Document:

EX-10.2

Exhibit 10.2

BIODEL INC.

EXECUTIVE SEVERANCE AGREEMENT

This Executive Severance Agreement (this “Agreement”), dated and effective as of                      is
between Biodel Inc., a Delaware corporation (the “Company”), and                                          (the
“Executive”).

WHEREAS the board of directors of the Company (the “Board”) has determined that it is in the best
interests of the Company and its shareholders to ensure that the Company will have the continued
dedication of the Executive, notwithstanding the fact that the Executive does not have any form of
traditional employment contract or other assurance of job security;

WHEREAS the Board believes it is imperative to diminish any distraction of the Executive arising
from the personal uncertainty and insecurity that arises in the absence of any assurance of job
security by providing the Executive with reasonable compensation and benefit arrangements in the
event of termination of the Executive’s employment by the Company under certain defined
circumstances;

WHEREAS the parties entered into an executive severance agreement as of                     ; and

WHEREAS the parties wish to amend such agreement so that such agreement as so amended shall read in
its entirety as follows.

NOW THEREFORE, in order to accomplish these objectives, the Board has caused the Company to enter
into this agreement.

1. TERM

The term of this Agreement (the “Term”) shall commence on the date this Agreement is executed by
the Executive and the Company and shall continue through the duration of the Executive’s employment
with the Company.

2. EMPLOYMENT

The Executive and the Company acknowledge that, except as may otherwise be provided under any other
written agreement between the Executive and the Company, the employment of the Executive by the
Company or by any affiliated or successor company is “at will” and may be terminated by either the
Executive or the Company or its affiliated companies at any time with or without cause, subject to
the termination payments prescribed herein.

3. ATTENTION AND EFFORT

During any period of time that the Executive remains in the employ of the Company, and excluding
any periods of paid time-off to which the Executive is entitled, the Executive will devote such of
his productive time, ability, attention, and effort as shall be reasonably necessary to the
business and affairs of the Company and the discharge of the responsibilities assigned to him
hereunder, and

 

 

will seek to perform faithfully and efficiently such responsibilities. It shall not be a violation
of this Agreement for the Executive to (a) serve on corporate, civic or charitable boards or
committees, (b) deliver lectures, fulfill speaking engagements or teach at educational
institutions, (c) manage personal investments, (d) continue to conduct any business or profession
conducted by Employee at the date of this Agreement or (e) continue to engage in activities
permitted by the policies of the Company or as specifically permitted by the Company, so long as
such activities do not significantly interfere with the performance of the Executive’s
responsibilities in accordance with this Agreement. It is expressly understood and agreed that to
the extent any such activities have been conducted by the Executive prior to the Term, the
continued conduct of such activities (or the conduct of activities similar in nature and scope
thereto) during the Term shall not thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.

4. TERMINATION

During the Term, employment of the Executive may be terminated as follows, but, in any case, the
nondisclosure provisions set forth in Section 7 hereof shall survive the termination of this
Agreement and the termination of the Executive’s employment with the Company:

4.1 BY THE COMPANY OR THE EXECUTIVE

At any time during the Term, the Company may terminate the employment of the Executive with or
without Cause (as defined below), and the Executive may terminate his employment for Good Reason
(as defined below) or for any reason, upon giving Notice of Termination (as defined below).

4.2 AUTOMATIC TERMINATION

This Agreement and the Executive’s employment shall terminate automatically upon the death or
Disability of the Executive. The term “Disability” as used herein shall mean the Executive’s
inability (with such accommodation as may be required by law and which places no undue burden on
the Company), to perform the Executive’s essential duties for a period or periods aggregating
twelve (12) weeks in any three hundred sixty-five (365) day period as a result of physical or
mental illness, loss of legal capacity or any other cause.

4.3 NOTICE OF TERMINATION

Any termination by the Company or by the Executive during the Term shall be communicated by Notice
of Termination to the other party given in accordance with Section 8 hereof. The term “Notice of
Termination” shall mean a written notice that (a) indicates the specific termination provision in
this Agreement relied upon, and (b) to the extent applicable, sets forth briefly the facts and
circumstances claimed to provide a basis for termination of the Executive’s employment under the
provision so indicated. The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance that contributed to a showing of Good Reason or Cause shall
not waive any right of the Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s
rights hereunder.

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4.4 DATE OF TERMINATION

“Date of Termination” means (a) if the Executive’s employment is terminated by reason of death, the
date of death, (b) if the Executive’s employment is terminated by reason of Disability, immediately
upon a determination by the Company of the Executive’s Disability, and (c) in all other cases, upon
the giving of the Notice of Termination. Notwithstanding the foregoing, the party giving the notice
in the case of (c) above will have the right, but not the obligation, to have the termination be
effective upon the expiration of any period specified in the Notice of Termination. In that event
the Executive’s employment and performance of services will continue during the specified period
unless the other party (the Company in the event of a termination by the Executive or the Executive
in the event of a termination by the Company) thereafter elects to terminate the employment of the
Executive pursuant to Section 2 and that termination is as of an earlier date. Notwithstanding the
foregoing, the Company may, upon notice to the Executive and without reducing the Executive’s
compensation during such period, excuse the Executive from any or all of his duties during such
period.

