Document:

Exhibit 10.1

Exhibit 10.1

[Letterhead of Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, P.C.]

(212) 880-9460

espiro@maglaw.com

April 30, 2009

BY HAND

Glenn M. Kurtz, Esq.

White & Case LLP

1155 Avenue of the Americas

New York, New York 10036-2787

Re: Loral Space & Communications Inc.

Dear Glenn:

I am writing to memorialize the terms of the settlement agreement reached at the conclusion of
the mediation session held before Justice Joseph T. Walsh on April 23, 2010. The mediation was
conducted between representatives of a Special Committee of the Board of Directors of Loral Space &
Communications Inc. (“Loral”) and Dr. Mark Rachesky, Mr. Hal Goldstein and Mr. Sai Devabhaktuni
(together, the “MHR Directors”). As you know, Loral has delegated to the Special Committee
authority to resolve the claim for indemnification asserted by the MHR Directors against Loral.

By letters dated January 22, March 20 and July 7, 2009, the MHR Directors requested
indemnification from Loral in the amount of $18,371,485.11. In addition, pursuant to Delaware law
and the terms of the Officers’ and Directors’ Indemnification Agreements between Loral and the MHR
Directors, the MHR Directors requested reimbursement for all legal fees and expenses incurred in
pursuing their claims to indemnification.

Loral, the MHR Directors and the MHR Entities1 agree that, in full and final
settlement of all claims that the MHR Directors and the MHR Entities may have against Loral

 

	 	 	 
	1	 	For purposes of this letter, the “MHR Entities” are
MHR Fund Management LLC, MHR Capital Partners Master Account LP, MHR Capital
Partners (100) LP, MHR Institutional Partners LP, MHRA LP, MHRM LP, MHR
Institutional Partners II LP, MHR Institutional Partners II A LP, MHR
Institutional Partners III LP, MHR Advisors LLC, MHR Institutional Advisors
LLC, MHR Institutional Advisors II LLC, and MHR Institutional Advisors III LLC.

 

 

 

Glenn M. Kurtz, Esq.

April 30, 2010

Page 2 of 3

for legal fees and expenses incurred in connection with (i) In re: Loral Space & Communications
Consolidated Litigation in the Court of Chancery of the State of Delaware, (ii) Babus v. Targoff in
the Supreme Court of the State of New York, County of New York, (iii) the related SEC
investigation, and (iv) any other related matters (collectively, the “Legal Matters”), Loral shall
pay to a party or parties designated by the MHR Directors the sum of $14.1 million. In addition,
pursuant to the terms of Loral’s Officers’ and Directors’ Indemnification Agreements, Loral shall
pay to a party or parties designated by the MHR Directors the sum of $256,821.25 as reimbursement
for any and all fees and expenses incurred by the MHR Directors in pursuing their indemnification
claim. Loral’s payments pursuant to this paragraph shall be made as soon as practicable, but, in
any event, no later than May 7, 2010, provided, that the MHR Directors, may, in their sole
discretion and by written notice to Loral, extend this deadline. The MHR Directors and MHR
Entities agree that, in consideration of the foregoing payments, they release and relinquish any
and all claims that they, or any of them, may have against Loral for payment, reimbursement, or
contribution for legal fees and expenses incurred in connection with the Legal Matters or in
pursuing the MHR Directors’ claim for indemnification.

To confirm our clients’ agreement to the foregoing, please have the MHR Directors and a
representative of the MHR Entities sign this letter below. I will arrange for John Stenbit, as
sole member of the Special Committee, also to sign this letter below. This letter agreement may be
signed in counterparts, all of which together shall constitute a single document, and faxed or pdf
copies shall be deemed originals.

Thank you for your cooperation in resolving this matter.

	 	 	 	 	 
	 	Sincerely,

 	 
	 	/s/ Edward M. Spiro/BLT
 	 
	 	Edward M. Spiro 	 

 

 

 

	 	 	 	 	 

Glenn M. Kurtz, Esq.

