Document:

exv10w1

 

Exhibit 10.1

PENFORD
CORPORATION

DEFERRED COMPENSATION PLAN

Amended and Restated as of January 1, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE I—PURPOSE
	 	 	 	 
	 
	 	 	 	 
	1.1 Purpose
	 	 	 	 
	1.2 Effective Date
	 	 	 	 
	 
	 	 	 	 
	ARTICLE II—DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	2.1 Account
	 	 	2	 
	2.2 Base Annual Salary
	 	 	2	 
	2.3 Beneficiary
	 	 	2	 
	2.4 Board
	 	 	2	 
	2.5 Bonus
	 	 	2	 
	2.6 Change in Control
	 	 	2	 
	2.7 Code
	 	 	4	 
	2.8 Committee
	 	 	4	 
	2.9 Compensation
	 	 	5	 
	2.10 Compensation Committee
	 	 	5	 
	2.11 Corporation
	 	 	5	 
	2.12 Deferral Commitment
	 	 	5	 
	2.13 Deferral Period
	 	 	5	 
	2.14 Determination Date
	 	 	5	 
	2.15 Director
	 	 	5	 
	2.16 Elective Deferred Compensation
	 	 	6	 
	2.17 Executive
	 	 	6	 
	2.18 Fees
	 	 	6	 
	2.19 Financial Hardship
	 	 	6	 
	2.20 Fiscal Year
	 	 	6	 
	2.21 Interest Rate
	 	 	6	 
	2.22 Participant
	 	 	6	 
	2.23 Participation Agreement
	 	 	7	 
	2.24 Plan
	 	 	7	 
	2.25 Retirement
	 	 	7	 
	2.26 Retirement Plan
	 	 	7	 
	2.27 Separation from Service
	 	 	7	 
	2.28 Specified Employee
	 	 	9	 
	2.29 Termination
	 	 	9	 
	2.30 Valuation Date
	 	 	9	 
	 
	 	 	 	 
	ARTICLE III—ELIGIBILITY AND DEFERRAL COMMITMENTS
	 	 	9	 
	 
	 	 	 	 
	3.1 Eligibility and Participation
	 	 	9	 
	3.2 Deferral Election
	 	 	10	 

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	3.3 Modification of Deferral Commitment
	 	 	10	 
	 
	 	 	 	 
	ARTICLE IV—DEFERRED COMPENSATION ACCOUNT
	 	 	11	 
	 
	 	 	 	 
	4.1 Account
	 	 	11	 
	4.2 Interest; Determination of Accounts
	 	 	11	 
	4.3 Statement of Account
	 	 	11	 
	 
	 	 	 	 
	ARTICLE V—PLAN BENEFITS
	 	 	11	 
	 
	 	 	 	 
	5.1 Plan Benefits
	 	 	11	 
	5.2 Form of Benefit Payment
	 	 	12	 
	5.3 Hardship Distributions
	 	 	13	 
	5.4 Golden Parachute Payments
	 	 	13	 
	5.5 Withholding on Benefit Payments
	 	 	14	 
	5.6 Time of Payment
	 	 	14	 
	5.7 Payment to Guardian
	 	 	14	 
	 
	 	 	 	 
	ARTICLE VI—BENEFICIARY DESIGNATION
	 	 	14	 
	 
	 	 	 	 
	6.1 Beneficiary Designation
	 	 	14	 
	6.2 Changes to Designation
	 	 	15	 
	6.3 Change in Marital Status
	 	 	15	 
	6.4 No Beneficiary Designation
	 	 	15	 
	6.5 Effect of Payment
	 	 	16	 
	 
	 	 	 	 
	ARTICLE VII—ADMINISTRATION
	 	 	16	 
	 
	 	 	 	 
	7.1 Committee; Duties
	 	 	16	 
	7.2 Agents
	 	 	16	 
	7.3 Binding Effect of Decisions
	 	 	16	 
	7.4 Indemnity of Committee
	 	 	16	 
	 
	 	 	 	 
	ARTICLE VIII—CLAIMS PROCEDURE
	 	 	17	 
	 
	 	 	 	 
	8.1 Claim
	 	 	17	 
	8.2 Denial of Claim
	 	 	17	 
	8.3 Review of Claim
	 	 	17	 
	8.4 Final Decision
	 	 	17	 
	 
	 	 	 	 
	ARTICLE IX—AMENDMENT AND TERMINATION OF THE PLAN
	 	 	18	 
	 
	 	 	 	 
	9.1 Amendment
	 	 	18	 
	9.2 Termination
	 	 	18	 
	 
	 	 	 	 
	ARTICLE X—MISCELLANEOUS
	 	 	18	 
	 
	 	 	 	 
	10.1 Unfunded Plan
	 	 	18	 

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	10.2 Unsecured General Creditor
	 	 	19	 
	10.3 Trust Fund
	 	 	19	 
	10.4 Nonassignability
	 	 	19	 
	10.5 Not a Contract of Employment
	 	 	20	 
	10.6 Protective Provisions
	 	 	20	 
	10.7 Governing Law
	 	 	20	 
	10.8 Validity
	 	 	20	 
	10.9 Notice
	 	 	20	 
	10.10 Successors
	 	 	20	 
	10.11 Compliance with Code Section 409A
	 	 	21	 

APPENDIX A

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PENFORD CORPORATION

DEFERRED COMPENSATION PLAN

Amended and Restated as of January 1, 2005

ARTICLE I—PURPOSE

1.1 Purpose

     Penford Corporation (the “Corporation”) adopts this Deferred Compensation Plan (the “Plan”) to
provide current tax planning opportunities as well as supplemental funds for Retirement or death
for certain employees and Directors of the Corporation. It is intended that the Plan will aid in
attracting and retaining employees and Directors of exceptional ability by providing them with this
benefit.

1.2 Effective Date

     The Plan, effective as of September 1, 1989, restated as of September 1, 1996 and restated as
of September 1, 2001, is amended by this restatement, as of January 1, 2005.

	 	(a)	 	Rules That Apply to Pre-2005 Credits. Amounts credited under the Plan
which relate entirely to services performed before January 1, 2005, shall continue to
be governed by the terms of the Prior Plan Statement, attached hereto as Appendix A.
	 
	 	(b)	 	Rules That Apply to 2005, 2006 and 2007 Credits. Amounts credited under
the Plan which relate all or in part to services performed on or after January 1,
2005, but before January 1, 2008, shall be governed by the terms of the Prior Plan
Statement subject to any modifications necessary to comply the deferred compensation
provisions in section 409A of the Code and proposed regulations and other guidance
issued prior to final regulations thereunder.
	 
	 	(c)	 	Rules That Apply to Post-2007 Credits. Amounts credited under the Plan
which relate all or in part to services performed on or after January 1, 2008, will
be governed by the terms of this Plan Statement, the terms of which are intended to
comply with the deferred compensation provisions in section 409A of the Code.

ARTICLE II—DEFINITIONS

     For purposes of this Plan, the following terms shall have the meanings indicated, unless the
context clearly indicates otherwise:

 

 

2.1 Account

     “Account” means the record maintained by the Corporation for each Participant in accordance
with Article IV with respect to any deferral of Compensation or Fees pursuant to this Plan.

2.2 Base Annual Salary

     “Base Annual Salary” means the annual compensation payable to an Executive, excluding Bonuses
and noncash compensation.

2.3 Beneficiary

     “Beneficiary” means the person, persons or entity designated under Article VI to receive any
Plan Benefits payable after a Participant’s death.

2.4 Board

     “Board” means the Executive Compensation and Development Committee of the Board of Directors
of Penford Corporation or any successor thereto.

2.5 Bonus

     “Bonus” means the compensation derived under the Corporation’s “Management Incentive Plan” and
payable in any year in a lump sum to an Executive.

2.6 Change in Control

     “Change in Control” means the occurrence of a “Change in the Ownership of the Corporation,”
“Change in Effective Control of the Corporation,” and/or a “Change in the Ownership of a
Substantial Portion of the Corporation’s Assets.”

	 	(a)	 	Change in the Ownership of the Corporation. A Change in the Ownership of
the Corporation shall occur on the date that any one person, or more than one “person
acting as a group” (as defined in Treasury Regulation §1.409A-3(i)(5)(v)(B)),
acquires ownership of stock of the Corporation that, together with stock held by such
person or group, constitutes more than 50% of the total fair market value or total
voting
power of the stock of the Corporation. If any one person, or more than one
person acting as a group, is considered to own more than 50% of the total
fair market value or total voting power of the stock of the Corporation, the
acquisition of additional stock by the same person or persons shall not
cause a Change in the Ownership of the Corporation (or cause a “Change in
the Effective Control of the Corporation”). An

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	 	 	 	increase in the percentage
of stock owned by any one person, or persons acting as a group, as a result
of a transaction in which the Corporation acquires its stock in exchange for
property shall be treated as an acquisition of stock for purposes of this
section. Notwithstanding the foregoing, a Change in Ownership of the
Corporation shall only occur when there is a transfer of stock of the
Corporation (or issuance of stock of the Corporation) and stock in the
Corporation remains outstanding after the transaction.
	 
	 	(b)	 	Change in the Effective Control of the Corporation. A Change in the
Effective Control of the Corporation shall occur on the date that either:

	 	(i)	 	Any one person, or more than one “person acting
as a group” (as defined in Treasury Regulation §1.409A-3(i)(5)(v)(B)),
acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) ownership of
stock of the Corporation possessing 30% or more of the total voting
power of the stock of the Corporation; or
	 
	 	(ii)	 	A majority of the members of the board of
directors of the Corporation is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority
of the members of the Corporation’s board of directors prior to the
date of the appointment or election; provided that such an event shall
only constitute a Change in Effective Control of the Corporation if no
other corporation is a majority shareholder.

	 	 	 	Notwithstanding the foregoing, if any one person, or more than one “person
acting as a group” (as defined in Treasury Regulation
§1.409A-3(i)(5)(vi)(D)), is considered to effectively control the
Corporation, the acquisition of additional control of the Corporation by the
same person or persons is not considered to cause a Change in the Effective
Control of the Corporation (or to cause a Change in the Ownership of the
Corporation).
	 
	 	(c)	 	Change in the Ownership of a Substantial Portion of the Corporation’s
Assets. A Change in the Ownership of a Substantial Portion of the Corporation’s
Assets occurs on the date that any one person,
or more than one “person acting as a group” (as defined in Treasury
Regulation §1.409A-3(i)(5)(vii)(C)), acquires assets from the Corporation
that have a total Gross Fair Market Value equal to or more than 40% of the
total Gross Fair Market Value of all of the assets of the Corporation
immediately prior to such acquisition or acquisitions. For purposes of this
paragraph, “Gross Fair Market Value” means the value of the assets of the
Corporation, or the value of

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	 	 	 	the assets being disposed of, determined
without regard to any liabilities associated with such assets.
	 
	 	 	 	Notwithstanding the foregoing, a Change in the Ownership of a Substantial
Portion of the Corporation’s Assets will not occur when there is a transfer
to an entity that is controlled by the shareholders of the transferring
corporation immediately after the transfer. A transfer of assets by the
Corporation is not treated as a Change in the Ownership of the Corporation’s
Assets if the assets are transferred to:

	 	(i)	 	A shareholder of the Corporation (immediately
before the asset transfer) in exchange for, or with respect to, its
stock; or
	 
	 	(ii)	 	An entity, 50% or more of the total value or
voting power of which is owned, directly or indirectly, by the
Corporation; or
	 
	 	(iii)	 	A person, or more than one person acting as a
group, that owns, directly or indirectly, 50% or more of the total
value or voting power of all the outstanding stock of the Corporation;
or
	 
	 	(iv)	 	An entity, at least 50% of the total value or
voting power of which is owned, directly or indirectly, by a person, or
more than one person acting as a group, that owns, directly or
indirectly, 50% or more of the total value or voting power of all the
outstanding stock of the Corporation.

	 	 	 	For purposes of this paragraph (c), a person’s status shall be determined
immediately after the transfer of the assets.
	 
	 	(d)	 	This section shall be interpreted in accordance with Section 409A of the
Code, and to the extent any provision herein conflicts with the terms of Section 409A
of the Code, such provision shall be deemed void.