5. TERMINATION PAYMENTS

In the event of termination of the Executive’s employment, all compensation and benefits shall
terminate, except as specifically provided in this Section 5.

5.1 TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR BY THE EXECUTIVE FOR GOOD REASON

If during the Term the Company terminates the Executive’s employment other than
for Cause or the Executive terminates his employment for Good Reason, the
Executive shall be entitled to:

(a) Payment of the following accrued obligations (the “Accrued Obligations”):

(i) the Executive’s then current annual base salary through the
Date of Termination to the extent not theretofore paid; and

(ii) if the performance criteria for earning the annual bonus
for the full fiscal year of termination have been fully
satisfied at the time of termination (excluding any requirement
that the Executive be employed by the Company at the end of the
fiscal year), the product of (x) the amount of the annual bonus
for that year and (y) a fraction the numerator of which is the
number of days in the current fiscal year through the Date of
Termination and the denominator of which is three hundred
sixty-five (365);

(iii) if the performance criteria for earning the annual bonus
for the full fiscal year of termination have not been fully
satisfied and the Board of Directors of the Company determines
that all such criteria could not have been satisfied if the
Executive remained employed for the full fiscal year, no amount
for the annual bonus; and

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(iv) if neither (ii) nor (iii) apply, the product of (x) the
Three-Year Average Annual Bonus and (y) a fraction the
numerator of which is the number of days in the current fiscal
year through the Date of Termination and the denominator of
which is three hundred sixty-five (365). “Three-Year Average
Annual Bonus” shall mean the average of bonuses paid or payable
to the Executive by the Company for each of the three fiscal
years immediately preceding the year of termination (including
the annualized amount of any such bonus paid or payable for any
partial year, but not stock options or stock awards, which
became fully vested and any deferred compensation earned during
any of those years and excluding any sign-on or other
one-time-only bonus). If the Executive has not been an
executive officer of the Company during the entire three-year
period referred to above or was not offered a bonus during any
of those years, then the Three-Year Average Annual Bonus shall
be calculated for such shorter time that he or she was an
executive officer of the Company and had been offered a bonus;
and

(v) any accrued paid time-off that would be payable under the
Company’s standard policy to the extent not theretofore paid.

(b) For eighteen (18) months after the Date of Termination or until the
Executive qualifies for comparable medical and dental insurance benefits from
another employer, whichever occurs first, and subject to the satisfactory
execution by the Executive (including the expiration of any revocation period)
of an agreement substantially in the form of Exhibit A hereof, the Company
shall pay the Executive’s premiums for

(i) health insurance benefit continuation for the Executive and
his family members, if applicable, that the Company provides to
the Executive under the provisions of the federal Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”), to the extent that the Company would have paid such
premiums had the Executive remained employed by the Company
(such continued payment is hereinafter referred to as “COBRA
Continuation”); and

(ii) additional health coverage, life, accidental death and
disability and other insurance programs for the Executive and
his family members, if applicable, to the extent such programs
existed on the Date of Termination.

(c) Continuation of the Executive’s then current annual base salary for the
fiscal year in which the Date of Termination occurs for a period of eighteen
(18) months after the Date of Termination, subject to the satisfactory
execution by the Executive (including the expiration of any revocation period)
of an

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agreement substantially in the form of Exhibit A hereof.

(d) An amount equal to one and one-half times the Three-Year Average Annual
Bonus, subject to the satisfactory execution by the Executive (including the
expiration of any revocation period) of an agreement substantially in the form
of Exhibit A hereof.

(e) Immediate vesting of all outstanding stock options previously granted to
the Executive by the Company, subject to the satisfactory execution by the
Executive (including the expiration of any revocation period) of an agreement
substantially in the form of Exhibit A hereof.

(f) The provision in any agreement evidencing any outstanding stock option
causing the option to terminate upon the expiration of three months (or any
other period relating to termination of employment) after termination of
employment shall be of no force or effect, except that nothing herein shall
extend any such option beyond its original term or shall affect its termination
for any reason other than termination of employment. The provisions of this
clause (f) are subject to the satisfactory execution by the Executive
(including the expiration of any revocation period) of an agreement
substantially in the form of Exhibit A.

5.2 TERMINATION FOR CAUSE OR OTHER THAN FOR GOOD REASON

If during the Term the Executive’s employment shall be terminated by the Company for Cause or by
the Executive for other than Good Reason, this Agreement shall terminate without further obligation
on the part of the Company to the Executive, other than the Company’s obligation to pay the
Executive the amounts in Section 5.1(a) (i) and (v).

5.3 TERMINATION BECAUSE OF DEATH OR DISABILITY

Upon the Executive’s death or Disability, this Agreement shall terminate automatically without
further obligation on the part of the Company to the Executive or his legal representatives under
this Agreement, other than the Company’s obligation, if any, to pay the Executive the benefits in
Section 5.1(a) to (e).

5.4 PAYMENT SCHEDULE

All payments, or any portion thereof, payable pursuant to Section 5.1, shall be made to the
Executive within ten (10) working days of the Date of Termination except that

(a) any amount payable to the Executive pursuant to Section 5.1(a)(ii), (iii)
or (iv) or Section 5.1(d) shall be paid to Executive when his or her bonus
would have been paid if he or she were still employed; and

(b) any payments payable to the Executive pursuant to Section 5.1(c) hereof
shall

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be made to the Executive in the form of salary continuation payable at
normal payroll intervals during the eighteen (18) month severance period on the
dates when the Executive would have received his or her payments of salary if
he or she were still employed and in the amounts he or she would have received.

