exv10w2







EXECUTION COPY




BIODEL INC.




EXECUTIVE EMPLOYMENT AGREEMENT



     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of March 26, 2010 by and between
Biodel Inc., a Delaware corporation (the “Company”), and Solomon S. Steiner, Ph.D. an individual
(“you”) (and, together, “Parties”).



     NOW THEREFORE, in consideration of your acceptance of continued employment, the Parties agree
to be bound by the terms contained in this Agreement as follows:



     1. Engagement. Effective March 29, 2010 (the “Effective Date”), you are ceasing to be the
Company’s President and Chief Executive Officer and becoming the Founder and Chief Scientific
Officer of the Company. You will report directly to the Company’s Chief Executive Officer (the
“CEO”). In your capacity as Chief Scientific Officer, you will head the Company’s discovery
research functions and have such other responsibilities, duties and authorities as may be specified
and mutually agreed upon with the CEO consistent with the role of Chief Scientific Officer. These
responsibilities may include serving as an officer and director of subsidiaries of the Company.



     2. Commitment. During and throughout your employment with the Company, you must devote
substantially all of your full working time and attention to the Company and you must not engage in
any employment, occupation, consulting or other similar activity absent the prior written consent
of the Company’s Board of Directors (the “Board”); provided, however, that you may (i) serve in any
capacity with any professional, community, industry, civic (including governmental boards),
educational or charitable organization, (ii) serve on up to two for-profit entity boards of
directors and up to two advisory boards, with the Board’s prior written consent, (iii) deliver
lectures, fulfill speaking engagements, and/or teach at educational institutions, subject to your
confidentiality obligations and to the CEO’s prior approval with respect to any lectures, speeches,
or other public announcements or presentations that involve the intellectual property of the
Company or its business operations, and (iv) subject to the Company’s conflict of interest
policies, make investments in other businesses and manage your and your family’s personal
investments and legal affairs; provided that any such activities described in clauses (i)-(iv)
above do not materially interfere with the performance of your duties for the Company and do not
otherwise violate this Agreement. You will perform your services under this Agreement primarily at
the Company’s offices in Danbury, Connecticut or at such place or places as you and the Board may
agree. You understand and agree that your employment will require travel from time to time.



     3. At-Will Employment. Beginning with the Effective Date, your employment with the Company
will be at-will, meaning either you or the Company can end your employment at any time and for any
or no reason, subject to the terms of Section 6 hereof.



     4. Cash and Incentive Compensation.



          (a) Base Salary. During your employment hereunder, you will receive a base salary at a monthly
rate of $33,333.33, annualizing to $400,000 (as revised under this



 









 




Agreement, the “Base Salary”).
The Company will pay your Base Salary periodically in arrears not less frequently than monthly in
accordance with the Company’s regular payroll practices as in effect from time to time. The Board
will review your Base Salary for increase (but not for decrease) no less frequently than annually.
If increased, the increased Base Salary will become the Base Salary for all purposes of this
Agreement and will not thereafter be decreased without your written consent, which may be withheld
for any reason or no reason.




          (b) Incentive Bonus. Upon meeting the applicable performance criteria established by the
Compensation Committee of the Board (the “Compensation Committee”) in its sole discretion, you will
be eligible to receive an annual incentive bonus (the “Annual Bonus”) for a given fiscal year of
the Company targeted at an amount equal to 50% of your Base Salary in effect at the Effective Date
or, for subsequent years, at the beginning of such fiscal year (the “Target Bonus”). For
performance exceeding such applicable performance criteria in the sole judgment of the Compensation
Committee, the Annual Bonus may be increased. The Annual Bonus, if any, will be paid when other
executives receive their bonuses under comparable arrangements but, in any event, no later than
March 15 of the year following the fiscal year with respect to which it is earned. The applicable
performance criteria for each fiscal year of the Company shall be determined by the Compensation
Committee no later than 90 days after the commencement of that fiscal year.




          (c) Equity Awards. You will be eligible for grants of option or other equity compensation in
future years, all at the sole discretion of the Compensation Committee.




          (d) Parachute Provisions. Your compensation under and beyond this Agreement is subject to
Exhibit A hereto until the third anniversary of the Effective Date.




     5. Employee Benefits.



          (a) Employee Welfare and Retirement Plans. You will, to the extent eligible, be entitled to
participate at a level commensurate with your position in all employee welfare benefit and
retirement plans and programs the Company provides to its executives in accordance with the terms
thereof as in effect from time to time.




          (b) Business Expenses. Upon submission of appropriate documentation in accordance with Company
policies, the Company will promptly pay, or reimburse you for, all reasonable business expenses
that you incur in performing your duties under this Agreement, including travel, entertainment,
professional dues and subscriptions, as long as such expenses are reimbursable under the Company’s
policies. Any payments or expenses provided in this Section 5(b) will be paid in accordance with
Section 7(c).