2.7 Code

     “Code” means the Internal Revenue Code of 1986, as amended, and any rules or regulations
promulgated thereunder.

2.8 Committee

     “Committee” means a committee of three (3) persons appointed by the Chief Executive Officer of
the Corporation to administer the Plan pursuant to Article VII.

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2.9 Compensation

     “Compensation” means the following, determined before reduction for amounts deferred under
this Plan:

	 	(a)	 	For an Executive, the total Base Annual Salary and Bonus remuneration
payable by the Corporation to the Executive for services performed for the
Corporation.
	 
	 	(b)	 	For a Director, all of the Fees payable by the Corporation for service on
the Board.

2.10 Compensation Committee

     “Compensation Committee” means the Executive Compensation and Development Committee of the
Board of Directors of Penford Corporation.

2.11 Corporation

     “Corporation” means Penford Corporation, a Washington corporation, or any successor thereto,
and any corporations or other entities affiliated with or subsidiary to it that may be selected by
the Compensation Committee to participate in the Plan.

2.12 Deferral Commitment

     “Deferral Commitment” means a commitment to defer the receipt of Base Annual Salary or Bonus
by an Executive or a commitment to defer the receipt of Fees by a Director pursuant to Article III
and for which a Participation Agreement has been submitted by the Executive or Director to the
Committee.

2.13 Deferral Period

     “Deferral Period” means the period for which a Participant has elected to defer a portion of
Compensation earned during such Deferral Period.

2.14 Determination Date

     “Determination Date” means the last day of each calendar month.

2.15 Director

     “Director” means a member of the Board.

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2.16 Elective Deferred Compensation

     “Elective Deferred Compensation” means the amount of Compensation or Fees that the Executive
or Director elects to defer pursuant to a Deferral Commitment.

2.17 Executive

     “Executive” means one of a select group of management or highly compensated employees of the
Corporation, as designated by the Committee and approved by the Compensation Committee for
participation in the Plan.

2.18 Fees

     “Fees” means Board meeting, committee meeting, annual retainer and committee chairmanship fees
paid by the Corporation for service on the Board.

2.19 Financial Hardship

     “Financial Hardship” means a severe financial hardship to the Participant resulting from
illness or accident of the Participant or of a dependent of the Participant, loss of the
Participant’s property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant. Financial
Hardship shall be determined by the Committee on the basis of information supplied by the
Participant in accordance with the standards set forth by the Committee.

2.20 Fiscal Year

     “Fiscal Year” means the twelve (12) month period ending on August 31.

2.21 Interest Rate

     “Interest Rate” means the monthly equivalent of an annual yield that is two (2) percentage
points higher than the annual yield of the Moody’s Average Corporate Bond Yield Index for the
preceding month, as published by Moody’s Investor Service, Inc. (or any successor thereto), or, if
such index is no longer published, a substantially similar index selected by the Board. At no time
shall the Interest Rate be less than six percent (6%) annually.

2.22 Participant

     “Participant” means an Executive or Director who has elected to defer Compensation during any
Deferral Period or who has an Account balance in the Plan.

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2.23 Participation Agreement

     “Participation Agreement” means the agreement submitted by an Executive or Director to the
Committee prior to the beginning of the Deferral Period in which the Elective Deferred Compensation
is earned to defer Compensation and the corresponding elections regarding the time and form in
which amounts shall be distributed from the Plan. With respect to Bonus amounts subject to a
Deferral Commitment, a Participation Agreement shall be filed with the Committee no later than six
(6) months before the end of the Fiscal Year in which such Bonus is earned.

2.24 Plan

     “Plan” means this Penford Corporation Deferred Compensation Plan as amended from time to time.

2.25 Retirement

     “Retirement” means

	 	(a)	 	With respect to an Executive, the date on which a Participant has a
Separation from Service on or after attaining age fifty-five (55), and
	 
	 	(b)	 	With respect to a Director, the date on which such Participant has a
Separation from Service on or after attaining age seventy (70).

2.26 Retirement Plan

     “Retirement Plan” means the Penford Corporation Retirement Plan effective March 1, 1984 as
amended from time to time.

2.27 Separation from Service

     “Separation from Service” means

	 	(a)	 	With respect to an Executive, a severance of the Executive’s employment
relationship with Penford Corporation and all business entities that are treated as a
single employer with the Penford Corporation under the rules of section 414(b) and
(c) of the Code, including the 80% standard therein (“Affiliates”) for any reason
other than the Executive’s death.

	 	(i)	 	A transfer from employment with the Penford
Corporation to employment with an Affiliate, or vice versa, shall not
constitute a Separation from Service.

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	 	(ii)	 	Whether a Separation from Service has occurred
is determined based on whether the facts and circumstances indicate
that the Corporation and the Executive reasonably anticipated that no
further services would be performed after a certain date or that the
level of bona fide services the Executive would perform after such date
(whether as an employee or as an independent contractor) would
permanently decrease to no more than twenty percent (20%) of the
average level of bona fide services performed (whether as an employee
or an independent contractor) over the immediately preceding three (3)
year period (or the full period of services to the Corporation if the
Executive has been providing services to the Corporation for less than
twelve months).
	 
	 	(iii)	 	Separation from Service shall not be deemed to
occur while the Executive is on military leave, sick leave or other
bona fide leave of absence if the period does not exceed six (6) months
or, if longer, so long as the Executive retains a right to reemployment
with the Penford Corporation or an Affiliate under an applicable
statute or by contract. For this purpose, a leave is bona fide only
if, and so long as, there is a reasonable expectation that the
Executive will return to perform services for the Penford Corporation
or an Affiliate. Notwithstanding the foregoing, a 29-month period of
absence will be substituted for such 6-month period if the leave is due
to any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous
period of no less than 6 months and that causes the Executive to be
unable to perform the duties of his or her position of employment.
	 
	 	(iv)	 	Where as part of a sale or other disposition of
assets by the Corporation to an entity that is not an Affiliate, an
Executive providing services to Penford Corporation or to an Affiliate
immediately before the transaction and to the buyer immediately after
the transaction (“Affected Executive”) would otherwise experience a
Separation from Service from as a result of the transaction, the
Corporation and the buyer shall have the discretion to specify that the
Affected Employee has not experienced a Separation from Service if
(i) the transaction results from bona fide, arm’s length negotiations,
(ii) all Affected Employees are
treated consistently, and (iii) such treatment is specified in
writing no later than the closing date of the transaction.

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	 	(b)	 	With respect to a non-employee Director, the time at which such individual
(i) ceases to serve as a member of the Board, and (ii) is not providing services as
an independent contractor to Penford Corporation or any Affiliate, and has no present
intent to provide such services in the future.

2.28 Specified Employee

     “Specified Employee” means a Participant who is a key employee (as defined in section 416(i)
of the Code without regard to paragraph (5) thereof) if the stock of the Corporation or an
Affiliate is publicly traded on an established securities market or otherwise. A Participant’s
status as a key employee shall be determined once each December 31 based on the facts existing
during the year ending on that date. If a Participant is determined to be a key employee on that
date, the Participant shall be treated as a Specified Employee for the year beginning the following
April 1 (and ending on the next succeeding March 31).

2.29 Termination

     “Termination” means Separation from Service prior to Retirement or death.

2.30 Valuation Date

     “Valuation Date” means the last day of the month immediately following the month in which the
Participant dies or has a Separation from Service.

ARTICLE III—ELIGIBILITY AND DEFERRAL COMMITMENTS

3.1 Eligibility and Participation

	 	(a)	 	Eligibility. The Committee shall specify the name of each Executive and
Director who shall be initially entitled to participate in the Plan as of the next
succeeding Deferral Period, except as provided for in subsection (c) below. These
names shall be submitted to the Board for approval. Once designated as eligible, an
Executive may participate in the Plan each year without further approval until such
time, if any, that the Committee determines that the Executive’s employment status no
longer deserves
reward through participation in the Plan. All Directors are eligible to
participate in the Plan each Deferral Period.
	 
	 	(b)	 	Participation. An eligible Executive and Director may elect to participate
in the Plan and to make a Deferral Commitment with respect to any Deferral Period by
submitting a Participation Agreement to the Committee no later than:

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	 	(i)	 	The last day of the calendar year preceding the
Deferral Period in which Salary or Fees are earned by the Participant;
and
	 
	 	(ii)	 	The date that is six (6) months before the end
of the Fiscal Year in which a Bonus is earned.

	 	(c)	 	Initial Year of Eligibility. In the case of the first year in which an
Executive or Director becomes eligible to participate in the Plan, such Executive or
Director may make a Deferral Commitment within thirty (30) days of becoming eligible
to participate in the Plan. Such Deferral Election shall only be effective with
respect to Compensation paid for services to be performed after such Deferral
Election has been submitted to the Committee.

3.2 Deferral Election

	 	(a)	 	Election by Executive. By timely execution of a Participation Agreement in
accordance with Section 3.1 hereof, an Executive may make a Deferral Commitment by
electing to defer receipt of a certain whole percentage or flat dollar amount, up to
twenty-five percent (25%), of the Base Annual Salary and a certain whole percentage
or flat dollar amount, up to fifty percent (50%), of any Bonus provided, however,
that any such Deferral Commitment shall apply only with respect to Base Annual Salary
and Bonus payable to the Executive by the Corporation prior to the Executive’s
Separation from Service or death.
	 
	 	(b)	 	Election by Director. By timely execution of a Participation Agreement in
accordance with Section 3.1 hereof, a Director may make a Deferral Commitment by
electing to defer receipt of a certain whole percentage or flat dollar amount, up to
one hundred percent (100%), of Fees.
	 
	 	(c)	 	Minimum Deferral. Total deferrals by a Participant in a Deferral Period
must be fifteen hundred dollars ($1,500) or more. In any partial first year of
participation, no minimum deferral shall be required.

3.3 Modification of Deferral Commitment

     Deferral Commitments shall be irrevocable except that the Committee may, in its sole
discretion, reduce the amount to be deferred or waive the remainder of the Deferral Commitment upon
a finding that the Participant has suffered a Financial Hardship. A finding of Financial Hardship
shall not limit a Participant’s ability to participate in succeeding Deferral Periods. However, in
the event of a hardship distribution under Section 401(k)-1(d)(3) of the Code a Participant’s
deferral election shall be cancelled and further deferrals shall not be made during the Deferral
Period.

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ARTICLE IV—DEFERRED COMPENSATION ACCOUNT

4.1 Account

     The Corporation shall establish on its books a separate Account for each Participant who
elects to defer Compensation under the Plan, and shall credit to the Account of each Participant
the Elective Deferred Compensation. The credit shall be entered on the Corporation’s books of
account at the time that Compensation not deferred is paid to the Participant. Any withholding of
taxes or other amounts with respect to Deferred Compensation that is required by state, federal, or
local law shall be withheld from the Participant’s corresponding nondeferred Compensation to the
maximum extent possible and the remaining amount shall reduce the amount credited to the
Participant’s Account.

4.2 Interest; Determination of Accounts

     Each Participant’s Account as of each Determination Date shall consist of the balance of the
Participant’s Account as of the immediately preceding Determination Date, plus the Participant’s
Elective Deferred Compensation credited and any earnings thereon, minus the amount of any
distributions made since the immediately preceding Determination Date. Earnings shall be
calculated as of each Determination Date based upon the average daily balance of the Account since
the preceding Determination Date and the Interest Rate and shall be credited to the Participant’s
Account at that time.

4.3 Statement of Account

     A report shall be issued by the Corporation to each Participant setting forth his or her
Account balance under the Plan as of the immediately preceding Determination Date as soon as
practicable after the close of each Plan Year or such other time as the Committee deems
appropriate.

ARTICLE V—PLAN BENEFITS

5.1 Plan Benefits

     The Corporation shall pay benefits pursuant to this Article V equal to the Participant’s
Account balance as of the Valuation Date to each Participant upon Separation from Service or death,
whichever first occurs, except as provided in subsection (a) below and as further described in this
Article V.

