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EXHIBIT 4.1
PENWEST, LTD.
1994 STOCK OPTION PLAN
(AS AMENDED AS OF JANUARY 21, 1997)
1. INTRODUCTION:
This Plan establishes the right of and procedures for PENWEST, LTD. (the
"Company") to grant stock options to its key employees. The Plan provides for
the granting of two types of options, namely, (1) Non-Statutory Stock Options
and (2) Incentive Stock Options. This Plan sets forth provisions applicable to
both types of options, to Non-Statutory Options only and to Incentive Stock
Options only.
2. PROVISIONS OF GENERAL APPLICATION:
The provisions of this Section 2 apply to both Non-Statutory Options and
Incentive Stock Options granted by the Company.
2.1 Objectives of the Plan:
The purpose of this Plan is to encourage ownership of Common Stock of the
Company by key employees of the Company and any subsidiary. This Plan is
intended to provide an incentive for maximum effort in the successful operation
of the Company and is expected to benefit the shareholders by enabling the
Company to attract and retain personnel of the best available talent through the
opportunity to share, by the proprietary interests created by this Plan, in the
increased value of the Company's shares to which such personnel have
contributed.
2.2 Stock Reserved for this Plan:
The stock reserved for issue upon the exercise of options granted under
this Plan will not exceed 1,000,000 shares of the Common Stock of the Company
(the "Shares"). Except to the extent provided by the last sentence of this
Section 2.2, if any outstanding option under this Plan expires or is terminated
for any reason, Shares allocable to the unexercised portion of such option shall
remain available for other options under this Plan provided that the aggregate
number of Shares subject to options under this Plan shall not exceed 1,000,000
Shares. The maximum number of Shares for which grants of options may be made to
any employee in any one fiscal year of the Company is 150,000. If an option
granted to an employee is canceled, the canceled option shall be counted against
the maximum number of shares for which options may be granted to the employee
hereunder.
2.3 Administration of this Plan:
This Plan will be administered by the Compensation Committee of the Board
of Directors of the Company (the "Committee") composed of two or more members
all of whom shall be "Non-Employee Directors" as defined in the rules and
regulations promulgated by the Securities and Exchange Commission pursuant to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and all of whom shall be "outside directors" as defined in the regulations
promulgated by the Internal Revenue Service pursuant to Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
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A majority of the Committee shall constitute a quorum, and acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all members of the Committee, shall be deemed the
acts of the Committee.
The Committee, after considering the recommendations of the President and
other officers of the Company, if the Committee shall deem the same appropriate,
shall:
(a) determine the number of shares subject to each option, the terms
thereof and the type of options to be granted, and direct the President,
or other officer in his absence, to enter into an appropriate agreement
evidencing such option;
(b) prescribe rules and regulations from time to time for
administration of this Plan;
(c) decide any questions arising as to the interpretation or
application of any provision of this Plan.
Any action, decision, interpretation or determination by the Committee
with respect to this Plan shall be final and binding upon all employees.
This Plan shall otherwise be administered in accordance with Section 16 of
the Exchange Act, including where required or advisable any amendments thereto
or successor statutes.
2.4 Eligibility Facts to be Considered in Granting Options:
An option may be granted to any officer or key employee who, at the time
the option is granted, is a regular full time employee of the Company or of any
subsidiary. In its determination of an employee to whom an option shall be
granted and the number of Shares to be covered by such option, the Committee
shall take into account the duties of the employee, the present and potential
contributions of the employee to the success of the Company, the anticipated
number of years of service remaining before the attainment by the employee of
the age of retirement, and other factors deemed relevant by the Committee in
connection with accomplishing the purpose of this Plan. An employee who has been
granted an option to purchase Shares, whether under this Plan or otherwise, may,
if the Committee shall so determine, be granted additional options. As used in
this Plan, the term "Optionee" shall refer to the person to whom an option is
granted hereunder.
