Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of
November 1, 2011 (the “Effective Date”), by and between NuPathe Inc. (the
“Employer”), a Delaware corporation, and Bart J. Dunn (the “Employee”).

 

Recitals

 

WHEREAS, the Employer desires to employ the Employee and the Employee desires to
be employed by the Employer upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the premises and covenants set forth herein,
and intending to be legally bound hereby, the parties to this Agreement hereby
agree as follows:

 

1.                                    Duties.   The Employee shall serve as Vice
President, Corporate Development and Licensing of the Employer.  The Employee
shall report to the Chief Executive Officer of the Employer.  The Employee
agrees to be so employed by the Employer and to devote his best efforts and
substantially all of his business time to advance the interests of the Employer
and to perform such executive, managerial, administrative and financial
functions as are required to develop the Employer’s business and to perform
other duties assigned to the Employee by the Chief Executive Officer that are
consistent with the Employee’s position.  Nothing set forth herein shall
prohibit the Employee from engaging in personal investing activities.  The
Employee shall be permitted to serve on the boards of directors of other
entities whose businesses are not competitive with the Employer in accordance
with Employer policy.

 

2.                                    Term.  This Agreement is effective as of
the Effective Date, and, from and after the Effective Date, will govern the
Employee’s employment by the Employer until that employment ceases in accordance
with the terms of this Agreement.

 

3.                                    Compensation

 

(a)                              Salary.  The Employee shall be paid a base
salary at the annual rate of $300,000 (the “Base Salary”) in accordance with the
Employer’s regular payroll practices.  The Board of Directors of the Employer
(the “Board”) or the Compensation Committee of the Board (the “Compensation
Committee”) shall review the Base Salary for appropriate increases at least
annually at the end of each calendar year pursuant to the normal performance
review policies for senior level executives.

 

(b)                              Sign-on Bonus.  The Employee shall be paid a
one-time sign-on bonus of $25,000 within thirty (30) days of the Effective Date.

 

(c)                               Incentive Compensation. The Employee shall
participate in short-term and long-term incentive programs, including equity
compensation programs, established by the Employer for its senior level
executives generally, at levels determined by the Board or the Compensation
Committee.  The Employee’s incentive compensation shall be subject to the terms
of the applicable plans and shall be determined based on the Employee’s
individual performance and Employer performance as determined by the Board or
the Compensation Committee.  Any annual incentive compensation earned by the
Employee shall be paid on or after January 1, but

 

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not later than March 15 of the fiscal year following the fiscal year for which
the annual incentive compensation is earned.

 

(d)                              Retirement and Welfare Benefits.  The Employee
shall participate in employee retirement and welfare benefit plans made
available to the Employer’s senior level executives as a group or to its
employees generally, as such retirement and welfare plans may be in effect from
time to time and subject to the eligibility requirements of the plans.  Nothing
in this Agreement shall prevent the Employer from amending or terminating any
retirement, welfare or other employee benefit plans or programs from time to
time as the Employer deems appropriate.

 

(e)                              Reimbursement of Expenses; Vacation.  The
Employee shall be reimbursed for all normal items of travel, entertainment and
miscellaneous business expenses reasonably incurred by the Employee on behalf of
the Employer, provided that such expenses are documented and submitted in
accordance with the reimbursement policies of the Employer as in effect from
time to time.  The Employee shall be entitled to vacation and sick leave in
accordance with the Employer’s vacation, holidays and other pay for time not
worked policies.

 

4.                                    Relocation.

 

(a)                              The Employee agrees to relocate to the
Philadelphia, PA area no later than December 30, 2012; provided, however, that
prior to such relocation until June 30, 2011, Employer shall provide Employee
with an apartment in or near Conshohocken, PA to use as a temporary residence.

 

(b)                              Subject to Section 5(f), below, upon Employee’s
relocation to the Philadelphia, PA area, Employer will: (i) reimburse Employee
for relocation expenses that are properly documented and reasonable under the
circumstances (the “Reimbursement Payment”); and,  in the event any portion of
the Reimbursement Payment is reportable as income to Employee under the Code, 
Employer will also pay Employee a gross-up payment equal to 30% of the amount of
the Reimbursement Payment that is reportable as income (the “Gross-up Payment”);
provided, however,  that in no event shall the maximum combined Reimbursement
Payment and Gross-up Payment paid to Employee exceed $100,000.

