Document:

EX-10.2

 

Exhibit 10.2

BIODEL INC.

2004 STOCK INCENTIVE PLAN

Section 1. Purpose of Plan

          Biodel Inc., a Delaware corporation (the “Company”), hereby adopts the 2004 Stock Incentive
Plan as set forth herein (this “Plan”). The purpose of this Plan is to enable the Company and its
subsidiaries to attract, retain and motivate their directors, employees, consultants and advisers
by providing for or increasing the proprietary interests of such persons in the Company, thereby
increasing the mutuality of interest between such persons and the Company’s stockholders.

Section 2. Persons Eligible Under Plan

          Any person, including any director of the Company, who is a director, employee, consultant or
adviser of the Company or any of its subsidiaries (a “Grantee”) shall be eligible to be considered
for the grant of Awards (as hereinafter defined) hereunder; provided, however, that only those
Grantees who are employees of the Company or any of its subsidiaries shall be eligible to be
considered for the grant of Incentive Stock Options (as hereinafter defined) hereunder; provided,
further, that Non-Employee Directors (as hereinafter defined) shall be eligible only for Awards
granted pursuant to Section 11 of this Plan.

Section 3. Awards

          (a) The Board of Directors of the Company (the “Board”) or the Committee (as hereinafter
defined), on behalf of the Company, is authorized under this Plan to enter into any type of
arrangement with a Grantee that is not inconsistent with the provisions of this Plan and that, by
its terms, involves or might involve the issuance of (i) shares of Common Stock, par value $.01 per
share, of the Company (the “Common Shares”) or (ii) a Derivative Security (as such term is defined
in Rule 16a-1 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), as such Rule may be amended from time to time) with an exercise or conversion privilege at a
price related to the Common Shares or with a value derived from the value of the Common Shares.
The entering into of any such arrangement is referred to herein as the “grant” of an “Award.”

          (b) Awards are not restricted to any specified form or structure and may include, without
limitation, sales or bonuses of stock, restricted stock, stock options, reload stock options, stock
purchase warrants, other rights to acquire stock, securities convertible into or redeemable for
stock, stock appreciation rights, limited stock appreciation rights, phantom stock, dividend
equivalents, performance units or performance shares, and an Award may consist of one such security
or benefit, or two or more of them in tandem or in the alternative.

          (c) Common Shares may be issued pursuant to an Award for any lawful
consideration as determined by the Committee, including, without limitation, services rendered
by the recipient of such Award.

 

 

          (d) Awards in the form of options shall provide for an exercise price which is not less than
85% of the fair value of the stock at the time the option is granted, except that the price shall
be 110% of the fair value in the case of an Incentive Stock Option (as hereinafter defined) granted
to any person who owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company. For purposes of this Paragraph (d) the fair value of stock
issuable upon exercise of an option shall be determined by the Board of Directors of the Company or
Committee taking into account the following:

          (i) If stock of the same class is publicly traded in an active market of substantial
depth, the recent market price of such securities.

          (ii) If stock of the same class has not been so publicly traded the price at which
securities of reasonably comparable corporations (if any) in the same industry are being
traded subject to appropriate adjustment for the dissimilarities between corporations being
compared.

          (iii) In the absence of any reliable indicator under subparagraph (i) and (ii) above,
the earnings history, book value and prospects of the Company in the light of market
conditions generally.

          (e) The exercise period for awards granted in the form of options shall be not more than 120
months from the date the option is granted except that the exercise period for awards granted in
the form of options shall be not more than 60 months from the date the option is granted in the
case of an Incentive Stock Option (as hereinafter defined) granted to any person who owns stock
possessing more than 10% of the total combined voting power of all classes of stock of the Company.

          (f) Awards granted in the form of options shall provide that the holder of the option shall
have the right to exercise in the event of termination of employment, to the extent that the holder
is entitled to exercise on the date employment terminates, as follows:

          (i) At least six months from the date of termination if termination was caused by death
or disability

          (ii) At least 30 days from the date of termination if termination was caused other than
by death or disability.

          (g) Subject to the other specific provisions of this Plan, the Board or the Committee, in its
sole and absolute discretion, shall determine all of the terms and conditions of each Award granted
under this Plan, which terms and conditions may include, among other things:

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          (i) A provision permitting the recipient of such Award, including any recipient who is
a director or officer of the Company, to pay the purchase price of the Common Shares or
other property issuable pursuant to such Award, or such recipient’s tax withholding
obligation with respect to such issuance, in whole or in part, by any one or more of the
following:

     (A) the delivery of previously owned shares of capital stock of the Company
(including “pyramiding”) or other property,

     (B) a reduction in the amount of Common Shares or other property otherwise
issuable pursuant to such Award, or

     (C) subject to applicable law, the delivery of a promissory note, the terms and
conditions of which shall be determined by the Committee; or

          (ii) A provision required in order for such Award to quality as an incentive stock
option under Section 422 of the Internal Revenue Code (an “Incentive Stock Option”).