          (c) Vacation. You will be entitled to vacation equal to four weeks per calendar year (accrued
ratably on a monthly basis or otherwise in accordance with the standard written policies of the
Company with regard to executives), to be taken at such times as you shall reasonably determine.




          (d) Attorneys Fees. The Company will pay up to $12,000 for you to obtain legal services in
connection with reviewing this Agreement for execution. The payment provided in this Section 5(d)
will be paid in accordance with Section 7(c).




- 2 -









 








     6. Termination of Employment.



          (a) General. Subject in each case to the provisions of this Section 6 and the other
provisions of this Agreement relating to our respective rights and obligations upon termination of
your employment, nothing in this Agreement interferes with or limits in any way the Company’s right
to terminate your employment at any time, for any reason or no reason, with or without notice, and
nothing in this Agreement confers on you any right to continue in the Company’s employ. If your
employment ceases for any or no reason, you (or your estate, as applicable) will be entitled to
receive (in addition to any compensation and benefits you are entitled to receive under Section
6(b) below): (i) any earned but unpaid Base Salary and, to the extent consistent with general
Company policy, accrued but unused vacation through and including the date of termination of your
employment to be paid in accordance with the Company’s regular payroll practices and with
applicable law but no later than the next regularly scheduled pay period, (ii) any earned but
unpaid Annual Bonus for the fiscal year preceding the fiscal year in which your employment ends, to
be paid on the date such Annual Bonus otherwise would have been paid if your employment had
continued, (iii) unreimbursed business expenses in accordance with the Company’s policies for which
expenses you have provided appropriate documentation, and (iv) any amounts or benefits to which you
are then entitled under the terms of the benefit plans then sponsored by the Company in accordance
with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of
the Internal Revenue Code of 1986, as amended (“Section 409A” of the “Code”)). Notwithstanding any
other provision in this Agreement to the contrary, you will be entitled to severance, if any,
solely through the terms of this Section 6, unless another written Board-approved agreement between
you and the Company, or other Board-approved arrangement, expressly provides otherwise. You agree
that no prior arrangement providing for severance to you remains in effect after the Effective
Date.




          (b) Severance. If your employment with the Company ends for any reason other than the
Company’s termination of your employment for Cause or your death, in addition to the amounts
covered by Section 6(a), the Company will pay to you the following, subject to compliance with
Section 6(b)(iv):





          (i) Cash Severance. The Company will pay to you in cash an amount equal to the sum
of (1) twice your then-current Base Salary, plus (2) two times the amount of your
target Annual Bonus for the fiscal year of the Company in which you are terminated,
plus (3) the amount of your target Annual Bonus for the fiscal year of the Company
in which you are terminated multiplied by a fraction, the numerator of which is twelve minus
the number of whole calendar months remaining in the fiscal year of the Company in which you
are terminated, and the denominator of which is 12, paid in equal installments over a
24-month period beginning as provided under Section 6(b)(iv) or at such later date as
Section 7(a) provides.




          (ii) Benefits. Subject to compliance with Section 6(b)(iv), if you are eligible and
elect to continue receiving group medical insurance under the continuation coverage rules
known as COBRA, the Company will continue to pay the share of the premium for such coverage
that it pays for active and similarly-situated employees who receive the same type of
coverage until the earlier of (i) the end of the 24th month after your employment ends or
(ii) the date your COBRA continuation coverage expires. Subject to compliance with Section
6(b)(iv), you will also receive outplacement services,



- 3 -









 






provided that such services may not
continue more than 12 months following the termination of your employment.




          (iii) Equity Compensation. In addition to the compensation and benefits described in
Section 6(b)(i) and (ii) above and subject to the release required under Section 6(b)(iv),
any outstanding equity compensation awards will fully and immediately vest with respect to
any amounts that would have vested if you had remained employed for an additional 24 months
and, as applicable, become exercisable, provided that the Board will have the right to
suspend exercises or sales with respect to such equity compensation pending satisfaction of
the release requirement, and provided further that the vesting will not accelerate the
distribution of shares underlying equity awards if such acceleration would trigger taxation
under Section 409A(a)(1)(B). The acceleration by 24 months will subsequently increase to
full vesting if your termination without Cause or resignation occurs within 12 months
following a Change in Control, subject to the release required under Section 6(b)(iv). The
treatment in this Section 6(b)(iii) applies notwithstanding any contrary provisions in the
applicable equity compensation plans or any award agreement, provided that you will be
entitled to any more favorable treatment provided to you under the terms of the plans or
agreements. For the purpose of this Agreement, “Change in Control” means a Change in
Control Event (as defined under Section 10(c) of the Company’s 2010 Stock Incentive Plan
(the “2010 Plan”) and taking into account the restrictions in Section 10(d) of the 2010
Plan).




