the Senior
Plan is appended to the Company's 1996 Proxy Statement dated September 19, 1996,
and may be accessed via the internet at http://www.sec.gov/cgi-bin/srch-
edgar?midwest+grain under the listing DEF 14A (9-17-96).
Discussion of Proposed Amendment
The Senior Plan presently authorizes the issuance of up to 450,000
shares of the Company's Common Stock pursuant to options and other forms of
stock incentives that may be awarded under that Plan. Since its inception in
1996, the Committee has granted options to purchase shares of the Company's
Common Stock each year to senior executives for an aggregate grant of 256,000
shares. The options were granted with maximum terms of five years at per share
exercise prices of $14.00 in fiscal 1996, $15.25 in fiscal 1997 and $13.75 in
fiscal 1998. On September 4, 1998, the Human Resources Committee that
administers the Plan amended those options to increase the maximum terms from
five years to ten years from the date of grant. At the present grant rate, the
Committee anticipates that the number of shares reserved for grant will be
exhausted in a little over a year. In order to provide for future grants beyond
that time and for possible other contingencies, the Committee and the Board
believed that it would be appropriate to revise the number of shares reserved
under that Plan at the same time as the stockholders were asked to consider the
reservation of shares under the Salaried Plan for all other salaried employees.
The proposed increase in the number of shares under the Senior Plan from 450,000
to 600,000, together with the 300,000 shares reserved under the Salaried Plan
will result in a total authorization under both plans of 900,000
13
<PAGE>
shares. An additional 90,000 shares are also authorized under the Company's
Stock Option Plan for Outside Directors that was also approved by the
Stockholders in 1996. The total reserved under all three plans would be 990,000,
or approximately 10.2% of total shares of Common Stock presently outstanding.
The Board and the Committee believe that this level of authorization is
consistent with levels maintained by other public companies having comparable
market capitalizations and should be sufficient for presently anticipated needs
under the Plans.
If the proposed amendment is adopted, the number of shares of common
stock that may be issued with respect to stock incentives granted under the
Senior Plan will be 600,000. 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 600,000
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 subject to any Substitute Stock Options granted in connection with a
merger or acquisition. 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.
Approval
Approval of the increase in shares for the Senior 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 amendment 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 AMENDMENT
TO THE SENIOR PLAN.
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<PAGE>
PROPOSAL 4
APPROVAL OF AMENDMENT TO
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 actions of the Board of Directors
amending Section 5(b)(4) of the Midwest Grain Products, Inc. 1996 Stock
Option Plan for Outside Directors and the maximum terms of options
granted thereunder are hereby approved.
General
In 1996 the Stockholders approved the 1996 Stock Option Plan for
Outside Directors (the "Outside Directors' Plan"). Under the Outside Directors'
Plan outside or non-employee directors of the Company are automatically granted
an option to purchase 1,000 shares of the Company's Common Stock on the first
business day following each annual meeting of stockholders at a price equal to
the fair market value of the Common Stock on that date. Under section 5(b)(4) of
the Outside Directors' Plan such options have maximum terms of five years. Under
the amendments the maximum five year term would be extended to ten years. A copy
of the Outside Directors' Plan is appended to the Company's 1996 Proxy Statement
dated September 19, 1996, and may be accessed via the internet at
http://www.sec.gov/cgi-bin/srch-edgar?midwest+grain under the listing DEF 14A
(9-17-96).
Discussion of Proposed Amendment
Based on a report from Hay Management Consultants, on September 4,
1998, the Human Resources Committee of the Board amended outstanding options
granted under the Senior and Salaried Plans so that their maximum terms would be
extended from five years to ten years. The Committee took the action to insure
that the options would be effective to accomplish their purposes and to make
them competitive with most options granted by other public companies, which
generally provide for ten year rather than five year maximum terms. Concurrent
with that action the Committee recommended to the Board and for the same reasons
that similar action be taken with respect to options granted and to be granted
under the Outside Directors' Plan. After considering the matter, the full Board
adopted amendments to Section 5(b)(4) and to outstanding options granted under
that Plan consistent with the Committee's recommendation, with the effectiveness
of the action conditioned upon stockholder approval. These actions were taken by
the Board on September 4, 1998.