5.5 CAUSE

For purposes of this Agreement, termination of the Executive’s employment shall
be for “Cause” if it is for any of the following:

(a) A refusal to carry out any material lawful duties of the Executive or any
directions or instructions of the Board or senior management of the Company
reasonably consistent with those duties;

(b) Failure to perform satisfactorily any lawful duties of the Executive or any
directions or instructions of the Board or senior management reasonably
consistent with those duties; provided, however, that the Executive has been
given notice and has failed to correct any such failure within (10) days
thereafter (unless any such correction by its nature cannot be done in 10 days,
in which event the Executive will have a reasonable time to correct failures),
and provided further that the Company shall have no obligation to give notice
and the Executive will have no such opportunity to correct more than two times
in any twelve calendar month period;

(c) Violation by the Executive of a local, state or federal law involving the
commission of a crime, other than minor traffic violations, or any other
criminal act involving moral turpitude;

(d) The Executive’s gross negligence, willful misconduct or breach of his or
her duty to the Company involving self-dealing or personal profit;

(e) Current abuse by the Executive of alcohol or controlled substances;
deception, fraud, misrepresentation or dishonesty by the Executive; or any
incident materially compromising the Executive’s reputation or ability to
represent the Company with investors, customers or the public; or

(f) Any other material violation of any provision of this Agreement by the
Executive not described in (a) or (b) above, subject to the same notice and
opportunity to correct provisions as are set forth in (b) above.

5.6 GOOD REASON

For purposes of this Agreement, “Good Reason” means:

(a) Reduction of the Executive’s annual base salary to a level below the level
in effect on the date of this Agreement, regardless of any change in the
Executive’s duties or responsibilities;

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(b) Any material diminution in Executive’s position, authority, duties or
responsibilities or any other action by the Company that results in a material
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated and inadvertent action not taken in bad faith and
that is remedied by the Company within ten (10) days after receipt of notice
thereof is provided to the Company by the Executive;

(c) The Company’s requiring the Executive to be based at any office or location
more than fifty (50) miles from the location of the Executive’s assigned
worksite prior to the Date of Termination and the Executive’s residence at any
such time such requirement is imposed;

(d) Any failure by the Company to comply with and satisfy Section 9 hereof;
provided, however, that the Company’s successor has received at least ten (10)
days’ prior written notice from the Company or the Executive of the
requirements of Section 9 hereof; or

(e) Any other material violation of any provision of this Agreement by the
Company.

Notwithstanding the foregoing, no basis for a termination for Good Reason will be deemed to exist
unless the Executive notifies the Company in writing of any event in (a) through (f) above within
90 days of the first occurrence of such event and the Company or its successor fails to cure any
such event within thirty (30) days after receipt of the notice. Furthermore, the Executive’s
termination of employment for good reason must occur no later than one year following the initial
existence of such condition.

5.7 WITHHOLDING TAXES

Any payments provided for in this Agreement shall be paid net of any applicable withholding
required under federal, state or local law.

5.8 WARN ACT

Notwithstanding the provisions of Section 5.1 through 5.5, in the event the Executive is entitled,
by operation of any act or law, to unemployment compensation benefits or benefits under the Work
Adjustment and Retraining Act of 1988 (known as the “WARN Act”) in connection with the termination
of his or her employment in addition to those required to be paid to him or her under this
Agreement, then to the extent permitted by applicable law governing severance payments or notice of
termination of employment, the Company shall be entitled to offset against the amount payable
hereunder the amounts of any such mandated payments.

5.9 PAYMENTS SUBJECT TO SECTION 409A

Subject to the provisions in this Section 5.9, any severance payments or benefits under this
Agreement shall begin only upon the date of the Executive’s “separation from service” (determined
as set forth below) which occurs on or after the date of termination of the Executive’s employment.

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The following rules shall apply with respect to distribution of the payments and benefits, if any,
to be provided to the Executive under this Agreement:

               a. It is intended that each installment of the severance payments and benefits provided under
this Agreement shall be treated as a separate “payment” for purposes of Section 409A of the Code
and the guidance issued thereunder (“Section 409A”). Neither the Company nor the Executive shall
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.

               b. If, as of the date of Executive’s “separation from service” from the Company, the Executive
is not a “specified employee” (within the meaning of Section 409A), then each installment of the
severance payments and benefits shall be made on the dates and terms set forth in this Agreement.

