MIDWEST GRAIN PRODUCTS, INC.
 
                1998 STOCK INCENTIVE PLAN FOR SALARIED EMPLOYEES
 
 
 
 
 
 
 
 
 
 
<PAGE>
 
                                TABLE OF CONTENTS
 
 
 
 
      Section                                                              Page
 
1.    Purposes.........................................................     1
 
2.    Definitions......................................................     1
 
3.    Grants of Stock Incentives.......................................     2
 
4.    Stock Subject to the Plan........................................     4
 
5.    Stock Awards.....................................................     5
 
6.    Stock Options....................................................     5
 
7.    Stock Appreciation Rights........................................     8
 
8.    Adjustment Provisions............................................     9
 
9.    Term.............................................................    10
 
10. Administration.....................................................    10
 
11. General Provisions.................................................    11
 
12. Amendment or Discontinuance of Plan................................    12
 
13. Effective Date.....................................................    13
 
 
                   Approved by Board of Directors, subject to
                   Stockholder Approval: March 5, 1998.
 
                   Approved by Stockholders: October _, 1998.
 
                   Effective Date: March 5, 1998.
 
 
 
 
 
<PAGE>
 
                          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 Emploees 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 paid
 
 
 
                                        
<PAGE>
 
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.
 
     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 
 
 
 
 
                                        2
<PAGE>
 
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  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.
 
 
 
 
                                        3
<PAGE>
 
     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 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.
 
 
 
                                        4
<PAGE>
 
     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
Section8  of the Plan) if they had been issued or  transferred  at the time the
Stock Award was granted.  Such  payments  may be made in cash,  shares of Common
Stock or a combination of cash and shares. Such payments may be made at the time
the shares are issued or transferred, or at the time or times the cash dividends
would have been payable if the shares had been issued or transferred at the time
the Stock Award was granted.  Any amount payable in shares of Common Stock under
the terms of the Stock Award may be paid in cash on each date on which  delivery
of shares would  otherwise have been made, in an amount equal to the Fair Market
Value on such date of the shares which would otherwise have been delivered.
 
     (c)  Restrictions on Transfer,  Forfeiture.  A Stock Award may contain such
terms and  conditions as the  Committee may determine  with respect to transfer,
payment or forfeiture of all or any part of the Stock Award.
 
     (d) Other  Terms.  A Stock  Award may be subject  to such  other  terms and
conditions,  including,  without  limitation,  restrictions  on  sale  or  other
disposition of the Stock Award or of the shares issued or  transferred  pursuant
to the Stock Award, as the Committee may determine; provided, however, that upon
the  issuance or transfer of shares  pursuant to a Stock  Award,  the  recipient
shall,  with respect to such shares,  be and become a shareholder of the Company
fully entitled to receive dividends, to vote and to exercise all other rights of
a shareholder except to the extent otherwise provided in the Stock Award.
 
     6.  STOCK OPTIONS
 
     Stock Incentives  granted under the Plan in the form of Stock Options shall
be subject to the following provisions:
 
     (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
 
 
 
 
                                        5
<PAGE>
 
     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 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
                                        6
<PAGE>
 
for any  shares as to which the right of  purchase  had not  accrued at the
time of exercise.  "Retirement" for purposes of paragraph 6(e)  and (f) shall be
defined by the Committee with respect to age, service,  and other  requirements.
Notwithstanding  the foregoing,  if the option is an Incentive Stock Option,  it
may be  exercised as an  incentive  stock option by the retired  optionee or his
estate not later than the day three months after the date of  termination of his
employment  and by his  estate  not  later  than the first  anniversary  of such
termination  of employment if the  optionee's  death  occurred  prior to the day
three months after the termination of employment.
 
     (g) Death. If an optionee shall die while in the employ of the Company or a
Subsidiary  and if the Option was in effect at the time of his death (whether or
not its terms had then  commenced),  the Option may, until the expiration of one
year from the date of death of the optionee or until the earlier  expiration  of
the Term of the  Option,  be  exercised  as and to the extent it could have been
exercised  by the  optionee  had  he  been  living  at the  time,  by the  legal
representatives of the optionee or by any person,  persons or entity to whom his
rights under the Option shall have been  transferred  pursuant to the provisions
of  paragraph (g)  of Section 11 of the Plan. Such exercise shall not be limited
to the shares as to which the right of purchase had accrued at the date of death
of the  optionee,  but  shall  be  subject  to  all  applicable  conditions  and
restrictions  prescribed in the Plan and the Option,  including any  installment
provision.
 