15
<PAGE>
The amendment to the Plan and each outstanding option revises the word
"five" to "ten" as follows:
"(4) Each Stock Option shall cease to be exercisable on the
date that is ten years following the date of grant."
The Outside Directors' Plan presently authorizes the issuance of up to
90,000 shares of the Company's Common Stock pursuant to options granted under
that Plan. An aggregate of 14,000 shares of Common Stock are covered by options
previously granted under that Plan, 7,000 of which were granted in 1996 at an
exercise price of $16.25 per share and 7,000 of which were granted in 1997 at an
exercise price of $14.25 per share.
Approval
Approval of the amendments requires the affirmative vote of the holders
of a majority of the shares of Common Stock and a majority of the shares of
Preferred Stock represented at the meeting. Broker non-votes will not be treated
as shares present or represented and entitled to vote at the Annual Meeting. The
Board of Directors believes that the approval of this amendment is in the best
interests of the Company since it will facilitate the Company's attraction,
motivation and retention of outside directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENTS TO THE OUTSIDE DIRECTOR'S PLAN AND OPTIONS GRANTED
THEREUNDER.
OTHER MATTERS
At this time the Company has no knowledge of any matters to come before
the meeting for action by the stockholders other than the election of directors
and the proposals on the Salaried and Senior Plans. However, if any other
matters come before the meeting, it is the intention of the persons named in the
accompanying Proxy to vote the Proxy in their best judgment.
16
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning compensation for
each of the years ending June 30, 1998, 1997 and 1996 awarded to, earned by, or
paid to the five most highly compensated executive officers of the Company for
services rendered in each of those years:
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
------------------------------ ------------
Securities
Other Annual Underlying All Other
Name and Salary Bonus Compensation Options Compensation
Principal Position Year ($) (1) ($) ($) (#) ($) (1)
- -------------------- ---- ------- ----- ------------ ----------- ------------
Laidacker M. Seaberg
President and Chief 1998 314,495 --- --- 24,000 14,399
Executive Officer 1997 299,520 --- --- 24,000 11,986
1996 225,226 --- --- 24,000 ---
Randy M. Schrick
Vice President of 1998 143,500 --- --- 12,000 12,914
Operations 1997 136,675 --- --- 12,000 10,924
1996 118,812 --- --- 12,000 ---
Robert G. Booe
Vice President-
Administration, 1998 143,500 --- --- 12,000 12,914
Controller, and Chief 1997 136,675 --- --- 12,000 10,924
Financial Officer 1996 118,812 --- --- 12,000 ---
Sukh Bassi, Ph.D.
Vice President-
Wheat Gluten 1998 126,588 15,000 --- 7,000 9,637
Marketing and Research 1997 120,550 --- --- 7,000 9,637
and Development 1996 104,785 --- --- 7,000 ---
Gerald Lasater
Vice President- 1998 117,362 --- --- 7,000 10,565
Wheat Starch Marketing 1997 112,250 --- --- 7,000 8,974
1996 98,013 --- --- 7,000 ---
- -----------------
(1) Consists of the amount of the Company's contributions to the Company's
Employee Stock Ownership Plans allocated to the accounts of each
executive officer for the years indicated.
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<PAGE>
Stock Options
The following table contains information concerning the grant of stock
options under the Company's Stock Incentive Plan of 1996 to the Named Executive
Officers during the fiscal year ended June 30, 1998.