               c. If, as of the date of the Executive’s “separation from service” from the Company, the
Executive is a “specified employee” (within the meaning of Section 409A), then:

                    i. Each installment of the severance payments and benefits due under this Agreement that, in
accordance with the dates and terms set forth herein, will in all circumstances, regardless of when
the separation from service occurs, be paid within the Short-Term Deferral Period (as hereinafter
defined) shall be treated as a short-term deferral within the meaning of Treasury Regulation §
1.409A-1(b)(4) to the maximum extent permissible under § 409A. For purposes of this Agreement, the
“Short-Term Deferral Period” means the period ending on the later of the fifteenth day of the third
month following the end of the Executive’s tax year in which the separation from service occurs and
the fifteenth day of the third month following the end of the Company’s tax year in which the
separation from service occurs; and

                    ii. Each installment of the severance payments and benefits due under this Agreement that is
not described in paragraph (c)(i) above and that would, absent this subsection, be paid within the
six-month period following the Executive’s “separation from service” from the Company shall not be
paid until the date that is six months and one day after such separation from service (or, if
earlier, the Executive’s death), with any such installments that are required to be delayed being
accumulated during the six-month period and paid in a lump sum on the date that is six months and
one day following the Executive’s separation from service and any subsequent installments, if any,
being paid in accordance with the dates and terms set forth herein; provided, however, that the
preceding provisions of this sentence shall not apply to any installment of severance payments and
benefits if and to the maximum extent that that such installment is deemed to be paid under a
separation pay plan that does not provide for a deferral of compensation by reason of the
application of Treasury Regulation § 1.409A-1(b)(9)(iii) (relating to separation pay upon an
involuntary separation from service). Any installments that qualify for the exception under
Treasury Regulation § 1.409A-1(b)(9)(iii) must be paid no later than the last day of the
Executive’s second taxable year following the taxable year in which the separation from service
occurs.

               d. The determination of whether and when the Executive’s separation from service from the
Company has occurred shall be made and in a manner consistent with, and based on the presumptions
set forth in, Treasury Regulation § 1.409A-1(h). Solely for purposes of this paragraph d,
“Company” shall include all persons with whom the Company would be considered a single employer
under Section 414(b) and 414(c) of the Code.

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               e. All reimbursements and in-kind benefits provided under this Agreement shall be made or
provided in accordance with the requirements of Section 409A to the extent that such reimbursements
or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that
(i) any reimbursement is for expenses incurred during the Executive’s lifetime (or during a shorter
period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement
during a calendar year may not affect the expenses eligible for reimbursement in any other calendar
year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the
calendar year following the year in which the expense is incurred and (iv) the right to
reimbursement is not subject to set off or liquidation or exchange for any other benefit.

6. REPRESENTATIONS AND WARRANTIES

In order to induce the Company to enter into this Agreement, the Executive represents and warrants
to the Company that neither the execution nor the performance of this Agreement by the Executive
will violate or conflict in any way with any other agreement by which the Executive may be bound.

7. NONDISCLOSURE; RETURN OF MATERIALS; NONSOLICITATION

7.1 NONDISCLOSURE

Except as required by his employment with the Company, the Executive will not, at any time during
the term of employment with the Company, or at any time thereafter, directly, indirectly or
otherwise, use, communicate, disclose, disseminate, lecture upon or publish articles relating to
any confidential, proprietary or trade secret information without the prior written consent of the
Company. The Executive understands that the Company will be relying on this covenant in continuing
the Executive’s employment, paying him compensation, granting him any promotions or raises, or
entrusting him with any information that helps the Company compete with others.

7.2 RETURN OF MATERIALS

All documents, records, notebooks, notes, memoranda, drawings, computer files or other documents
made or compiled by the Executive at any time while employed by the Company, or in his possession,
including any and all copies thereof, shall be the property of the Company and shall be held by the
Executive in trust and solely for the benefit of the Company, and shall be delivered to the Company
by the Executive upon termination of employment or at any other time upon request by the Company.

7.3 NONSOLICITATION

During the period that Executive is receiving the payments described in Section 5.1(c) he or she
will not actively solicit any employees of the Company or its Affiliates to accept employment from
any other person or entity. “Affiliate” is defined as any entity controlling, controlled by or
under common control with the Company within the meaning of Rule 405 of the Securities and Exchange
Commission under the Securities Act of 1933.

8. FORM OF NOTICE

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Every notice required by the terms of this Agreement shall be given in writing
by serving the same upon the party to whom it was addressed personally or by
registered or certified mail, return receipt requested, at the address set forth
below or at such other address as may hereafter be designated by notice given in
compliance with the terms hereof:

If to the Executive:

	 	 	 
	If to the Company:

	 	Biodel Inc.

Attn: President

100 Saw Mill Road

Danbury, CT 06810

or such other address as shall be provided in accordance with the terms hereof. Except as set forth
in Section 4.4 hereof, if notice is mailed, such notice shall be effective upon mailing. Notices
sent in any other manner specified above shall be effective upon receipt.

9. ASSIGNMENT

This Agreement is personal to the Executive and shall not be assignable by the Executive. The
Company shall assign to and require any successor (whether by purchase of assets, merger or
consolidation) to all or substantially all the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place. As used in this
Agreement, the “Company” shall mean Biodel Inc. and any affiliated company or successor to its
business and/or assets as aforesaid that assumes and agrees to perform this Agreement by contract,
operation of law or otherwise; and as long as such successor assumes and agrees to perform this
Agreement, the termination of the Executive’s employment by one such entity and the immediate
hiring and continuation of the Executive’s employment by the succeeding entity shall not be deemed
to constitute a termination or trigger any severance obligation under this Agreement. All the terms
and provisions of this Agreement shall be binding upon and insure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted assigns.