Section 4. Stock Subject to Plan

          (a) The aggregate number of Common Shares that may be issued pursuant to all Awards granted
under this Plan shall be 2,200,000. Such maximum number does not include the number of Common
Shares subject to the unexercised portion of any stock option granted under this Plan that expires
or is terminated. Such maximum number of Common Shares is subject to adjustment as provided in
Section 7 hereof (and is referred to herein as the “Share Limitation”). If any Award shall expire,
terminate or be reacquired by the Company for any reason, the unexercised or reacquired portion
thereof shall again be available for the grant of Awards hereunder.

          (b) At any time, the aggregate number of Common Shares issued and issuable pursuant to all
Awards (including all Incentive Stock Options) granted under this Plan shall not exceed the Share
Limitation, subject to adjustment as provided in Section 7 hereof.

          (c) For purposes of Section 4(b) hereof, the aggregate number of Common Shares issued and
issuable pursuant to Awards granted under this Plan shall at any time be deemed to be equal to the
sum of the foregoing:

          (i) The number of Common Shares which were issued prior to such time pursuant to Awards
granted under this Plan excluding (except for purposes of computing the Share Limitation
applicable to Incentive Stock Options granted under this Plan) shares which were reacquired
by the Company pursuant to provisions in the Awards with respect to which those shares were
issued giving the Company the right to reacquire such shares upon the occurrence of certain
events; plus

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          (ii) The number of Common Shares which are or may be issuable at or after such time
pursuant to outstanding Awards granted under this Plan prior to such time.

          (d) In no event shall any Grantee receive in any fiscal year Awards which exceed an aggregate
of 120,000 Common Shares.

Section 5. Duration of Plan

          No Awards shall be granted under this Plan after October 1, 2014. Although Common Shares may
be issued after October 1, 2014 pursuant to Awards granted prior to such date, no Common Shares
shall be issued under this Plan after October 1, 2024.

Section 6. Administration of Plan

          (a) This Plan shall be administered by the Board or a committee thereof (the “Committee”)
consisting of two or more directors appointed by the Board for that purpose.

          (b) Subject to the provisions of this Plan, the Board or the Committee shall be authorized and
empowered to do all things necessary or desirable in connection with the administration of this
Plan, including, without limitation, the following:

          (i) Adopt, amend and rescind rules and regulations relating to this Plan;

          (ii) Determine which persons meet the requirements of Section 2 hereof for eligibility
under this Plan and to which of such eligible persons, if any, Awards shall be granted
hereunder;

          (iii) Grant Awards to eligible persons and determine the terms and conditions thereof,
including the number of Common Shares issuable pursuant thereto;

          (iv) Determine whether, and the extent to which, adjustments are required pursuant to
Section 7 hereof; and

          (v) Interpret and construe this Plan and the terms and conditions of any Award granted
hereunder.

Section 7. Adjustments; Acceleration Upon Change in Control

          (a) Adjustments. If the outstanding securities of the class then subject to this Plan
are increased, decreased or exchanged for or converted into a different number or kind of shares or
securities of the Company as a result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, stock dividend, stock split, reverse stock split or the like,
then, unless the terms of such transaction or document evidencing an Award shall provide otherwise,
the Committee may make appropriate and proportionate adjustments in (i) the

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number and type of shares or other securities of the Company that may be acquired pursuant to
Incentive Stock Options and other Awards theretofore granted under this Plan and (ii) the maximum
number and type of shares or other securities of the Company that may be issued pursuant to
Incentive Stock Options and other Awards thereafter granted under this Plan.

          (b) Acceleration. Each outstanding Award shall, except as otherwise provided in any
applicable agreement or instrument evidencing an Award granted after the effectiveness of this Plan
(as set forth in Section 9 hereof), become exercisable in full for the aggregate number of Common
Shares covered thereby, or shall vest unconditionally, in the event of (i) the acquisition by any
single entity or group of at least fifty percent (50%) of the outstanding voting securities of the
Company or (ii) a sale of all or substantially all of the assets of the Company to another person
or entity other than an affiliate of the Company, or a reorganization, merger, business combination
or consolidation of the Company as a result of which at least 50% of the voting securities of the
Company or its successor are held, directly or indirectly, by persons or entities who did not hold
at least 50% of the voting securities of the Company immediately prior to such transaction. The
Committee may also, in its discretion, accelerate the exercisability or vesting of any Award
granted hereunder in accordance with the administration of this Plan. For purposes of (i) above,
“group” shall have the meaning set forth in Rule 13d-5 of the Securities and Exchange Commission
under the Exchange Act, and shall include as to each person, entity or group, each “affiliate” of
that person, entity or group, as that term is defined in Rule 12b-2 of the Securities and Exchange
Commission under the Exchange Act. The terms “person,” “entity” and “group” as used in (i) above
shall not include the Company or any of its subsidiaries, any employee benefit plan of the Company
or any of its subsidiaries, any entity holding voting securities of the Company for or pursuant to
the terms of any such plan or any person, entity or group succeeding to the ownership of all or any
portion of the shares presently owned beneficially by Solomon S. Steiner who is his lawfully
appointed executor, administrator, guardian or custodian, his spouse or any of his issue, any
trust, partnership, corporation or entity in which any of the foregoing have (individually or in
the aggregate) more than fifty percent (50%) of the beneficial interest or any charitable
foundation established by Dr. Steiner or any of the foregoing persons or entities. Securities will
be deemed to constitute 50% of the voting securities of the Company or its successor if the holders
thereof collectively have the power to elect at least 50% of the directors or, if the successor is
not a corporation, 50% of the other analogous controlling persons. In order to permit the grantee
of any Award which is outstanding upon the occurrence of any of the events referred to in (i) or
(ii) above to receive the same consideration as a result of such event as would the holder of the
outstanding shares of Common Stock of the Company subject to the Award, the grantee will have the
right to give notice of the exercise of the option or other analogous right included in the Award
in advance of the occurrence of the events described in (i) or (ii) above effective upon the
occurrence of such event, and any such exercise shall be deemed effective upon the occurrence of
the event and prior to any termination of the Award as a result of the event. The Company shall
give the grantee notice in advance of the occurrence of the events described in (i) or (ii) above
sufficient to enable the grantee to exercise grantee’s right.

