Exhibit 10.3

RESTRICTED STOCK UNIT AGREEMENT

THIS AGREEMENT (this “Agreement”) is made effective this 15th day of September,
2010 (the “Date of Grant”) by and between Inspire Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), and Charles A. Johnson (the “Grantee”).

WHEREAS, in connection with the Executive Employment Agreement, dated August 12,
2010, by and between the Company and the Grantee (the “Executive Employment
Agreement”), the Company agreed to grant to the Grantee 150,000 restricted stock
units (the “Units” or the “Grant”) as an inducement to Grantee to accept
employment with the Company as the Company’s Executive Vice President of
Research and Development and Chief Medical Officer; and

WHEREAS, the Compensation Committee of the Board of Directors of the Company
(the “Committee”) has authorized the Company to grant the Units as an inducement
grant to the Executive outside of the Company’s Amended and Restated 2010 Equity
Compensation Plan consistent with Nasdaq Marketplace Rule 5635(c)(4).

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound
hereby, agree as follows:

1. Grant of Restricted Units. The Company hereby grants to the Grantee 150,000
Units. Each Unit is equivalent in value to one share of the common stock of the
Company (the “Company Stock”), and shall entitle the Grantee to receive from the
Company, subject to Section 2 of this Agreement, one share of Company Stock.
Except as otherwise specifically set forth herein, capitalized terms contained
in this Agreement shall have the respective meanings given to them in the
Executive Employment Agreement and shall survive the termination of the
Executive Employment Agreement.

2. Vesting of Units. The Units are subject to forfeiture to the Company until
such time as they vest and become nonforfeitable as set forth below in this
Section 2.

(a) Units shall vest and become nonforfeitable in the manner provided below, if
the Grantee is Employed by the Employer (as defined below) on the applicable
date. For this purpose, the term “Shares” refers to the number of shares
underling that portion of the Units that vests in the manner described under
Vest Type and Full Vest Date. The term “Vest Type” describes how the Units
covering those shares will vest before the Full Vest Date. For example, if Vest
Type is “annual”, the Units will vest with respect to those shares on a pro rata
basis on each anniversary of the Date of Grant. The term “Full Vest Date” is the
date on which that portion of the Grant covering all of the corresponding shares
set forth in the “Shares” column will be fully vested.

 

Shares

 

Vest Type

 

Full Vest Date

37,500

  Annual   1st Anniversary of the Date of Grant

112,500

 

Annual

(vesting ratably on an annual basis over the next three years following the 1st
anniversary of the Date of Grant)

  4th Anniversary of the Date of Grant

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(b) Except as otherwise provided herein or in the Executive Employment
Agreement, the terms of which are deemed included herein and shall control in
the event of any conflict, upon the Grantee’s Separation from Service
(as defined in Section 11 hereof) with the Employer for Death or Disability, any
Units which have not vested as of such date shall immediately vest. If the
Grantee experiences a Separation from Service for any other reason, any Units
which have not vested as of such date shall immediately and automatically be
forfeited.

(c) The issuance of the Company Stock underlying the Units that have become
vested and nonforfeitable (including the issuance of stock certificates
evidencing the Common Stock) is subject to the satisfaction of any withholding
obligations (including federal and state income, and FICA taxes), as described
in Section 3, below.

3. Delivery of Company Stock. Subject to Section 6.2 of the Grantee’s Executive
Employment Agreement and the Grantee’s satisfaction of any withholding
obligations (including federal and state income, and FICA taxes) in connection
with the Grantee’s receipt of any Units, as soon as administratively feasible
following the scheduled vesting date of such Units per Section 2(a) or sixty
(60) days following an earlier vesting date that occurs as a result of the
Grantee’s separation from service (the “Delivery Date”), the Grantee shall
receive stock certificates (or other appropriate documentation) evidencing the
conversion of the vested Units into Company Stock. The Grantee’s withholding
obligations, if any, shall be satisfied by making a payment to the Company in
cash, by personal check, or by a reduction of the number of Shares deliverable
to the Grantee, at the Grantee’s election, in an amount sufficient to satisfy
such withholding obligations. The withholding of the Units vesting shall be paid
by reduction if Grantee has not elected prior to the vesting date and made any
cash payment due on or prior to the vesting date. Notwithstanding anything
herein to the contrary, the Units shall be construed in a manner that would not
result in an excise tax under Section 409A of the Code as described in
Section 6.2 of the Executive Employment Agreement which is incorporated herein
by reference and shall survive the termination of the Executive Employment
Agreement.

4. Rights as Unit Holder. The Grantee shall not have voting or any other rights
as a stockholder of the Company with respect to the Units. Grantee shall have
all of the rights and privileges of a holder of Company Stock with respect to
the shares of Company Stock that he receives in satisfaction of his Units
pursuant to this Agreement.

5. Stock Splits, etc. If there is any change in the number or kind of shares of
Company Stock outstanding (i) by reason of a stock dividend, spin-off,
recapitalization, stock split, or combination or exchange of shares; (ii) by
reason of a merger, reorganization, or consolidation; (iii) by reason of a
reclassification or change in par value; or (iv) by reason of any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company’s receipt of consideration, or if the value of
outstanding shares of Company Stock is substantially reduced as a result of a
spin-off or the Company’s payment of an extraordinary dividend or distribution,
the number of shares covered by this Grant, the kind of shares issued under this
Grant shall be appropriately adjusted by the Company to reflect any increase or
decrease in the number of, or change in the kind or value of, issued shares of
Company Stock to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under this Grant; provided, however, that any
fractional shares resulting from such adjustment shall be rounded down to the
nearest whole share. Any adjustments determined by the Company shall be final,
binding, and conclusive.