     (h) Exercise.  To the extent that the right to purchase  shares has accrued
under an Option,  the Option may be exercised  from time to time by the optionee
or by a person or persons  entitled to exercise  the Option,  by delivery to the
Company of a written notice, in the manner and in such form as may be prescribed
by the Committee,  stating the number of shares with respect to which the Option
is being exercised,  and by making provision satisfactory to the Company for the
payment in full of the Option price of the shares prior to or in connection with
the delivery of  certificates  evidencing the shares.  The Committee may, in its
discretion  and upon  request of the  Participant,  issue shares of Common Stock
upon the  exercise  of an Option  directly  to a  brokerage  firm or firms to be
approved by the Company,  without  payment of the purchase price by the optionee
but upon delivery of an irrevocable guarantee by such brokerage firm or firms of
the payment of such  purchase  price or upon the  participant's  issuance to the
brokerage  firm of  irrevocable  instructions  to sell or  margin  a  sufficient
portion of the shares and deliver the sale or margin loan  proceeds  directly to
the Company to pay the exercise price and any withholding taxes. Upon receipt of
such notice and payment  arrangement in form  satisfactory  to the Company,  the
Company shall deliver to or upon the order of the optionee, or such other person
entitled to exercise the Option,  at the General  Office of the  Company,  or at
such  place as shall be  mutually  acceptable,  a  certificate  of  certificates
evidencing such shares.  An Option may not be exercised for fractional shares of
Common Stock.  Payment in form satisfactory to the Company may, at the option of
the  Company,  include  payment by transfer  to the  Company of other  shares of
Mature Stock or other  Common Stock which was not obtained  through the exercise
of a stock option owned by the  Optionee or by the  withholding  of shares to be
distributed in connection with the exercise of a Stock  Incentive.  Common Stock
transferred  to the Company or withheld from shares to be distributed in payment
of the option  price or  withholding  taxes  shall be valued at the Fair  Market
Value of the Common Stock on the date of the exercise.
 
 
                                        7
<PAGE>
 
     (i) No  Rights  Before  Exercise.  No  person  shall  have any  rights of a
stockholder by virtue of an Option except with respect to shares actually issued
to him, and issuance of shares shall not confer retroactive rights to dividends.
 
     (j) Substitute Options.  Options may be granted under the Plan from time to
time in substitution  for stock options held by employees of other  corporations
who are about to become  employees of the Company or a Subsidiary  as the result
of a merger or consolidation of the employing  corporation with the Company or a
Subsidiary,  or the  acquisition by the Company or a Subsidiary of the assets of
the employing corporation,  or the acquisition by the Company or a Subsidiary of
stock  of the  employing  corporation  as the  result  of  which  it  becomes  a
Subsidiary.  The terms and conditions of the  substitute  options so granted may
vary from the terms and conditions set forth in this Section 6 to such extent as
the Committee at the time of grant may deem appropriate to conform,  in whole or
in part,  to the  provisions of the options in  substitution  for which they are
granted.
 
     (k) Certain  Limits on Incentive  Stock  Options.  In the case of Incentive
Stock Options, the amounts, terms and conditions of such grants shall be subject
to and comply with the  requirements for Incentive Stock Options as set forth in
Section  422 of the Code,  as from  time to time  amended,  and any  regulations
implementing such statute.
 
     7.  STOCK APPRECIATION RIGHTS.
 
     (a) Grant. Stock Appreciation  Rights may be granted in connection with any
Option granted under the Plan, either at the time of the grant of such Option or
at any  time  thereafter  during  the  term  of the  Option.  A grant  of  Stock
Appreciation  Rights shall either be included in the  instrument  evidencing the
Option to which they relate or  evidenced by a separate  instrument  meeting the
requirements of Section 3 of the Plan.
 
     (b) Settlement.  A person entitled to exercise an Option in connection with
which Stock  Appreciation  Rights shall have been granted shall be entitled,  at
such time or times and subject to such terms and  conditions as may be stated in
the granting  instrument,  to settle all or part of the Option by requesting the
Company  to pay,  in  cancellation  of the  part of the  Option  to be  settled,
consideration in an amount equal to the number of shares of Common Stock subject
to the  canceled  part of the Option  times the amount by which the fair  market
value  of one  share  on  the  exercise  date  exceeds  the  Option  Price  (the
"Appreciation").  The election  shall be made in a written  instrument,  in form
satisfactory   to  the  Committee,   delivered  in  the  manner   prescribed  in
Section 6(h) for the exercise of options.
 