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Section 8. Amendment and Termination of Plan

          The Board may amend or terminate this Plan at any time and in any manner; provided, however,
that (a) no such amendment or termination shall deprive the recipient of any Award theretofore
granted under this Plan, without the consent of such recipient, of any of his or her rights
thereunder or with respect thereto; and (b) no such amendment shall increase the aggregate number
of Common Shares that may be issued pursuant to all Incentive Stock Options granted under this Plan
(except pursuant to Section 7(a) hereof) or change, alter or modify the employees or class of
employees eligible to receive Incentive Stock Options under this Plan without the approval of the
stockholders of the Company, which approval must be obtained within 12 months after the adoption of
such amendment by the Board.

Section 9. Effectiveness of the Plan

          This Plan shall become effective as of the date of approval by the vote of a majority of the
voting securities of the Company present, either in person or by proxy, and entitled to vote at a
duly constituted meeting of stockholders of the Company at which a quorum is present throughout.
Prior to such approval, Awards may be granted under this Plan, provided that the exercise and/or
vesting of Awards so granted shall be expressly subject to the condition that this Plan shall have
been so approved. Unless this Plan shall be so approved, this Plan and all Awards theretofore made
hereunder shall become null and void.

Section 10. Stock Exchange Requirements; Applicable Laws

          Notwithstanding anything to the contrary in this Plan, no Common Shares purchased upon
exercise of an Award, and no certificate representing all or any part of such shares, shall be
issued or delivered if (a) such shares have not been admitted to listing upon official notice of
issuance on each stock exchange upon which shares of that class are then listed or (b) in the
opinion of counsel to the Company, such issuance or delivery would cause the Company to be in
violation of or to incur liability under any Federal, state or other securities law, or any
requirement of any listing agreement to which the Company is a party or any other requirement of
law or of any administrative or regulatory body having jurisdiction over the Company.

Section 11. Non-Employee Director Awards

          Notwithstanding anything to the contrary contained herein or in any agreement evidencing any
Award hereunder, each member of the Board who is not an employee of the Company (“Non-Employee
Directors”) shall be eligible for Awards only issued pursuant to and in accordance with the terms
of this Section 11.

          (a) Eligibility. Subject to the terms and conditions of this Plan, all Non-Employee
Directors of the Company shall automatically become participants in this Plan
under this Section 11 upon their election as directors of the Company.

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          (b) Automatic Option Grants. Each person who becomes a Non-Employee Director shall
automatically be awarded and issued on the date of his or her first such election and without
further action of the Board, a nonqualified stock option to purchase 25,000 shares of Common Stock
of the Company. Such grant shall hereinafter be referred to as an “Initial Grant.” If the date
designated in this subsection for any Initial Grant is not a trading day of the Common Stock and
the Common Stock is then traded, such Initial Grant shall be made on the first trading day which
follows such designated date.

          On December 1 of each year (or, in any year, if such day is not a trading day for the Common
Stock and the Common Stock is then traded, the first trading day thereafter), each Non-Employee
Director (other than a Non-Employee Director who received an Initial Grant within twelve months)
shall be automatically awarded and issued on such date, without further action of the Board or
Committee, a nonqualified stock option to purchase 10,000 shares of Common Stock of the Company (an
“Annual Grant”); provided that, in the case of a Non-Employee Director who received an Annual Grant
within 12 months, the number of shares covered by such Annual Grant shall be 10,000 multiplied by a
fraction, the numerator of which is the number of days elapsed from the date of such Initial Grant
until the next succeeding Annual Grant, and the denominator of which is 365.