10. WAIVERS

No delay or failure by any party hereto in exercising, protecting or enforcing any of its rights,
titles, interests or remedies hereunder, and no course of dealing or performance with respect
thereto, shall constitute a waiver thereof. The express waiver by a party hereto of any right,
title, interest or remedy in a particular instance or circumstance shall not constitute a waiver
thereof in any other instance or circumstance. All rights and remedies shall be cumulative and not
exclusive of any other rights or remedies.

11. AMENDMENTS IN WRITING

No amendment, modification, waiver, termination or discharge of any provision of this Agreement, or
consent to any departure therefrom by either party hereto, shall in any event be effective unless
the same shall be in writing, specifically identifying this Agreement and the provision intended to

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be amended, modified, waived, terminated or discharged and signed by the President or Chief
Executive Officer of the Company and the Executive, and each such amendment, modification, waiver,
termination or discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement, course of dealing or performance or any other matter not set forth in an
agreement in writing and signed by the Company and the Executive.

12. APPLICABLE LAW

This Agreement shall in all respects, including all matters of construction, validity and
performance, be governed by, and construed and enforced in accordance with, the laws of the State
of New York without regard to any rules governing conflicts of laws.

13. ARBITRATION; ATTORNEYS’ FEES

Except in connection with enforcing Section 7 hereof, for which legal and equitable remedies may be
sought in a court of law, any dispute arising under this Agreement shall be subject to arbitration.
The arbitration proceeding shall be conducted in accordance with the Employment Arbitration Rules
of the American Arbitration Association (the “AAA Rules”) then in effect, conducted by one (1)
arbitrator either mutually agreed upon or selected in accordance with the AAA Rules. The
arbitration shall be conducted in New York County, New York, under the jurisdiction of the New York
office of the American Arbitration Association. The arbitrator shall have authority only to
interpret and apply the provisions of this Agreement, and shall have no authority to add to,
subtract from or otherwise modify the terms of this Agreement. Any demand for arbitration must be
made within sixty (60) days of the event(s) giving rise to the claim that this Agreement has been
breached. The arbitrator’s decision shall be final and binding, and each party agrees to be bound
by the arbitrator’s award, subject only to an appeal therefrom in accordance with the laws of the
State of New York. Either party may obtain judgment upon the arbitrator’s award in the Supreme
Court of New York County, New York. If it becomes necessary to pursue or defend any legal
proceeding, whether in arbitration or court, in order to resolve a dispute arising under this
Agreement, the prevailing party in any such proceeding shall be entitled to recover costs and
attorneys’ fees.

14. SEVERABILITY

If any provision of this Agreement shall be held invalid, illegal or unenforceable in any
jurisdiction, for any reason, including, without limitation, the duration of such provision, its
geographical scope or the extent of the activities prohibited or required by it, then, to the full
extent permitted by law: (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in order to carry out the intent of the parties
hereto as nearly as may be possible, (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to reform such provision to the
extent necessary for such provision to be enforceable under applicable law.

15. COORDINATION WITH CHANGE OF CONTROL AGREEMENT

The Company and the Executive are contemporaneously with this Agreement entering into a Change of
Control Agreement (the “Change of Control Agreement”), which agreement provides for

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certain forms of severance and benefit payments in the event of termination of Executive’s
employment under certain defined circumstances. This Agreement is in addition to the Change of
Control Agreement, providing certain assurances to the Executive in circumstances that the Change
of Control Agreement does not cover, and in no way supersedes or nullifies the Change of Control
Agreement. Nevertheless, it is possible that a termination of employment by the Company or by the
Executive may fall within the scope of both agreements. In such event, payments made to the
Executive under Section 5.1 hereof shall be coordinated with payments made to the Executive under
Section 8.1 of the Change of Control Agreement as follows:

(a) Accrued Obligations under this Agreement shall be paid first, in which case
the obligations under Section 8.1(a) of the Change of Control Agreement need
not be paid;

(b) COBRA Continuation under this Agreement shall be provided first, in which
case the obligations under Section 8.1(b) of the Change of Control Agreement
need not be provided; and

(c) The severance payments required under Sections 8.1(c) and 8.1(d) of the
Change of Control Agreement shall be paid first, in which case any severance
payment required under Sections 5.1(c) and 5.1(d) hereof need not be provided.

16. EXCESS PARACHUTE PAYMENTS

If any portion of the payments or benefits under this Agreement, taken together with any other
agreement or benefit plan of the Company (including stock options), would be characterized as an
“excess parachute payment” to the Executive under Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”), the payments and benefits shall be reduced to the extent necessary
to avoid the imposition of any tax that would otherwise be owed under Section 4999 of the Code.
Such reductions shall first be made to the bonus payments referred to in Section 5.1(a)(ii), (iii)
or (iv), whichever is applicable, then to the salary continuation payments referred to in Section
5.1(c) and then to the salary payments under Section 5.1(a)(i). The determination of whether and
the extent to which payments and benefits are to be reduced pursuant to this Section 16 shall be
made in writing by tax accountants and/or tax lawyers selected by the Company and reasonably
acceptable to the Executive.