	 	(a)	 	Early Withdrawals. A Participant’s Account may be distributed to the
Participant before Separation from Service as follows:

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	 	(i)	 	Early Withdrawals. A Participant may elect in
a Participation Agreement to withdraw all or any portion of the amount
deferred by that Participation Agreement as of a date specified in the
election. Such date shall not be sooner than seven (7) years after the
date the Deferral Period commences. The amount withdrawn shall not
exceed the amount of Compensation deferred, excluding earnings. All
elections shall be irrevocable except that any election made pursuant
to this subsection (a) shall be null and void in the event the
Participant has a Separation from Service or dies prior to the
specified withdrawal date.
	 
	 	(ii)	 	Form of Payment. Early withdrawals shall be
paid in a lump sum and shall be charged to the Participant’s Account as
a distribution.

	 	(b)	 	Retirement and Termination Benefits. Upon a Separation from Service except
due to death, Corporation shall pay the Participant a benefit equal to the balance in
such Participant’s Account as further described in Section 5.2 herein.
	 
	 	(c)	 	Death Benefit.

	 	(i)	 	Pretermination. If a Participant dies while
employed by Corporation or serving on the Board, Corporation shall pay
to the Participant’s Beneficiary a benefit equal to the balance in such
Participant’s Account. The benefit shall be paid in the form elected
by the Participant in the applicable Participation Agreement, or, if no
such election is on file with the Committee, in a lump sum.
	 
	 	(ii)	 	Posttermination. If a Participant dies
following the Participant’s Separation from Service, Corporation shall
pay the Participant’s Beneficiary a benefit equal to the balance, if
any, in such Participant’s Account. The benefit shall be paid, or
continued to be paid, in the form elected by the Participant in the
applicable Participation Agreement for distributions on account of
Separation from Service.

5.2 Form of Benefit Payment

	 	(a)	 	Forms of Payment. Each Deferral Commitment made by a Participant shall
include an election with respect to the form of benefit payment upon death,
Termination, Retirement or upon Separation from Service within twenty-four (24)
months after a Change in Control. The Participant may choose from the following
options:

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	 	(i)	 	In up to ten (10) substantially equal annual
installments;
	 
	 	(ii)	 	In a single sum payment; or
	 
	 	(iii)	 	In a combination of partial lump sum payment,
and balance in up to ten (10) substantially equal annual installments,

	 	 	 	Such election shall be irrevocable as of the December 31 prior to the
Deferral Period to which such elections apply.
	 
	 	(b)	 	Small Accounts. If the Participant’s Account balance is under five
thousand dollars ($5,000) on the Valuation Date, the Plan Benefits shall be paid in a
lump sum notwithstanding anything herein to the contrary.
	 
	 	(c)	 	Installments. If benefits are paid in installments, the amount of each
annual installment shall be determined each year on the twelve (12) month anniversary
of the Valuation Date based upon the remaining Account balance, the remaining number
of installments and the Interest Rate in effect as of the month preceding the
Valuation Date.

5.3 Hardship Distributions

     Notwithstanding anything herein to the contrary, payment from the Participant’s Account may be
made to the Participant, or to a Beneficiary following the death of a Participant, if in the sole
discretion of the Committee such Participant or Beneficiary has a Financial Hardship. A payment
based upon Financial Hardship of the Participant may not exceed the amount required to meet the
immediate financial need created by such Financial Hardship and not reasonably available from other
sources of the Participant. A Deferral Commitment may be
terminated upon proof of a Financial Hardship, and the Participant may make a new Deferral
Commitment in accordance with Article III herein.

5.4 Golden Parachute Payments

     If any benefit payable under this Plan would constitute an excess parachute payment under Code
Section 280G or any successor provision, the amount payable by the Corporation to a Participant
shall be increased to the extent necessary to result in the Participant’s receiving the same net
amount after all applicable taxes have been paid as the net after-tax amount the Participant would
have received if the benefit had not been subject to additional taxes due to being treated as an
excess parachute payment. Such additional benefit shall be paid to Participant at the same time
and in the same manner as the benefit to which it relates is paid.

-13-

 

5.5 Withholding on Benefit Payments

     The Corporation shall withhold from payments made hereunder any taxes required to be withheld
from such payments under federal, state or local law. However, a Beneficiary may elect not to have
withholding for federal income tax purposes pursuant to Code Section 3405(a)(2) or any successor
provision thereto.

5.6 Time of Payment

     A lump sum payment or the first payment in a series of installment payments shall commence no
later than thirty-five (35) days after the Valuation Date, except that Participants who are
Specified Employees shall not receive a distribution of any amount, where such distribution is made
on account of Separation from Service, before the date which is six months after the date of
Separation from Service. In the event a distribution must be delayed:

	 	(a)	 	The amount of the lump-sum payment shall be valued as of the last day of
the month immediately preceding the payment date; and
	 
	 	(b)	 	The first in a series of installment payments shall include an amount equal
to the sum of the monthly payments which would have been paid to the Participant but
for the payment deferral.

     All payment under Article V of this Plan shall be made as of the first day of a month.

5.7 Payment to Guardian

     If a Plan Benefit is payable to a minor or a person declared incompetent or to a person
incapable of handling the disposition of property, the Committee may direct payment of such Plan
Benefit to the guardian, legal representative or person having the care and custody of such
minor, incompetent or person. The Committee may require proof of incompetency, minority,
incapacity or guardianship as it may deem appropriate prior to distribution of the Plan Benefit.
Such distribution shall completely discharge the Committee and the Corporation from all liability
with respect to such Plan Benefit.

ARTICLE VI—BENEFICIARY DESIGNATION

6.1 Beneficiary Designation

     Each Participant shall have the right, at any time, to designate any person or persons or an
entity as his Beneficiary or Beneficiaries (both primary as well as secondary) to whom benefits
under this Plan shall be paid in the event of a Participant’s death prior to complete distribution
of the benefits due under the Plan. Each Beneficiary Designation shall be in written form
prescribed by the Committee and will be effective only when filed with the Committee

-14-

 

during the
Participant’s lifetime. Designation by a married Participant of a Beneficiary other than the
Participant’s spouse shall not be effective without spousal execution of a written consent
acknowledging the effect of the designation unless such consent cannot be obtained because the
spouse cannot be located.

6.2 Changes to Designation

     Any Beneficiary designation may be changed by the Participant without the consent of the
previously named Beneficiary by the filing of a new designation with the Committee subject to the
spousal consent required in Section 6.1 above. The filing of a new Beneficiary designation shall
cancel all designations previously filed, unless the designation clearly indicates that such
designation controls the Account attributable to Elective Deferred Compensation for a particular
Deferral Period.

6.3 Change in Marital Status

     If the Participant’s marital status changes after the Participant has designated a
Beneficiary, the following shall apply:

	 	(a)	 	If the Participant is married at death but was unmarried when the
designation was made, the designation shall be void unless the spouse has consented
to it in the manner prescribed above.
	 
	 	(b)	 	If the Participant is unmarried at death but was married when the
designation was made:

	 	(i)	 	The designation shall be void if the spouse was
named as Beneficiary.
	 
	 	(ii)	 	The designation shall remain valid if a
nonspouse Beneficiary was named.

	 	(c)	 	If the Participant was married when the designation was made and is married
to a different spouse at death, the designation shall be void unless the new spouse
has consented to it in the manner prescribed above.

6.4 No Beneficiary Designation

     If any Participant fails to designate a Beneficiary in the manner provided above, if the
designation is void, or if the Beneficiary designated by a deceased Participant dies before the
Participant or before complete distribution of the Participant’s benefits, the Participant’s
Beneficiary shall be the person in the first of the following classes in which there is a survivor:

	 	(a)	 	The Participant’s surviving spouse;

-15-

 

	 	(b)	 	The Participant’s children in equal shares, except that if any of the
children predecease the Participant but leave issue surviving, then such issue shall
take by right of representation the share the parent would have taken if living;
	 
	 	(c)	 	The Participant’s estate.

6.5 Effect of Payment

     The payment to the deemed Beneficiary shall completely discharge the Corporation’s obligations
under this Plan.

ARTICLE VII—ADMINISTRATION

7.1 Committee; Duties

     This Plan shall be administered by a committee of three (3) persons appointed by the Chief
Executive Officer of the Corporation. The Committee shall have such powers and duties as may be
necessary to discharge its responsibilities. These powers shall include, but not be limited to,
interpretation of the Plan provisions, determination of amounts due to any Participant, the rights
of any Participant or Beneficiary under this Plan, the right to require any necessary information
from any Participant, determine the amounts credited to Participant’s Account and earnings, and any
other activities deemed necessary or helpful.

7.2 Agents

     The Committee may, from time to time, employ other agents and delegate to them such
administrative duties as it sees fit, and may from time to time consult with counsel who may be
counsel to the Corporation.

7.3 Binding Effect of Decisions

     The decision or action of the Committee in respect of any question arising out of or in
connection with the administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon all persons having
any interest in the Plan.

7.4 Indemnity of Committee

     To the extent permitted by applicable law, the Corporation shall indemnify, hold harmless and
defend the members of the Committee against any and all claims, loss, damage, expense or liability
arising from any action or failure to act with respect to this Plan, on account

-16-

 

of such member’s
service on the Committee, except in the case of gross negligence or willful misconduct.

ARTICLE VIII—CLAIMS PROCEDURE

8.1 Claim

     Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or
requesting information under the Plan shall present the request in writing to the Committee, which
shall respond in writing within thirty (30) days.

8.2 Denial of Claim

     If the claim or request is denied, the written notice of denial shall state:

	 	(a)	 	The reasons for denial, with specific reference to the Plan provisions on
which the denial is based,
	 
	 	(b)	 	A description of any additional material or information required and an
explanation of why it is necessary, and
	 
	 	(c)	 	An explanation of the Plan’s claims review procedure.

8.3 Review of Claim

     Any person whose claim or request is denied or who has not received a response within thirty
(30) days may request review by notice given in writing to the Committee within sixty (60) days of
the date of denial or the end of the thirty (30) day period. The claim or request shall be
reviewed by the Committee who may, but shall not be required to, grant the claimant a hearing. On
review, the claimant may have representation, examine pertinent documents, and submit issues and
comments in writing.

8.4 Final Decision

     The decision on review shall normally be made within sixty (60) days of the date the request
to review is received by the Committee. If an extension of time is required for a hearing or other
special circumstances, the claimant shall be notified and the time limit shall be one hundred
twenty (120) days from the date the request to review is received by the Committee. The
Committee’s final decision shall be in writing and shall state the reasons and the relevant Plan
provisions. All decisions on review shall be final and bind all parties concerned.

-17-

 

ARTICLE IX—AMENDMENT AND TERMINATION OF THE PLAN

9.1 Amendment

     The Board may at any time amend the Plan in whole or in part provided, however, that no
amendment shall be effective to decrease or restrict the amount credited to any Account maintained
under the Plan as of the date of amendment. Changes in the definition of “Interest Rate” shall be
subject to the following restrictions:

	 	(a)	 	Notice. A change shall not become effective before the first day of the
calendar year which follows the adoption of the amendment and at least thirty (30)
days’ written notice of the amendment to the Executive.
	 
	 	(b)	 	Change in Control. Any change in the definition of Interest Rate after a
Change in Control shall apply only to those amounts credited to the Executive’s
Account after the Change in Control.

9.2 Termination

     The Board may at any time partially or completely terminate the Plan if, in its judgment, the
tax, accounting, or other effects of the continuance of the Plan, or potential payments thereunder,
would not be in the best interests of the Corporation.

	 	(a)	 	Partial Termination. The Board may partially terminate the Plan by
instructing the Committee not to accept any additional Deferral Commitments. In the
event of such a partial termination, the Plan shall continue to operate and be
effective with regard to Deferral Commitments entered into prior to the effective
date of such partial termination.
	 
	 	(b)	 	Complete Termination. The Board may completely terminate the Plan by
instructing the Committee not to accept any additional Deferral Commitments, and may
terminate all ongoing Deferral Commitments and distribute all Account balances
provided such termination and liquidation is consistent with Code Section 409A.

ARTICLE X—MISCELLANEOUS

10.1 Unfunded Plan

     This Plan is intended to be an unfunded plan maintained primarily to provide deferred
compensation benefits for a select group of “management or highly-compensated employees” within the
meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), and therefore to be exempt from the provisions of Parts 2,

-18-

 

3 and 4 of Title I of
ERISA. Accordingly, the Plan shall terminate and no further benefits shall accrue hereunder in the
event it is determined by a court of competent jurisdiction or by an opinion of counsel that the
Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA which
is not so exempt. In the event of a termination under this Section 10.1, all ongoing Deferral
Commitments shall terminate, no additional Deferral Commitments will be accepted by the Committee,
and the amount of each Participant’s Account balance shall be distributed to such Participant at
such time and in such manner as the Committee, in its sole discretion, determines.