 

5.                                    Termination.

 

(a)                              Death.  This Agreement shall automatically
terminate effective as of the date of the Employee’s death, in which event the
Employer shall have no further obligation or liability under this Agreement
except that the Employer shall pay to the Employee’s estate:  (i) any portion of
the Employee’s Base Salary for the period up to the Employee’s date of death
that has been earned but remains unpaid; and (ii) any benefits that have been
earned, accrued and are due to the Employee under the terms of the employee
benefit plans of the Employer, which benefits shall be paid in accordance with
the terms of those plans; and (iii) the amount of the Earned Bonus as defined
herein.  The Earned Bonus shall be paid at the same time bonuses are paid to
employees of the Employer generally in accordance with the terms of the
Employer’s annual bonus plan.

 

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(b)                              Total Disability.  In the event of the
Employee’s Total Disability (as defined below), the Employer may terminate the
employment of the Employee, to the extent permitted by law, immediately upon
written notice to the Employee, in which event, the Employer shall have no
further obligation or liability under this Agreement except that the Employer
shall pay to the Employee:  (i) any portion of the Employee’s Base Salary for
the period up to the date of termination that has been earned but remains
unpaid; (ii) any benefits that have been earned, accrued and are due to the
Employee under the terms of the employee benefit plans of the Employer, which
benefits shall be paid in accordance with the terms of those plans; and
(iii) the amount of the Earned Bonus as defined herein.  The Earned Bonus shall
be paid at the same time bonuses are paid to employees of the Employer generally
in accordance with the terms of the Employer’s annual bonus plan.

 

(c)                               Termination by the Employer for Cause. 
Subject to any applicable right to cure under Section 5(g) (i), the Employer may
terminate the Employee’s employment at any time, effective immediately, for
Cause upon written notice to the Employee.  In the event that the Employer
terminates the Employee pursuant to this Section 5(c), the Employer shall have
no further obligation or liability under this Agreement, except that the
Employer shall pay to the Employee: (i) any portion of the Employee’s Base
Salary for the period up to the Termination Date that has been earned but
remains unpaid; and (ii) any benefits that have been earned, accrued and are due
to the Employee under the terms of the employee benefit plans of the Employer,
which benefits shall be paid in accordance with the terms of those plans.

 

(d)                              Termination by the Employer Without Cause;
Termination by the Employee for Good Reason.  The Employer may terminate the
employment of the Employee for any reason other than those specified in
Section 5(b) or 5(c), including, without limitation, on or after a Change of
Control, upon thirty (30) days written notice (or Base Salary and benefit
continuation in lieu of such thirty (30) day notice) to the Employee.  In
addition, the Employee may terminate his employment at any time, including,
without limitation, on or after a Change of Control, upon written notice to the
Employer for Good Reason in accordance with the requirements of
Section 5(g) (v).

 

In the event the Employer terminates the employment of the Employee for any
reason other than those specified in Section 5(b) or 5(c) hereof or the Employee
terminates his employment for Good Reason, the Employer shall pay to the
Employee:

 

(i)                                   any portion of the Employee’s Base Salary
for the period up to the Termination Date that has been earned but remains
unpaid;

 

(ii)                                any benefits that have been earned, accrued
and are due to the Employee under the terms of any employee benefit plans of the
Employer, which benefits shall be paid in accordance with the terms of those
plans; and

 

(iii)                             subject to the execution and nonrevocation by
the Employee of a release satisfactory to the Employer and on reasonable, market
level terms (the “Release”) and the Employee’s compliance with all terms and
provisions of this Agreement that survive the termination of the Employee’s
employment by the Employer, the Employer shall provide the Employee with the
payments and benefits set forth below.  Notwithstanding any provision of this

 

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Agreement to the contrary, in no event shall the timing of the Employee’s
execution of the Release, directly or indirectly result in the Employee
designating the calendar year of payment and to the extent payment could be made
in more than one taxable year, payment shall be made in the later taxable year.