     (c) Form of Consideration. The form of the consideration to be paid for the
Appreciation  shall  either be cash,  shares of Common Stock having an aggregate
market value on the exercise date equal to the Appreciation, or a combination of
cash and shares.  Such form of  consideration  shall be specified  either by the
Committee or, subject to the approval of the Committee, by the person exercising
the Stock Appreciation Right,  provided that such form of consideration shall in
no event include fractional shares of Common Stock.
 
     (d)  Provisions in a Related  Option.  An Option in  connection  with which
Stock  Appreciation  Rights are  granted  may  prescribe  or limit the period or
periods of time during which the
                                       8
<PAGE>
 
     Stock Appreciation  Rights may be exercised as provided in paragraph (b) of
this  Section 7,   and  may  prescribe  such  additional  terms  and  conditions
applicable to the exercise of the Stock Appreciation Rights as may be determined
by the  Committee  and as are  consistent  with the Plan.  In no event may Stock
Appreciation  rights be exercised at a time when the Option in  connection  with
which they were granted is not exercisable.
 
     8. ADJUSTMENT PROVISIONS
 
     In the event of a reorganization  of the Company,  an equitable  adjustment
shall be made in: (a) the number  and class of shares or other  securities  that
may be issued or transferred pursuant to Stock Incentives in the aggregate or to
any  individual,  (b) the number and class of shares or other  securities  which
have not been issued or transferred under outstanding Stock Incentives,  (c) the
purchase price to be paid per share under outstanding Options, and (d) the price
to be paid  per  share  by the  Company  or a  subsidiary  for  shares  or other
securities issued or transferred  pursuant to Stock Incentives which are subject
to a right of the  Company or a  Subsidiary  to  reacquire  such shares or other
securities.  For  this  purpose,  a  "reorganization"  shall be  deemed  to have
occurred in the event:
 
     (i)any  recapitalization,  reclassification,  split-up or  consolidation of
shares of Common Stock shall be effected;
 
     (ii)the outstanding shares of Common Stock are, in connection with a merger
or  consolidation  of the Company or the  acquisition by another  corporation of
Common  Stock or of all or part of the assets of the  Company,  exchanged  for a
different  number or class of shares of stock or other securities of the Company
or for shares of the stock or other securities of another corporation;
 
     (iii)new, different or additional shares or other securities of the Company
or of another  corporation  are  received  by the  holders of Common  Stock with
respect to such stock; or
 
     (iv)any  distribution  other than a cash dividend is made to the holders of
Common Stock.
 
     The Committee may also  unilaterally  amend outstanding stock incentives to
remove   restrictions  or  otherwise  change  the  terms  of  outstanding  stock
incentives to permit such incentives to be substituted for comparable incentives
to be  provided  by any entity  which  assumes the  Company's  obligations  with
respect to such outstanding stock incentives upon terms and conditions  approved
by the Board of Directors or Stockholders.
 
     In the event of any other change in the capital structure or in the capital
stock of the Company, the Committee shall be authorized to make such appropriate
adjustments  in the  maximum  number of shares of  Common  Stock  available  for
issuance  under  the  Plan  in  the  aggregate  or to  any  individual  and  any
adjustments  and/or  modifications  to outstanding  Stock Incentives as it deems
appropriate.
 
 
 
 
 
                                        9
<PAGE>
 
     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.
 
     (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.
 
 
 
 
 
                                       10
<PAGE>
 
     (d) Limited Liability.  No member of the Board or of the Committee shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or any Stock Incentive granted under the Plan, and shall incur no liability
except for willful misconduct in the performance of their duties.
 
 
     11. GENERAL PROVISIONS
 
     (a) No  right  to  Continued  Employment.  Nothing  in the  Plan nor in any
instrument executed pursuant thereto shall confer upon any employee any right to
continue in the employ of the Company or a Subsidiary  or shall affect the right
of the Company or of a Subsidiary  to terminate  the  employment of any employee
with or without cause.
 