6. Tax Consequences. The Grantee understands and agrees that the Company has not
advised the Grantee regarding the Grantee’s income tax liability in connection
with the vesting of the Units. The Grantee has reviewed with the Grantee’s own
tax advisors the federal, state, local

 

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and foreign tax consequences of this investment and the transactions
contemplated by this Agreement. The Grantee is relying solely on such advisors
and not on any statements or representations of the Company or any of its
agents. The Grantee understands that, except as otherwise specifically provided
in the Executive Employment Agreement, the Grantee (and not the Company) shall
be responsible for the Grantee’s own tax liability that may arise as a result of
this investment or the transactions contemplated by this Agreement.

7. Restriction on Transfer. None of the Units or any beneficial interest therein
shall be transferred, encumbered, pledged or otherwise alienated or disposed of
in any way except by will or by the laws of descent and distribution.

8. Restrictive Legends. Stock certificates provided to the Grantee evidencing
the Company Stock received hereunder shall bear such legends as the Company
deems necessary or desirable under the Securities Act of 1933, as amended
(the “Securities Act”), or the rules or regulations promulgated thereunder.

9. Requirements for Issuance or Transfer of Shares. No Company Stock shall be
issued or transferred in connection with the Grant under this Agreement unless
and until all legal requirements applicable to the issuance or transfer of such
Company Stock have been complied with. This Grant made shall be conditioned on
the Grantee’s undertaking in writing to comply with such restrictions on his
subsequent disposition of such shares of Company Stock, and certificates
representing such shares may be legended to reflect any such restrictions.
Certificates representing shares of Company Stock issued or transferred under
this Agreement (or other evidence of ownership) will be subject to such
stop-transfer orders and other restrictions as may be required by applicable
laws, regulations and interpretations, including any requirement that a legend
be placed thereon.

10. Change in Control. The provision of the Inspire Executive Change in Control
Severance Benefit Plan (or successor plan, if any), as in effect from
time-to-time during the term of this Agreement, shall apply to the Option (it
being understood that the Company may choose to terminate such plan without a
successor plan being adopted).

11. Definitions.

(a) “Separation from Service” shall mean the date on which the Grantee
experiences a separation from service with the Company as defined in
Section 409A of the Code and the regulations promulgated thereunder.

(b) “Employed by the Employer” shall mean employment as an employee of the
Employer.

(c) “Employer” shall mean the Company and its parent and subsidiary
corporations, as determined by the Board of Directors of the Company
(the “Board”).

12. Administration. The Committee shall have the authority to interpret and
construe the terms of this Agreement in a manner consistent with the terms of
the Executive Employment Agreement. Notwithstanding the foregoing, all
determinations with regard to matters covered by the Executive Employment
Agreement shall be resolved in accordance with the dispute resolution provisions
provided therein and such resolutions shall be binding with regard to such
matters for purposes of this Agreement.

13. Amendment of Agreement. This Agreement may only be modified or amended in a
writing signed by both parties.

 

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14. Waiver. Either party’s failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party thereafter from enforcing each
and every other provision of this Agreement. The rights granted both parties
herein are cumulative and shall not constitute a waiver of either party’s right
to assert all other legal remedies available to it under the circumstances.

15. Further Assurances. The Grantee agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.

16. No Employment or Other Rights. The grant of Units hereunder shall not confer
upon the Grantee any right to be retained by, or to continue in, the employ of
the Employer.

17. Compliance with Law. The Committee may from time to time impose any
conditions on the Units or the Company Stock underlying the Units as it deems
necessary or advisable to ensure that this Grant satisfies the conditions of
Rule 16b-3, and that Units are issued and the underlying Company Stock are
resold in compliance with the Securities Act.

18. Applicable Law. The validity, construction, interpretation and effect of
this Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of North Carolina, without giving effect to the
conflicts of laws provisions thereof.

19. Notice. Any notice to the Company provided for in this Agreement shall be
addressed to the Company in care of the Compensation Committee at 4222 Emperor
Boulevard, Suite 200, Durham, North Carolina, 27703-8466, and any notice to the
Grantee shall be addressed to such Grantee at the current address shown on the
payroll of the Employer, or to such other address as a party may designate to
the other party in writing. Any notice shall be delivered by hand, sent by
telecopy or enclosed in a properly sealed envelope addressed as stated above,
deposited, postage prepaid, in a post office regularly maintained by the United
States Postal Service.

20. Headings. Paragraph headings are for reference only. In the event of a
conflict between a title and the content of a Paragraph, the content of the
Paragraph shall control.

21. Counterparts. This Agreement may be executed, including execution by
facsimile signature, in one or more counterparts, each of which shall be deemed
an original, and all of which together shall be deemed to be one and the same
instrument.

[Signature page to follow]

 

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IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Agreement, and the Grantee has executed this Agreement, effective
as of the Date of Grant.

 

INSPIRE PHARMACEUTICALS, INC.: By:  

/s/ Joseph M. Spagnardi

Name:  

Joseph M. Spagnardi

Title:  

SVP, General Counsel & Secretary

I hereby accept the Units described in this Agreement, and I agree to be bound
by the terms of this Agreement.

 

GRANTEE: By:  

/s/ Charles A. Johnson

Grantee:  

Charles A. Johnson

 

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