 

(A)                           Severance in an amount equal to 0.5 times the
Employee’s Base Salary at the rate in effect at the time of the Employee’s
termination.  The severance amount shall be paid in equal monthly installments
in accordance with the Employer’s regular payroll practices over a period of six
(6) months, beginning within sixty (60) days following the Termination Date;

 

(B)                            the amount of the Earned Bonus which shall be
paid at the same time bonuses are paid to employees of the Employer generally in
accordance with the terms of the Employer’s annual bonus plan;

 

(C)                           continued medical and dental coverage at the same
level in effect at the Termination Date (or generally comparable coverage) for a
period of twelve (12) months following the Termination Date for himself and,
where applicable, his spouse and dependents, at the same premium rates as may be
charged from time to time for employees generally, as if the Employee had
continued in employment during such twelve (12) month period.  The COBRA health
care continuation period shall run concurrently with the foregoing twelve (12)
month period; and

 

(D)                           vesting of all outstanding unvested stock options
and other equity-based awards held by the Employee as of the Termination Date
that would have vested had the Employee remained employed until the end of the
calendar quarter in which the Termination Date occurs.

 

(e)                              Effect of a Change of Control.  Notwithstanding
any provision of Section 5(d) to the contrary, if the Employee’s employment is
terminated pursuant to Section 5(d) within the ninety (90) day period preceding
a Change of Control or on or within twelve (12) months following a Change of
Control, the Employee shall be entitled to the same payments and benefits
described in Section 5(d) above, subject to execution and nonrevocation of the
Release and the Employee’s compliance with all terms and provisions of this
Agreement that survive the termination of the Employee’s employment by the
Employer; provided that (i) the severance multiplier in
Section 5(d)(iii)(A) above shall be 1.0 times the Employee’s Base Salary at the
rate in effect at the time of the Employee’s termination plus 1.0 times the
Employee’s targeted annual bonus for the year in which the Termination Date
occurs, without regard to whether the relevant Employee and Employer goals have
been achieved, (ii) the period of continued medical and dental coverage in
Section 5(d)(iii)(B) above shall be twelve (12) months following the Termination
Date and (iii) one hundred percent (100%) of all outstanding unvested stock
options and other equity-based awards held by the Employee as of the Termination
Date shall become fully vested and exercisable (to the extent applicable) as of
the Termination Date; provided, further, that any Performance Award shall vest
upon termination of the Employee’s employment in accordance with the terms of
the award agreement evidencing such Performance Award.

 

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Notwithstanding anything set forth in this Agreement to the contrary, if any
payment or benefit, including severance benefits, that the Employee would
receive from the Employer in connection with a Change of Control or otherwise
(“Payment”) would (i) constitute a “parachute payment” within the meaning of
section 280G of the Code and (ii) but for this sentence, be subject to the
excise tax imposed by section 4999 of the Code (the “Excise Tax”), then such
Payment shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be
either (A) the largest portion of the Payment that would result in no portion of
the Payment being subject to the Excise Tax or (B) the largest portion, up to
and including the total, of the Payment, whichever amount, after taking into
account all applicable federal, state and local employment taxes, income taxes,
and the Excise Tax (all computed at the highest applicable marginal rate),
results in the Employee’s receipt, on an after-tax basis, of the greater amount
of the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax.  If a reduction in payments or benefits (or a
cancellation of the acceleration of vesting of stock options or equity awards)
constituting “parachute payments” is necessary so that the Payment equals the
Reduced Amount, such reduction and/or cancellation of acceleration shall occur
in the order that provides the maximum economic benefit to the Employee.  In the
event that acceleration of vesting of a stock option or equity award is to be
reduced, such acceleration of vesting also shall be canceled in the order that
provides the maximum economic benefit to the Employee.

 

The Employer shall appoint a nationally recognized accounting firm with
appropriate subject matter expertise to make the determinations required under
this Section 5(e).