10.2 Unsecured General Creditor

     Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or
equitable rights, interest or claims in any property or assets of the Corporation, nor shall they
be Beneficiaries of, or have any rights, claims or interests in any life insurance policies,
annuity contracts or the proceeds therefrom owned or which may be acquired by the Corporation.
Except as may be provided in Section 10.3, such policies, annuity contracts or other assets of the
Corporation shall not be held under any trust for the benefit of the Participants, their
Beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the
fulfilling of the obligations of the Corporation under this Plan. Any and all of the Corporation’s
assets and policies shall be, and remain, the general, unpledged, unrestricted assets of the
Corporation. The Corporation’s obligation under the Plan shall be that of an unfunded and
unsecured promise to pay money in the future.

10.3 Trust Fund

     The Corporation shall be responsible for the payment of all benefits provided under the Plan.
At its discretion, the Corporation may establish one (1) or more trusts, with such trustees as the
Board may approve, for the purpose of providing for the payment of such benefits. Although such
trust or trusts may be irrevocable, the assets thereof shall be subject to the claims of all the
Corporation’s creditors in the event of insolvency. To the extent any benefits provided under the
Plan are actually paid from any such trust, the Corporation shall have no further obligation with
respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and
shall be paid by, the Corporation.

10.4 Nonassignability

     Neither a Participant nor any other person shall have the right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be unassignable and nontransferable. No part of
the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a Participant’s or any other
person’s bankruptcy or insolvency.

-19-

 

10.5 Not a Contract of Employment

     The terms and conditions of this Plan shall not be deemed to constitute a contract of
employment between the Corporation and the Participant, and the Participant (or the Participant’s
Beneficiary) shall have no rights against the Corporation except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a Participant the right to
be retained in the service of the Corporation or to interfere with the right of the Corporation to
discipline or discharge the Participant at any time.

10.6 Protective Provisions

     A Participant will cooperate with the Corporation by furnishing any and all information
requested by the Corporation, in order to facilitate the payment of benefits hereunder, and by
taking such physical examinations as the Corporation may deem necessary and taking such other
actions as may be requested by the Corporation.

10.7 Governing Law

     The provisions of this Plan shall be construed and interpreted according to the laws of the
State of Washington, except as preempted by federal law.

10.8 Validity

     If any provision of this Plan shall be held illegal or invalid for any reason, said illegality
or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal and invalid provisions had never been inserted herein.

10.9 Notice

     Any notice or filing required or permitted to be given to the Committee under the Plan shall
be sufficient if in writing and hand delivered, or sent by registered or certified mail, to any
member of the Committee or the Secretary of the Corporation. Such notice shall be deemed given as
of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on
the receipt for registration or certification. Mailed notice to the Committee shall be directed to
the Corporation’s address. Mailed notice to a Participant or Beneficiary shall be directed to the
individual’s last known address in the Corporation’s records.

10.10 Successors

     The provisions of this Plan shall bind and inure to the benefit of the Corporation and its
successors and assigns. The term successors as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of the Corporation, and successors of any such
corporation or other business entity.

-20-

 

10.11 Compliance with Code Section 409A

     Notwithstanding anything herein to the contrary, all provisions in this document shall be
interpreted, to the extent possible, to be in compliance with Code Section 409A. However, in the
event any provision of this Agreement is determined to not be in compliance with Code Section 409A
and any regulations or other guidance promulgated thereunder, such provision shall be null and void
to the extent of such noncompliance.

	 	 	 	 	 
	 	 	PENFORD CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	President and CEO
	 
	 	 	 	 
	 

	 	Dated:	 	 
	 

	 	 	 	 

-21-

 

APPENDIX A

PENFORD CORPORATION

DEFERRED COMPENSATION PLAN

Effective September 1, 1989

Restated September 1, 2001

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	PAGE
	ARTICLE I—PURPOSE
	 	 	1	 
	 
	 	 	 	 
	1.1 Purpose
	 	 	1	 
	1.2 Effective Date
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II—DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	2.1 Account
	 	 	1	 
	2.2 Base Annual Salary 
	 	 	1	 
	2.3 Beneficiary
	 	 	1	 
	2.4 Board
	 	 	1	 
	2.5 Bonus
	 	 	1	 
	2.6 Change in Control
	 	 	2	 
	2.7 Committee
	 	 	2	 
	2.8 Compensation
	 	 	2	 
	2.9 Corporation
	 	 	2	 
	2.10 Deferral Commitment
	 	 	2	 
	2.11 Deferral Period
	 	 	3	 
	2.12 Determination Date
	 	 	3	 
	2.13 Director
	 	 	3	 
	2.14 Early Retirement Date
	 	 	3	 
	2.15 Elective Deferred Compensation
	 	 	3	 
	2.16 Executive
	 	 	3	 
	2.17 Fees
	 	 	3	 
	2.18 Financial Hardship 
	 	 	3	 
	2.19 Interest
	 	 	3	 
	2.20 Normal Retirement Date
	 	 	4	 
	2.21 Participant
	 	 	4	 
	2.22 Participation Agreement
	 	 	4	 
	2.23 Plan
	 	 	4	 
	2.24 Plan Benefit
	 	 	4	 
	2.25 Plan Year
	 	 	4	 
	2.26 Retirement
	 	 	4	 
	2.27 Retirement Plan
	 	 	4	 
	2.28 Termination
	 	 	5	 
	 
	 	 	 	 
	ARTICLE III—ELIGIBILITY AND DEFERRAL COMMITMENTS
	 	 	5	 
	 
	 	 	 	 
	3.1 Account
	 	 	5	 
	3.2 Deferral Election
	 	 	5	 
	3.3 Modification of Deferral Commitment
	 	 	6	 

(i)

 

	 	 	 	 	 
	 	 	PAGE
	ARTICLE IV—DEFERRED COMPENSATION ACCOUNT
	 	 	6	 
	4.1 Account
	 	 	6	 
	4.2 Interest; Determination of Accounts
	 	 	6	 
	4.3 Statement of Account
	 	 	6	 
	 
	 	 	 	 
	ARTICLE V—PLAN BENEFITS
	 	 	6	 
	 
	 	 	 	 
	5.1 Plan Benefit
	 	 	6	 
	5.2 Commencement of Payments
	 	 	7	 
	5.3 Form of Benefit Payment
	 	 	7	 
	5.4 Hardship Distributions
	 	 	8	 
	5.5 Accelerated Distribution
	 	 	9	 
	5.6 Supplemental Retirement Benefit
	 	 	9	 
	5.7 Golden Parachute Payments
	 	 	9	 
	5.8 Withholding on Benefit Payments
	 	 	9	 
	5.9 Valuation and Settlement
	 	 	9	 
	5.10 Payment to Guardian
	 	 	10	 
	 
	 	 	 	 
	ARTICLE VI—BENEFICIARY DESIGNATION
	 	 	10	 
	 
	 	 	 	 
	6.1 Beneficiary Designation
	 	 	10	 
	6.2 Changes to Designation
	 	 	10	 
	6.3 Change in Marital Status
	 	 	10	 
	6.4 No Beneficiary Designation
	 	 	11	 
	6.5 Effect of Payment
	 	 	11	 
	 
	 	 	 	 
	ARTICLE VII—ADMINISTRATION
	 	 	11	 
	 
	 	 	 	 
	7.1 Committee; Duties
	 	 	11	 
	7.2 Agents
	 	 	11	 
	7.3 Binding Effect of Decisions
	 	 	11	 
	7.4 Indemnity of Committee
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VIII—CLAIMS PROCEDURE
	 	 	12	 
	 
	 	 	 	 
	8.1 Claim
	 	 	12	 
	8.2 Denial of Claim
	 	 	12	 
	8.3 Review of Claim
	 	 	12	 
	8.4 Final Decision
	 	 	12	 
	 
	 	 	 	 
	ARTICLE IX—AMENDMENT AND TERMINATION OF THE PLAN
	 	 	12	 
	 
	 	 	 	 
	9.1 Amendment
	 	 	12	 
	9.2 Corporation’s Right to Terminate
	 	 	13	 

(ii)

 

	 	 	 	 	 
	 	 	PAGE
	ARTICLE X—MISCELLANEOUS
	 	 	14	 
	 
	 	 	 	 
	10.1 Unfunded Plan
	 	 	14	 
	10.2 Unsecured General Creditor
	 	 	14	 
	10.3 Trust Fund
	 	 	14	 
	10.4 Nonassignability
	 	 	14	 
	10.5 Not a Contract of Employment
	 	 	15	 
	10.6 Protective Provisions
	 	 	15	 
	10.7 Governing Law
	 	 	15	 
	10.8 Validity
	 	 	15	 
	10.9 Notice
	 	 	15	 
	10.10 Successors
	 	 	16	 

(iii)

 

PENFORD CORPORATION

DEFERRED COMPENSATION PLAN

ARTICLE I—PURPOSE

1.1 Purpose

     Penford Corporation (the “Corporation”) adopts this Deferred Compensation Plan (the “Plan”) to
provide current tax planning opportunities as well as supplemental funds for Retirement or death
for certain employees and Directors of the Corporation. It is intended that the Plan will aid in
attracting and retaining employees and Directors of exceptional ability by providing them with this
benefit.

1.2 Effective Date

     The Plan, effective as of September 1, 1989 and restated September 1, 1996, is amended by this
restatement, as of September 1, 2001.

ARTICLE II—DEFINITIONS

     For purposes of this Plan, the following terms shall have the meanings indicated, unless the
context clearly indicates otherwise:

2.1 Account

     “Account” means the record maintained by the Corporation for each Participant in accordance
with Article IV with respect to any deferral of Compensation or Fees pursuant to this Plan.

2.2 Base Annual Salary

     “Base Annual Salary” means the annual compensation payable to an Executive, excluding Bonuses
and noncash compensation.

2.3 Beneficiary

     “Beneficiary” means the person, persons or entity designated under Article VI to receive any
Plan Benefits payable after a Participant’s death.

2.4 Board

     “Board” means the Compensation and Benefits Committee of the Board of Directors of
Penford Corporation or any successor thereto.

2.5 Bonus

     “Bonus” means the compensation derived under the Corporation’s “Management Incentive Plan” and
payable in any year in a lump sum to an Executive.

PAGE 1 - DEFERRED COMPENSATION PLAN

 

2.6 Change in Control

     A Change in Control shall have occurred if:

     (a) Any Person is or becomes the beneficial owner, directly or indirectly, of
securities of the Corporation representing more than fifty percent (50%) of the voting power
of the outstanding Voting Stock,

     (b) The effective date of a merger, consolidation, reorganization or dissolution in
which the Corporation is not the surviving entity, or

     (c) During any period of two (2) consecutive years, individuals who constitute the
Board of Directors of the Corporation at the beginning of any such period cease for any
reason to constitute at least a majority thereof, unless the election, or the nomination for
election by the Corporation’s shareholders, of each new director was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who were directors of the
Corporation at the beginning of such period. “Person” means an individual, firm, corporation
or other entity, together with all Affiliates and Associates of such Person, but shall not
include the Corporation, any subsidiary of the Corporation or any employee benefit plan of
the Corporation. “Affiliate” and “Associate” shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. “Voting Stock”
means the common stock of the Corporation and any other shares entitled to vote for the
election of directors of the Corporation.

2.7 Committee

     “Committee” means a committee of three (3) persons appointed by the Chief Executive Officer of
the Company to administer the Plan pursuant to Article VII.

2.8 Compensation

     “Compensation” means the following, determined before reduction for amounts deferred under
this Plan:

     (a) For an Executive, the total Base Annual Salary and Bonus remuneration payable by
the Corporation to the Executive for services.

     (b) For a Director, all of the fees payable by the Corporation for service on the
Board.

2.9 Corporation

     “Corporation” means Penford Corporation, a Washington corporation, or any successor thereto,
and any corporations or other entities affiliated with or subsidiary to it that may be selected by
the Board.