          (iv) Release. To receive any severance benefits provided for under this Agreement, you
must deliver to the Company a general release of claims arising prior to the date of
termination and relating to your employment by the Company in a customary form provided by
the Company, which must become irrevocable within 60 days following the date of your
termination of employment, provided, that in no event shall the release purport to release
claims to the compensation described in Section 6(a) and (b) and, if applicable, Section
4(d) or other continuing rights under this Agreement. Subject to Section 7, any such
severance benefits that (i) are conditioned in any part on such a release of claims and (ii)
would otherwise be paid (assuming the release is given) prior to the last day on which the
release could become irrevocable assuming your latest possible execution and delivery of the
release (such last day, the “Release Effective Date”) shall be paid, if ever, only on the
Release Effective Date, even if your release becomes irrevocable before that date. The
Company may elect to make such payment up to thirty (30) days prior to the Release Effective
Date, however. You must continue to comply with the covenants under Sections 8 and 9 in all
material respects to continue to receive severance benefits.



          (c) Termination for Cause.




          (i) General. If the Company terminates your employment for Cause, you will be
entitled only to the payments described in Section 6(a) (excluding clause (ii) of Section
6(a)). You will have no further right to receive any other compensation or benefits after
such termination or resignation of employment, except as determined in accordance with the
terms of the employee benefit plans or programs of the Company or as required by law.



- 4 -









 






          (ii) Cause. For purposes of this Agreement, “Cause” means termination of
your employment because of (i) fraud, (ii) willful and material misrepresentation not
including any exercise of business judgment in good faith relating to the performance of
your duties to the Company, which misrepresentation results in or is likely to result in a
material adverse effect on the Company; (iii) material instances of theft or embezzlement of
assets of the Company; (iv) your conviction, or plea of guilty or nolo contendere to any
felony; (v) material failure to follow the Company’s conduct and ethics policies that have
been provided or made available to you, which failure results in or is likely to result in a
material adverse effect on the Company; (vi) your material breach of this Agreement; and/or
(vii) your continued failure to attempt in good faith to materially perform your duties as
reasonably assigned by the Board. Before terminating your employment for Cause under
clauses (ii), (iii), (v), (vi), or (vii) above, the Company will specify in writing to you
the nature of the act, omission, refusal, or failure that it deems to constitute Cause and
give you 30 days after you receive such notice to correct the situation (and thus avoid
termination for Cause), unless the Board agrees to further extend the time for correction,
provided that the Board can shorten or eliminate the 30 day period for clauses other than
(vii) if it determines that the Cause is impossible to correct. In addition, you may elect
to resign in response to an assertion of Cause under clause (vii) and your resignation will
be treated instead under Section 6(b).



          (d) Further Effect of Termination on Officer Positions. If your employment ends for any
reason, you agree that you will cease immediately to hold any and all officer positions you then
have with the Company or any affiliate, absent a contrary direction from the Board (which may
include either a request to continue such service or a direction to cease serving upon notice). You
hereby irrevocably appoint the Company to be your attorney to execute any documents and do anything
in your name to effect your ceasing to serve as an officer of the Company and any affiliate, should
you fail to resign following a request from the Board to do so. A written notification signed by a
director or duly authorized officer of the Company that any instrument, document or act falls
within the authority conferred by this subsection will be conclusive evidence that it does so. The
Company will prepare any documents, pay any filing fees, and bear any other expenses related to
this section.




     7. Effect of Section 409A of the Code.



          (a) Six Month Delay. If and to the extent any portion of any payment, compensation or other
benefit provided to you in connection with your employment termination is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A and you are a specified
employee as defined in Section 409A(a)(2)(B)(i), as determined by the Company in accordance with
its procedures, by which determination you hereby agree that you are bound, such portion of the
payment, compensation or other benefit shall not be paid before the earlier of (i) the expiration
of the six month period measured from the date of your “separation from service” (as determined
under Section 409A) or (ii) the tenth day following the date of your death following such
separation from service (the “New Payment Date”). The aggregate of any payments that otherwise
would have been paid to you during the period between the date of separation from service and the
New Payment Date shall be paid to you in a lump sum in the first payroll period beginning after
such New Payment Date, and any remaining payments will be paid on their original schedule.
Payments subject to the foregoing




- 5 -









 







up to six month delay will bear interest for the period they are
delayed at the Wall Street Journal prime rate based on the interest rate in effect on the date of
employment termination, compounded monthly and paid in the first payroll period beginning after the
New Payment Date.