          (c) Option Prices. The purchase price of the Common Stock under each option granted
pursuant to this Section 11 shall be 100% of the fair value of the Common Stock on the grant date
determined under Paragraph (d) of Section 3 if at that time the Common Stock is not traded and the
Fair Market Value of the Common Stock on the grant date if at that time the Common Stock is traded.
The “Fair Market Value” of a share of Common Stock or of a share of another class of capital stock
of the Company on any day shall be equal to the last sale price, regular way, of such a share on
the business day preceding such day or, in case no such sale takes place on such day and there were
sales within a reasonable period before the date for which the Fair Market Value is to be
determined, the mean between the lowest and highest sale prices, regular way, on the nearest date
before the date as of which the Fair Market Value is to be determined, in either case as reported
in the principal consolidated transaction reporting system with respect to securities listed or
admitted to trading on the principal national securities exchange on which such shares are listed
or admitted to trading or, if the shares trade in the Nasdaq National Market, then in that Market,
or, if such shares are not listed or admitted to trading on any national securities exchange or the
Nasdaq National Market, the last quoted price, or if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System or such other system then in use. If none of
the foregoing provisions for determining Fair Market Value are applicable, the Fair Market Value
will be determined by the Board or the Committee taking into account the prices at which the shares
of other comparable companies, if any, are being traded (subject to appropriate adjustment for the
dissimilarities between the companies being compared), the earnings history, book value and
prospects of the Company and other
factors deemed relevant by the Board or Committee.

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          (d) Term of Options. The term of each option issued to Non-Employee Directors
hereunder shall be for a period of eight years from the grant date.

          (i) Termination of Director Status.

          (A) Death or Permanent Disability. In the event that a Non-Employee Director
shall cease to be a Non-Employee Director of the Company or any of its subsidiaries
(such event shall be referred to herein as a “Terminating Event”) by reason of the
death or Permanent Disability (as hereinafter defined) of a Non-Employee Director,
then (1) the option shall terminate on the first anniversary of the date of such
Terminating Event and (2) the option shall be exercisable during that one year
period by the Non-Employee Director or, in the event of death or a Permanent
Disability involving the appointment of a guardian, custodian or other similar
personal representative, the person or persons to whom the Non-Employee Directors’
rights under the option shall have passed by will or by the applicable laws of
descent or distribution or as a result of any such appointment, only to the extent
that it was exercisable on the date of such death or Permanent Disability.
“Permanent Disability” shall mean the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which
can be expected to result in death or which has lasted or can be expected to last
for a continuous period of not less than twelve (12) months. The Non-Employee
Director shall not be deemed to have a Permanent Disability unless proof of the
existence thereof shall have been furnished to the Committee in such form and
manner, and at such times, as the Committee may require. Any determination by the
Committee that a Non-Employee Director does or does not have a Permanent Disability
and/or the date thereof shall be final and binding upon the Company and the
Non-Employee Director.

          (B) Other Termination. If the Terminating Event is for any reason
other than those enumerated in Subsection 11(d)(i)(A), the option shall terminate
one (1) month from the date of such Terminating Event and shall be exercisable only
to the extent it was exercisable on the date of the Terminating Event.

          (ii) Death Following the Terminating Event. If a Non-Employee Director shall
die at any time after the occurrence of a Terminating Event and prior to the last date on
which the option could have been exercised as provided above, then, to the extent that the
option was exercisable on the date of such Terminating Event, the option shall terminate on
the earlier of the date on which such option otherwise would expire or the first anniversary
of the date of such death.

          (iii) Other Terminating Events. An option granted pursuant to this Section
11 shall terminate upon the dissolution or liquidation of the Company unless the terms
of the plan of dissolution or liquidation provide otherwise.

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          (e) Vesting of Options. Each option granted to a Non-Employee Director pursuant to
this Section 11 shall become exercisable as to 50% of the shares of Common Stock covered by such
option on the first anniversary of the Grant Date and shall become exercisable as to the remaining
50% of the shares of Common Stock covered by such option on the second anniversary of the Grant
Date.

          (f) No Right to Continue as Director. Nothing contained in this Plan or in any
agreement evidencing an Award granted hereunder to a Non-Employee Director shall confer any right
to continue as a director or shall any way affect the right and power of the stockholders of the
Company to remove such participant as a member of the Board at any time, to the same extent as
might have been done if this Plan had not been adopted.

          (g) Limitation on Amendments. This Section 11 may not be amended more than once every
six months, other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.

9EX-10.6

 

Exhibit 10.6

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of December 30, 2004 by
and among Biodel Inc., a Delaware corporation with an address at 6 West Kenosia Avenue, Danbury, CT
06810-7352 (“BIODEL”, “Employer” or the “Company”), and Solomon S. Steiner, Ph.D., an individual
residing 24 Old Wagon Road, Mt. Kisco, New York 10509 (“Employee”).