2.5 Vesting of Options:
The Committee shall have the authority to establish the conditions for
determining when the optioned Shares may be purchased, and whether all of the
options may be exercised at one time or in increments. The conditions for
vesting may include continued employment, attainment of individual,
departmental, divisional or Company goals, or such other conditions as the
Committee may designate.
2.6 Accelerated Vesting:
The Committee shall have the authority to establish criteria for
accelerating the vesting of options if certain events occur. The Committee may
provide for accelerated vesting in the case of such events as merger,
consolidation, reorganization, tender offer, takeover bid, sale of assets, or
dissolution. All options shall automatically vest upon the option holder's: (i)
death, (ii) "disability" as defined in, and
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determined in accordance with, the Company's Supplemental Plan of Disability, or
(iii) retirement (1) in accordance with the Company's normal retirement policy
or (2) prior to attaining sixty-five (65) years of age provided specific
approval of such vesting is given by the Company. No such acceleration shall
allow the holder of an option to purchase any optioned Shares for which the
options have expired.
2.7 Terms and Expiration of Options:
Each option granted under this Plan shall be in writing, shall be subject
to such amendment or modification from time to time as the Committee shall deem
necessary or appropriate to comply with, or take advantage of, applicable laws
or regulations and shall contain provisions to the following effect, together
with such other provisions as the Committee shall from time to time approve:
(a) that, subject to the provisions of Section 2.7(b) below, the
option, as to the whole or any part thereof, may be exercised only by the
Optionee or permitted transferee;
(b) that neither the whole nor any part of the option shall be
transferable (whether by operation of law otherwise) other than by the
will of, or by the laws of descent and distribution applicable to, a
deceased Optionee or (except in the case of an Incentive Stock Option)
pursuant to a qualified domestic relations order; provided, that the
Committee may, in its discretion, authorize the whole or any part of a
Non-Statutory Option to be transferable without consideration to the
spouse, children or grandchildren of the Optionee ("Immediate Family
Members") or to a trust for the exclusive benefit of such Immediate Family
Members or to a partnership in which such Immediate Family Members are the
only partners; and that the option and any and all rights granted to the
Optionee thereunder and not theretofore effectively and completely
exercised shall automatically terminate and expire upon any sale, transfer
or hypothecation or any attempted sale, transfer or hypothecation of such
rights contrary to the provisions hereof or upon the bankruptcy or
insolvency of the Optionee or permitted transferee;
(c) that subject to the foregoing provisions, an option may be
exercised at different times for portions of the total number of option
Shares for which the right to purchase or exercise shall have vested
provided that such portions are in multiples of five (5) Shares;
(d) that the Optionee or permitted transferee shall have no right to
receive any dividend on or to vote or exercise and right in respect of any
Shares the certificate for which has not been issued to him, her or it;
(e) that the option shall each expire at the earliest of the
following:
(1) the date specified in the option;
(2) a date specified in the option but not later than twelve
(12) months after voluntary or involuntary termination of the
Optionee's employment other than termination as described in
Paragraph (3) below;
(3) upon the discharge of the Optionee for misconduct,
willfully or wantonly harmful to the Company;
(4) twelve (12) months after the Optionee's death or
disability;
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(5) such earlier date as the Committee may specify in the
event of a merger, consolidation, reorganization, tender offer,
takeover bid, sale of assets, or dissolution;
(f) that the terms of the option shall not be affected by any change
of the Optionee's duties or position so long as the Optionee shall
continue to be employed by the Company or a subsidiary.
2.8 Notice of Intent to Exercise Option:
The Optionee or permitted transferee desiring to exercise an option
granted hereunder as to all or part of the Shares covered thereby shall in
writing notify the Company at its principal office at Bellevue, Washington, to
that effect specifying the number of option Shares to be purchased. With respect
to any Shares acquired pursuant to Section 2.6, the Optionee or permitted
transferee shall be deemed to have given to the Company the notice of exercise
required by this Section 2.8 ten (10) days prior to the closing or effective
date of any accelerating event.