17. ENTIRE AGREEMENT

Except as described in Section 15 hereof, this Agreement constitutes the entire agreement between
the Company and the Executive with respect to the subject matter hereof, and all prior or
contemporaneous oral or written communications, understandings, or agreements between the Company
and the Executive with respect to such subject matter are hereby superseded and nullified in their
entireties, except that the agreement relating to proprietary information and inventions between
the Executive and the Company shall continue in full force and effect.

18. COUNTERPARTS

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This Agreement may be executed in counterparts, each of which counterpart shall be deemed an
original, but all of which together shall constitute one and the same instrument.

19. SECTION 409A. This Agreement is intended to comply with the provisions of Section 409A and
this Agreement shall, to the extent practicable, be construed in accordance therewith. The Company
makes no representation or warranty and shall have no liability to the Executive or any other
person if any provisions of this Agreement are determined to constitute deferred compensation
subject to Section 409A and do not satisfy an exemption from, or the conditions of, Section 409A.

IN WITNESS WHEREOF, the parties have executed and entered into this Agreement effective on the date
first set forth above.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BIODEL INC.  	 	EXECUTIVE  
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	
	 	Its:	 	 	 	 	 	 	 	 	 	 	 	 

-13-

 

EXHIBIT A

GENERAL RELEASE AND SETTLEMENT AGREEMENT

The parties to this General Release and Settlement Agreement (“Release”) between
                                                             (“Employee”) and Biodel Inc. (“the Company”) state that:

The parties desire to terminate their employment relationship. Both parties desire to fully and
finally resolve all differences and disputes without further costs;

THEREFORE, the parties agree:

     1. Employee and the Company stipulate, agree, and understand that, in consideration of the
following mutual releases and, in the case of the Employee, the payments to Employee as provided in
the Executive Severance Agreement between the Employee and the Company dated                                         ,
each, on behalf of itself, its successors, and assigns, and, in the case of the Employee, on behalf
of the Employee’s heirs, administrators and executors, releases the other, and, in the case of the
Company, its subsidiaries, affiliates, related companies and their directors, officers, employees
and agents, from any and all debts, obligations, claims, demands, judgments or causes of action of
any kind whatsoever in tort, contract, by statute, or on any other basis which either have or may
have arising out of the Employee’s employment by the Company and the termination thereof from the
beginning of time to the date of the signing this Release including but not limited to any claims
of harassment or discrimination (for example, on the basis of sex, race, age, national origin,
handicap or disability) under any federal, state or local law, rule or regulation including, but
not limited to, the Age Discrimination in Employment Act, 29 U.S.C. §621, et seq., Title
VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act or
any claim arising under the Employment Retirement Income Security Act (“ERISA”) (except for
claims for vested benefits under ERISA), breach of contract, express or implied but excluding from
the foregoing mutual releases Workmen’s Compensation claims and obligations of the parties (i)
under this Release, (ii) under the Executive Severance and Change of Control Agreements between the
Employee and the Company dated                                         , (iii) under any stock option or other award
granted under any stock option or other plan of the Company including without limitation [here
describe options or awards by date of grant], (iv) under the Biodel Inc. Employee Proprietary
Information and Inventions Agreement executed by Employee, (v) relating to shares of Common Stock
of Biodel Inc. owned by Employee, (vi) under any indemnity provisions in favor of Employee
contained in the certificate of incorporation or bylaws of the Company or under Delaware law, (vii)
under the Indemnification Agreement with the Company dated                                          executed by
Employee or (viii) under any policy of liability insurance of the Company for directors and
officers. The obligations set forth in (i) through (viii) are herein sometimes collectively
referred to as “the Continuing Obligations”.

     2. Employee agrees not to seek reemployment with the Company or any of its affiliates.

14

 

     3. This Release shall be governed by the substantive law of the State of New York. In the
event of any dispute concerning the interpretation of this Release or in any way related to
Employee’s employment or termination of employment, the dispute shall be resolved by arbitration
within the County of New York, New York, in accordance with the then existing rules for employment
dispute arbitration of the American Arbitration Association, and judgment upon any arbitration
award may be entered by any state or federal court having jurisdiction thereof. The parties intend
this arbitration provision to be valid and construed as broadly as possible. The prevailing party
in such arbitration shall recover its reasonable costs and attorneys’ fees.

     4. If any provision of this General Release and Settlement Agreement is determined to be
invalid or unenforceable, all of the other provisions shall remain valid and enforceable
notwithstanding, unless the provision found to be unenforceable is of such material effect that
this Release cannot be performed in accordance with the intent of the parties in the absence
thereof.

     5. Except for the Continuing Obligations, no promise or agreement other than that expressed
herein has been made. Except for the Continuing Obligations, this General Release and Settlement
Agreement constitutes a single integrated contract expressing the entire agreement of the parties
hereto. Except for the Continuing Obligations, there are no other agreements, written or oral,
express or implied, between the parties concerning the subject matter hereof, except the provisions
set forth in this Release. Except for the Continuing Obligations, this Release supersedes all
previous agreements and understandings, whether written or oral. This Release can be amended,
modified or terminated only by a writing executed by both Employee and the President of the
Company.

     6. In compliance with the Older Workers Benefit Protection Act, Employee has been given
twenty-one (21) days to review this Release before signing it. Employee also understands that he
may revoke this General Release and Settlement Agreement within seven (7) days after it has been
signed and that it is not enforceable or effective until the seven (7) day revocation period has
expired. Additionally, employee has been advised in this writing to consult with an attorney before
executing this General Release and Settlement Agreement.