W I T N E S S E T H:

     WHEREAS, Employer desires to secure the services of Employee as President and Chief Executive
Officer; and

     WHEREAS, Employee desires to enter into the employ of Employer in accordance with the terms
and conditions herein set forth;

     NOW, THEREFORE, in consideration of the premises and of the covenants and agreements of the
parties herein set forth, the parties hereto hereby covenant and agree as follows:

          1. Position of Employment. Subject to the terms and conditions hereof, Employer
hereby agrees to employ the services of Employee as President and Chief Executive Officer and
Employee hereby accepts such employment and agrees to serve the Company in such capacity. Employee
shall have the duties, authority and responsibilities customarily associated with the offices of
President and Chief Executive Officer and shall report to the Company’s Board of Directors. During
the period that Employee is employed by Employer, Employee shall devote substantially all of his
business time and attention to

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the performance
of the duties described herein. Notwithstanding the foregoing, Employee shall be entitled to
serve on the Board of Directors of Vyteris, Inc. and the Boards of other Companies if approved by
the Company’s Board of Directors, to pursue charitable endeavors and to participate in professional
organizations, provided that such activities do not interfere in any material respect with the
performance by Employee of his duties hereunder. Employee shall at all time act in good faith in
the performance of his duties. Employee agrees to abide by the rules, regulations, instructions,
personnel practices and policies of the Company and any changes therein which may be adopted from
time to time by the Company applicable to employees generally, including, but not limited to, those
relating to the protection of the Company’s proprietary trade secrets and confidential information.

     2. Contract Term. Unless terminated earlier pursuant to Section 4 below, the initial
term of Employee’s employment under this Agreement shall be for the period from the date of this
Agreement (the “Commencement Date”) to December 30, 2007 (the “Initial Termination Date”).
Following the Initial Termination Date, this Agreement shall be automatically renewed for
successive one-year terms (each, a “Renewal Term”) unless, at least three months prior to the
Initial Termination Date or the expiration of a Renewal Term, as applicable, Employee or BIODEL in
his or its respective sole discretion notifies the other party in writing of his or its intent to
terminate this Employment Agreement as of the Initial Termination Date or the expiration of a
Renewal Term, as applicable. The term of Employee’s employment hereunder, including any renewal
periods pursuant to the immediately preceding sentence, shall be hereafter referred to as the
“Contract Term.”

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     3. Salary and Additional Benefits.

          3.1 Employer shall pay to Employee and Employee agrees to accept as compensation for his
services to be rendered hereunder, an initial base salary of Two Hundred and Fifty Thousand Dollars
($250,000) (“Base Salary”) per year for the period commencing with the Commencement Date and ending
on the completion of the Contract Term, payable in equal installments on the 15th and last day of
each month.

          3.2 During the term of this Agreement, Employee, as President and CEO, shall be entitled to
receive an annual year-end bonus in cash in an amount of not more than sixty percent (60%) of Base
Salary as determined by the Board of Directors. At the time the Board of Directors considers the
Employee’s bonus but not less than annually, the Board of Directors shall also consider an award to
the employee of stock or options to acquire stock under any stock award plan then in effect.

          3.3 Employee shall be entitled to vacations, at such times as Employee shall reasonably
determine, of at least four weeks each year of employment hereunder.

          3.4 In addition to the foregoing, Employee shall also(i) participate in and be entitled to
receive medical insurance and other benefits substantially equivalent to the normal benefits
provided by BIODEL to its employees generally and (ii) participate in various retirement, welfare,
fringe benefit and executive perquisite plans, programs and arrangements of the Company to the
extent the senior executives of the Company generally are eligible for participation under the
terms of such plans, programs and arrangements including, without limitation, plans, programs and
arrangements for the granting of options to purchase securities of the Company or other equity
based

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compensation. Employee acknowledges the right of Employer to change, amend, or terminate any of the
benefits referred to in this paragraph, at any time in a manner which does not discriminate between
Employee and other company employees who are eligible to participate in such benefits.

          3.5 Employer shall reimburse Employee for any ordinary, necessary and reasonable travel,
maintenance and entertainment expenses incurred by the Employee in the course of his duties under
this Agreement, in accordance with the Employer’s customary policies and practices in effect from
time to time, upon submission to the Employer of appropriate vouchers and receipts evidencing the
same.

          3.6 The Company shall pay a mandatory bonus of $250,000 (payable to Steiner Ventures) upon (a)
stockholders equity of the Company exceeding $20mm, (b) if any class of securities of the Company
are registered under the Securities Act of 1933, (b) the Company enters into stategic partnership
with an initial advance, payment or investment of $5 mm, or (d) five years from the date of
execution. Such bonus shall be paid in any event, including, without limitation, whether or not
the employeed is then employed by the Company and whether or not the employee is then deceased.