2.9 Recapitalization:
The aggregate number of Shares for which options may be granted hereunder,
the number of Shares covered by each outstanding option and the price per share
thereof in each such option shall be proportionately adjusted for any increase
or decrease in the number of outstanding shares of Common Stock of the Company
resulting from a division or consolidation of shares or any other increase or
decrease in such shares effected without receipt of consideration by the Company
excluding any decrease resulting from the purchase of shares for the treasury.
If the adjustment would result in a fractional share, the Optionee shall be
entitled to one (1) additional share, provided that the total number of Shares
to be granted under this Plan shall not be increased above the equivalent number
of shares initially allocated to this Plan or subsequently approved by the
shareholders of the Company for issuance hereunder.
2.10 Termination and Amendment of this Plan:
The directors of the Company may at any time modify, amend or terminate
this Plan, provided, however, that (i) no outstanding option may be amended or
modified without the consent of the holder thereof, and (ii) no amendment or
modification to this Plan shall increase the number of Shares as to which
options may be granted under this Plan or change the class of employee to whom
options may be granted under this Plan without shareholder approval.
2.11 Granting of Options:
The granting of any option pursuant to this Plan shall be entirely in the
discretion of the Committee and nothing herein contained shall be construed to
give any officer or employee any right to participate under this Plan or to
receive any option under it.
The granting of an option pursuant to this Plan shall not constitute an
agreement or understanding, express or implied, on the part of the Company or a
subsidiary to employ the Optionee for any specified period.
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2.12 Withdrawal:
An Optionee may at any time elect in writing to abandon an option with
respect to the number of Shares as to which the option shall not have been
exercised.
2.13 Government Regulations:
This Plan and the granting and exercise of any option hereunder and the
obligations of the Company to sell and deliver Shares under any such option
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies as may be required. This Plan shall be
governed by the laws of the State of Washington.
2.14 Shareholder Approval:
This Plan shall be submitted to the shareholders for their approval within
twelve (12) months from the date hereof.
2.15 Compliance with Securities Laws:
The Committee shall have the right to:
(a) require an Optionee or permitted transferee to execute, as a
condition of the exercise of an option, a letter evidencing the Optionee's
or permitted transferee's intent to acquire the Shares for investment and
not with a view to the distribution thereof;
(b) place appropriate legends upon the certificate or
certificates for the Shares; and
(c) take such other acts as it deems necessary in order to cause the
issuance of optioned Shares to comply with applicable provisions of state
and federal securities laws.
3. PROVISIONS APPLICABLE TO NON-STATUTORY AND INCENTIVE STOCK
OPTIONS:
The provisions of this Section 3 shall apply to Non-Statutory Options and
Incentive Stock Options.
3.1 Method of Exercise of Option:
Within ten (10) days after receipt by the Company of the notice provided
for in Section 2.8, but not later than the expiration date specified in Section
2.7(e), the option shall be exercised as to the number of Shares specified in
the notice of payment to the Company of the amount specified in either Section
4.2 or Section 5.5, as may be applicable. Payment of the purchase price provided
in the option shall be made in cash, in shares of the Company's Common Stock, or
in any combination of cash and shares of the Company's Common Stock. Full or
partial payment in shares of the Company's Common Stock shall be deemed to be
the equivalent of payment in cash of the fair market value of those shares. For
purposes of the preceding sentence and this Plan, "fair market value" is defined
as the average, if any, of the closing prices for the Common Stock as of 4:00
p.m. Eastern Time on the date of exercise on the principal trading exchange or
national automated stock quotation system on which the Common
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Stock is traded or quoted. Payment of the purchase price in shares of the
Company's Common Stock shall be subject to rules and procedures established by
the Committee including but not limited to any minimum holding period of the
shares used in payment of the purchase price.
3.2 Holding Period:
Any Optionee who is an officer, director or ten percent ( 10%) shareholder
of the Company shall be precluded from selling or transferring any Common Stock
or other security of the Company underlying an option during the six (6) months
immediately following the grant of the option.