     (b) Legal  Requirements  for Transfers.  No shares of Common Stock shall be
issued or  transferred  pursuant  to a Stock  Incentive  unless  the  Company is
satisfied that there has been compliance with all legal requirements  applicable
to the issuance or transfer of such shares. In connection with any such issuance
or transfer, the person acquiring the shares shall, if requested by the Company,
give  assurances  satisfactory to the Company that the shares are being acquired
for  investment  and not  with a view to  resale  or  distribution  thereof  and
assurances in respect of such other matters as the Company may deem desirable to
assure compliance with all applicable legal requirements.
 
     (c) No Rights in shares Before Issue or Transfer. No employee (individually
or as a member of a group), and no beneficiary or other person claiming under or
through  him,  shall have any right,  title or  interest  in or to any shares of
Common  Stock  allocated  or reserved for the purposes of the Plan or subject to
any Stock Incentive,  except as to such shares of Common Stock, if any, as shall
have been issued or transferred to him.
 
     (d) Grants to  Prospective  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
 
                                      11
<PAGE>
 
Incentive.  Such  provisions may include a requirement  that all or part of
the amount of such taxes be paid to the  Company  or  Subsidiary,  in cash or by
transfer to the  Company of shares of Mature  Stock or other Stock which was not
obtained through the exercise of a stock option owned by the employee, or by the
withholding  of cash or shares of Common Stock payable to the employee under the
stock incentive,  or by any combination of the foregoing. To the extent that tax
provisions are satisfied with shares of the Company's  Common Stock,  such stock
shall be valued at Fair Market Value on the appropriate transaction date.
 
     (g) No  Assignments.  No  Stock  Incentive  and no  rights  under  a  Stock
Incentive or under the Plan, contingent or otherwise, shall, by operation of law
or otherwise,  be  transferable  or  assignable  or subject to any  encumbrance,
pledge,  hypothecation or charge of any nature,  or to execution,  attachment or
other legal  process,  except that, in the event of the death of the holder of a
Stock  Incentive,  the holder's  rights under the Stock  Incentive  may pass, as
provided by law,  to the legal  representatives  of the  holder,  and such legal
representatives  may transfer  any rights in respect of such Stock  Incentive to
the person or persons or entity  (including a trust) entitled  thereto under the
will of the holder of such Stock Incentive,  or in the case of intestacy,  under
the  applicable  laws  relating to  intestacy.  During the life of a holder of a
Stock  Incentive,  the Stock Incentive shall be exercisable only by such holder.
Notwithstanding  the foregoing,  a Stock Incentive may be  transferable,  to the
extent set forth in the applicable award agreement.
 
     (h) No Restriction on Other Plans.  Nothing in the Plan is intended to be a
substitute for, or shall preclude or limit the establishment or continuation of,
any other plan,  practice or  arrangement  for the  payment of  compensation  or
fringe benefits to employees  generally,  or to any class or group of employees,
which the Company or any Subsidiary  now has or may hereafter  lawfully put into
effect, including, without limitation, any retirement, pension,  profit-sharing,
insurance, stock purchase, incentive compensation or bonus plan.
 
     (i)  Applicable  Law.  The  place  of  administration  of  the  Plan  shall
conclusively  be  deemed to be within  the  State of  Kansas  and the  validity,
construction, interpretation and administration of the Plan and of any rules and
regulations or  determinations  or decisions made thereunder,  and the rights of
any  and all  persons  having  or  claiming  to have  any  interest  therein  or
thereunder,  shall be governed by and be  determined  exclusively  and solely in
accordance  with,  the  laws  of the  State  of  Kansas.  Without  limiting  the
generality of the foregoing, the period within which any action arising under or
in connection  with the Plan, or any payment or award made or  purportedly  made
under or in connection  therewith,  must be commenced,  shall be governed by the
laws of the State of Kansas, irrespective of the place where the act or omission
complained  of took place and of the  residence  of any party to such action and
irrespective of the place where the action may be brought.
 
     12. AMENDMENT OR DISCONTINUANCE OF PLAN
 
     (a)  Amendments.  The Plan may be amended by the Board of  Directors at any
time, provided that without the affirmative vote of the holders of a majority of
the shares of the Company's Common Stock and a vote of the holders of a majority
of the Company's Preferred Stock present or represented, and entitled to vote at
a meeting duly held in accordance  with  applicable  law, no amendment  shall be
made which (i) increases the aggregate number of shares of Common Stock that may
be issued
 
                                       12
<PAGE>
 
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
 
                                       13