          (b) General 409A Principles. For the purposes of determining when amounts otherwise payable
on account of your termination of employment under this Agreement will be paid, which amounts
become due because of your termination of employment, “termination of employment” or words of
similar import, as used in this Agreement, shall be construed as the date that you first incur a
“separation from service” for purposes of Section 409A on or following termination of employment.
For purposes of this Agreement, each amount to be paid or benefit to be provided will be construed
as a separate identified payment for purposes of Section 409A, and any payments that are due within
the “short term deferral period” as defined in Section 409A or are paid in a manner covered by
Treas. Reg. Section 1.409A-1(b)(9)(iii) will not be treated as deferred compensation unless
applicable law requires otherwise. Neither the Company nor you will have the right to accelerate
or defer the delivery of any such payments or benefits except to the extent specifically permitted
or required by Section 409A. This Agreement is intended to comply with the provisions of Section
409A and this Agreement will, to the extent practicable, be construed in accordance therewith.
Terms defined in this Agreement will have the meanings given such terms under Section 409A if and
to the extent required to comply with Section 409A. In any event, the Company makes no
representations or warranty and will have no liability to you or any other person, other than with
respect to payments made by the Company in violation of the provisions of this Agreement, if any
provisions of or payments under this Agreement are determined to constitute deferred compensation
subject to Code Section 409A but not to satisfy the conditions of that section.




          (c) Expense Timing. Payments with respect to reimbursements of expenses will be made in the
ordinary course and, in any case, on or before the last day of the calendar year following the
calendar year in which the relevant expense is incurred. The amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, and the
right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another
benefit.




8. Confidentiality, Disclosure, and Assignment




          (a) Confidentiality. Except as may be required by law, you will not, during or after your
employment with the Company, publish, disclose, or utilize in any manner any Confidential
Information obtained while employed by the Company other than on behalf of the Company. If your
employment with the Company ends, you will not, without the Company’s prior written consent, retain
or take away any drawing, writing or other record in any form containing any Confidential
Information. For purposes of this Agreement, “Confidential Information” means information or
material of the Company that is not generally available to or used by others unaffiliated with the
Company, or the utility or value of which is not generally known, whether or not the underlying
details are in the public domain, including:





          (i) information or material relating to the Company and its business as conducted or
anticipated to be conducted; business plans; operations; past, current or anticipated
products, services, or software; customers or prospective customers; strategic



- 6 -









 






partners
and/or collaborators, price lists and all other pricing information; licensing arrangements;
research, engineering, development, manufacturing, purchasing, accounting, or marketing
activities;




          (ii) information or material relating to the Company’s inventions, improvements,
discoveries, “know-how,” technological developments, or unpublished writings or other works
of authorship, or to the materials, apparatus, processes, formulae, plans or methods used in
the development, manufacture or marketing of the Company’s products or services;




          (iii) information on or material relating to the Company that when received is marked
as “proprietary,” “private,” or “confidential”;




          (iv) the Company’s trade secrets;




          (v) information or material relating to the Company and its databases, modules,
products, programs, product improvements, product enhancements and/or developments, designs,
specifications, processes, methods, techniques, operations, projects, plans, chemical
compounds, chemical or biological materials, engineering data, clinical or technological
data, research data, financial data, personnel data, and other confidential agreements or
documents (including, but not limited to, clinical trial protocols and unpublished patent
applications); and




          (vi) any similar information of the type described above that the Company obtained from
another party and that the Company treats as or designates as being proprietary, private or
confidential, whether or not owned or developed by the Company.


Notwithstanding the foregoing, “Confidential Information” does not include any information that is
properly published or in the public domain; provided, however, that information that is published
by or with your aid outside the scope of employment or contrary to the requirements of this
Agreement will not be considered to have been properly published, and therefore will not be in the
public domain for purposes of this Agreement.




          (b) Business Conduct and Ethics. During your employment with the Company, you will not engage
in any activity that you are or should have been aware is substantially likely to materially
conflict with the Company’s best interests, and you will comply in all material respects with the
Company’s policies and guidelines pertaining to business conduct and ethics.




          (c) Disclosure. You will disclose promptly in writing to the Company all inventions,
discoveries, software, writings and other works of authorship that you created, made, conceived,
discovered, reduced to practice or wrote jointly or singly on Company time or on your own time
during your employment with the Company (“Developments”), provided that the invention, improvement,
discovery, software, writing or other work of authorship is capable of being used by the Company in
its business, and all such inventions, improvements, discoveries, software, writings and other
works of authorship shall belong solely to the Company.