     4. Termination. The employment of the Employee by the Company pursuant to this
Agreement shall terminate upon the occurrence of any of the following:

          4.1 Expiration of the Contract Term in accordance with Section 2;

          4.2 At the election of the Company, for cause, upon written notice by the Company to the
Employee. For the purposes of this Section 4.2, cause for termination
shall be deemed to exist upon (a) a good faith finding by the Board of Directors of the

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Company of
(i) failure of the Employee to perform in any material respect his assigned duties for the Company
customarily associated with the Office of Chief Executive Officer, which failure continues for ten
(10) days subsequent to written notice from the Company to the Employee of such failure, or (ii)
dishonesty, gross negligence or misconduct not involving any exercise of business judgment in good
faith relating to the performance of his duties for the Company; (b) the conviction of the Employee
of, or the entry of a pleading of guilty or nolo contendere by the Employee to, any crime involving
moral turpitude or any felony; or (c) the material breach by the Employee of any terms of this
Agreement, which breach continues for ten (10) days subsequent to written notice from the Company
to the Employee of the breach;

          4.3 Upon the death or, at the election of the Company, disability of the Employee. As used in
this Agreement, the term “disability” shall mean the inability of the Employee, due to a physical
or mental disability, for a period of 180 days, whether or not consecutive, during any 360-day
period to perform the services contemplated under this Agreement. A determination of disability
shall be made by a physician satisfactory to both the Employee and the Company; provided that if
the Employee and the Company do not agree on a physician, the Employee and the Company shall each
select a physician and these two together shall select a third physician, whose determination as to
disability shall be binding on all parties. Nothing herein shall be construed to violate any
Federal or State law including the Family and Medical Leave Act of 1993, 29 U.S.C.S. §2601 et
seq., and the Americans With Disabilities Act, 42 U.S.C.S. §12101 et seq.

          4.4 The Company may terminate the employment of the Employee at any time without cause
immediately upon giving the Employee 30 days’ prior written

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notice of termination or payment in
lieu of notice. The Employee may terminate his employment at any time for good reason immediately
upon giving the Employer thirty (30) days prior written notice of termination. For the purpose of
this Section 4.4, good reason for termination shall exist upon (i) the material breach by the
Company of any terms of this Agreement which breach continues for ten (10) days subsequent to
written notice from the Employee to the Company of the breach or (ii) the assignment of the
Employee of any duties inconsistent in any material respect with the Employee’s positions with the
Company as set forth in this Agreement (including status, offices and titles), authority, duties
or responsibilities as contemplated by this Agreement or any action by the Company which results in
a material diminution in such positions, authority, duties or responsibilities, excluding for this
purpose any isolated, insubstantial and inadvertent action not taken in bad faith and which is
promptly remedied by the Company.

     5. Effect of Termination.

          5.1 Termination for Cause. In the event the Employee’s employment is terminated for
cause pursuant to Section 4.2, the Company shall pay to the Employee the compensation and benefits
which would otherwise be payable or accrued to him through the last day of his actual employment by
the Company.

          5.2 Termination for Death or Disability. If the Employee’s employment is terminated
by death or because of disability pursuant to Section 4.3, the Company shall pay to the estate of
the Employee or to the Employee, as the case may be, the compensation and benefits which would
otherwise be payable or accrued to the
Employee through the date of his termination and an additional six months because of

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death or
disability. The Company will continue health benefits for one year after the date of termination.

          5.3 Termination Without Cause. If the Employee’s employment is terminated (a) at the
election of the Company pursuant to Section 4.4 without cause, or (b) at the election of the
Employee pursuant to Section 4.4 for good reason, and in consideration of the post-termination
non-compete and non-solicitation agreement set forth in Section 6, the Company shall pay to the
Employee the compensation and benefits payable or accrued to him under Section 4 (including the
provision of medical insurance, disability and life insurance), at the times provided in Section 4,
through the longer of (x) two (2) years following the termination date or (y) the balance of the
term of this Agreement.

     6. Non-Compete and Non-Solicitation.

          6.1 The Employee recognizes that his willingness to enter into the restrictive covenants
contained in this Section 6 are a critical condition precedent to the willingness of BIODEL to
enter into and perform under this Agreement. The Employee also acknowledges that the restrictions
contained in this Section 6 will not materially or unreasonably interfere with the Employee’s
ability to earn a living. The Employee acknowledges that the restrictions contained in this
Section 6 are necessary to protect the legitimate interests of BIODEL and to ensure that Employee
will not reveal or use BIODEL’s confidential, proprietary or trade secret information or unfairly
compete with BIODEL after his termination.

          6.2 During the Contract Term and, in the event the Employee’s employment is terminated for
cause pursuant to Section 4.2, through the day immediately

7

 

prior to the first anniversary of the
termination date, or, if the Employee’s employment is terminated (a) at the election of the Company
pursuant to Section 4.4 without cause, or (b) at the election of the Employee pursuant to Section
4.4 for good reason, for so long as the Company shall pay to the Employee the compensation and
benefits payable or accrued to him under Section 4 (including the provision of medical insurance,
disability and life insurance), at the times provided in Section 4, the Employee will not directly
or indirectly:

               (a) as an individual proprietor, partner, stockholder, officer, employee, consultant,
director, joint venturer, investor, agent, distributor, dealer, representative, lender, or in any
other capacity whatsoever (other than as the holder of outstanding stock or equity of another
entity), engage in the business of delivering insulin by the oral, sublingual or injectable route
of administration; or

               (b) recruit, solicit or induce, or attempt to induce, any employee or employees of the Company
to terminate their employment with, or otherwise cease their relationship with, the Company, or
hire any such employee; or

               (c) knowingly solicit, divert, limit or take away, or attempt to divert or to take away, the
business or patronage of any of the clients, customers, dealers, distributors, representatives or
accounts, or prospective clients, customers, dealers, distributors, representatives or accounts, of
the Company which were contacted, solicited or served by employees of the Company while the
Employee was employed by the Company.