April 30, 2010

Page 3 of 3

	 	 	 	 	 
	ACCEPTED AND AGREED TO:	 	 
	 
	 	 	 	 
	/s/ Mark Rachesky
 

MARK RACHESKY
	 	 
	 
	 	 	 	 
	/s/ Hal Goldstein_
 

HAL GOLDSTEIN
	 	 
	 
	 	 	 	 
	/s/ Sai Devabhaktuni
 

SAI DEVABHAKTUNI
	 	 
	 
	 	 	 	 
	MHR ENTITIES (as defined in footnote 1)	 	 
	 
	 	 	 	 
	By:

	 	/s/ Hal Goldstein
 

Hal Goldstein
	 	 
	 
	 	 	 	 
	SPECIAL COMMITTEE OF THE BOARD OF 
DIRECTORS
OF LORAL SPACE & COMMUNICATIONS INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ John P. Stenbit
 

John P. Stenbitexv10w1

Exhibit 10.1

PENWEST PHARMACEUTICALS CO.

Amended Executive Retention Agreement

     THIS AMENDED EXECUTIVE RETENTION AGREEMENT (this “Agreement”) by and between Penwest
Pharmaceuticals Co., a Washington corporation (the “Company”), and [    ]
(the “Executive”) is made as of [    ] (the “Effective Date”).

     WHEREAS, the Company recognizes that, as is the case with many publicly-held corporations, the
possibility of a change in control of the Company exists and that such possibility, and the
uncertainty and questions which it may raise among key personnel, may result in the departure or
distraction of key personnel to the detriment of the Company and its shareholders,

     WHEREAS, the Company desires to reinforce and encourage the continued employment and
dedication of the Company’s key personnel without distraction from the possibility of a change in
control of the Company and related events and circumstances, and

     WHEREAS, the Company and the Executive are parties to an Executive Retention Agreement dated
as of [    ] (the “Prior Agreement”),

     NOW, THEREFORE, as an inducement for and in consideration of the Executive remaining in its
employ, the Company agrees that the Executive shall receive the severance benefits set forth in
this Agreement in the event the Executive’s employment with the Company is terminated under the
circumstances described below in connection with or subsequent to a Change in Control (as defined
below).

     1. Key Definitions.

     As used herein, the following terms shall have the following respective meanings:

          1.1 “Change in Control” means an event or occurrence set forth in any one or more of
subsections (a) through (d) below (including an event or occurrence that constitutes a Change in
Control under one of such subsections but is specifically exempted from another such subsection):

               (a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person
beneficially owns (within the meaning of Rule 13d-3 promulgated under the 1934 Securities Exchange
Act, as amended) 50% or more of the combined voting power of the then-outstanding securities of the
Company entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the
Company (excluding an acquisition

 

 

pursuant to the exercise, conversion or exchange of any security
exercisable for, convertible into or exchangeable for common stock or voting securities of the
Company, unless the Person exercising, converting or exchanging such security acquired such
security directly from the Company or an underwriter or agent of the Company), (ii) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iii) any acquisition by any corporation pursuant to a
Business Combination (as defined below) which complies with clauses (i) and (ii) of subsection (c)
of this definition; or

               (b) such time as the Continuing Directors (as defined below) do not constitute a majority of
the Board of Directors of the Company (or, if applicable, the Board of Directors of a successor
corporation to the Company) (the “Board”), where the term “Continuing Director” means at any date a
member of the Board (i) who was a member of the Board on the date of execution of the Prior
Agreement or (ii) who was nominated or elected subsequent to such date by at least a majority of
the directors who were Continuing Directors at the time of such nomination or election or whose
election to the Board was recommended or endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election; provided, however, that there
shall be excluded from this clause (ii) any individual whose initial assumption of office occurred
as a result of an actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a
person other than the Board; or

               (c) the consummation of a merger, consolidation, reorganization, recapitalization or share
exchange involving the Company or a sale or other disposition of all or substantially all of the
assets of the Company in one or a series of transactions (a “Business Combination”), unless,
immediately following such Business Combination, each of the following two conditions is satisfied:
(i) all or substantially all of the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors, of the resulting or acquiring
corporation in such Business Combination (which shall include, without limitation, a corporation
which as a result of such transaction owns the Company or substantially all of the Company’s assets
either directly or through one or more subsidiaries) (such resulting or acquiring corporation is
referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their
ownership of the Outstanding Company Voting Securities immediately prior to such Business
Combination and (ii) no Person (excluding any employee benefit plan (or related trust) maintained
or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or
indirectly, 50% of the combined voting power of the then-outstanding securities of the Acquiring
Corporation entitled to vote generally in the election of directors (except to the extent that such
ownership existed prior to the Business Combination); or

               (d) the liquidation or dissolution of the Company.