          (d) Current Assignments. You agree to assign and do hereby assign to the Company (or any
person or entity the Company designates) all your right, title and interest in




- 7 -









 




and to all
Developments and all related patents, patent applications, copyrights and copyright applications.
However, this subsection does not apply to Developments that do not relate to the business or
research and development conducted or planned to be conducted by the Company at the time such
Development is created, made, conceived or reduced to practice and that are made and conceived by
you not during normal working hours, not on the Company’s premises and not using the Company’s
tools, devices, equipment or Confidential Information. You understand that, to the extent this
Agreement shall be construed in accordance with the laws of any state that precludes a requirement
in an employee agreement to assign certain classes of inventions made by an employee, this
subsection shall be interpreted not to apply to any invention that a court rules and/or the Company
agrees falls within such classes. You also hereby waive all claims to moral rights in any
Developments.




          (e) Instruments of Assignment. You will sign and execute all instruments of assignment and
other papers to evidence vestiture of your entire right, title and interest in such inventions,
improvements, discoveries, software, writings or other works of authorship in the Company, at the
Company’s reasonable request and expense, and you will do all acts and sign all instruments of
assignment and other papers the Company may reasonably request relating to applications for
patents, patents, copyrights, and the enforcement and protection thereof. You further agree that if
the Company is unable, after reasonable effort, to secure your signature on any such papers, any
executive officer of the Company will be entitled to execute any such papers as your agent and
attorney-in-fact, and you hereby irrevocably designate and appoint each executive officer of the
Company as your agent and attorney-in-fact to execute any such papers on your behalf, and to take
any and all actions as the Company may reasonably deem necessary or desirable in order to protect
its rights and interests in any Development, under the conditions described in this sentence. If
you are needed, at any time, to give testimony, evidence, or opinions in any litigation or
proceeding involving any patents or copyrights or applications for patents or copyrights, both
domestic and foreign, relating to inventions, improvements, discoveries, software, writings or
other works of authorship you conceived, developed or reduced to practice, you hereby agree to do
so, and if your employment ends, the Company will pay you at an hourly rate mutually agreeable to
the Company and you, plus reasonable traveling or other expenses, subject to Section 7(c).




          (f) Government Obligations. You acknowledge that the Company from time to time may have
agreements with other persons or with the United States Government, or agencies thereof, that
impose obligations or restrictions on the Company regarding inventions made during the course of
work under such agreements or regarding the confidential nature of such work. You agree to be
bound by all such obligations and restrictions that are made known to you and to take all action
reasonably necessary to discharge the obligations of the Company under such agreements.




          (g) Additional Post-Employment Provisions. When your employment ends, you must (x) cease and
not thereafter commence use of any Confidential Information or intellectual property (including any
patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other
source indicator) if such property is owned or used by the Company and not otherwise licensed to
you; (y) immediately destroy, delete, or return to the Company, at the Company’s option, all
originals and copies in any form or medium (including memoranda, books, papers, plans, computer
files, letters and other data) in your possession or control (including any of the foregoing stored
or located in your office, home, laptop or other




- 8 -









 







computer, whether or not Company property) that
contain Confidential Information or otherwise relate to the business of the Company, except that
you may retain only those portions of any personal notes, notebooks and diaries that do not contain
Confidential Information; and (z) notify and fully cooperate with the Company regarding the
delivery or destruction of any other Confidential Information of which you are or become aware to
the extent such information is in your possession or control. Notwithstanding anything elsewhere
to the contrary, you may retain (and not destroy) (x) information showing your compensation or
relating to reimbursement of expenses that you reasonably believe are necessary for tax purposes
and (y) copies of plans, programs, policies and arrangements of, or other agreements with, the
Company addressing your compensation or employment or termination thereof.




          (h) Survival. The obligations of this Section 8 (other than Section 8(b)) will survive the
expiration or termination of this Agreement and your employment.




     9. Noncompetition and Nonsolicitation.



          (a) General. The Parties recognize and agree that (a) you have been and are remaining a
senior executive of the Company, (b) you have received, and will in the future receive, substantial
amounts of the Company’s Confidential Information, (c) the Company’s business is conducted on a
worldwide basis, and (d) provision for noncompetition and nonsolicitation obligations by you is
critical to the Company’s continued economic well-being and protection of the Company’s
Confidential Information. In light of these considerations, this Section 9 sets forth the terms and
conditions of your obligations of noncompetition and nonsolicitation during and subsequent to the
termination of this Agreement and/or the cessation of your employment for any reason.




          (b) Noncompetition.