          6.3. In the event that any court of competent jurisdiction determines that the duration or the
geographic scope, or both, of the non-

8

 

competition and non-solicitation provisions set forth in this
Section 6 are unreasonable and that such provisions are to that extent unenforceable, the parties
hereto agree that the provisions shall remain in full force and effect for the greatest time period
and in the greatest area that would not render them unenforceable.

          6.4 The restrictions contained in this Section 6 are necessary for the protection of the
Company’s legitimate interests, confidential, proprietary or trade secret information, or goodwill;
or to protect the Company from the misuse or disclosure of its confidential, proprietary or trade
secret information; or to protect the Company from unfair competition. The Employee agrees that any
breach of this Section 6 will cause the Company substantial and irreparable damage and therefore,
in the event of any such breach, in addition to such other remedies which may be available, the
Company shall have the right to seek specific performance and injunctive relief.

          6.5 The Employee agrees that the duration and geographic restrictions imposed in this
Agreement are fair and reasonable and are reasonably required for the protection of the Company.
To the extent any portion of this Agreement, or any portion of any provision of this Agreement, is
held to be invalid or unenforceable, it shall be revised to reflect most nearly the parties’ intent
and the remainder of the provision or provisions of this Agreement shall be unaffected and shall
continue in full force and effect.

          6.6 For purposes of this Section 6 and Section 7, the “Company” refers to the Company and any
of its affiliates.

9

 

     7. Confidential Information

          7.1. By executing this Agreement, the Employee recognizes and agrees that he is employed in a
position with the Company in which he will have access to certain confidential and proprietary
information concerning the business of the Company which is of great value to the Company and
which, if used in competition with the Company, would render great and irreparable harm to the
Company. Such information includes, but is not limited to, information relating to business
operations; services; network; systems; strategic business plans; marketing plans; long-range
goals; assets and liabilities; technical and engineering methods, processes, and/or know-how;
research and development activities; products; computer software and programs; marketing data;
pricing; product designs; discoveries; inventions; budgets; projections; customers and suppliers;
development plans, strategies and forecasts; new products and services; and financial statements.
This information is provided to the Employee solely for use in the course of his employment with,
and for the benefit of, the Company.

          7.2. To ensure that such confidential information provided to the Employee is maintained in
confidence by him and not used by him to unfairly compete with the Company, the Employee shall not,
during the course of the Employee’s employment and at any time within two (2) years thereafter
following the termination of his employment (regardless of whether the Employee’s termination is
voluntary or involuntary, or with or without cause), divulge, furnish or make accessible to anyone,
or use in any way other than in furtherance of the interests of the Company: (i) any confidential,
proprietary or secret knowledge or information which the Employee has acquired or become acquainted
with, or will acquire or become acquainted with, during

10

 

the course of the Employee’s employment with the Company; (ii) any confidential or proprietary
information concerning the Company’s customers, including but not limited to, information
concerning a customers need, practice or preferences; (iii) any confidential, proprietary or trade
secret research and development activities of the Company; and (iv) any other confidential,
proprietary or trade secret information relating to the business of the Company. The Employee
agrees that this restriction applies to all such information regardless of whether such information
was developed by him. This restriction shall not apply to information (i) which is or becomes
public knowledge through no fault of the Employee, (ii) is known to the Employee at the time of its
disclosure as shown by his prior written records, or (iii) is disclosed to the Employee by a third
party who is under no confidential obligation to the Company. The Employee further agrees that
upon request by the Company, or upon the termination of the Employee’s employment, the Employee
will immediately return to the Company any and all such information in the Employee’s possession or
under the Employee’s control.

     8. Representations and Warranties of the Employee. The Employee represents and
warrants to the Company as follows:

          8.1. All facts concerning the Employee’s background, education, experience and employment
history as described to the Company in writing are true and correct;

          8.2 The Employee’s execution of this Agreement and employment with the Company does not and
will not conflict with any obligations that the Employee has to any current or former employer, any
other individual, corporation, partnership,

11

 

association, trust or any other entity or organization, including any instrumentality of
government;

          8.3 All files, records, compilations, reports, studies, manuals, memoranda, notebooks,
documents, financial reports and statements, correspondence, and other confidential information
whether prepared by the Employee or otherwise coming into the possession of the Employee, and all
copies thereof, are, and shall remain, the exclusive property of the Company, and shall be
delivered to the Company as soon as reasonably practicable and at the expense of the Company in the
event of the Employee’s termination or at any other time if requested by the Company.