          1.2 “Cause” means willful misconduct by the Executive or willful failure by the
Executive to perform his/her responsibilities to the Company (including, without limitation, breach
by the Executive of any provision of any employment, consulting, advisory,

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nondisclosure,
non-competition or other similar agreement between the Executive and the Company), as determined by
the Company, which determination shall be conclusive.

          1.3 “Change in Control Date” means the first date during the Term (as defined in
Section 2) on which a Change in Control occurs. Anything in this Agreement to the contrary
notwithstanding, if (a) a Change in Control occurs, (b) the Executive’s employment with the Company
is terminated prior to the date on which the Change in Control occurs, and (c) it is reasonably
demonstrated by the Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise
arose in connection with or in anticipation of a Change in Control, then for all purposes of this
Agreement the “Change in Control” shall mean the date immediately prior to the date of such
termination of employment.

          1.4 “Disability” means a condition causing the Executive to be disabled within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), and any
regulations promulgated thereunder.

          1.5 “Good Reason” means the occurrence, without the Executive’s written consent, of
any of the following events or circumstances:

               (a) the assignment to the Executive of duties inconsistent in any material respect with the
Executive’s authority (including status, offices, titles and reporting requirements), duties, or
responsibilities in effect immediately prior to the earliest to occur of (i) the Change in Control
Date, (ii) the date of the execution by the Company of the initial written agreement or instrument
providing for the Change in Control or (iii) the date of the adoption by the Board of a resolution
providing for the Change in Control (with the earliest to occur of such dates referred to herein as
the “Measurement Date”), or any other action or omission by the Company which results in a material
diminution in such authority, duties, or responsibilities; or

               (b) a change by the Company in the location at which the Executive performs his/her principal
duties for the Company to a new location that increases the distance which the Executive commutes
to a distance that is 35 miles greater than the distance of the Executive’s commute immediately
prior to the Measurement Date.

Notwithstanding the occurrence of any event or circumstance set forth in clauses (a) or (b) above,
such occurrence shall not be deemed to constitute Good Reason if, prior to the Date of Termination
specified in the Notice of Termination (each as defined in Section 3.2(a)) given by the Executive
in respect thereof, such event or circumstance has been fully corrected and the Executive has been
reasonably compensated for any losses or damages resulting therefrom (provided that such right of
correction by the Company shall only apply to the first Notice of Termination for Good Reason given
by the Executive).

     2. Term of Agreement. This Agreement, and all rights and obligations of the parties
hereunder, shall take effect upon the Effective Date and shall expire upon the first to occur of
(a) the expiration of the Term (as defined below) if a Change in Control has not occurred during
the Term, (b) the termination of the Executive’s employment with the Company prior to the Change

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in
Control Date, (c) the date 18 months after the Change in Control Date, if the Executive is still
employed by the Company as of such later date, or (d) the fulfillment by the Company of all of its
obligations under this Agreement if the Executive’s employment with the Company terminates within
18 months following the Change in Control Date. “Term” shall mean the period commencing as of the
Effective Date and continuing in effect through December 31, 2011.

     3. Employment Status; Termination Following Change in Control.

          3.1 Not an Employment Contract. The Executive acknowledges that this Agreement does
not constitute a contract of employment or impose on the Company any obligation to retain the
Executive as an employee and that this Agreement does not prevent the Executive from terminating
employment at any time. If the Executive’s employment with the Company terminates for any reason
and subsequently a Change in Control shall occur, the Executive shall not be entitled to any
benefits hereunder except as otherwise provided pursuant to Section 1.3.

          3.2 Notice of Termination of Employment.

               (a) If the Change in Control Date occurs during the Term, any termination of the Executive’s
employment by the Company or by the Executive within 18 months following the Change in Control Date
(other than due to the death of the Executive) shall be communicated by a written notice to the
other party hereto (the “Notice of Termination”), given in accordance with Section 9. Any Notice
of Termination shall specify the effective date of the employment termination (the “Date of
Termination”). The Date of Termination set forth in such Notice of Termination shall not be less
than 30 days or more than 60 days after the date of delivery of such Notice of Termination, except
in the case of termination by the Company for Cause in which case such termination may be effective
immediately.