               (i) Unless the Company waives or limits the obligation in accordance with Section
9(b)(ii), you agree that during employment and for (i) a period of 24 months following your
cessation of employment, if you are terminated by the Company without Cause or you resign
(and the Company provides the benefits to which you are entitled under Section 6(b)); or
(ii) a period of 12 months following your cessation of employment if you are terminated by
the Company for Cause (the “Noncompete Period”), you will not directly or indirectly, alone
or as a partner, equityholder, officer, director, manager, or employee of any other firm or
entity, provide the same or similar services as you provided to the Company to any business
that competes with any part of the Company’s (or any of its subsidiaries’) business as and
where conducted as of the date of such termination of employment. For purposes of this
clause (i), “equityholder” does not include the passive, beneficial ownership of less than
5% of the combined voting power of all issued and outstanding voting securities of a
publicly held corporation whose stock is traded on a major stock exchange. Also for
purposes of this clause (i), “the Company’s business” means the discovery, development and
commercialization of innovative treatments for diabetes and other endocrine disorders based
on the delivery of insulin and other peptide hormones by oral, sublingual, or injectable
routes of administration. The Noncompete Period will be further extended by any period of
time during which you are in violation of Section 9(b) or (c).



- 9 -









 






          (ii) At its sole option the Company may, by written notice to you at any time within
the Noncompete Period, waive or limit the time and/or geographic area in which you cannot
engage in competitive activity.



          (c) Nonsolicitation of Employees and Consultants. During your employment and during the
Noncompete Period, you must not, directly or indirectly, individually or on behalf of any
individual or entity, (a) hire or offer to hire as an employee or engage or offer to engage the
services of any individual or entity who you are aware is then employed by or who provides services
to the Company, including those who ceased to be employed or provide services within six months
before the date of proposed hiring or engagement (to the extent, in the case of any consultant,
such engagement would require the consultant to materially diminish or otherwise limit his, her, or
its services to the Company), or (b) solicit, aid or induce any individual or entity who you are
aware is then employed by or who provides services to the Company, including those who ceased to be
employed or provide services within six months before the date of proposed hiring or engagement, to
reduce or terminate his, her, or its services to the Company and its subsidiaries, to accept
employment with, or render services to or with, any individual or entity unaffiliated with the
Company (provided that nothing in this Section 9(c) prohibits you from, directly or indirectly,
engaging in any general solicitations, so long as your solicitation does not specifically target
any of the individuals or entities who were employed by or who provided services to the Company
during the period prohibited above).




          (d) Survival. The obligations of this Section 9 survive the expiration or termination of this
Agreement and your employment.




     10. Enforcement. The restrictions contained in Sections 8 and 9 are necessary for the
protection of the business and goodwill of the Company and you agree that you consider them to be
reasonable for such purpose. You agree that any material breach of Sections 8 and 9 is likely to
cause the Company substantial and irrevocable damage that is difficult to measure. Therefore, in
the event of any such breach or threatened breach, you agree that the Company, in addition to such
other remedies as may be available, shall have the right to obtain an injunction from a court
restraining such a breach or threatened breach and the right to specific performance of the
provisions of this Agreement and you hereby waive the adequacy of a remedy at law as a defense to
such relief and any requirement of the Company to post a bond, and you will be deemed to have
expressly waived any rights you may have had to payments under Section 6(b).



     11. Indemnification. In addition to any indemnification provided by the Company’s
organizational documents, the Company will enter into an indemnification agreement with you as a
director in the form used for other directors, provided, that such indemnification
agreement shall also indemnify you with respect to your service as an officer of the Company. This
Section 11 will survive the termination or expiration of this Agreement and your employment.




	 	 	12. Miscellaneous.





          (a) Notices. All notices required or permitted under this Agreement shall be in writing and
shall be deemed effective upon personal delivery or three business days following deposit in a
United States Post Office, by certified mail, postage prepaid, or one business day after it is sent
for next-business day delivery via a reputable nationwide overnight courier service in the case of
notice to the Company to its address set forth in the introductory paragraph hereto and in the case
of notice to you to the current address on file with the Company. Either Party




- 10 -









 







may change the
address to which notices are to be delivered by giving notice of such change to the other Party in
the manner set forth in this Section 12(a).




          (b) No Mitigation. You are not required to seek other employment or otherwise mitigate the
value of any severance benefits contemplated by this Agreement, nor will any such benefits be
reduced by any earnings or benefits that you may receive from any other source. Notwithstanding
any other provision of this Agreement, any sum or sums paid under this Agreement will be in lieu of
any amounts to which you may otherwise be entitled under the terms of any severance plan, policy,
program, agreement or other arrangement sponsored by the Company or an affiliate of the Company.




          (c) Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE
WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF,
DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING ARISING
IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE RELEASE IT CONTEMPLATES,
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, THE
PARTIES AGREE THAT ANY PARTY MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE
OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THEIR
RIGHTS TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT,
RELATING TO YOUR EMPLOYMENT, OR COVERED BY THE CONTEMPLATED RELEASE.