     7. THE EMPLOYEE STATES THAT HE/SHE IS IN GOOD HEALTH AND FULLY COMPETENT TO MANAGE HIS/HER
BUSINESS AFFAIRS, THAT HE/SHE HAS CAREFULLY READ THIS GENERAL RELEASE AND SETTLEMENT AGREEMENT,
THAT HE/SHE FULLY UNDERSTANDS ITS FINAL AND BINDING EFFECT, THAT THE ONLY PROMISES MADE TO HIM/HER
TO SIGN THIS RELEASE ARE THOSE STATED AND CONTAINED IN THIS RELEASE OTHER THAN FOR THE CONTINUING
OBLIGATIONS, AND THAT HE/SHE IS SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY.

AGREED AND ACCEPTED this                      day of                     ,                     :

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BIODEL INC.	 	 	 	EXECUTIVE
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Its:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 

15EX-10.3

Exhibit 10.3

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of December 30, 2004, as
amended and restated effective March 20, 2007, as further amended and restated effective November
20, 2007 and as further amended and restated effective December 31, 2008 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 at 24 Old Wagon
Road, Mt. Kisco, New York 10509 (“Employee”).

WITNESSETH:

     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;

     WHEREAS, the parties entered into an agreement as of December 30, 2004, which was amended and
restated effective March 20, 2007 and further amended and restated as of November 20, 2007;

     WHEREAS, the parties wish to further amend such agreement so that such agreement as so amended
shall read in its entirety as follows.

     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

 

     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 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 November 20, 2009 (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

2

 

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.” Notwithstanding the foregoing, if a Change of Control occurs
during the Contract Term, the Contract Term shall automatically extend for a period of two (2)
years from the effective date of Change of Control and shall automatically terminate at the end of
such period. “Change of Control” shall have the Definition set forth in Appendix A hereto, which is
hereby incorporated by reference.

     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 Three Hundred and Seventy-Five
Thousand Dollars ($375,000) (“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. In the event the Board of Directors shall by resolution
increase the base salary, then this agreement shall be deemed so amended as of the effective date
of such resolution or such other date specified in such resolution.

          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 fifty percent (50%) of Base
Salary as determined by the Board of Directors.

3

 

Such bonus shall be paid no later than March 15 of
the calendar year next following the calendar year for which the bonus is paid. 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 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

4

 

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 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

5

 

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 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 (45) days prior written notice of termination; provided, however,
that the Employee may terminate his employment for good reason only if such notice is given within 90 days of the initial
existence of any of the conditions described in the following sentence and the Employee provides
the Company a period of 30 days after the receipt of such notice during which the Company may
remedy such conditions. Furthermore, the Executive’s

6

 

termination of employment for good reason
must occur no later than one year following the initial existence of such condition. 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 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 death or
disability; such payments shall be made at the time they would otherwise have been paid as set
forth in Section 3. The Company will continue health benefits for one year after the date of
termination.

7

 

          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 3,
through the longer of (x) two (2) years following the termination date or (y) the balance of the
term of this Agreement.

          5.4 Payments Subject to Section 409A. Subject to the provisions in this Section 5.4,
any severance payments or benefits under this Agreement shall begin only upon the date of the
Employee’s “separation from service” (determined as set forth below) which occurs on or after the
date of termination of the Employee’s employment. The following rules shall apply with respect to
distribution of the payments and benefits, if any, to be provided to the Employee under this
Agreement:

               a. It is intended that each installment of the severance payments and benefits provided under
this Agreement shall be treated as a separate “payment” for purposes of Section 409A of the Code
and the guidance issued thereunder (“Section 409A”). Neither the Company nor the Employee shall
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.

               b. If, as of the date of Employee’s “separation from service” from the Company, the Employee
is not a “specified employee” (within the meaning of

8

 

Section 409A), then each installment of the
severance payments and benefits shall be made on the dates and terms set forth in this Agreement.

               c. If, as of the date of the Employee’s “separation from service” from the Company, the
Employee is a “specified employee” (within the meaning of Section 409A), then:

                    i. Each installment of the severance payments and benefits due under this Agreement that, in
accordance with the dates and terms set forth herein, will in all circumstances, regardless of when
the separation from service occurs, be paid within the Short-Term Deferral Period (as hereinafter
defined) shall be treated as a short-term deferral within the meaning of Treasury Regulation §
1.409A-1(b)(4) to the maximum extent permissible under § 409A. For purposes of this Agreement, the
“Short-Term Deferral Period” means the period ending on the later of the fifteenth day of the third
month following the end of the Employee’s tax year in which the separation from service occurs and
the fifteenth day of the third month following the end of the Company’s tax year in which the
separation from service occurs; and

                    ii. Each installment of the severance payments and benefits due under this Agreement that is
not described in paragraph (c)(i) above and that would, absent this subsection, be paid within the
six-month period following the Employee’s “separation from service” from the Company shall not be
paid until the date that is six months and one day after such separation from service (or, if earlier, the Employee’s
death), with any such installments that are required to be delayed being accumulated during the
six-month period and paid in a lump sum on the date that is six months and one day following the
Employee’s separation from service and any