OPTION GRANTS IN FISCAL 1998
Potential
Individual Grants Realizable Value
Number of % of Total at Assumed
Securities Options Annual Rates of
Underlying Granted to Stock Price
Options Employees Exercise Appreciation for
Granted in Fiscal Price Expiration Option Term
Name (#) (1) Year ($/Sh) Date 5% ($) 10% ($)
---- ---------- --------- -------- ------ ------ -------
Laidacker M. Seaberg 24,000 26.7 13.75 12/11/07 $208,080 $525,840
Randy M. Schrick 12,000 13.4 13.75 12/11/07 104,040 262,920
Robert G. Booe 12,000 13.4 13.75 12/11/07 104,040 262,920
Sukh Bassi, Ph.D. 7,000 7.7 13.75 12/11/07 60,690 153,370
Gerald Lasater 7,000 7.7 13.75 12/11/07 60,690 153,370
Option Exercises and Year End Holdings
The following table provides information, with respect to the Named
Executive Officers, concerning the exercise of options during the fiscal year
ended June 30, 1998, and unexercised options held as of the end of fiscal 1998:
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND FY-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
---- --------------- -------------- ------------- -------------
Laidacker M. Seaberg --- --- 18,000/54,000 ---
Randy M. Schrick --- --- 9,000/27,000 ---
Robert G. Booe --- --- 9,000/27,000 ---
Sukh Bassi, Ph.D. --- --- 5,250/15,750 ---
Gerald Lasater --- --- 5,250/15,750 ---
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<PAGE>
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, 1993 and ending June
30, 1998, 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 113 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, 1993
AND AT EACH SUBSEQUENT JUNE 30
[Performance Graph Omitted - grap reflects information shown in table below]
1993 1994 1995 1996 1997 1998
MWGP $100 $143 $ 75 $ 53 $ 54 $ 60
NASDAQ FOOD $100 $101 $108 $111 $131 $160
NASDAQ COMPOSITE $100 $101 $135 $173 $210 $277
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<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, 1998, consisted of F.D. "Fran" Jabara
(Chairman), Daryl R. Schaller, Ph. D. and Robert J. Reintjes. The present
Committee consists of Daryl R. Schaller, Ph.D. (Chairman), Eleanor B. Schwartz,
D.B.A. and Tom MacLeod, Jr. 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 and employees 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, 1998 ("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 in the
summer of 1995 for all executive officers. In January, 1996 a portion of the
reductions was restored and by the end of the fiscal year ending June 30, 1996,
the rates of base pay were returned to levels in effect at the beginning of the
prior year. Since June 30, 1996, and due to a continuation of adverse conditions
affecting the Company's operations modest base salary increases have been
effected to keep salary levels reasonably consistent with inflation and salary
levels for executives in comparable positions in comparable enterprises.
Annual Cash Bonuses. Annual cash bonuses are paid primarily pursuant to a
Cash Bonus Plan that has been utilized prior to the downturn that began in 1994.
Under that plan each executive, along
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with all other nonunion personnel, become entitled to cash bonuses, payable
semiannually, of up to 25% of each employee's base salary if certain performance
targets are met. Due to a continuation of adverse economic situations which has
prevailed since 1995 bonus targets have not been met. Accordingly, no cash
bonuses have been paid to any Executive Officers for the last three years under
this Plan.
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
have been made from the bonus pool to any of the named executive officers for
the last three years other than a $15,000 bonus to Mr. Bassi during 1998 . That
bonus was awarded due to the success achieved by the Company's Wheat Gluten
Division in promoting the recent victory by the United States Wheat Gluten
Industry Council in its action to establish quotas against the dumping of
subsidized wheat gluten in the United States by foreign exporters.
Executive Stock Bonus Plan. From time to time 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 and the Stock
Incentive Plan have been the vehicles designed to achieve this objective. Under
the Executive Stock Bonus 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 that 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 last three years, the Committee
has elected not to implement the Executive Stock Bonus Plan for any employees in
either of the last three fiscal years. The Committee also decided in 1996 to
exclude participation by Senior Executives in the plan in the future due to
their inclusion in the 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.