          (d) Severability. Each provision of this Agreement must be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement. Moreover, if a court of competent jurisdiction
determines any of the provisions contained in this Agreement to be unenforceable because the
provision is excessively broad in scope, whether as to duration, activity, geographic application,
subject or otherwise, it will be construed, by limiting or reducing it to the extent legally
permitted, so as to be enforceable to the extent compatible with then applicable law to achieve the
intent of the Parties.




          (e) Assignment. This Agreement will be binding upon and will inure to the benefit of (i) your
heirs, beneficiaries, executors and legal representatives upon your death and (ii) any successor of
the Company. Any such successor of the Company will be treated as substituted for the Company under
the terms of this Agreement for all purposes. You specifically agree that any assignment may
include rights under the restrictive covenants of Sections 8 and 9. As used herein, “successor”
will mean any person, firm, corporation or other business entity that at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the
assets or business of the Company and its subsidiaries.




     None of your rights to receive any form of compensation payable under this Agreement will be
assignable or transferable except through a testamentary disposition or by the laws of




- 11 -












 




descent and distribution upon your death or as provided in Section 10(j). Any attempted assignment,
transfer, conveyance or other disposition (other than as aforesaid) of any interest in your rights
to receive any form of compensation hereunder will be null and void; provided, however, that
notwithstanding the foregoing, you will be allowed to transfer vested shares subject to stock
options (other than incentive stock options within the meaning of Section 422 of the Code) or the
vested portion of other equity awards consistent with the rules for transfers to “family members”
as defined in Securities Act Form S-8. Any other attempted assignment, transfer, conveyance or
other disposition of any interest in your rights to receive any form of compensation hereunder will
be null and void.




          (f) No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may only be
amended, canceled or discharged or any obligations thereunder waived through a writing signed by
you and the Chair of the Compensation Committee or any executive officer of the Company (other than
you) duly authorized either by the Board or the Compensation Committee.




          (g) No Conflict of Interest. You confirm that you have fully disclosed to the Company, to the
best of your knowledge, all circumstances under which you, your immediate family and other persons
who reside in your household have or may have a conflict of interest with the Company. You further
agree to fully disclose to the Company any such circumstances that might arise during your
employment upon your becoming aware of such circumstances.




          (h) Other Agreements. You hereby represent that your performance of all the terms of this
Agreement and the performance of your duties as an employee of the Company does not and will not
breach any agreement to keep in confidence proprietary information, knowledge or data acquired by
you in confidence or in trust prior to your employment with the Company and that you will not
disclose to the Company or induce the Company to use any confidential or proprietary information,
knowledge or material belonging to any previous employer or others. You also represent that you
are not a party to or subject to any restrictive covenants, legal restrictions, policies,
commitments or other agreements in favor of any entity or person that would in any way preclude,
inhibit, impair or limit your ability to perform your obligations under this Agreement, including
noncompetition agreements or nonsolicitation agreements, and you further represent that your
performance of the duties and obligations under this Agreement does not violate the terms of any
agreement to which you are a party. You agree that you will not enter into any agreement or
commitment or agree to any policy that would prevent or hinder your performance of duties and
obligations under this Agreement.




          (i) Disclosure of this Agreement. You acknowledge that the Company may provide others,
including but not limited to customers of the Company and any of your future employers or
prospective business associates, with a copy of this Agreement (or portions thereof) to highlight
your continuing obligations to the Company hereunder.




          (j) Survivorship. The respective rights and obligations of the Company and you hereunder will
survive any termination of your employment to the extent necessary to the intended preservation of
such rights and obligations.




          (k) Beneficiaries. You will be entitled, to the extent applicable law permits, to select and
change the beneficiary or beneficiaries to receive any compensation or benefit payable hereunder
upon your death by giving the Company written notice thereof in a manner consistent






-12-









 







with the terms of any applicable plan documents. If you die, severance then due or other amounts
due hereunder will be paid to your designated beneficiary or beneficiaries or, if none are
designated or none survive you, your estate.




          (l) Withholding. The Company will be entitled to withhold, or cause to be withheld, any amount
of federal, state, city or other withholding taxes or other amounts either required by law or
authorized by you with respect to payments made to you in connection with your employment.




          (m) Company Policies. References in this Agreement to Company policies and procedures are to
those policies and procedures in effect at the Effective Date, as the Company may amend them from
time to time upon reasonable notice to you.