3.3 Substitutions and Assumptions:
The Committee shall have the right to substitute or assume options in
connection with mergers, reorganizations, separations or other "corporate
transactions" as that term is defined in and said substitutions and assumptions
are permitted by Section 424 of the Code, and the regulations promulgated
thereunder. The number of Shares reserved pursuant to Section 2.2 may be
increased by the corresponding number of options assumed and, in the case of a
substitution, by the net increase in the number of Shares subject to options
before and after the substitution.
3.4 Proceeds from Sale of Stock:
Proceeds of the purchase of optioned Shares by an Optionee or permitted
transferee shall be for the general business purposes of the Company.
4. PROVISIONS APPLICABLE SOLELY TO NON-STATUTORY STOCK OPTIONS:
In addition to the provisions of Sections 2 and 3, the following
paragraphs shall apply to any options granted under this Plan which are not
Incentive Stock Options.
4.1 Option Price:
The option or purchase price of each Share optioned under this Plan shall
be determined by the Committee at the time the option is granted, provided that
the option price shall not be less than the fair market value of such Shares on
the date of grant.
4.2 Method of Exercise of Option:
The amount to be paid by the Optionee or permitted transferee upon
exercise of a Non-Statutory Option shall be the full purchase price thereof
provided in the option, together with the amount of federal, state or local
taxes of any kind required to be withheld by the Company. If a permitted
transferee fails to pay such withholding taxes, the Optionee shall pay them. An
Optionee or permitted transferee may elect to pay his or her withholding taxes
by having the Company withhold shares of Company stock having a value equal to
the amount required to be withheld. The value of the shares to be withheld is
deemed to be equal to the fair market value of the shares on the day the option
is exercised. An election by an Optionee to have shares withheld for this
purpose will be subject to the following restrictions:
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(a) if an Optionee has received multiple option grants, a
separate election must be made for each grant;
(b) the election must be made prior to the day the option is
exercised;
(c) the election will be irrevocable; and
(d) the election will be subject to the disapproval of the
Committee.
5. PROVISIONS APPLICABLE SOLELY TO INCENTIVE STOCK OPTIONS:
In addition to the provisions of Sections 2 and 3, the following
paragraphs shall apply to any options granted under this Plan which are
Incentive Stock Options.
5.1 Conformance with Internal Revenue Code:
Options granted under this Plan which are "Incentive Stock Options" shall
conform to, be governed by and interpreted in accordance with, Section 422 of
the Code and any regulations promulgated thereunder as well as any amendments to
the Code and such regulations.
5.2 Option Price:
The option or purchase price of each Share optioned under the Incentive
Stock Option provisions of this Plan shall be determined by the Committee at the
time of the action for the granting of the option but shall not, in any event,
be less than the fair market value of such Shares on the date of grant.
5.3 Limitation on Vesting of Incentive Stock Option:
The aggregate fair market value of the option Shares (determined on the
date of grant) with respect to which Incentive Stock Options are exercisable for
the first time by an Optionee during any calendar year (under this Plan and any
other plan of the Company or its subsidiaries which authorizes Incentive Stock
Options) shall not exceed $100,000.
5.4 Limitation on Grants to Substantial Shareholders:
An employee may not, immediately prior to the grant of an Incentive Stock
Option hereunder, own stock in the Company representing more than ten percent
(10%) of the voting power of all classes of stock of the Company unless the per
share option price specified by the Committee for the Incentive Stock Options
granted such an employee is at least one hundred ten percent (110%) of the fair
market value of the Company's stock on the date of grant and such option, by its
terms, is not exercisable after the expiration of five (5) years from the date
such option is granted.
5.5 Method of Exercise of Option:
The amount to be paid by the Optionee upon exercise of an Incentive Stock
Option shall be the full purchase price thereof provided in the option.
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5.6 Time Limits on Grants and Exercises:
No Incentive Stock Option may be granted after October 26, 2004, and no
Incentive Stock Option may have a term of more than ten (10) years.
PENWEST, LTD.
By /s/ Tod R. Hamachek
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Its President
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ATTEST:
/s/ Jeffrey T. Cook
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Its Secretary
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