 

The Employer shall bear all expenses with respect to the making of the
determinations by such accounting firm required to be made under this
Section 5(e).  The accounting firm engaged to make the determinations under this
Section 5(e) shall provide its calculations, together with detailed supporting
documentation, to the Employer and the Employee as soon as practicable after the
date on which the Employee’s right to a Payment is triggered (if requested at
that time by the Employer or the Employee) or such other time as requested by
the Employer or the Employee.  If the accounting firm determines that no Excise
Tax is payable with respect to a Payment, either before or after the application
of the Reduced Amount, it shall furnish the Employer with an opinion reasonably
acceptable to the Employee that no Excise Tax will be imposed with respect to
such Payment.  Any good faith determinations of the accounting firm made under
this Section 5(e) shall be final, binding, and conclusive upon the Employer and
the Employee.

 

(f)                                 Elective Termination by Employee.  Employee
may voluntarily terminate his employment with the Employer at any time upon
thirty (30) days prior written notice, which termination shall become effective
upon the thirtieth (30) day after the receipt of such notice.  In the event that
the Employee terminates his employment pursuant to this Section 5(f):

 

(i)                                   the Employer shall have no further
obligation or liability under this Agreement, except that the Employer shall pay
to the Employee: (A) any portion of the Employee’s Base Salary for the period up
to the Termination Date that has been earned but remains unpaid; and (B) any
benefits that have been earned, accrued and are due to the

 

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Employee under the terms of the employee benefit plans of the Employer, which
benefits shall be paid in accordance with the terms of those plans; and

 

(ii)                                if such termination by Employee occurs on or
before November 1, 2013, Employee shall, within thirty (30) days after the
Termination Date, reimburse Employer for the full amount of the Reimbursement
Payment and the Gross-up Payment provided to Employee in accordance with
Section 4(b).

 

(g)                              Definitions.

 

(i)                                   “Cause” shall be deemed to exist with
respect to any termination of employment by the Employer for any of the
following reasons:

 

(1)                              the Employee’s engagement in conduct
constituting breach of fiduciary duty, gross negligence or willful misconduct
relating to the Employer or the performance of the Employee’s duties; provided
that no act or failure to act shall be deemed “willful” unless done, or omitted
to be done, by the Employee not in good faith or without reasonable belief that
the Employee’s action or omission was in the best interest of the Employer;

 

(2)                              the Employee’s substantial and continued
failure to perform the Employee’s material duties in a satisfactory manner after
written notice specifying the areas in which performance is unsatisfactory and,
if subject to cure, the Employee’s failure to perform within thirty (30) days
after such notice;

 

(3)                              the Employee’s commission of any act of fraud
with respect to the Employer;

 

(4)                              the Employee’s violation of any covenants or
agreements in favor of the Employer regarding confidentiality, non-competition
and/or non-solicitation; or

 

(5)                              the Employee’s conviction of a felony or a
crime involving moral turpitude under the laws of the United States or any state
or political subdivision thereof.

 

Any notice required to be provided to the Employee under clause (2) of this
definition of “Cause” shall state that failure to cure within the applicable
period will result in termination for Cause.

 

(ii)                                “Change of Control”  shall have the same
meaning ascribed to such term under the Employer’s 2010 Omnibus Equity

 

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Compensation Plan, as in effect on the date hereof and as it may be amended from
time to time.

 

(iii)                             “Code” shall mean the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder.

 

(iv)                            “Earned Bonus” means the actual annual bonus
earned by the Employee for the fiscal year in which the Employee’s Termination
Date occurs; pro rated to reflect the portion of the fiscal year during which
the Employee was employed by the Employer, determined by multiplying the full
year bonus that would otherwise have been payable to the Employee based upon the
achievement of applicable performance objectives by a fraction, the numerator of
which is the number of days during which the Employee was employed by the
Employer in the year of termination and the denominator of which is three
hundred sixty-five (365).