The Plan was approved by stockholders at the Annual Meeting in 1996. 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. Since that action the Committee has granted
options to Senior Executives on an annual basis. In fiscal 1998, options were
granted to eight executives to purchase an aggregate of 79,500 shares of the
Company's Common Stock at a price of $13.75 per share. Additional information
about options granted in 1998 and the aggregate of options granted since the
adoption of the plan is reflected in the tables on page 18.
Employee Stock Ownership Plan. The final component of executive
compensation consists of participation in the Company's employee stock ownership
plans for salaried and certain hourly employees ("Salaried ESOP"). Amounts
contributed by the Company are invested in shares of the
20
<PAGE>
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 Salaried ESOP 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. In fiscal
1998, the Company contributed an amount equal to 9% of eligible compensation for
the plan.
Compensation of the Chief Executive Officer for 1998. All of the
components of the 1998 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 F.D. ("Fran") Jabara
(Chairman), Daryl R. Schaller and Robert J. Reintjes, 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, 1998, 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 %
Michael Braude (b).................... 6,833 .07
Robert G. Booe (b) (c)(d)............. 1,007,866 10.39
Daryl Schaller (b).................... 1,767 .02
Brian Cahill (c)..................... 935,200 9.64
Cloud L. Cray, Jr.(b)(e)(f)........... 2,389,674 24.64 333 76.2
Richard B. Cray (e)(g)................ 106,839 1.10 334 76.4
F. D. "Fran". Jabara (b).............. 5,451 .06
Dave Rindom (c)....................... 924,482 9.53
Tom MacLeod (b)....................... 10,582 .11
Robert J. Reintjes (b)(h)............. 13,520 .14
Randy M. Schrick (b)(c)(i)............ 955,606 9.85
Laidacker M. Seaberg (b)(c)(e)(j)..... 1,488,018 15.34 383 87.6
Eleanor B. Schwartz (b)............... 3,712 .04
Cray Family Trust (e)................. 333 76.2
Trustees of the Company's ESOPs (c)... 923,863 9.52
All Officers and Directors
as a Group of 18 (b)(k)............. 4,069,238 41.95 384 87.9
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(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 the classes of stock had business addresses at
1300 Main Street, Atchison, Kansas 66002, as of June 30, 1998.
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 table includes shares which may be acquired pursuant to stock
options granted under the Company's stock option plans that became
exercisable on or before May 1, 1998. These consist of options held by
six non-employee directors to purchase 2,000 shares each and one
non-employee director to purchase 1,000 shares, options held by Messrs.
Booe, Schrick and Seaberg to purchase 9,000, 9,000 and 18,000 shares,
respectively and options held by all officers and directors as a group
to purchase 69,125 shares.
(c) The Company's Employee Stock Ownership Plans (ESOPs) hold for the benefit
of participants 923,863 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 except 1,000 were allocated at July 1, 1998).
Unallocated shares are voted by the trustees. The trustees, and the
number of shares allocated to their accounts are as follows: Mr. Seaberg
(65,607 shares); Mr. Booe (38,954 shares); Mr. Cahill (8,784 shares);
Mr. Rindom (5,697 shares); and Mr. Schrick (19,964 shares). A total of
187,400 shares are allocated to the accounts of all other officers and
directors.
(d ) Includes 45,000 shares held by Mr. Booe's wife.
(e) 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.
(f) Includes 154,723 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.
(g) 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.
(h) All but 6,930 of the shares are held by Mr. Reintjes' wife.
(i) Includes 6,603 shares held by members of Mr. Schrick's family.
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<PAGE>
(j) Includes 141,793 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.
(k) 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.
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 1998. The selection was made upon the recommendation
of the Audit Committee, which consists of Mr. Braude, Chairman, and Messrs.
MacLeod, Jr., Jabara, Reintjes, Schaller 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 therefore.
Stockholders who intend to present proposals for inclusion in the
Company's Proxy Statement for the next Annual Meeting of Stockholders on October
7, 1999, 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 June 1, 1999. In addition, proxies solicited
by management may confer discretionary authority to vote on matters which are
not included in the proxy statement but which are raised at the Annual Meeting
by Stockholders, unless the Company receives written notice of the matter on or
before August 1, 1999, at the above address.