2.10 Deferral Commitment

     “Deferral Commitment” means a Base Annual Salary Deferral Commitment or a Bonus Deferral
Commitment made by an Executive or a Fee Deferral Commitment made by a Director pursuant to

PAGE 2 - DEFERRED COMPENSATION PLAN

 

Article III and for which a Participation Agreement has been submitted by the Executive or Director
to the Committee.

2.11 Deferral Period

     “Deferral Period” means the period during which a Participant has elected to defer a portion
of his Compensation. The Deferral Period shall be a Plan Year.

2.12 Determination Date

     “Determination Date” means the last day of each calendar month.

2.13 Director

     “Director” means a member of the Board.

2.14 Early Retirement Date

     “Early Retirement Date” means the date on which a Participant terminates employment with
Employer, the earlier of the date on or after such Participant’s attainment of age fifty-five (55)
and completion of twenty (20) Years of Service or age sixty-two (62) and completion of ten (10)
Years of Service, but prior to the Participant’s Normal Retirement Date.

2.15 Elective Deferred Compensation

     “Elective Deferred Compensation” means the amount of Compensation or Fees that the Executive
or Director elects to defer pursuant to a Deferral Commitment.

2.16 Executive

     “Executive” means one of a select group of management or highly compensated employees of the
Corporation, as designated by the Committee and approved by the Board for participation in the
Plan.

2.17 Fees

     “Fees” means Board meeting, committee meeting, annual retainer and committee chairmanship
fees.

2.18 Financial Hardship

     “Financial Hardship” means a severe financial hardship to the Participant resulting from a
sudden and unexpected illness or accident of the Participant or of a dependent of the Participant,
loss of the Participant’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of the Participant.
Financial Hardship shall be determined by the Committee on the basis of information supplied by the
Participant in accordance with the standards set forth by the Committee.

PAGE 3 - DEFERRED COMPENSATION PLAN

 

2.19 Interest

     “Interest” means the monthly equivalent of an annual yield that is two (2) percentage points
higher than the annual yield of the Moody’s Average Corporate Bond Yield Index for the preceding
month, as published by Moody’s Investor Service, Inc. (or any successor thereto), or, if such index
is no
longer published, a substantially similar index selected by the Board. At no time shall the
Interest Rate be less than six percent (6%) annually.

2.20 Normal Retirement Date

     “Normal Retirement Date” means the date on which a Participant terminates employment with
Employer on or after such Participant’s attainment of age sixty-five (65).

2.21 Participant

     “Participant” means an Executive or Director who has elected to defer Compensation or Fees
during any Deferral Period.

2.22 Participation Agreement

     “Participation Agreement” means the agreement submitted by an Executive or Director to the
Committee prior to the beginning of the Deferral Period, with respect to one (1) or more Deferral
Commitments made for such Deferral Period.

2.23 Plan

     “Plan” means this Deferred Compensation Plan as amended from time to time.

2.24 Plan Benefit

     “Plan Benefit” means:

     (a) The Deferred Compensation Account benefit payable to a Participant as calculated
pursuant to Article IV and payable under Sections 5.1 through 5.5; and

     (b) The Supplemental Retirement Benefit payable to an Executive under Section 5.6.

2.25 Plan Year

     “Plan Year” means the fiscal year of the Corporation.

2.26 Retirement

     “Retirement” means:

     (a) For an Executive, termination from service on or after the Early Retirement Date or
Normal Retirement Date. The Committee, in its sole discretion, may deem any separation from
service as a Retirement.

PAGE 4 - DEFERRED COMPENSATION PLAN

 

     (b) For a Director, termination from service on the Board at or after age seventy (70).

2.27 Retirement Plan

     “Retirement Plan” means the Penford Corporation Retirement Plan effective March 1, 1984 as
amended from time to time.

2.28 Termination

     Termination means:

     (a) For an Executive, leaving employment with the Corporation prior to Retirement.

     (b) For a Director, leaving the Board prior to Retirement.

ARTICLE III—ELIGIBILITY AND DEFERRAL COMMITMENTS

3.1 Eligibility and Participation

     (a) Eligibility. The Committee shall specify the name of each Executive who shall be
initially entitled to participate in the Plan as of the next succeeding Plan Year. These
names shall be submitted to the Board for approval. Once designated eligible, an Executive
may participate in the Plan each year without further approval until such time, if any, that
the Committee determines that the Executive’s employment status no longer deserves reward
through participation in the Plan. Notwithstanding that determination, no account shall be
paid out until Retirement or Termination. All Directors are eligible to participate each
year.

     (b) Participation. An eligible individual may elect to participate in the Plan with
respect to any Deferral Period by submitting a Participation Agreement to the Committee by
the thirtieth (30th) day of the month immediately preceding the beginning of the
Deferral Period.

     (c) Part-Year Participation. When an individual first becomes eligible to participate
during a Deferral Period, a Participation Agreement may be submitted to the Committee within
thirty (30) days following notification of the individual of eligibility to participate,
which will be effective only with regard to Compensation earned following such submission.

3.2 Deferral Election

     (a) Election by Executive. Prior to September 1, 2001, an Executive could elect to
defer receipt of a certain whole percentage or flat dollar amount, up to fifty percent
(50%), of the Base Annual Salary and a certain whole percentage or flat dollar amount, up to
one hundred percent (100%), of any Bonus payable to him or her as an employee of the
Corporation. Beginning September 1, 2001, an Executive may elect to defer receipt of a
certain whole percentage or flat dollar amount, up to twenty-five percent (25%), of the Base
Annual Salary and a certain whole percentage or flat dollar amount, up to fifty percent
(50%), of any Bonus payable to him or her as an employee of the Corporation for the next
Plan Year; provided, however, that any such election to defer shall apply only with respect
to Base Annual Salary or any Bonus payable to the Executive by the Corporation prior to the
Executive’s termination of employment for any reason.

PAGE 5 - DEFERRED COMPENSATION PLAN

 

     (b) Election by Director. A Director may elect to defer receipt of a certain whole
percentage or flat dollar amount, up to one hundred percent (100%), of Fees for the next
Plan Year.

     (c) Minimum Deferral. Total deferrals by a Participant in a year must be fifteen
hundred dollars ($1,500) or more. In any partial first year of participation, no minimum
deferral shall be required.

3.3 Modification of Deferral Commitment

     Deferral Commitments shall be irrevocable except that the Committee may, in its sole
discretion, reduce the amount to be deferred or waive the remainder of the Deferral Commitment upon
a finding that the Participant has suffered a Financial Hardship. A finding of Financial Hardship
shall not limit a Participant’s ability to participate in succeeding Deferral Periods. In the event
a Participant becomes disabled under the Penford Long-Term Disability Plan, deferrals will be
immediately suspended.

ARTICLE IV—DEFERRED COMPENSATION ACCOUNT

4.1 Account

     The Corporation shall establish on its books a separate account for each Participant who
elects to defer Compensation under the Plan, and shall credit to the account of each Participant
the Elective Deferred Compensation. The credit shall be entered on the Corporation’s books of
account at the time that Compensation or Fees not deferred are paid to the Participant. Any
withholding of taxes or other amounts with respect to Deferred Compensation that is required by
state, federal, or local law shall be withheld from the Participant’s corresponding nondeferred
compensation to the maximum extent possible and the remaining amount shall reduce the amount
credited to the Participant’s Account.

4.2 Interest; Determination of Accounts

     Each Participant’s Account as of each Determination Date shall consist of the balance of the
Participant’s Account as of the immediately preceding Determination Date, plus the Participant’s
Elective Deferred Compensation credited and any Interest earned, minus the amount of any
distributions made, since the immediately preceding Determination Date. Interest earned shall be
calculated as of each Determination Date based upon the average daily balance of the Account since
the preceding Determination Date and shall be credited to the Participant’s Account at that time.

4.3 Statement of Account

     A report shall be issued by the Corporation to each Participant setting forth his or her
Account balance under the Plan as of the immediately preceding Determination Date as soon as
practicable after the close of each Plan Year or such other time as the Committee deems
appropriate.

PAGE 6 - DEFERRED COMPENSATION PLAN

 

ARTICLE V—PLAN BENEFITS

5.1 Plan Benefit

     The Corporation shall pay Plan Benefits pursuant to this Article V equal to the Participant’s
Account to each Participant who terminates employment for any reason.

     (a) Early Withdrawals. A Participant’s Account may be distributed to the Participant
before Termination of employment or service on the Board as follows:

     (i) Early Withdrawals. A Participant may elect in a Participation Agreement to
withdraw all or any portion of the amount deferred by that Participation Agreement as
of a date specified in the election. For elections made for a Plan Year prior to
September 1, 1996, such withdrawal shall be made for the purchase of a primary
residence or the costs of providing a secondary education to a dependent. If at the
time the withdrawal is scheduled said reason does not exist, the early withdrawal
election shall be null and void. For elections made for a Plan Year beginning
September 1, 1996 or thereafter, such withdrawal shall be made for any reason, which
reason need not be disclosed by the Participant. Such date shall not be sooner than
seven (7) years after the date the Deferral Period commences. The amount withdrawn
shall not exceed the amount of Compensation deferred, without Interest.

     (ii) Form of Payment. Withdrawals shall be paid in a lump sum and shall be
charged to the Participant’s Account as a distribution.

     (b) Retirement and Termination Benefits. If an Executive terminates employment with
Corporation, or if a Director terminates service on the Board, for any reason except death,
Corporation shall pay the Participant benefits equal to the balance in the Account.

     (c) Death Benefit.

     (i) Pretermination. If a Participant dies while employed by Corporation or
serving on the Board, Corporation shall pay to the Participant’s Beneficiary benefits
equal to the balance in the Account. The benefit shall be paid in the form elected by
the Participant in the form of payment designation, or, if no such election is on file,
in a lump sum.

     (ii) Posttermination. If a Participant dies following the Participant’s
Retirement or Termination of employment with Corporation or service on the Board,
Corporation shall pay the Participant’s Beneficiary benefits equal to the balance, if
any, in the Account. Payments shall continue to be made in the same form as those made
to the Participant prior to death.

5.2 Commencement of Payments

     (a) Deferred Compensation Account. Payment of any Deferred Compensation Account
benefits under the Plan shall be made as of, or commence as of, the earlier of:

     (i) A date elected by the Participant as specified in the applicable Participation
Agreement between the Corporation and the Participant; or

     (ii) The settlement date as provided in Section 5.9.

PAGE 7 - DEFERRED COMPENSATION PLAN

 

     (b) Supplemental Retirement Benefits. Supplemental Retirement Benefits under
Section 5.6 shall be made as of, or commence as of, the earliest date for which a monthly
payment is payable to or for the Participant under the Retirement Plan.

5.3 Form of Benefit Payment

     At the time the Participant elects to defer Compensation, the Participant shall also elect the
form of benefit payment. The Participant may elect a different form of benefit payment for payments
made due
to either Retirement, Termination prior to Retirement or Termination within twenty-four (24) months
following a Change in Control.

     (a) Alternative Forms. Alternative forms of benefit payment are:

     (i) In equal annual installments, the number of such installments not to exceed
ten (10), as designated by the Participant;

     (ii) In a single sum payment; or

     (iii) In a combination of partial lump sum payment, and balance in installments,
not to exceed ten (10) years.

     Such election shall be irrevocable.

     (b) Small Accounts. If the Participant’s Account is under five thousand dollars
($5,000) on the valuation date, the benefit shall be paid in a lump sum.

     (c) Installments. If payment is by installments, the amount of the installments shall
be redetermined each year on the twelve (12) month anniversary of the valuation date based
upon the remaining Account balance, the remaining number of installments and Interest equal
to the rate in effect as of the preceding month.

5.4 Hardship Distributions

     Notwithstanding the foregoing provisions of this Article V, payment from the Participant’s
Deferred Compensation Account may be made to the Participant or a Beneficiary following the death
of a Participant in the sole discretion of the Committee by reason of Financial Hardship. A payment
based upon Financial Hardship of the Participant may not exceed the amount required to meet the
immediate financial need created by the hardship and not reasonably available from other sources of
the Participant. Any resumption of the Participant’s deferrals under the Plan shall be made only at
the election of the Participant in accordance with Article III herein.