               (b) If the Executive seeks to terminate his/her employment with the Company for Good Reason,
then the Notice of Termination shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment. Any Notice of Termination
for Good Reason given by the Executive must be given within 30 days of the first occurrence of the
event(s) or circumstance(s) which constitute(s) Good Reason.

     4. Benefits to Executive. If the Change in Control Date occurs during the Term and
the Executive’s employment is terminated by the Company (other than for Cause, Disability or death)
or by the Executive for Good Reason within 18 months following the Change in Control Date, then the
Executive shall be entitled to the following benefits:

               (a) Compensation.

                    (i) The Company shall pay to the Executive in a lump sum in cash within 30 days (or such
earlier date as applicable law requires) after the Date of Termination (A) the Executive’s base
salary through the Date of Termination (B) any accrued vacation pay, in each case to the extent not
previously paid, (C) when permitted by Section

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409A, the amount of any compensation previously
deferred by the Executive (together with any accrued interest or earnings thereon) and (D) a $
10,000 transition payment ;

                    (ii) The Company shall pay to the Executive an amount equal to [200%/150%] of the sum of (x)
the highest annual base salary of the Executive during the period of the Executive’s employment
with the Company and (y) the highest annual bonus of the Executive during the period of the
Executive’s employment with the Company, including for this purpose the target annual bonus of the
Executive for the calendar year during which the Date of Termination occurs, over a period (the
“Payment Period”) that is equal in length to [24 months for the Chief Executive Officer] [18 months
for all other Executives] for the Executive and commences on the Date of Termination (or as soon
thereafter as is permitted under Sections 6 and 7), which amount shall be paid to the Executive in
installments, in accordance with the Company’s regular payroll practices. Notwithstanding the
foregoing installment provisions, subject to the Executive Release requirement and timing of
Section 7, if and to the extent the payments are exempted from the six-month delay by Sections
6(a)(iii)(1) and (2), the Company shall make the payments in this Section 4(a)(ii) on or within 10
days after the date provided by Section 7;

                    (iii) Provided that the Executive complies with the Executive Release requirements, (A) if the
Executive is eligible and elects to continue receiving group medical insurance under the
continuation coverage rules known as COBRA, the Company will pay the full premium for such coverage
that it pays for active and similarly-situated employees who receive the same type of coverage
until the earlier of (i) the end of the Payment Period or (ii) the date the COBRA continuation
coverage expires, and (B) in the event that the Payment Period extends beyond the date the COBRA
continuation coverage expires, then following the date of such expiration, the Company shall pay to
the Executive on a monthly basis until the end of the Payment Period an amount equal to the same
monthly premium that the Company was paying for COBRA continuation coverage for the Executive
immediately prior to the expiration of the COBRA continuation coverage; provided, however, that if
the Executive becomes reemployed with another employer and is eligible to receive health insurance
benefits from such employer, then the Company shall no longer be required to make these payments;

                    (iv) to the extent not previously paid or provided, the Company shall timely pay or provide to
the Executive any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive following the Executive’s termination of employment under any plan, program,
policy, practice, contract or agreement of the Company and its affiliated companies.

               (b) Stock Acceleration. Each outstanding option to purchase shares of Common Stock of
the Company held by the Executive shall become immediately exercisable in full and shares of Common
Stock of the Company received upon exercise of any options will no longer be subject to a right of
repurchase by the Company, and each outstanding restricted stock award shall be deemed to be fully
vested and will no longer be subject to a right of repurchase by the Company.

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     5. Taxes.

               (a) Notwithstanding any other provision of this Agreement, except as set forth in paragraph
(b) below, in the event that the Company undergoes a “Change in Ownership or Control” (as defined
below), the Company shall not be obligated to provide to the Executive a portion of any “Contingent
Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive
to the extent necessary to eliminate any “excess parachute payments” (as defined in Section
280G(b)(1) of the Code) for the Executive. For purposes of this Section 5, the Contingent
Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the
aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-30 or any
successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as
the “Eliminated Amount.”

               (b) Notwithstanding the provisions of paragraph (a), no such reduction in Contingent
Compensation Payments shall be made if (i) the Eliminated Amount (computed without regard to this
sentence) exceeds (ii) 110% of the aggregate present value (determined in accordance with Treasury
Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any
additional taxes that would be incurred by the Executive if the Eliminated Payments (determined
without regard to this sentence) were paid to him/her (including, state and federal income taxes on
the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to
all of the Contingent Compensation Payments in excess of the Executive’s “base amount” (as defined
in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in
Contingent Compensation Payments pursuant to this Section 5(b) shall be referred to as an
“Override.” For purpose of this paragraph, if any federal or state income taxes would be
attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed
by multiplying the amount of the Eliminated Payment by the maximum combined federal and state
income tax rate provided by law.

