exv10w1



 






Exhibit 10.1




JUNE 9, 2006




Mr. Benjamin Palleiko

One Meadowland Drive

Hopkinton, Ma 01748



Dear Ben:



I am pleased to formally extend to you an offer of employment with Penwest Pharmaceuticals Co. The
purpose of this letter is to confirm and clarify various elements of your offer.




	 	 	 	 	 
	•

	 	Assignment:
	 	You will assume the responsibility of Senior Vice President,
Corporate Development and Chief Financial Officer reporting to
Jennifer Good, President & CEO.
	 
	 	 	 	 
	•

	 	Annual Salary:
	 	Your starting salary will be $285,000 per year or $23,750 per month.
	 
	 	 	 	 
	•

	 	Stock Options:
	 	150,000 shares of non-qualified stock options in Penwest Pharmaceuticals Co. Shares will
vest at 25% a year over a four-year period and will be priced at market value on your start
date.
	 
	 	 	 	 
	•

	 	Bonus Incentive Program:
	 	You will be eligible to participate in the Penwest annual bonus incentive Program
with a payment opportunity of up to 30% of your base salary subject to individual and company performance
targets. There will be no pro-rate on your first year bonus with the company.
	 
	 	 	 	 
	•

	 	Executive Retention Agreement:
	 	You will be entitled to an executive retention agreement to be
signed on Retention the hire date. This agreement,
subject to the details outlined in the plan Agreement document, will in essence provide you
with 12 months plus
2 weeks pay for
each full year of
employment with the
Company in the
event of
termination of
employment other
than for cause.
The agreement will
also provide that
all stock options
held by the
executive will be
accelerated in full
and free of any
right of repurchase
by the Company.
Please refer to the
signed plan
document for
complete terms and
conditions.
	 
	 	 	 	 
	•

	 	Annual Stock Option Grant:
	 	You will be eligible to participate in the annual stock option
grant given to Option Grant all employees based on both merit and
level within the company.
	 
	 	 	 	 
	•

	 	401(k) Savings Plan:
	 	You may contribute up to 15% of your pay, with a company match
Plan of $0.75 on the first 6% of your contribution
(subject to a 90 day waiting period and the next sign up date)
	 
	 	 	 	 
	•

	 	Stock Purchase Plan:
	 	You may purchase company
stock at a 15% discount through after-Plan tax payroll
deduction (subject to a 90 day waiting period and the next sign
up date).
	 
	 	 	 	 
	•

	 	Vacation:
	 	You will be entitled to four weeks
vacation per year. If beginning after March 1, your vacation
will be pro-rated for the year. This will continue until such
time as you fall within Penwest’s vacation policy bands.
	 
	 	 	 	 
	•

	 	Living Expenses:
	 	Penwest will reimburse you for living
expenses while in Danbury for up to 24 months, at which time the
arrangement will be revisited.





The above describes some of the terms of Penwest’s Compensation and Benefits programs, which may be
updated from time to time. The official documents govern in all cases.




 









 







This offer will be contingent upon successful completion of the procedures outlined in the enclosed
addendum, as well as verification of the information regarding your background and qualifications
that you provided on your resume/application.



I have attached our Company’s Proprietary Information Agreement and Conflict of Interest Policy as
well as authorization for drug testing and background search. Please sign the attachments along
with one copy of this offer letter and return them to me.



We hope that you view our offer as an indication of our confidence in your long-term success at
Penwest. We know you will be a strong addition to our team and believe you will find your
experience at Penwest to be challenging, rewarding and fun.




Sincerely,

/s/ Jennifer L. Good                     

Jennifer L. Good

President & CEO




	 	 	 	 	 
	Accepted:

	 	/s/ Benjamin L. Palleiko	 	 
	 

	 	 

By: Benjamin Palleiko