9

 

subsequent installments, if any, being paid in
accordance with the dates and terms set forth herein; provided, however, that the preceding
provisions of this sentence shall not apply to any installment of severance payments and benefits
if and to the maximum extent that that such installment is deemed to be paid under a separation pay
plan that does not provide for a deferral of compensation by reason of the application of Treasury
Regulation § 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary separation from
service). Any installments that qualify for the exception under Treasury Regulation §
1.409A-1(b)(9)(iii) must be paid no later than the last day of the Employee’s second taxable year
following the taxable year in which the separation from service occurs.

               d. The determination of whether and when the Employee’s separation from service from the
Company has occurred shall be made and in a manner consistent with, and based on the presumptions
set forth in, Treasury Regulation § 1.409A-1(h). Solely for purposes of this paragraph d,
“Company” shall include all persons with whom the Company would be considered a single employer
under Section 414(b) and 414(c) of the Code.

               e. All reimbursements and in-kind benefits provided under this Agreement shall be made or
provided in accordance with the requirements of Section 409A to the extent that such reimbursements
or in-kind benefits are subject to Section 409A, including, where applicable, the requirements that (i) any reimbursement is for expenses
incurred during the Employee’s lifetime (or during a shorter period of time specified in this
Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not
affect the expenses eligible for reimbursement in any

10

 

other calendar year, (iii) the reimbursement
of an eligible expense will be made on or before the last day of the calendar year following the
year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off
or liquidation or exchange for any other benefit.

     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 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:

11

 

               (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-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

12

 

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.

     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

13

 

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 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

14

 

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, 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.

15

 

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

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

     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 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;

16

 

          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 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.

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     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 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.

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     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.

     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.

     20. Section 409A. This Agreement is intended to comply with the provisions of Section
409A and this Agreement shall, to the extent practicable, be construed in accordance

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therewith.
The Company makes no representation or warranty and shall have no liability to the Employee or any
other person if any provisions of this Agreement are determined to constitute deferred compensation
subject to Section 409A and do not satisfy an exemption from, or the conditions of, Section 409A.

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

	 	 	 	 	 
	 	BIODEL INC.

 	 
	 	By:  	/s/ Gerard Michel
 	 
	 	 	Name:  	Gerard Michel 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	 	 
	 	                                 /s/ Solomon S. Steiner
 	 
	 	Solomon S. Steiner 	 
	 	 	 

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APPENDIX A

For purposes of this Agreement, a “Change of Control” shall be deemed to have occurred, if any one
of the following events occurs:

(a) the acquisition by any person or group of beneficial ownership of more than
50% of the outstanding shares of Common Stock of the Company, or, if there are
then outstanding any other voting securities of the Company, such acquisition
of more than 50% of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors, except for any of the following acquisitions of beneficial ownership
of Common Stock or other voting securities of the Company: (i) by the Company
or any Employee benefit plan (or related trust) sponsored or maintained by the
Company or any entity controlled by the Company; (ii) by Solomon S. Steiner; or
(iii) by any person or entity during the lifetime Solomon S. Steiner if the
shares acquired were beneficially owned by Solomon S. Steiner immediately prior
to their acquisition and the acquisition is a transfer to a trust, partnership,
corporation or other entity in which Solomon S. Steiner owns a majority of the
beneficial interests;

(b) the Company sells all or substantially all of its assets (or consummates
any transaction having a similar effect) or the Company merges or consolidates
with another entity or completes a reorganization unless the holders of the
voting securities of the Company outstanding immediately prior to the
transaction own immediately after the transaction in approximately the same
proportions 50% or more of the combined voting power of the voting securities
of the entity purchasing the assets or surviving the merger or consolidation or
the voting securities of its parent company, or, in the case of a
reorganization, 50% or more of the combined voting power of the voting
securities of the Company; Notwithstanding the foregoing, any purchase or
redemption of outstanding shares of Common Stock or other voting securities by
the Company resulting in an increase in the percentage of outstanding shares or
other voting securities beneficially owned by any person or group shall be
deemed to constitute a reorganization; however, no increase in the percentage
of outstanding shares or other voting securities beneficially owned by Solomon
S. Steiner or any person or entities referred to in (a)(i) or (iii) above
resulting from any redemption of shares or other voting securities by the
Company shall result in a Change of Control;

(c) the Company is liquidated; or

(d) the Board (if the Company continues to own its business) or the

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board of
directors or comparable governing body of any successor owner of its business
(as a result of a transaction which is not itself a Change of Control) consists
of a majority of directors or members who are not Incumbent Directors. For
purposes of this Agreement, (A) “voting securities” means securities whose
holders are entitled to vote in the election of all or a majority of the
authorized number of directors at the time the determination of ‘voting
securities” status is being made and (B) 50% or more of the combined voting
power shall refer to the voting power to elect a majority of the authorized
number of directors determined at that time. “Voting securities” shall not
include preferred stock or other securities whose holders are entitled to vote
in the election of all or a majority of the authorized number of directors upon
the occurrence of some event or circumstance which has not occurred and such
rights to vote are not in effect at the time of the determination of “voting
securities” status. Preferred stock and other securities whose holders are then
entitled to vote for less than a majority of the authorized number of
directors, shall not be considered “voting securities.”

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