               (c) For purposes of this Section 5 the following terms shall have the following respective
meanings:

                    (i) “Change in Ownership or Control” shall mean a change in the ownership or effective control
of the Company or in the ownership of a substantial portion of the assets of the Company determined
in accordance with Section 280G(b)(2) of the Code.

                    (ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of
compensation that is made or made available (under this Agreement or otherwise) to a “disqualified
individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning
of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

               (d) Any payments or other benefits otherwise due to the Executive following a Change in
Ownership or Control that could reasonably be characterized (as determined by the Company) as
Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates
provided for in this Section 5(d), except to the extent the structure of the Change in Ownership or
Control requires prompter payment. Within 30 days after each date on which the Executive first
becomes entitled to receive (whether or not then due)

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a Contingent Compensation Payment relating to
such Change in Ownership or Control, the Company shall determine and notify the Executive (with
reasonable detail regarding the basis for its determinations) (i) which Potential Payments
constitute Contingent Compensation Payments, (ii) the Eliminated Amount and (iii) whether the
Override is applicable. The Potential Payments will be reduced in the following order: (i)
nonacceleration of any stock options whose exercise price is at or above the fair market value of
the stock as determined in the discretion of the Compensation Committee (taking into account, as
appropriate, the proceeds that would be received in connection with the event covered by Section
4999) (“Underwater Options”), (ii) the cash severance due under Section 6(a)(ii) above, (iii)
nonacceleration of any stock options other than Underwater Options, and (iv) any vesting or
distribution of restricted stock or restricted stock units. Within each category described in
clauses (i), (iii), and (iv), reductions or eliminations shall be made in reverse order beginning
with vesting or distributions that are to be paid the farthest in time from the date of event
covered by Section 4999. The Company shall promptly make to the Executive the Payments that remain
after such reductions.

               (e) The provisions of this Section 5 are intended to apply to any and all payments or benefits
available to the Executive under this Agreement or any other agreement or plan of the Company under
which the Executive receives Contingent Compensation Payments.

     6. Payments subject to Section 409A.

               (a) Subject to this Section 6, payments or benefits under Section 4 shall begin only upon the
date of a “separation from service” of the Executive (determined as set forth below) which occurs
on or after the termination of the Executive’s employment. The following rules shall apply with
respect to distribution of the payments and benefits, if any, to be provided to the Executive under
Section 4, as applicable:

                    (i) It is intended that each installment of the payments and benefits provided under Section 4
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.

                    (ii) If, as of the date of the “separation from service” of the Executive from the Company,
the Executive is not a “specified employee” (within the meaning of Section 409A), then each
installment of the payments and benefits shall be made on the dates and terms set forth in Section
4.

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

                         (1) Each installment of the payments and benefits due under Section 4 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) and
shall be treated as a short-term deferral within

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the meaning of Treasury Regulation Section
1.409A-1(b)(4) to the maximum extent permissible under Section 409A. For purposes of this
Agreement, the “Short-Term Deferral Period” means the period ending on the later of the
15th day of the third month following the end of the Executive’s tax year in which the
separation from service occurs and the 15th day of the third month following the end of
the Company’s tax year in which the separation from service occurs; and

                         (2) Each installment of the payments and benefits due under Section 4 that is not described in
Section 6(a)(iii)(1) and that would, absent this subsection, be paid within the six-month period
following the “separation from service” of the Executive 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 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 Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of the
Executive’s second taxable year following his taxable year in which the separation from service
occurs.

               (b) The determination of whether and when a separation from service of the Executive from the
Company has occurred shall be made and in a manner consistent with, and based on the presumptions
set forth in, Treasury Regulation Section 1.409A-1(h). Solely for purposes of this Section 6(b),
“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.

               (c) All reimbursements and in-kind benefits provided under the 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.