 

(v)                               “Good Reason” shall be deemed to exist with
respect to any termination of employment by the Employee for any of the
following reasons:

 

(1)                              prior to or on or after a Change of Control, a
material reduction in the Employee’s duties and responsibilities, which for
purposes of this Agreement means the assignment to Employee of any duties or
responsibilities which are materially inconsistent with or adverse to the
Employee’s then current duties, responsibilities, positions and/or titles with
the Employer;

 

(2)                              a material reduction of the Employee’s
then-current base salary or target bonus opportunity;

 

(3)                              the requirement that the Employee regularly
report to work at a location that is more than fifty (50) miles from the
location of the Employee’s employment as of the Effective Date;

 

(4)                              a material breach of this Agreement by the
Employer; or

 

(5)                              in the event of the assignment of this
Agreement to a third party, the failure of the assignee or successor entity to
agree to be bound to the terms of this Agreement;

 

provided, however, that for any of the foregoing to constitute Good Reason, the
Employee must provide written notification of his intention to resign within
ninety (90) days after the Employee first knows or first has reason to know of
the occurrence of any such

 

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event or condition, and, the Employer must have thirty (30) business days from
the date of receipt of such notice to effect a cure of the event or condition
constituting Good Reason.  If the Employer fails to effect a cure of the event
or condition constituting Good Reason, the Employee must actually resign from
employment within thirty (30) days following the expiration of the foregoing
cure period.  In the event of a cure of such event or condition constituting
Good Reason by the Employer, such event or condition shall no longer constitute
Good Reason.

 

(vi)                          “Termination Date” shall mean the date on which
the Employee’s employment with the Employer terminates in accordance with the
applicable provisions of this Agreement.

 

(vii)                       “Total Disability,” shall mean an illness,
incapacity or a mental or physical condition that renders the Employee unable,
despite the provision, if requested, of a reasonable accommodation as that term
is defined in the Americans with Disabilities Act, to perform the essential
functions of his employment position for a continuous period of six (6) months
or more.

 

(h)                              No Mitigation.  The Employee shall not be
required to mitigate the amount of any payment provided for in this Section 5 by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Section 4 be reduced by any compensation earned by
the Employee as the result of employment by another employer or self-employment,
by retirement benefits, by offset against any amounts (other than loans or
advances to the Employee by the Employer) claimed to be owed by the Employee to
the Employer, or otherwise.

 

6.                                    Non-Disclosure; Non-Competition and Prior
Agreements.

 

(a)                              Non-Disclosure.  The Employee acknowledges that
in the course of performing services for the Employer, the Employee will obtain
knowledge of the Employer’s business plans, products, processes, software,
know-how, trade secrets, formulas, methods, models, prototypes, discoveries,
inventions, improvements, disclosures, names and positions of employees and/or
other proprietary and/or confidential information (collectively the
“Confidential Information”).  The Employee agrees to keep the Confidential
Information secret and confidential and not to publish, disclose or divulge to
any other party, and the Employee agrees not to use any of the Confidential
Information for the Employee’s own benefit or to the detriment of the Employer
without the prior written consent of the Employer, whether or not such
Confidential Information was discovered or developed by the Employee.  The
Employee also agrees not to divulge, publish or use any proprietary and/or
confidential information of others that the Employer is obligated to maintain in
confidence.

 

(b)                              Non-Competition.  The Employee agrees that,
during his employment by the Employer hereunder and for an additional period of
six (6) months after the termination of the Employee’s employment hereunder for
any reason, except for a termination in connection

 