PAGE 8 - DEFERRED COMPENSATION PLAN

 

5.5 Accelerated Distribution

     Notwithstanding any other provision of the Plan, within twenty-four (24) months following a
Change in Control or at any time following Retirement or Termination of employment or service on
the Board, a Participant shall be entitled to receive, upon written request to the Committee, a
lump sum distribution equal to ninety percent (90%) of the vested Account balance as of the
Determination Date immediately preceding the date on which the Committee receives the written
request. The remaining balance of ten percent (10%) shall be forfeited by the Participant. A
Participant who receives a distribution under this Section 5.5 shall not participate in the Plan
for twelve (12) calendar months following the election. The amount payable under this Section shall
be paid in a lump sum within sixty-five (65) days following the receipt of the notice by the
Committee from the Participant. Following the death of the Participant, the designated Beneficiary
may, at any time, request an accelerated distribution under this Section.

5.6 Supplemental Retirement Benefit

     Employer shall restore an amount equal to any reduction in a Participant’s Retirement Plan or
Social Security benefits because of deferrals under this Plan to the extent the Retirement Plan or
Social Security benefits are not restored by any other Employer-provided plan or agreement.

5.7 Golden Parachute Payments

     If any benefit payable under this Plan would constitute an excess parachute payment under
Section 280G of the Internal Revenue Code of 1986, or any successor provision, the amount payable
shall be increased to the extent necessary to result in the Participant’s receiving the same net
amount after all applicable taxes have been paid as the net after-tax amount the Participant would
have received if the benefit had not been subject to additional taxes due to being treated as an
excess parachute payment.

5.8 Withholding on Benefit Payments

     The Corporation shall withhold from payments made hereunder any taxes required to be withheld
from such payments under federal, state or local law. However, a Beneficiary may elect not to have
withholding for federal income tax purposes pursuant to Section 3405(a)(2) of the Internal Revenue
Code, or any successor provision thereto.

5.9 Valuation and Settlement

     The last day of the month following the month of Retirement, Termination or death shall be the
valuation date. If a lump sum is elected, the amount of the lump sum shall be based on the value of
the Participant’s Account on the valuation date. If a combination of lump sum and installments is
elected, the lump sum will be paid on the settlement date and installments will commence on the
twelve (12) month anniversary of the valuation date. If installment payments are elected, the
amount of the installment payments shall be based on the value of the Participant’s Account on the
valuation date. The date on which installment payments commence shall be the settlement date. The
settlement date shall be no more than thirty-five (35) days after the valuation date. All payments
shall be made as of the first day of the month.

PAGE 9 - DEFERRED COMPENSATION PLAN

 

5.10 Payment to Guardian

     If a Plan benefit is payable to a minor or a person declared incompetent or to a person
incapable of handling the disposition of property, the Committee may direct payment of such Plan
benefit to the guardian, legal representative or person having the care and custody of such minor,
incompetent or person. The Committee may require proof of incompetency, minority, incapacity or
guardianship as it may deem appropriate prior to distribution of the Plan benefit. Such
distribution shall completely discharge the Committee and the Corporation from all liability with
respect to such benefit.

ARTICLE VI—BENEFICIARY DESIGNATION

6.1 Beneficiary Designation

     Each Participant shall have the right, at any time, to designate any person or persons or an
entity as his Beneficiary or Beneficiaries (both primary as well as secondary) to whom benefits
under this Plan shall be paid in the event of a Participant’s death prior to complete distribution
of the benefits due under the Plan. Each Beneficiary Designation shall be in written form
prescribed by the Committee and will be effective only when filed with the Committee during the
Participant’s lifetime. Designation by a married Participant of a Beneficiary other than the
Participant’s spouse shall not be effective without spousal execution of a written consent
acknowledging the effect of the designation unless such consent cannot be obtained because the
spouse cannot be located.

6.2 Changes to Designation

     Any Beneficiary designation may be changed by the Participant without the consent of the
previously named Beneficiary by the filing of a new designation with the Committee subject to the
spousal consent required in Section 6.1 above. The filing of a new Beneficiary designation shall
cancel all designations previously filed, unless the designation clearly indicates that such
designation controls the account attributable to deferrals made during the election period in which
the designation is filed.

6.3 Change in Marital Status

     If the Participant’s marital status changes after the Participant has designated a
Beneficiary, the following shall apply:

     (a) If the Participant is married at death but was unmarried when the designation was
made, the designation shall be void unless the spouse has consented to it in the manner
prescribed above.

     (b) If the Participant is unmarried at death but was married when the designation was
made:

     (i) The designation shall be void if the spouse was named as Beneficiary.

     (ii) The designation shall remain valid if a nonspouse Beneficiary was named.

PAGE 10 - DEFERRED COMPENSATION PLAN

 

     (c) If the Participant was married when the designation was made and is married to a
different spouse at death, the designation shall be void unless the new spouse has consented
to it in the manner prescribed above.

6.4 No Beneficiary Designation

     If any Participant fails to designate a Beneficiary in the manner provided above, if the
designation is void, or if the Beneficiary designated by a deceased Participant dies before the
Participant or before complete distribution of the Participant’s benefits, the Participant’s
Beneficiary shall be the person in the first of the following classes in which there is a survivor:

     (a) The Participant’s surviving spouse;

     (b) The Participant’s children in equal shares, except that if any of the children
predecease the Participant but leave issue surviving, then such issue shall take by right of
representation the share the parent would have taken if living;

     (c) The Participant’s estate.

6.5 Effect of Payment

     The payment to the deemed Beneficiary shall completely discharge the Corporation’s obligations
under this Plan.

ARTICLE VII—ADMINISTRATION

7.1 Committee; Duties

     This Plan shall be administered by a committee of three (3) persons appointed by the Chief
Executive Officer of the Company. The Committee shall have such powers and duties as may be
necessary to discharge its responsibilities. These powers shall include, but not be limited to,
interpretation of the Plan provisions, determination of amounts due to any Participant, the rights
of any Participant or Beneficiary under this Plan, the right to require any necessary information
from any Participant, determine the amounts credited to Participant’s Account and Interest earned,
and any other activities deemed necessary or helpful.

7.2 Agents

     The Committee may, from time to time, employ other agents and delegate to them such
administrative duties as it sees fit, and may from time to time consult with counsel who may be
counsel to the Corporation.

7.3 Binding Effect of Decisions

     The decision or action of the Committee in respect of any question arising out of or in
connection with the administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon all persons having
any interest in the Plan.

PAGE 11 - DEFERRED COMPENSATION PLAN

 

7.4 Indemnity of Committee

     To the extent permitted by applicable law, the Corporation shall indemnify, hold harmless and
defend the members of the Committee against any and all claims, loss, damage, expense or liability
arising from any action or failure to act with respect to this Plan, on account of such member’s
service on the Committee, except in the case of gross negligence or willful misconduct.

ARTICLE VIII—CLAIMS PROCEDURE

8.1 Claim

     Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or
requesting information under the Plan shall present the request in writing to the Committee, which
shall respond in writing as soon as practicable.

8.2 Denial of Claim

     If the claim or request is denied, the written notice of denial shall state:

     (a) The reasons for denial, with specific reference to the Plan provisions on which the
denial is based,

     (b) A description of any additional material or information required and an explanation
of why it is necessary, and

     (c) An explanation of the Plan’s claims review procedure.

8.3 Review of Claim

     Any person whose claim or request is denied or who has not received a response within thirty
(30) days may request review by notice given in writing to the Committee. The claim or request
shall be reviewed by the Committee who may, but shall not be required to, grant the claimant a
hearing. On review, the claimant may have representation, examine pertinent documents, and submit
issues and comments in writing.

8.4 Final Decision

     The decision on review shall normally be made within sixty (60) days. If an extension of time
is required for a hearing or other special circumstances, the claimant shall be notified and the
time limit shall be one hundred twenty (120) days. The decision shall be in writing and shall state
the reasons and the relevant Plan provisions. All decisions on review shall be final and bind all
parties concerned.

PAGE 12 - DEFERRED COMPENSATION PLAN

 

ARTICLE IX—AMENDMENT AND TERMINATION OF THE PLAN

9.1 Amendment

     The Board may at any time amend the Plan in whole or in part provided, however, that no
amendment shall be effective to decrease or restrict the amount credited to any Account maintained
under the Plan as of the date of amendment. Changes in the definition of “Interest” shall be
subject to the following restrictions:

     (a) Notice. A change shall not become effective before the first day of the Plan Year
which follows the adoption of the amendment and at least thirty (30) days’ written notice of
the amendment to the Executive.

     (b) Change in Control. Any change in the definition of Interest after a Change in
Control shall apply only to those amounts credited to the Executive’s Account after the
Change in Control.

9.2 Corporation’s Right to Terminate

     The Board may at any time partially or completely terminate the Plan if, in its judgment, the
tax, accounting, or other effects of the continuance of the Plan, or potential payments thereunder,
would not be in the best interests of the Corporation.

     (a) Partial Termination. The Board may partially terminate the Plan by instructing the
Committee not to accept any additional Deferral Commitments. In the event of such a partial
termination, the Plan shall continue to operate and be effective with regard to Deferral
Commitments entered into prior to the effective date of such partial termination.

     (b) Complete Termination. The Board may completely terminate the Plan by instructing
the Committee not to accept any additional Deferral Commitments, and terminate all ongoing
Deferral Commitments. In the event of such a complete termination, the Plan shall cease to
operate and, prior to a Change in Control, the Committee shall pay out to each Participant
the balance in his Account in equal annual installments amortized over the period listed
below based on the Account balance at the time of such complete termination:

	 	 	 
	Appropriate Account Balance	 	Payout Period
	   
	Less than $10,000

	 	2 Years
	$10,000 but less than $50,000

	 	5 Years
	More than $50,000

	 	10 Years
	   

     Interest earned on the unpaid balance in the Participant’s Account shall be the
applicable Interest rate on the Determination Date immediately preceding the effective date
of such complete termination.

     Upon Plan termination prior to a Change in Control, any Participant who is retired and
receiving installment payments will receive the account balance in a lump sum.

     After a Change in Control, the benefits shall be paid to each Participant in the form
elected by each Participant.

PAGE 13 - DEFERRED COMPENSATION PLAN

 

ARTICLE X—MISCELLANEOUS

10.1 Unfunded Plan

     This Plan is intended to be an unfunded plan maintained primarily to provide deferred
compensation benefits for a select group of “management or highly-compensated employees” within the
meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), and therefore to be exempt from the provisions of Parts 2, 3 and 4 of Title I of
ERISA. Accordingly, the Plan shall terminate and no further benefits shall accrue hereunder in the
event it is determined by a court of competent jurisdiction or by an opinion of counsel that the
Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA which
is not so exempt. In the event of a termination under this Section 10.1, all ongoing Deferral
Commitments shall terminate, no additional Deferral Commitments will be accepted by the Committee,
and the amount of each Participant’s Account balance shall be distributed to such Participant at
such time and in such manner as the Committee, in its sole discretion, determines.

10.2 Unsecured General Creditor

     Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or
equitable rights, interest or claims in any property or assets of the Corporation, nor shall they
be Beneficiaries of, or have any rights, claims or interests in any life insurance policies,
annuity contracts or the proceeds therefrom owned or which may be acquired by the Corporation.
Except as may be provided in Section 10.3, such policies, annuity contracts or other assets of the
Corporation shall not be held under any trust for the benefit of the Participants, their
Beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the
fulfilling of the obligations of the Corporation under this Plan. Any and all of the Corporation’s
assets and policies shall be, and remain, the general, unpledged, unrestricted assets of the
Corporation. The Corporation’s obligation under the Plan shall be that of an unfunded and unsecured
promise to pay money in the future.

10.3 Trust Fund

     The Corporation shall be responsible for the payment of all benefits provided under the Plan.
At its discretion, the Corporation may establish one (1) or more trusts, with such trustees as the
Board may approve, for the purpose of providing for the payment of such benefits. Although such
trust or trusts may be irrevocable, the assets thereof shall be subject to the claims of all the
Corporation’s creditors in the event of insolvency. To the extent any benefits provided under the
Plan are actually paid from any such trust, the Corporation shall have no further obligation with
respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and
shall be paid by, the Corporation.