     7. Release. The obligation of the Company to make the payments and provide the
benefits to the Executive under Section 4(a)(ii) and Section 4(a)(iii) is conditioned upon the
Executive signing a release of claims, in a customary and reasonable form requested by the Company
(the “Executive Release”), within such period of time as the Company may specify following the Date
of Termination (provided that the Executive Release must become effective before the
60th day after Date of Termination). The Company shall not be obligated to make any
payments to the Executive under Section 4(a)(ii) and Section 4(a)(iii) until the Executive Release
has become effective in accordance with its terms. Assuming the Executive Release has become
effective, the payments subject to the Executive Release will be paid (or begin payment) upon the
60th day after termination of employment, and the Company shall promptly pay to the
Executive any payments that would otherwise have been made to the Executive between the Date of
Termination and such 60th day.

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     8. Successors.

          8.1 Successor to Company. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of the Company expressly to assume and agree to perform this Agreement to the
same extent that the Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain an assumption of this Agreement at or prior to the effectiveness
of any succession shall be a breach of this Agreement and shall constitute Good Reason (and be
subject to the timing in Section 3.2(b)) because failure to do so would be a material breach if the
Executive elects to terminate employment, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the Date of Termination.
As used in this Agreement, “Company” shall mean the Company as defined above and any successor to
its business or assets as aforesaid which assumes and agrees to perform this Agreement, by
operation of law or otherwise.

          8.2 Successor to Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should die while any
amount would still be payable to the Executive or his/her family hereunder if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or administrators of
the Executive’s estate.

     9. Notice. All notices, instructions and other communications given hereunder or in
connection herewith shall be in writing. Any such notice, instruction or communication shall be
sent either (i) by registered or certified mail, return receipt requested, postage prepaid, or (ii)
prepaid via a reputable nationwide overnight courier service, in each case addressed to the
Company, at 2981 Route 22, Patterson, New York 12563, and to the Executive at the Executive’s
address indicated on the signature page of this Agreement (or to such other address as either the
Company or the Executive may have furnished to the other in writing in accordance herewith). Any
such notice, instruction or communication shall be deemed to have been delivered five business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid, or one
business day after it is sent via a reputable nationwide overnight courier service. Either party
may give any notice, instruction or other communication hereunder using any other means, but no
such notice, instruction or other communication shall be deemed to have been duly delivered unless
and until it actually is received by the party for whom it is intended.

     10. Miscellaneous.

          10.1 Employment by Subsidiary. For purposes of this Agreement, the Executive’s
employment with the Company shall not be deemed to have terminated solely as a result of the
Executive continuing to be employed by a wholly-owned subsidiary of the Company.

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          10.2 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

          10.3 Injunctive Relief. The Company and the Executive agree that any breach of this
Agreement by the Company is likely to cause the Executive substantial and irrevocable damage and
therefore, in the event of any such breach, in addition to such other remedies which may be
available, the Executive shall have the right to specific performance and injunctive relief.

          10.4 Governing Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal laws of the State of Connecticut, without regard
to conflicts of law principles.

          10.5 Waivers. No waiver by the Executive at any time of any breach of, or compliance
with, any provision of this Agreement to be performed by the Company shall be deemed a waiver of
that or any other provision at any subsequent time.

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

          10.7 Tax Withholding. Any payments provided for hereunder shall be paid net of any
applicable tax withholding required under federal, state or local law.

          10.8 Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto in respect of the subject
matter contained herein; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled, including the Prior Agreement which is
hereby terminated as of the Effective Date.

          10.9 Amendments. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.

          10.10 Executive’s Acknowledgements. The Executive acknowledges that he/she: (a) has
read this Agreement; (b) has been represented in the preparation, negotiation, and execution of
this Agreement by legal counsel of the Executive’s own choice or has voluntarily declined to seek
such counsel; (c) understands the terms and consequences of this Agreement; and (d) understands
that the law firm of Wilmer Cutler Pickering Hale and Dorr LLP is acting as counsel to the Company
in connection with this Agreement and is not acting as counsel for the Executive.

          10.11 Section 409A. This Agreement is intended to comply with the provisions of
Section 409A and the 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.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first set forth above.

	 	 	 	 	 
	 	PENWEST PHARMACEUTICALS CO.

 	 
	 	By:  	
 	 
	 	 	Name:  	Christophe Bianchi 	 
	 	 	Title:  	Chairman of the Compensation

Committee of the Board of Directors 	 
	 
	 
	 	EXECUTIVE:

 	 
	 	
 	 
	 	Name:  	 	 
	 	Address:  	 
	 

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