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with a Change of Control pursuant to Section 4(e) in which case the foregoing
six (6) month period shall instead be the twelve (12) month period after the
termination of the Employee’s employment, neither the Employee nor any
corporation or other entity in which the Employee may be interested as a
partner, trustee, director, officer, employee, agent, shareholder, lender of
money or guarantor, or for which he performs services in any capacity (including
as a consultant or independent contractor) shall at any time during such period
be engaged, directly or indirectly, in any Competitive Business (as that term is
hereinafter defined).  The Employee shall not solicit or, if the Employee owns
or has the right to acquire more than five percent (5%) of the fully-diluted
equity of the employing entity or its affiliates, hire, directly or indirectly,
any person that was employed by Employer during the six (6) month period
immediately preceding the Employee’s termination of employment with the
Employer.  For purposes of this Section 5(b) the term “Competitive Business”
shall mean any job, role, or specific responsibilities within a firm, company,
or business organization that competes directly with the Employer’s business as
in effect at the time of the Employee’s termination of employment with the
Employer or in a business area planned in writing by the Employer before the
Termination Date for entry within twelve (12) months of the Termination Date at
the time of the Employee’s termination of employment with the Employer.  The
foregoing prohibition shall not prevent any employment or engagement of the
Employee, after termination of employment with the Employer, by any firm,
company, or business organization engaged in a Competitive Business as long as
the activities of any such employment or engagement, in any capacity, do not
involve work on matters related to any business, product or service being
developed, manufactured, marketed, distributed or planned in writing by the
Employer at the time of the Employee’s termination of employment with the
Employer.  The Employee’s ownership of no more than one percent (1%) of the
outstanding voting stock of a publicly traded company shall not constitute a
violation of this Section 6(b).  The Employee is entering into this covenant not
to compete in consideration of the agreements of the Employer in this Agreement,
including but not limited to, the agreement of the Employer to pay severance to
the Employee upon a termination of employment pursuant to Section 5(d) hereof
and the agreement of the Employer to accelerate the vesting of the Employee’s
stock options and other equity-based awards upon a Change of Control in
accordance with the terms of Section 5(e).

 

(c)                               Prior Agreements.  The Employee represents and
warrants to the Employer that there are no restrictions, agreements or
understandings whatsoever to which the Employee is a party that would prevent or
make unlawful the Employee’s execution of this Agreement or the Employee’s
employment hereunder, is or would be inconsistent or in conflict with this
Agreement or the Employee’s employment hereunder, or would prevent, limit or
impair in any way the performance by the Employee of the obligations hereunder.

 

7.                                    Inventions and Discoveries.

 

(a)                              Disclosure.  The Employee shall promptly and
fully disclose to the Employer, with all necessary detail, all developments,
know-how, discoveries, inventions, improvements, concepts, ideas, formulae,
processes and methods (whether copyrightable, patentable or otherwise) made,
received, conceived, acquired or written by the Employee (whether or not at the
request or upon the suggestion of the Employer, solely or jointly with others),
during the period of  his employment with the Employer that (i) result from,
arise out of, or relate to any work, assignment or task performed by the
Employee on behalf of the Employer,

 

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whether undertaken voluntarily or assigned to the Employee within the scope of 
his responsibilities to the Employer, or (ii) were developed using the
Employer’s facilities or other resources or in Employer time, or (iii) result
from the Employee’s use or knowledge of the Employer’s Confidential Information,
or (iv) relate to the Employer’s business or any of the products or services
being developed, manufactured or sold by the Employer or that may be used in
relation therewith (collectively referred to as “Inventions”).  The Employee
hereby acknowledges that all original works of authorship that are made by the
Employee (solely or jointly with others) within the above terms and that are
protectable by copyright are “works made for hire,” as that term is defined in
the United States Copyright Act.  The Employee understands and hereby agrees
that the decision whether or not to commercialize or market any Invention
developed by the Employee solely or jointly with others is within the Employer’s
sole discretion and for the Employer’s sole benefit and that no royalty shall be
due to the Employee as a result of the Employer’s efforts to commercialize or
market any such Invention.

 

(b)                              Assignment and Transfer.  The Employee agrees
to assign and transfer to the Employer all of the Employee’s right, title and
interest in and to the Inventions, and the Employee further agrees to deliver to
the Employer any and all drawings, notes, specifications and data relating to
the Inventions, and to sign, acknowledge and deliver all such further papers,
including applications for and assignments of copyrights and patents, and all
renewals thereof, as may be necessary to obtain copyrights and patents for any
Inventions in any and all countries and to vest title thereto in the Employer
and its successors and assigns and to otherwise protect the Employer’s interests
therein.  The Employee shall not charge the Employer for time spent in complying
with these obligations.  If the Employer is unable because of the Employee’s
mental or physical incapacity or for any other reason to secure the Employee’s
signature to apply for or to pursue any application for any United States or
foreign patents or copyright registrations covering Inventions or original works
of authorship assigned to the Employer as above, then the Employee hereby
irrevocably designates and appoints the Employer and its duly authorized
officers and agents as the Employee’s agent and attorney in fact, to act for and
in the Employee’s behalf and stead to execute and file any such applications and
to do all other lawfully permitted acts to further the prosecution and issuance
of letters patent or copyright registrations thereon with the same legal force
and effect as if executed by the Employee.