10.4 Nonassignability

     Neither a Participant nor any other person shall have the right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be unassignable and nontransferable. No part of
the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a Participant’s or any other
person’s bankruptcy or insolvency.

PAGE 14 - DEFERRED COMPENSATION PLAN

 

10.5 Not a Contract of Employment

     The terms and conditions of this Plan shall not be deemed to constitute a contract of
employment between the Corporation and the Participant, and the Participant (or the Participant’s
Beneficiary) shall have no rights against the Corporation except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a Participant the right to
be retained in the service of the Corporation or to interfere with the right of the Corporation to
discipline or discharge the Participant at any time.

10.6 Protective Provisions

     A Participant will cooperate with the Corporation by furnishing any and all information
requested by the Corporation, in order to facilitate the payment of benefits hereunder, and by
taking such physical examinations as the Corporation may deem necessary and taking such other
actions as may be requested by the Corporation.

10.7 Governing Law

     The provisions of this Plan shall be construed and interpreted according to the laws of the
State of Washington, except as preempted by federal law.

10.8 Validity

     If any provision of this Plan shall be held illegal or invalid for any reason, said illegality
or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal and invalid provisions had never been inserted herein.

10.9 Notice

     Any notice or filing required or permitted to be given to the Committee under the Plan shall
be sufficient if in writing and hand delivered, or sent by registered or certified mail, to any
member of the Committee or the Secretary of the Corporation. Such notice shall be deemed given as
of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on
the receipt for registration or certification. Mailed notice to the Committee shall be directed to
the Corporation’s address. Mailed notice to a Participant or Beneficiary shall be directed to the
individual’s last known address in the Corporation’s records.

PAGE 15 - DEFERRED COMPENSATION PLAN

 

10.10 Successors

     The provisions of this Plan shall bind and inure to the benefit of the Corporation and its
successors and assigns. The term successors as used herein shall include any corporate or other
business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of the Corporation, and successors of any such
corporation or other business entity.

	 	 	 	 	 
	 

	 	 	 	PENFORD CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	President and CEO
	 
	 	 	 	 
	 

	 	Dated: 	 	 
	 

	 	 	 	 

PAGE 16 - DEFERRED COMPENSATION PLANexv10w8

 

Exhibit 10.8

PENFORD CORPORATION

2006 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD NOTICE

     Penford Corporation (the “Company”) hereby grants to you a Restricted Stock Award
(the “Award”) for shares of the Company’s Common Stock under the Company’s 2006 Long-Term Incentive
Plan (the “Plan”). The Award is subject to all the terms and conditions set forth in this
Restricted Stock Award Notice (the “Award Notice”) and in the Restricted Stock Award Agreement and
the Plan, which are attached to and incorporated into the Award Notice in their entirety.

	 	 	 
	Participant:

	 	                                        
	Grant Date:

	 	                                        
	Vesting Commencement Date:

	 	                                        
	Number of Shares Subject to 

the Award (the “Shares”):

	 	                                        
	Fair Market Value Per Share on 

Grant Date:

	 	$                    
	Vesting Schedule:
	 	 

[Plan provides for full vesting upon death]

Additional Terms/Acknowledgement: You acknowledge receipt of, and understand and agree to, this
Award Notice, the Restricted Stock Award Agreement and the Plan. You further acknowledge that as
of the Grant Date, the Award Notice, the Restricted Stock Award Agreement and the Plan set forth
the entire understanding between you and the Company regarding the Award and supersede all prior
oral and written agreements on the subject[, with the exception of the Change of Control Agreement
dated ___].

	 	 	 	 	 
	PENFORD CORPORATION	 	PARTICIPANT
	 
	 	 	 	 
	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 

Attachments:

1. Restricted Stock Award Agreement

2. 2006 Long-Term Incentive Plan

 

 

PENFORD CORPORATION

2006 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK AWARD AGREEMENT

     Pursuant to your Restricted Stock Award Notice (the “Award Notice”) and this Restricted Stock
Award Agreement (this “Agreement”), Penford
Corporation (the “Company”) has granted you a
Restricted Stock Award (the “Award”) under its 2006 Long-Term Incentive Plan (the “Plan”)
for the number of shares of the Company’s Common Stock indicated in your Award Notice. Capitalized
terms not defined in this Agreement but defined in the Plan have the same definitions as in the
Plan.

     The details of the Award are as follows:

1. Vesting

     The Award will vest and no longer be subject to forfeiture according to the vesting schedule
set forth in the Award Notice (the “Vesting Schedule”). Shares subject to the portion of the Award
that has vested and is no longer subject to forfeiture according to the Vesting Schedule are
referred to herein as “Vested Shares.” Shares subject to the portion of the Award that has not
vested and remains subject to forfeiture under the Vesting Schedule are referred to herein as
“Unvested Shares.” The Unvested Shares will vest (and to the extent so vested cease to be Unvested
Shares remaining subject to forfeiture) in accordance with the Vesting Schedule (the Unvested and
Vested Shares are collectively referred to herein as the “Shares”), provided that vesting will
cease upon the cessation of your Continuous Status as a Participant

2. Forfeiture of Unvested Shares upon Termination of Service

     Unless the Committee determines otherwise prior to your termination of employment or other
cessation of Continuous Service as a Participant, all Unvested Shares will immediately be forfeited
to the Company upon your termination of employment or any other cessation of Continuous Service as
a Participant without payment of any consideration to you.

3. Consideration for Award

     The Company acknowledges your payment of full consideration for the Award in the form of
services previously rendered and/or services to be rendered hereafter to the Company (in either
case, in an amount equal to no less than the aggregate par value of the Shares).

4. Securities Law Compliance

4.1 You represent and warrant that you (a) have been furnished with a copy of the Plan and all
information which you deem necessary to evaluate the merits and risks of receipt of the Shares,
(b) have had the opportunity to ask questions and receive answers concerning the information
received about the Shares and the Company, and (c) have been given the opportunity to obtain any
additional information you deem necessary to verify the accuracy of any information obtained
concerning the Shares and the Company.

 

 

4.2 You hereby represent and warrant that you are receiving the Shares for your own account, for
investment purposes only, and not with a view towards the distribution or public offering of all or
any part of the Shares.

4.3 You hereby agree that you will in no event sell or distribute all or any part of the Shares
unless (a) there is an effective registration statement under the Securities Act of 1933, as
amended, and applicable state securities laws covering any such transaction involving the Shares or
(b) the Company receives an opinion of your legal counsel (concurred in by legal counsel for the
Company) stating that such transaction is exempt from registration or the Company otherwise
satisfies itself that such transaction is exempt from registration. You understand that the
Company has no obligation to you to register the Shares with the SEC and has not represented to you
that it will so register the Shares.

4.4 You hereby consent to the placing of a legend on your certificate(s) as set forth in Section 8
and to the placing of a stop-transfer order on the books of the Company and with any transfer
agents against the Shares until the Shares may be legally resold or distributed.

4.5 You hereby agree to indemnify the Company and hold it harmless from and against any loss, claim
or liability, including attorneys’ fees or legal expenses, incurred by the Company as a result of
any breach by you of, or any inaccuracy in, any representation, warranty or statement made by you
in this Agreement or the breach by you of any terms or conditions of this Agreement.

5. Rights as Shareholder

     Unless the Shares are forfeited, you shall be considered a shareholder of the Company with
respect to all such Shares that have not been forfeited and shall have all rights with respect to
such Shares, including the right to vote or consent to all matters that may be presented to the
Shareholders and to receive all dividends and other distributions paid on such Shares. If any
dividends or distributions are paid in Common Stock, such Common Stock shall be subject to the same
restrictions as the Shares with respect to which it was paid.

6. Transfer Restrictions

     Unless otherwise permitted by the Committee, any sale, pledge assignment, encumbrance,
hypothecation, transfer conveyance in trust, gift, or other transfer or disposition of any kind,
whether voluntary or by operation of law, directly or indirectly (other than by will or by the laws
of descent or distribution), of Unvested Shares or Shares otherwise subject to forfeiture
restrictions pursuant to the Agreement will be strictly prohibited and void.

7. Section 83(b) Election for Award

     You understand that under Section 83(a) of the Code, the excess of the Fair Market Value of
the Unvested Shares on the date the forfeiture restrictions lapse over the purchase price, if any,
paid for such Shares will be taxed, on the date such forfeiture restrictions lapse, as ordinary
income subject to payroll and withholding tax and tax reporting, as applicable. For this purpose,
the term “forfeiture restrictions” means the right of the Company to receive

 

 

back any Unvested Shares upon termination of employment or other cessation of your Continuous
Status as Participant. You understand that you may elect under Section 83(b) of the Code to be
taxed at the time the Unvested Shares are acquired, rather than when and as the Unvested Shares
cease to be subject to the forfeiture restrictions. Such election (an “83(b) Election”) must be
filed with the Internal Revenue Service within 30 days from the Grant Date of the Award. Even if
the Fair Market Value of the Unvested Shares on the Grant Date equals the purchase price, if any,
(and thus no tax is payable), you must file the election within the 30-day period to avoid the risk
of adverse tax consequences in the future.

     You understand that (a) you will not be entitled to a deduction for any ordinary income
previously recognized as a result of the 83(b) Election if the Unvested Shares are subsequently
forfeited to the Company, and (b) the 83(b) Election may cause you to recognize more ordinary
income than you would have otherwise recognized if the Internal Revenue Service determines that the
value of the Unvested Shares on the date the Shares are transferred is higher than the Fair Market
Value of the Shares on that date as determined by the Company and/or the value of the Unvested
Shares subsequently declines.

     THE FORM FOR MAKING AN 83(b) ELECTION IS ATTACHED TO THIS AGREEMENT AS EXHIBIT B. YOU
UNDERSTAND THAT FAILURE TO FILE SUCH AN ELECTION WITHIN THE 30-DAY PERIOD MAY RESULT IN THE
RECOGNITION OF ORDINARY INCOME BY YOU AS THE FORFEITURE RESTRICTIONS LAPSE. You further understand
that an additional copy of such election form should be filed with your federal income tax return
for the calendar year in which the date of this Agreement falls. You acknowledge that the
foregoing is only a summary of the federal income tax laws that apply to the receipt of the
Unvested Shares under this Agreement and does not purport to be complete. YOU FURTHER ACKNOWLEDGE
THAT THE COMPANY HAS DIRECTED YOU TO SEEK INDEPENDENT ADVICE REGARDING THE APPLICABLE PROVISIONS OF
THE CODE, THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH YOU MAY
RESIDE, AND THE TAX CONSEQUENCES OF YOUR DEATH.

     You agree to execute and deliver to the Company with this Agreement a copy of the
Acknowledgment and Statement of Decision Regarding Section 83(b) Election attached hereto as
Exhibit A. You further agree that you will execute and deliver to the Company with this Agreement
a copy of the 83(b) Election attached hereto as Exhibit B if you choose to make such an election.

8. Effect of Change in Control

     Notwithstanding any other provision in the Plan to the contrary, the following provisions
shall apply unless otherwise prohibited under applicable laws, or by the rules and regulations of
any applicable governmental agencies or national securities exchanges or quotation systems. This
Award shall be Accelerated (as defined in Section 8(b) below) immediately prior to a Change in
Control described in Section 8(c).

     (a) “Accelerated” shall mean that the Award shall become fully vested.