          8.4the

     8.5 The Employee acknowledges that the Company may, and contemplates, purchasing “key
man life insurance” on Employee with the Company as sole benificiary.

          8.6 The Employee confirms that all IP created or owned by Steiner Ventures, since it’s inception in
April, 2003 belongs to the Comapany.

          8.7 Representations and Warranties of the Company. thethethethe

     9.
Indemnification. Employer shall indemnify Employee and hold him harmless against any and
all claims and liabilities asserted against Employee which arise in connection with the performance
of Employee’s duties and responsibilities while acting in Employee’s capacity as an employee of
Employer, except Employer shall not be

12

 

obligated
to indemnify or hold Employee harmless against any claim or liability which arises out of
Employee’s bad faith or intentional misconduct.

     10. Property Rights. With respect to information, inventions and discoveries
developed, made or conceived of by Employee, either alone or with others, at any time during
Employee’s employment by the Company and whether or not within working hours, arising out of such
employment or pertinent to any field of business or research in which, during such employment, the
Company is engaged or (if such is known to or ascertainable by Employee) is considering engaging,
Employee agrees:

          10.1 that all such information, inventions and discoveries, whether or not patented or
patentable, shall be and remain the exclusive property of the Company;

          10.2 to disclose promptly to an authorized representative of the Company all such information
in Employee’s possession as to possible applications and uses thereof;

          10.3 not to file any patent application relating to any such invention or discovery except
with the prior written consent of an authorized officer of the Company;

          10.4 that Employee hereby waives and releases any and all rights Employee may have in and to
such information, inventions and discoveries and hereby assigns to the Company and/or its nominees
all of Employee’s right, title and interest in them, and all Employee’s right, title and interest
in any patent, patent application, copyright or other property right based thereon. Employee hereby
irrevocably designates and appoints the Company and each of its duly authorized officers and agents
as Employee’s agent and attorney-in-fact to act for Employee and in Employee’s behalf and stead to
execute and file any document and to do all other lawfully permitted acts to

13

 

further the prosecution, issuance and enforcement of any such patent, patent application, copyright
or other property right with the same force and effect as if executed and delivered by Employee;
and

          10.5 at the request of the Company and without expense to Employee, to execute such documents
and perform such other acts as the Company deems necessary or appropriate for the Company to obtain
patents on such inventions in a jurisdiction or jurisdictions designated by the Company, and to
assign to the Company or its designee such inventions and any patent applications and patents
relating thereto.

     11. Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed effective upon personal delivery or upon deposit in the United States
Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the
address shown above, or at such other address or addresses as either party shall designate to the
other in accordance with this Section 10.

     12. Governing Law. This Agreement shall be construed, interpreted and enforced in
accordance with the internal laws (and not the law of conflicts) of the State of New York.

     13. Jurisdiction. Except as otherwise provided for herein, each of the parties (a)
submits to the exclusive jurisdiction of any state court sitting in New York County, New York or
federal court sitting in the Southern District of New York in any action or proceeding arising out
of or relating to this Agreement, (b) agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court and (c) agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the parties waives any
defense of inconvenient

14

 

forum to the
maintenance of any action or proceeding so brought and waives any bond, surety or other security
that might be required of any other party with respect thereto. Any party may make service on
another party by sending or delivering a copy of the process to the party to be served at the
address and in the manner provided for giving of notices in Section 13. Nothing in this Section 13,
however, shall affect the right of any party to serve legal process in any other manner permitted
by law.

     14. Survival. The provisions of Sections 6, 7, 8, 9, 10, 11, 12 and 13 shall survive
the termination of this Agreement.

     15. Pronouns. Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the singular forms of
nouns and pronouns shall include the plural, and vice versa.

     16. Entire Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements and understandings, whether written or oral, relating
to the subject matter of this Agreement.

     17. Amendment. This Agreement may be amended or modified only by a written
instrument executed by all of the parties hereto.

     18. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of all of the parties hereto and their respective successors and assigns, including any
corporation with which or into which the Company may be merged or which may succeed to its assets
or business; provided, however, that the obligations of the Employee are personal and shall not be
assigned by him.

15

 

     19. Miscellaneous.

          19.1 No delay or omission by either party in exercising any right under this Agreement shall
operate as a waiver of that or any other right. A waiver or consent given by the Company on any one
occasion shall be effective only in that instance and shall not be construed as a bar or waiver of
any right on any other occasion.

          19.2 The captions of the sections of this Agreement are for convenience of reference only and
in no way define, limit or affect the scope or substance of any section of this Agreement.

          19.3 In case any provision of this Agreement shall be invalid, illegal or otherwise
unenforceable, the validity, legality and enforceability of the remaining provisions shall in no
way be affected or impaired thereby.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first
written above.

	 	 	 	 	 	 	 
	 	 	BIODEL INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Scott Weisman	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Scott Weisman	 	 
	 	 	Title: Director	 	 
	 
	 	 	 
	 
	 	/s/ Solomon Steiner	 
	 	 	 	 	 
	 	 	Solomon Steiner	 	 

16

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