 

(c)                               Records.  The Employee agrees that in
connection with any research, development or other services performed for the
Employer, the Employee will maintain careful, adequate and contemporaneous
written records of all Inventions, which records shall be the property of the
Employer.

 

8.                                    Employer Documentation.  The Employee
shall hold in a fiduciary capacity for the benefit of the Employer all
documentation, disks, programs, data, records, drawings, manuals, reports,
sketches, blueprints, letters, notes, notebooks and all other writings,
electronic data, graphics and tangible information and materials of a secret,
confidential or proprietary information nature relating to the Employer or the
Employer’s business that are in the possession or under the control of the
Employee.

 

9.                                    Injunctive Relief.  The Employee
acknowledges that  his compliance with the agreements in Sections 6, 7, and 8
hereof is necessary to protect the good will and other proprietary interests of
the Employer and that he is one of the principal executives of the

 

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Employer and conversant with its affairs, its trade secrets and other
proprietary information.  The Employee acknowledges that a breach of any of his
agreements in Sections 6, 7 and 8 hereof will result in irreparable and
continuing damage to the Employer for which there will be no adequate remedy at
law; and the Employee agrees that in the event of any breach of the aforesaid
agreements, the Employer and its successors and assigns shall be entitled to
injunctive relief and to such other and further relief as may be proper.

 

10.                            Application of Section 409A of the Internal
Revenue Code.

 

(a)                              Compliance.  This Agreement shall be
interpreted to avoid any penalty sanctions under section 409A of the Code.  If
any payment or benefit cannot be provided or made at the time specified herein
without incurring sanctions under section 409A of the Code, then such benefit or
payment shall be provided in full at the earliest time thereafter when such
sanctions will not be imposed.  For purposes of section 409A of the Code, all
payments to be made upon a termination of employment under this Agreement may
only be made upon a “separation from service” under section 409A of the Code,
each payment made under this Agreement shall be treated as a separate payment,
and the right to a series of installment payments under this Agreement is to be
treated as a right to a series of separate payments.  In no event shall the
Employee, directly or indirectly, designate the calendar year of payment.  All
reimbursements provided under this Agreement shall be made or provided in
accordance with the requirements of section 409A of the Code, including, where
applicable, the requirement 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
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
liquidation or exchange for another benefit.

 

(b)                              Payment Delay.   Notwithstanding any provision
in this Agreement to the contrary, if at the time of the Employee’s termination
of employment with the Employer, the Employer has securities which are
publicly-traded on an established securities market and the Employee is a
“specified employee” (as defined in section 409A of the Code) and it is
necessary to postpone the commencement of any severance payments otherwise
payable pursuant to this Agreement as a result of such termination of employment
in order to prevent any accelerated or additional tax under section 409A of the
Code, then the Employer shall postpone the commencement of the payment of any
such payments or benefits hereunder (without any reduction in such payments or
benefits ultimately paid or provided to the Employee) that are not otherwise
paid within the short-term deferral exception under section 409A of the Code and
are in excess of the lesser of two (2) times (i) the Employee’s then-annual
compensation or (ii) the limit on compensation then set forth in section
401(a)(17) of the Code, until the first payroll date that occurs after the date
that is six (6) months following the Employee’s “separation from service” with
the Employer (as defined under section 409A of the Code).  If any payments are
postponed due to such requirements, such postponed amounts shall be paid in a
lump sum to the Employee, and any installment payments due to the Employee shall
recommence, on the first payroll date that occurs after the date that is six
(6) months following the Employee’s “separation from service” with the
Employer.  If the Employee dies during the postponement period prior to the
payment of the postponed amount, the amounts withheld on account of section 409A
of the

 

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Code shall be paid to the personal representative of the Employee’s estate
within sixty (60) days after the date of the Employee’s death.

