STOCK OPTION PLAN
The purpose of the PENWEST, LTD. Stock Option Plan for Non-Employee Directors (the "Plan") is to
promote the interests of PENWEST, LTD. (the "Corporation") and its shareholders by encouraging Non-
Employee Directors of the Corporation to have a direct and personal stake in the performance of the
Corporation's Common Stock.
Unless the context clearly indicates otherwise, the following terms have the meanings set forth below.
"Annual Option" means a stock option granted under Section 7.
"Board of Directors" or "Board" means the Board of Directors of the Corporation.
"Business Day" means any day except Saturday, Sunday or a legal holiday in the State of Washington.
"Change in Control" means (i) the first purchase of shares pursuant to a tender offer or exchange offer (other than
a tender offer or exchange offer by the Corporation) for all or part of the Common Stock or any securities
convertible into Common Stock, (ii) the receipt by the Corporation of a Schedule 13D or other advice indicating
that a person is the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of 20% or more of the
Common Stock, (iii) the date of approval by the shareholders of the Corporation of an agreement providing for
any consolidation or merger of the Corporation in which the Corporation will not be the continuing or surviving
corporation or pursuant to which shares of Common Stock would be converted into cash, securities or other
property, other than a merger of the Corporation in which the holders of Common Stock immediately prior to the
merger would have the same proportion of ownership of common stock of the surviving corporation immediately
after the merger, (iv) the date of approval by the shareholders of the Corporation of any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the
Corporation, (v) the adoptio