FORM OF 2006 LONG-TERM INCENTIVE PLAN PERFORMANCE BASED CASH AWARD AGREEMENT
EXHIBIT 10.16
Penford Corporation (the “Company”), on [date] (the “Grant Date”), granted to you the
opportunity to earn an Award pursuant to the terms of the Company’s 2006 Long-Term Incentive Plan
(the “Plan”). The Award is subject to all the terms and conditions set forth in this Award
Agreement (the “Award Agreement”) and in the Plan, which is attached to and incorporated into this
Award Agreement in its entirety.
1. Definitions.
(a) “Earning Period” means the period from [dates].
(b) “Performance Period” means the period from [dates].
(c) “Performance Period Cash Flow/EBITDA” means the Company’s cash flow calculated as earnings
before interest, taxes, depreciation and amortization, for the fiscal year of the Company ending
[date] (the “Performance Period Cash Flow/EBITDA”), all as confirmed by the Committee based on
information presented by the Chief Financial Officer of the Company; provided, however, that
Performance Period Cash Flow/EBITDA shall be calculated without regard to the following: changes
in accounting principles (i.e, cumulative effect of GAAP changes); extraordinary items as defined
in accordance with US GAAP or which are the result of a change in the law or the Company’s response
thereto; income/loss from discontinued operations and income/loss on sale of discontinued
operations; non-recurring operating income/expenses (separately stated and disclosed in the
financial statements — e.g., restructuring charges, legal settlement charges, goodwill write-off);
and impairment of intangibles.
(d) Unless otherwise noted, all other terms used herein that are defined in the Plan have the
same meaning given them in the Plan.
2. Award Amount. The amount of the Award (the “Award Amount”) will be calculated
pursuant to the amount shown in column (b) below in accordance with this Section 2, based on
satisfaction of the criteria set forth in column (a) below:
| (a) | ||||
| Performance Period | (b) | |||
| Achievement Level | Cash Flow/EBITDA | Award | ||
Maximum
|
$ [ ] | $ [ ] | ||
Target
|
$ [ ] | $ [ ] | ||
Threshold
|
$ [ ] | $ [ ] |
The Award Amount for achievement levels between the Target and Maximum achievement shall be
interpolated on a straight line basis (rounded up to the nearest integer) and the Award Amount for
achievement levels between the Threshold and Target achievement shall be interpolated on a straight
line basis (rounded up to the nearest integer). No Award Amount will be paid if Performance Period
Cash Flow/EBITDA is less than the Threshold achievement level and no increase to the Award Amount
will be made for Performance Period Cash Flow/EBITDA in excess of the Maximum achievement level.
The Award Amount will vest on [date] if your employment or service with the Company and its
Subsidiaries has not terminated during the Earning Period. The Award Amount will be paid within
ninety days after it vests, with the timing of the payment within such ninety days determined by
the Committee. Subject to Section 4 Forfeiture and except as provided in Section 3
Death or Disability and 5 Change in Control below, the Award Amount, provided you
were employed by or providing services to the Company or Subsidiary throughout the Earning Period,
will be paid no later than [date].
3. Death or Disability. If after the Performance Period but prior to the end of the
Earning Period, you either die while in the employ or service of the Company or a Subsidiary or
have your employment or service with the Company terminated because of a Disability within the
Earning Period, your Award Amount as calculated pursuant to Section 2 Award Amount shall
become vested and be paid to you or your estate within ninety days (such timing of payment within
the ninety days determined in the sole discretion of the Committee) after your death or termination
of employment or service with the Company or any Subsidiary because of Disability.
4. Forfeiture. Your right to receive an Award Amount is forfeited if your employment
or service with the Company and its Subsidiaries terminates during the Earning Period for any
reason other than on account your death or incurring a Disability as set forth in Section 3
Death or Disability or prior to your vesting in the Award Amount as set forth in Section 5
Change in Control below.