By Order of the Board of Directors
s/Laidacker M. Seaberg
Laidacker M. Seaberg
President and Chief Executive Officer
September 17, 1998
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Appendix A
MIDWEST GRAIN PRODUCTS, INC.
1998 STOCK INCENTIVE PLAN FOR SALARIED EMPLOYEES
<PAGE>
TABLE OF CONTENTS
Section Page
1. Purposes....................................................... A-1
2. Definitions.................................................... A-1
3. Grants of Stock Incentiv....................................... A-2
4. Stock Subject to the Pla....................................... A-4
5. Stock Awards................................................... A-5
6. Stock Options.................................................. A-5
7. Stock Appreciation Right....................................... A-8
8. Adjustment Provisions... ...................................... A-9
9. Term............................................................ A-10
10. Administration................................................... A-10
11. General Provisions.............................................. A-11
12. Amendment or Discontinuanc....................................... A-12
13. Effective Date................................................... A-13
Approved by Board of Directors, subject to
Stockholder Approval: March 5, 1998.
Approved by Stockholders: October _, 1998.
Effective Date: March 5, 1998.
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MIDWEST GRAIN PRODUCTS, INC.
1998 STOCK INCENTIVE PLAN FOR SALARIED EMPLOYEES
1. PURPOSES
The purposes of the Plan are (a) to provide additional
incentive for Salaried Employees of the Company and its Subsidiaries by
authorizing a Committee of the Board of Directors to grant stock incentives to
such Salaried 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 Salaried
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.
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
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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.
Salaried Employee: A salaried, full-time employee of the
Company or of a Subsidiary, including an officer or director who is an 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.
Plan: The 1998 Stock Incentive Plan for Salaried Employees
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.
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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,
Salaried Employees who are not members of the Committee. Subject to express
limitations contained in the Plan, conditions governing the grant of Incentive
Stock Options and applicable Federal and State laws governing discrimination
based on age, sex, race, national origin, disability and the like, the Committee
may exercise complete discretion with respect to (a) the number and amount of
stock incentives to be granted, (b) the timing and frequency of any grant, (c)
the identification of Salaried Employees to receive grants under the plan and to
thereby participate in a grant ("Participant"), (d) the amount of incentives to
be granted to a Participant and the terms and conditions to be established for
each grant. In exercising such discretion, the Committee may take into account
all legally cognizable factors, including without limitation, factors such as
the Participant's performance and length of service, recommendations of
supervisors, management and other superiors, the performance of business units,
departments or divisions within which the Participant is employed, and the
financial condition and performance of the Company as a whole. The Committee may
also grant options individually or to specified classes or groups of persons and
thereby exclude other individuals, classes or groups that may otherwise be
eligible to participate in an option grant. Nothing contained in this Plan is to
be construed as providing any Salaried Employee with any right to receive any
stock incentive simply by virtue of such person's being or achieving the status
of a Salaried Employee
(b) Types of Stock Incentives. Stock Incentives may be
granted in the following forms:
(i) a 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.
(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
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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 three hundred thousand (300,000) 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 Salaried 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
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thousand (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 Salaried 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
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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:
(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. The provisions set forth in this subsection shall apply, unless the
Committee otherwise specifies in the Award or unless the Option is intended to
be an Incentive Stock Option. 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
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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. The provisions set forth in this subsection
shall apply, unless the Committee otherwise specifies in the Award or unless the
Option is intended to be an Incentive Stock Option. 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 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
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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 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.
(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.
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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.
(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 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
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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.
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.
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 March 5,
1998, 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.
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(b) Expiration Date. No Stock Incentives shall be granted
under the Plan after March 4, 2008. 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
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.
(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
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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 Salaried 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 Salaried 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
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 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
A-12
<PAGE>
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 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
A-13
<PAGE>
that may be issued 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 Salaried 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. 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.