          (n) Governing Law; Venue; Jurisdiction and Service of Process. This Agreement must be
construed, interpreted, and governed in accordance with the laws of Connecticut without reference
to rules relating to conflicts of law. Any action, suit or other legal proceeding arising under or
relating to any provision of this Agreement must be commenced only in a court of the State of
Connecticut (or, if appropriate, a federal court located within the State of Connecticut), and the
Company and you each consent to the jurisdiction of such a court. With respect to any such court
action, the Parties hereto (a) submit to the personal jurisdiction of such courts; (b) consent to
service of process by the means specified under Section 12(a); and (c) waive any other requirement
(whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction,
inconvenient forum, or service of process.




          (o) Entire Agreement. This Agreement and any documents referred to herein represent the entire
agreement of the Parties and will supersede any and all previous contracts, arrangements or
understandings between the Company and you, specifically including but not limited to your
employment agreement with the Company entered into as of December 30, 2004 and amended thereafter,
but not including any prior equity awards as modified by this Agreement.




Signatures on Page Following







-13-









 








     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed and you have
hereunto set your hand to be effective as of the Effective Date.



	 	 	 	 	 	 
	 	 	BIODEL INC.	
	 
	 	 	 	 	
	 

	 	By:	 	 	
	 

	 	 	 	 	
	Date	 	 	 	Brian J.G. Pereira, MD	
	 	 	 	 	Chair, Biodel Compensation Committee	
	 
	 	 	 	 	
	 	 	SOLOMON S. STEINER, Ph.D.	
	 
	 	 	 	 	
	 
	 	 	 	 	 	
	Date
	 	 	 	 	






-14-









 





Exhibit A

Parachute Provisions



CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.




     (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below,
if any payment or distribution by the Company or its affiliates to or for your benefit (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required under this Section) (a
“Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or you incur any
interest or penalties with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then you
will be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that
after payment by you of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, you retain an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments. This Exhibit A will only apply
to events subject to Section 4999 that occur before the third anniversary of the Effective Date and
while you remain employed by the Company.



     (b) Subject to the provisions of Paragraph (c) below, all determinations required to be made
under this Exhibit A, including whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall
be made by such national, certified public accounting firm as you may designate (the “Accounting
Firm”), which shall provide detailed supporting calculations both to the Company and you as soon as
practicable following (but in any event within 30 days after) the receipt of notice from you that
there has been a Payment, or such earlier time as is requested by the Company. If the Accounting
Firm is serving as accountant or auditor for the individual, entity or group effecting the event
triggering the Excise Tax, you must appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). The Company shall bear all fees and expenses of the Accounting Firm.
Any determination by the Accounting Firm will be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that the
Company will not have made should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder. If the Company exhausts its remedies pursuant to Paragraph (c)
below and you thereafter are required to make a payment of any Excise Tax, the Accounting Firm will
determine the amount of the Underpayment that has occurred and the Company must promptly pay any
such Underpayment to or for your benefit. Any Gross-Up Payment, as specified under this Agreement,
shall be paid in any event not later than the end of your taxable year next following the taxable
year in which you remit the applicable taxes to the appropriate taxing authority.



-15-









 





     (c) You must notify the Company in writing of any claim by the Internal Revenue Service that,
if successful, would require the payment by the Company of the Gross-Up Payment. Such notification
must be given as soon as practicable but no later than ten business days after you are informed in
writing of such claim and must apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. You may not pay such claim prior to the expiration of
the 30-day period following the date on which you give such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim is due). If the
Company notifies you in writing prior to the expiration of such period that it desires to contest
such claim, you must:



     (i) give the Company any information reasonably requested by the Company relating to such
claim,



     (ii) take such action in connection with contesting such claim as the Company reasonably
requests in writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by the Company,



     (iii) cooperate with the Company in good faith in order effectively to contest such claim, and



     (iv) permit the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and must indemnify and hold you
harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Paragraph (c), the Company will control all
proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct you to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and you agree to prosecute such
contest to a determination before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company determines; provided, however, that if the
Company directs you to pay such claim and sue for a refund, the Company must advance the amount of
such payment to you, on an interest-free basis and must indemnify and hold you harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of limitations relating to
payment of taxes for your taxable year with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Company’s control of the contest
will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and
you will be entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.


If, after you receive an amount advanced by the Company pursuant to Paragraph (c),you become
entitled to receive any refund with respect to such claim, you must (subject to the Company’s






-16-









 







complying with the requirements of Paragraph (c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes applicable thereto). If,
after your receipt of an amount advanced by the Company pursuant to Paragraph (c), a determination
is made that you will not be entitled to any refund with respect to such claim and the Company does
not notify you in writing of its intent to contest such denial of refund prior to the expiration of
30 days after such determination, then such advance will be forgiven and will not be required to be
repaid and the amount of such advance will offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.





-17-