EXHIBIT 99.2
PENWEST PHARMACEUTICALS
CO.
Nonstatutory Stock
Option Agreement
1. Grant of Option
.
This agreement (this
“Agreement”) evidences the grant by Penwest
Pharmaceuticals Co., a Washington corporation (the
“Company”), on June 21, 2004 (the “Grant
Date”) to Alan F. Joslyn, an employee of the Company (the
“Employee”), of an option to purchase, in whole or in
part, on the terms provided herein, a total of 100,000 shares (the
“Shares”) of common stock, $.001 par value per share,
of the Company (“Common Stock”) at an exercise price of
$11.06 per Share. Unless earlier terminated, this option shall
expire at 5:00 p.m., Eastern time, on June 22, 2014 (the
“Final Exercise Date”).
It is intended that the option
evidenced by this Agreement shall not be an incentive stock option
as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the
“Code”). Except as otherwise indicated by the context,
the term “Employee”, as used in this option, shall be
deemed to include any person who acquires the right to exercise
this option validly under its terms.
2. Vesting Schedule
.
(a) This option will become
exercisable (“vest”) as to 25% of the original number
of Shares on the first anniversary of the Grant Date and as to an
additional 25% of the original number of Shares at the end of each
successive one year period following the first anniversary of the
Grant Date until the fourth anniversary of the Grant Date.
(b) The right of exercise shall
be cumulative so that to the extent the option is not exercised in
any period to the maximum extent permissible it shall continue to
be exercisable, in whole or in part, with respect to all Shares for
which it is vested until the earlier of the Final Exercise Date or
the termination of this option under Section 3 or
Section 6 hereof.
(c) Notwithstanding the
foregoing, this option shall automatically become exercisable in
full (i) upon a Change in Control Event (as defined below)
prior to the date the Employee ceases to be an Eligible Employee
(as defined below), (ii) upon the Employee’s death or
disability (within the meaning of Section 22(e)(3) of the
Code) on or prior to the date the Employee ceases to be an Eligible
Employee or (iii) upon the Employee’s retirement in
accordance with the Company’s normal retirement policy,
provided in each case that the Company has not terminated the
Employee’s relationship with the Company for
“cause” or determined that discharge for
“cause” was warranted as specified in Section 3(e)
below.
(d) For the purposes of this
Section 2, a “Change in Control Event” shall
mean:
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(i) |
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the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended) (a “Person”) of
beneficial ownership of any capital stock of the Company if, after
such acquisition, such |
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Person beneficially owns (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended)
50% or more of the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a
Change in Control Event: (A) any acquisition directly from the
Company, (B) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (C) any acquisition
by any corporation pursuant to a Business Combination (as defined
below) which complies with clauses (x) and (y) of
subsection (iii) of this definition; or |
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(ii) |
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such time as the Continuing Directors (as defined below) do not
constitute a majority of the Board of Directors of the Company (the
“Board”) (or, if applicable, the Board of Directors of
a successor corporation to the Company), where the term
“Continuing Director” means at any date a member of the
Board (x) who was a member of the Board on the Grant Date or
(y) who was nominated or elected subsequent to such date by at
least a majority of the directors who were Continuing Directors at
the time of such nomination or election or whose election to the
Board was recommended or endorsed by at least a majority of the
directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be
excluded from this clause (y) any individual whose initial
assumption of office occurred as a result of an actual or
threatened election contest with respect to the election or removal
of directors or other actual or threatened solicitation of proxies
or consents, by or on behalf of a person other than the Board;
or |
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(iii) |
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the consummation of a merger, consolidation, reorganization,
recapitalization or share exchange involving the Company or a sale
or other disposition of all or substantially all of the assets of
the Company (a “Business Combination”), unless,
immediately following such Business Combination, each of the
following two conditions is satisfied: (x) all or
substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% the combined voting power of
the then-outstanding securities entitled to vote generally in the
election of directors, of the resulting or acquiring corporation in
such Business Combination (which shall include, without limitation,
a corporation which as a result of such transaction owns the
Company or substantially all of |
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the Company’s assets either directly or through one or
more subsidiaries) (such resulting or acquiring corporation is
referred to herein as the “Acquiring Corporation”) in
substantially the same proportions as their ownership of the
Outstanding Company Voting Securities immediately prior to such
Business Combination and (y) no Person (excluding any employee
benefit plan (or related trust) maintained or sponsored by the
Company or by the Acquiring Corporation) beneficially owns,
directly or indirectly, 50% of the combined voting power of the
then-outstanding securities of the Acquiring Corporation entitled
to vote generally in the election of directors (except to the
extent that such ownership existed prior to the Business
Combination); or |
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(iv) |
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the liquidation or dissolution of the Company. |
3. Exercise of
Option .
(a) Form of Exercise .
Each election to exercise this option shall be in writing, signed
by the Employee, and received by the Company at its principal
office, accompanied by this agreement, and payment in full in the
manner provided in Section 4 below. The Employee may purchase
less than the number of shares covered hereby, provided that no
partial exercise of this option may be for any fractional share or
for fewer than five whole shares.
(b) Continuous Relationship
with the Company Required . Except as otherwise provided in
this Section 3, th
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