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 March 5, 1998, all in accordance with the Certificate of
Incorporation, Bylaws and applicable laws of the State of Kansas.
Dated March 5, 1998.
s/Marta Myers
Marta Myers, 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 __, 1998, in accordance with the Certificate of Incorporation,
Bylaws and applicable laws of the State of Kansas.
Dated October __, 1998.
---------------------
Marta Myers, Secretary
A-14
<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 8, 1998, or at any
adjournment thereof.
The undersigned has received the Company's Annual Report for 1998, 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 2001. The Board of
Directors has nominated Tom MacLeod, Jr.
o FOR the Nominee. o AUTHORITY WITHHELD from the Nominee.
2. Approval of the 1998 Stock Incentive Plan for Salaried Employees:
o FOR o AGAINST o ABSTAIN
3. Approval of amendment to the Stock Incentive Plan of 1996:
o FOR o AGAINST o ABSTAIN
4. Approval of amendment to the 1996 Stock Option Plan for Outside Directors:
o FOR o AGAINST o ABSTAIN
5. 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, 3 and 4.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD.
<PAGE>
[Logo] 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 8, 1998,
or at any adjournment thereof.
The undersigned has received the Company's Annual Report for 1998, 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 two Group B Directors for terms expiring in 2001.
The Board has nominated:
Cloud L. Cray, Jr. and Robert J. Reintjes
o FOR both Nominees o AUTHORITY WITHHELD from both Nominees
o AUTHORITY WITHHELD from the following Nominee:_____________________
2. Approval of the 1998 Stock Incentive Plan for Salaried Employees:
o FOR o AGAINST o ABSTAIN
3. Approval of amendment to the Stock Incentive Plan of 1996:
o FOR o AGAINST o ABSTAIN
4. Approval of amendment to the 1996 Stock Option Plan for Outside Directors:
o FOR o AGAINST o ABSTAIN
5. 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, 3 and 4.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD.
<PAGE>
September 17, 1998
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 8, 1998.
We are also enclosing a copy of the Company's Annual Report for 1998
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/Laidacker 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 United Missouri Bank of Kansas City,
N.A. as Trustee of the Midwest Grain Products, Inc. Employee Stock Purchase Plan
(the "ESPP"), 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 8, 1998, or at any adjournment thereof.
The undersigned has received the Company's Annual Report for 1998 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 Recommends a vote FOR the following proposals:
1. Election of one Group A Director for a term expiring in 2001. The Board of
Directors has nominated Tom MacLeod, Jr.
o FOR the Nominee. o AUTHORITY WITHHELD from the Nominee.
2. Approval of the 1998 Stock Incentive Plan for Salaried Employees:
o FOR o AGAINST o ABSTAIN
3. Approval of amendment to the Stock Incentive Plan of 1996:
o FOR o AGAINST o ABSTAIN
4. Approval of amendment to the 1996 Stock Option Plan for Outside Directors:
o FOR o AGAINST o ABSTAIN
5. 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, 3 and 4.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD.
<PAGE>
September 17, 1998
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 8, 1998.
We are also enclosing a copy of the Company's Annual Report for 1998
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/ Laidacker 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 8,
1998, or at any adjournment thereof.
The undersigned has received the Company's Annual Report for 1998 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 Recommends a vote FOR the following proposals:
1. Election of one Group A Director for a term expiring in 2001. The Board of
Directors has nominated Tom MacLeod, Jr.
o FOR the Nominee. o AUTHORITY WITHHELD from the Nominee.
2. Approval of the 1998 Stock Incentive Plan for Salaried Employees:
o FOR o AGAINST o ABSTAIN
3. Approval of amendment to the Stock Incentive Plan of 1996:
o FOR o AGAINST o ABSTAIN
4. Approval of amendment to the 1996 Stock Option Plan for Outside Directors:
o FOR o AGAINST o ABSTAIN
5. In their 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, 3 and 4.
BE SURE TO SIGN AND DATE THE REVERSE SIDE OF THIS CARD.