 

 

     (b) “Change in Control” shall mean any of the following events:

     (i) The Company is merged, consolidated, or reorganized (“Reorganization”) with
another entity and as a result of which less than 50% of the outstanding voting interests
or securities of the surviving or resulting entity immediately after the Reorganization are
owned in the aggregate by the former shareholders of the Company, as the same shall have
existed immediately prior to such Reorganization, in substantially the same proportions as
their ownership before such Reorganization;

     (ii) The Company sells all or “Substantially All” of its assets to another entity that
is not a wholly-owned subsidiary or affiliate of the Company, provided that a sale shall
constitute Substantially All of the Company’s assets only if the fair market value of the
consideration received for such assets exceeds 50% of the fair market value of the
Company’s average total market capitalization during the twenty (20) trading days ending
twenty (20) trading days prior to the first public announcement of such sale; provided
further that the fair market value of the consideration received and the total market
capitalization of the Company shall be as reasonably determined by the Board in good faith
and that both the Company’s stock and any publicly traded consideration received in a sale
shall be valued using the closing price for such security (y) for the period referenced
above in the case of the Company’s stock and (z) the average closing prices for the first
twenty (20) trading days after the closing of any sale or other transaction in which any
publicly traded consideration is received;

     (iii) Any person, within the meaning of Sections 3(a)(9), 13(d), or 14(d) (as in
effect on the date hereof) of the Exchange Act (“Person”), other than any employee benefit
plan then maintained by the Company, acquires more than 40% of the outstanding voting
securities of the Company (whether, directly, indirectly, beneficially or of record). For
purposes hereof, ownership of voting securities shall take into account and shall include
ownership as determined by applying the provisions of Rule 13d-3(d)(1)(i) (as in effect on
the date hereof) pursuant to the Exchange Act; or

     (iv) During any twenty-four (24) month period individuals who constitute the Board at
the beginning of such period cease for any reason to constitute at least a majority
thereof, unless the election, or nomination for election by the Company’s shareholders, of
each new director was approved by the vote of at least two-thirds of the directors then
still in office who were directors of the Company at the beginning of such period; provided
that no individual shall be considered so approved if such individual initially assumed
office as a result of or in connection with an actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board.

 

 

9. Golden Parachute Taxes

     Subject to the terms of an applicable change in control agreement executed by you and the
Company, in the event that any amounts paid or deemed paid to you pursuant to this Agreement are
deemed to constitute “excess parachute payments” as defined in Section 280G of the Code (taking
into account any other payments made to you under the Plan and any other compensation paid or
deemed paid to you), or if you are deemed to receive an “excess parachute payment” by reason of the
acceleration of vesting of your Award granted under the Plan due to a Change in Control, the amount
of such payments or deemed payments shall be reduced (or, alternatively, the number of Awards that
become 100% vested shall be reduced), so that no such payments or deemed payments shall constitute
excess parachute payments. The determination of whether a payment or deemed payment constitutes an
excess parachute payment shall be in the sole discretion of the Board.

10. Legends

     You understand and agree that the Shares are subject to forfeiture as set forth in this
Agreement. You understand that any certificate(s) representing the Shares may bear legends in
substantially the following form:

“The securities represented by this certificate are subject to certain restrictions on transfer and
forfeiture rights held by the issuer and/or its assignee(s) and may not be sold, assigned,
transferred, encumbered or in any way disposed of except as set forth in a restricted stock award
agreement between the issuer and the original recipient of these shares, a copy of which may be
obtained at the principal office of the issuer. Such transfer restrictions and forfeiture rights
are binding on transferees of these shares.”

11. Assignment Separate From Certificate

     As security for the faithful performance of this Agreement, you agree, upon execution of this
Agreement, to deliver a stock power in the form attached to this Agreement as Exhibit C, executed
by you and by your spouse, if any (with the transferee, certificate number, date and number of
Shares left blank), along with any certificate(s) evidencing shares issued to you, to the Secretary
of the Company or its designee (“Escrow Holder”), who is hereby appointed to hold such stock power
and any such certificate(s) in escrow and to take all such actions and to effectuate all such
transfers and/or releases of such Shares as are in accordance with the terms of this Agreement.
You and the Company agree that Escrow Holder will not be liable to any party to this Agreement (or
to any other party) for any actions or omissions unless Escrow Holder is grossly negligent relative
thereto. Escrow Holder may rely on any letter, notice or other document executed by any signature
purported to be genuine and may rely on advice of counsel and obey any order of any court with
respect to the transactions contemplated in this Agreement. The Shares will be released from
escrow upon your written request after termination of the Company’s forfeiture rights under
Section 2.

 

 

12. Stop-Transfer Notices

     You understand and agree that, in order to ensure compliance with the restrictions referred to
in this Agreement, the Company may issue appropriate “stop-transfer” instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records. The Company will not be required to (a) transfer
on its books any Shares that have been sold or transferred in violation of the provisions of this
Agreement or (b) treat as the owner of the Shares, or otherwise accord voting, dividend or
liquidation rights to, any transferee to whom the Shares have been transferred in contravention of
this Agreement.

13. Independent Tax Advice

     You acknowledge that determining the actual tax consequences to you of receiving or disposing
of the Shares may be complicated. These tax consequences will depend, in part, on your specific
situation and may also depend on other variables not within the control of the Company. You are
aware that you should consult a competent and independent tax advisor for a full understanding of
the specific tax consequences to you of receiving or disposing of the Shares. Prior to executing
the Award Notice, you either have consulted with a competent tax advisor independent of the Company
to obtain tax advice concerning the receipt or disposition of the Shares in light of your specific
situation or you have had the opportunity to consult with such a tax advisor but chose not to do
so.

14. Withholding and Disposition of Shares

     As a condition to the removal of forfeiture restrictions from your Vested Shares, you agree to
make arrangements satisfactory to the Company for the payment of any federal, state, local or
foreign withholding tax obligations that arise either upon receipt of the Shares or as the
forfeiture restrictions on any Shares lapse. Notwithstanding the previous sentence, you
acknowledge and agree that the Company and any Subsidiary have the right to withhold Shares or
deduct from payments of any kind otherwise due to you any federal, state or local taxes of any kind
required by law to be withheld with respect the Award.

15. General Provisions

15.1 No Waiver. No waiver of any provision of this Agreement will be valid unless in writing and
signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce
any right hereunder constitute a continuing waiver of the same or a waiver of any other right
hereunder.

15.2 Cancellation of Shares. If the Company or its assignees exercises the Company’s forfeiture in
accordance with the provisions of this Agreement, then, from and after such time, the person from
whom such Shares are to be forfeited will no longer have any rights as a recipient of such Shares,
such Shares will be deemed forfeited in accordance with the applicable provisions of this
Agreement, and the Company or its assignees will be deemed the owner and recipient of such Shares,
whether or not the certificates therefor have been delivered as required by this Agreement.

 

 

15.3 Undertaking. You hereby agree to take whatever additional action and execute whatever
additional documents the Company may deem necessary or advisable in order to carry out or effect
one or more of the obligations or restrictions imposed on either you or the Shares pursuant to the
express provisions of this Agreement.

15.4 Agreement Is Entire Contract. This Agreement and the Award Notice constitute the entire
contract between the parties hereto with regard to the subject matter hereof [except for the Change
of Control Agreement dated ___] [add this language when applicable]. This Agreement and the Award
Notice are made pursuant to the provisions of the Plan and will in all respects be construed in
conformity with the express terms and provisions of the Plan.

15.5 Successors and Assigns. The provisions of this Agreement will inure to the benefit of, and be
binding on, the Company and its successors and assigns and you and your legal representatives,
heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such
person will have become a party to this Agreement and agreed in writing to join herein and be bound
by the terms and conditions hereof.

15.6 No Employment or Service Contract. Nothing in this Agreement will affect in any manner
whatsoever the right or power of the Company, or a any Subsidiary of the Company, to terminate your
employment or services on behalf of the Company or any Subsidiary of the Company, for any reason,
with or without Cause.

15.7 Counterparts. The Award Notice may be executed in two or more counterparts, each of which
will be deemed an original, but which, upon execution, will constitute one and the same instrument.

15.8 Governing Law. To the extent not otherwise governed by the laws of the United States, this
Agreement will be construed and administered in accordance with and governed by the laws of the
State of Washington.

 

 

EXHIBIT A

ACKNOWLEDGMENT AND STATEMENT OF DECISION REGARDING SECTION 83(b) ELECTION

     The
undersigned, a recipient of ___ shares of Common Stock of Penford Corporation, a
Washington corporation (the “Company”), pursuant to a restricted stock award granted pursuant to
the Company’s 2006 Long-Term Incentive Plan (the “Plan”), hereby states as follows:

     1. The undersigned acknowledges receipt of a copy of the Plan relating to the offering of such
shares. The undersigned has carefully reviewed the Plan and the Restricted Stock Award Notice and
Restricted Stock Award Agreement pursuant to which the award was granted.

     2. The undersigned either (check and complete as applicable):

	 	(a)	— 	has consulted, and has been fully advised by, the
undersigned’s own tax advisor, ___, whose business
address is ___, regarding the federal, state and local
tax consequences of receiving shares under the Plan, and particularly
regarding the advisability of making an election pursuant to Section 83(b) of
the Internal Revenue Code of 1986, as amended (the “Code”), and pursuant to
the corresponding provisions, if any, of applicable state law, or
	 
	 	(b)	— 	has knowingly chosen not to consult such a tax advisor.

     3. The undersigned hereby states that the undersigned has decided (check as applicable)

	 	(a)	— 	to make an election pursuant to Section 83(b) of the Code,
and is submitting to the Company, together with the undersigned’s executed
Restricted Stock Award Notice, an executed form entitled “Election Under
Section 83(b) of the Internal Revenue Code of 1986”, or
	 
	 	(b)	— 	not to make an election pursuant to Section 83(b) of the
Code.

     4. Neither the Company nor any affiliate or representative of the Company has made any
warranty or representation to the undersigned with respect to the tax consequences of the
undersigned’s purchase of shares under the Plan or of the making or failure to make an election
pursuant to Section 83(b) of the Code or the corresponding provisions, if any, of applicable state
law.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	[Name]

 

 

EXHIBIT B

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

     The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue
Code, to include in taxpayer’s gross income for the current taxable year the amount of any
compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described
below:

	1.	 	The name, address, taxpayer identification number and taxable year of the undersigned are as
follows:

	 	 	 
	NAME OF TAXPAYER:
	 	 
	 

	 	 

	 	 	 
	NAME OF SPOUSE:
	 	 
	 

	 	 

	 	 	 
	ADDRESS:
	 	 
	 

	 	 

	 	 	 
	IDENTIFICATION NO. OF TAXPAYER:
	 	 
	 

	 	 

	 	 	 
	IDENTIFICATION NO. OF SPOUSE:
	 	 
	 

	 	 

	 	 	 
	TAXABLE YEAR:
	 	 
	 

	 	 

	2.	 	The property with respect to which the election is made is described as follows:
___ shares of the Common Stock of Penford Corporation, a Washington corporation (the
“Company”).
	 
	3.	 	The date on which the property was transferred is: ___, 200___
	 
	4.	 	The property is subject to the following restrictions:
	 
	 	 	The property is subject to a right pursuant to which taxpayer forfeits the rights in
and to the shares if for any reason taxpayer’s service with the Company is
terminated. The forfeiture right lapses in a series of installments over a
[___]-year period ending on ___.
	 
	5.	 	The aggregate fair market value at the time of transfer, determined without regard to any
restriction other than a restriction which by its terms will never lapse, of such property is:
$___
	 
	6.	 	The amount (if any) paid for such property is: $___

 

 

     The undersigned has submitted a copy of this statement to the person for whom the services
were performed in connection with the undersigned’s receipt of the above-described property. The
undersigned is the person performing the services in connection with the transfer of said property.

     The undersigned understands that the foregoing election may not be revoked except with the
consent of the Commissioner.

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	Recipient

 

 

DISTRIBUTION OF COPIES

	1.	 	File original with the Internal Revenue Service Center where the taxpayer’s income tax return
will be filed. Filing must be made by no later than 30 days after the date the property was
transferred.
	 
	2.	 	Attach one copy to the taxpayer’s income tax return for the taxable year in which the
property was transferred.
	 
	3.	 	Mail one copy to the Company at the following address:

Penford Corporation

7094 S. Revere Parkway

Centennial, Colorado 80112-3932

Attn: Secretary

 

 

EXHIBIT C

STOCK POWER AND ASSIGNMENT

SEPARATE FROM CERTIFICATE

     FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Award Agreement dated as of
___, ___, the undersigned hereby sells, assigns and transfers unto
___ shares of the Common Stock of Penford Corporation, a Washington
corporation, standing in the undersigned’s name on the books of said corporation represented by
Certificate No. ___ delivered herewith, and does hereby irrevocably constitute the Secretary of
said corporation as attorney-in-fact, with full power of substitution, to transfer said stock on
the books of said corporation.

	 	 	 
	Dated:
	 	 
	 

	 	 

	 	 	 
	Signature:
	 	 
	 

	 	 

	 	 	 
	Please print name:
	 	 
	 

	 	 

Please see Section 11 of the Restricted Stock Award Agreement for information on completing this
form.

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