5. Change in Control. Notwithstanding any other provision of this Award Agreement,
your right to receive the Award Amount shall become vested and paid immediately prior to a Change
in Control (as defined in your Change of Control Agreement with the Company dated as of [date], as amended from time to time (the “Change in Control Agreement”)) (the “Change in Control”)
if you were employed by the Company immediately prior to the Change in Control and such Change in
Control occurs after both the Performance Period and the determination by the Committee of the
Award Amount based on the Performance Period. In addition, if you are employed by the Company
immediately prior to the Change in Control and such Change in Control occurs before either the end
of the Performance Period or the determination by the Committee of the Award Amount based on the
Performance Period, the Award Amount shall be treated as the Maximum Award Amount to which you
could have been entitled under this Award Agreement if the Maximum Performance Period Cash
Flow/EBITDA was achieved during the Performance Period and your right to such Maximum Award Amount
shall be vested and paid immediately prior to a Change in Control.
6. 409A Compliance. This Award is intended to be exempt from the requirements of
Section 409A of the Code by reason of the short-term deferral exemption and the terms of this Award
shall be interpreted, operated and administered in a manner consistent with this intention to the
extent the Company deems necessary to comply with Section 409A of the Code. If the short-term
deferral exemption or any other exemption from Section 409A of the Code is not available, to the
extent Section 409A of the Code is applicable thereto, the terms of this Award shall be
interpreted, operated and administered in a manner consistent with the intention to comply with the
requirements of Section 409A of the Code to the extent the Company deems necessary to comply with
Section 409A of the Code including, without limitation, to the extent necessary to comply with
Section 409A of the Code, limiting the accelerated payout timing in connection with a Change in
Control to situations constituting a change in the ownership or effective control of the Company or
in the ownership of a substantial portion of the assets of the Company within the meaning of
Section 409A of the Code and limiting the accelerated payout timing in connection with a
termination of employment or service because of Disability to
situations constituting a permissible payment event under Section 409A of the Code.
Notwithstanding any other provision in this Plan, the Company, to the extent it deems necessary or
advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally
amend or modify this Award to reflect the intention that the Award qualifies for exemption from or
complies with Section 409A of the Code in a manner which does not adversely affect you; provided,
however, that neither the Company nor the Committee makes any representation that this Award shall
be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section
409A of the Code from applying to this Award.
7. Withholding Taxes. You hereby authorize withholding from payroll and any other
amounts payable to you, and otherwise agree to make adequate provision for any sums required to
satisfy federal, state, local or foreign withholding tax obligations that may arise in connection
with the Award.
8. Successors and Assigns. The provisions of this Award 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 Award Agreement and agreed in
writing to join herein and be bound by the terms and conditions hereof.
9. No Employment or Service Contract. Nothing in this Award Agreement will affect in
any manner whatsoever the right or power of the Company or 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.
10. Employment and Service. In determining cessation of employment or service,
transfers between the Company and/or any Subsidiary shall be disregarded, and changes in status
between that of an Employee and Director shall be disregarded.
11. Unfunded Award. Nothing in this Award shall create or be deemed to create a trust
or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and
you.
12. Governing Plan Document. The Award is subject to all the provisions of the Plan,
the provisions of which are hereby made a part of your Award, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of the Award and
those of the Plan, the provisions of the Plan shall control.
13. Employee Data Privacy. By entering into this Award Agreement, you (a) authorize
the Company and any agent of the Company administering the Plan or providing Plan recordkeeping
services, to disclose to the Company or any of its affiliates any information and data the Company
requests in order to facilitate the Award and the administration of the Plan; (b) waive any data
privacy rights you may have with respect to such information; and (c) authorize the Company and its
agents to store and transmit such information in electronic form.
14. Governing Law. To the extent not otherwise governed by the laws of the United
States, this Award Agreement will be construed and administered in accordance with and governed by
the laws of the State of Washington.
15. Counterparts. This Award Agreement 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.
Additional Terms/Acknowledgement. You acknowledge receipt of, and understand and
agree to, this Award Agreement and the Plan. You further acknowledge that as of the Grant Date,
this 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 and that the
Award Amount shall not be treated as a “Target Bonus” under your Change in Control Agreement.
| PENFORD CORPORATION | [Executive Name] | |||
By: |
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| Title: |
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Attachment:
2006 Long-Term Incentive Plan