 

11.                            Supersedes Other Agreements.  This Agreement
supersedes and is in lieu of any and all other employment arrangements between
the Employee and the Employer.

 

12.                            Amendments.  Any amendment to this Agreement
shall be made in writing and signed by the parties hereto.

 

13.                            Enforceability.  If any provision of this
Agreement shall be invalid or unenforceable, in whole or in part, then such
provision shall be deemed to be modified or restricted to the extent and in the
manner necessary to render the same valid and enforceable, or shall be deemed
excised from this Agreement, as the case may require, and this Agreement shall
be construed and enforced to the maximum extent permitted by law as if such
provision had been originally incorporated herein as so modified or restricted
or as if such provision had not been originally incorporated herein, as the case
may be.

 

14.                            Governing Law.  This Agreement shall be governed
in all respects by the laws of the Commonwealth of Pennsylvania without regard
to the conflicts of laws principles of any jurisdiction.  Any legal proceeding
arising out of or relating to this Agreement shall be instituted in the United
States District Court for the Eastern District of Pennsylvania, or if such court
does not have jurisdiction or will not accept jurisdiction, in the Court of
Common Pleas in and for the County in which the Employer’s principal place of
business is located, and the Employee hereby consents to the personal and
exclusive jurisdiction of such court and hereby waives any objection that the
Employee may have to the laying of venue of any such proceeding and any claim or
defense of inconvenient forum.

 

15.                            Assignment.

 

(a)                              By the Employer.  The rights and obligations of
the Employer under this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and assigns of the Employer.  This Agreement may be
assigned by the Employer without the consent of the Employee.  The Employer
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Employer to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Employer would be required to
perform it if no such succession had taken place. Unless expressly provided
otherwise, “Employer” as used herein shall mean the Employer as defined in this
Agreement and any successor to its business and/or assets as aforesaid.

 

(b)                              By the Employee.  This Agreement and the
obligations created hereunder may not be assigned by the Employee, but all
rights of the Employee hereunder shall inure to the benefit of and be
enforceable by his heirs, devisees, legatees, executors, administrators and
personal representatives.

 

16.                            Notices.  All notices required or permitted to be
given hereunder shall be in writing and shall be deemed to have been given when
mailed by certified mail, return receipt

 

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requested, or delivered by a national overnight delivery service addressed to
the intended recipient as follows:

 

If to the Employer:

NuPathe Inc.

227 Washington Street, Suite 200

Conshohocken, PA  19428
Attention:  Chairman of the Board

 

If to the Employee:

Bart J. Dunn

241 Booth Meadow Lane

Durham, NC  27713

 

Any party may from time to time change its address for the purpose of notices to
that party by a similar notice specifying a new address, but no such change
shall be deemed to have been given until it is actually received by the party
sought to be charged with its contents.

 

17.                            Waivers.  No claim or right arising out of a
breach or default under this Agreement shall be discharged in whole or in part
by a waiver of that claim or right unless the waiver is supported by
consideration and is in writing and executed by the aggrieved party hereto or
his or its duly authorized agent.  A waiver by any party hereto of a breach or
default by the other party hereto of any provision of this Agreement shall not
be deemed a waiver of future compliance therewith, and such provisions shall
remain in full force and effect.

 

18.                            Survival of Covenants.  The provisions of
Sections 6, 7, 8 and 9 hereof shall survive the termination of this Agreement. 
Furthermore, any other provision of this Agreement that, by its terms, is
intended to continue beyond the termination of the Employee’s employment shall
continue in effect thereafter.

 

[space intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the
date first above written.

 

 

NUPATHE INC.

 

 

 

By: /s/ Jane H. Hollingsworth

 

Title: Chief Executive Officer

 

 

 

 

 

 

 

EMPLOYEE

 

 

 

/s/ Bart J. Dunn

 

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