Document:

exv10w13

Exhibit 10.13

NUPATHE
INC.

2010 OMNIBUS INCENTIVE COMPENSATION PLAN

 

 

NUPATHE
INC.

2010 OMNIBUS INCENTIVE COMPENSATION PLAN

     Effective as of the Effective Date (as defined below), the NuPathe 2010 Omnibus Incentive
Compensation Plan (the “Plan”) is hereby established as a successor to the 2005 Equity
Compensation Plan (the “2005 Plan”). The 2005 Plan is hereby merged with and into this
Plan effective as of the Effective Date, and no additional grants shall be made thereafter under
the 2005 Plan. Outstanding grants under the 2005 Plan shall continue in effect according to their
terms as in effect before the Plan merger (subject to such amendments as the Committee (as defined
below) determines, consistent with the 2005 Plan, as applicable), and the shares with respect to
outstanding grants under the 2005 Plan shall be issued or transferred under this Plan.

     The purpose of the Plan is (i) to provide employees of NuPathe Inc. (the “Company”)
and its subsidiaries, certain consultants and advisors who perform services for the Company or its
subsidiaries and non-employee members of the Board of Directors of the Company with the opportunity
to receive grants of incentive stock options, nonqualified stock options, stock appreciation
rights, stock awards, stock units, performance units and other stock-based awards, and (ii) to
provide selected executive employees with the opportunity to receive bonus awards that are
considered “qualified performance-based compensation” under section 162(m) of the Code (as defined
below).

     The Company believes that the Plan will encourage the participants to contribute materially to
the growth of the Company, thereby benefitting the Company’s stockholders, and will align the
economic interests of the participants with those of the stockholders. The Plan shall be effective
as of Effective Date.

Section 1. Definitions

     The following terms shall have the meanings set forth below for purposes of the Plan:

          (a) “Board” shall mean the Board of Directors of the Company.

          (b) “Bonus Award” shall mean a bonus awarded under the Plan that is designated as
“qualified performance-based compensation” under section 162(m) of the Code, as described in
Section 15.

          (c) “Cause” shall mean, except to the extent specified otherwise by the Committee, a
finding by the Committee that the Participant (i) has breached his or her employment or service
contract with the Employer, (ii) has engaged in disloyalty to the Employer, including, without
limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty, (iii) has
disclosed trade secrets or confidential information of the Employer to persons not entitled to
receive such information, (iv) has breached any written non-competition, non-solicitation,
invention assignment or confidentiality agreement between the Participant and

 

 

the Employer or (v) has engaged in such other behavior detrimental to the interests of the
Employer as the Committee determines.

          (d) Unless otherwise set forth in a Grant Instrument, a “Change of Control” shall be
deemed to have occurred if:

               (i) Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act)
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more than 50% of the voting power of the then
outstanding securities of the Company; provided that a Change of Control shall not be deemed to
occur as a result of a transaction in which the Company becomes a subsidiary of another corporation
and in which the stockholders of the Company, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such stockholders to more
than 50% of all votes to which all stockholders of the parent corporation would be entitled in the
election of directors.

               (ii) The consummation of (A) a merger or consolidation of the Company with another corporation
where the stockholders of the Company, immediately prior to the merger or consolidation, will not
beneficially own in substantially the same proportion as ownership immediately prior to the merger
or consolidation, immediately after the merger or consolidation, shares entitling such stockholders
to more than 50% of all votes to which all stockholders of the surviving corporation would be
entitled in the election of directors, or where the members of the Board, immediately prior to the
merger or consolidation, would not, immediately after the merger or consolidation, constitute a
majority of the board of directors of the surviving corporation, (B) a sale or other disposition of
all or substantially all of the assets of the Company, or (C) a liquidation or dissolution of the
Company.

               (iii) A change in the composition of the Board over a period of twelve (12) consecutive months
or less such that a majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board members described
in clause (A) who were still in office at the time the Board approved such election or nomination.

The Committee may modify the definition of Change of Control for a particular Grant as the
Committee deems appropriate to comply with section 409A of the Code or otherwise.

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

          (f) “Committee” shall mean the Compensation Committee of the Board or another
committee appointed by the Board to administer the Plan. With respect to Grants and Bonus Awards
that are intended to be “qualified performance-based compensation” under section 162(m) of the
Code, the Committee shall consist of two or more persons appointed by the Board, all of whom shall
be “outside directors” as defined under section 162(m) of the Code.

 

 

The Committee shall also consist of directors who are “non-employee directors” as defined
under Rule 16b-3 promulgated under the Exchange Act.

          (g) “Company” shall mean NuPathe Inc. and shall include its successors.

          (h) “Company Stock” shall mean common stock of the Company.

          (i) “Disability” or “Disabled” shall mean a Participant’s becoming disabled
within the meaning of section 22(e)(3) of the Code, within the meaning of the Employer’s long-term
disability plan applicable to the Participant or as otherwise determined by the Committee.

          (j) “Dividend Equivalent” shall mean an amount determined by multiplying the number of
shares of Company Stock subject to a Grant by the per-share cash dividend paid by the Company on
its outstanding Company Stock, or the per-share fair market value (as determined by the Committee)
of any dividend paid on its outstanding Company Stock in consideration other than cash.

          (k) “Effective Date” shall mean the date at which the registration statement
for the initial public offering of the Company Stock is declared
effective by the Securities and Exchange Commission
 and the Company Stock is priced for the initial public offering of
such Company Stock,
subject to approval of the Plan by the stockholders of the Company.

          (l) “Employee” shall mean an employee of the Employer (including an officer or
director who is also an employee), but excluding any person who is classified by the Employer as a
“contractor” or “consultant,” no matter how characterized by the Internal Revenue Service, other
governmental agency or a court. Any change of characterization of an individual by the Internal
Revenue Service or any court or government agency shall have no effect upon the classification of
an individual as an Employee for purposes of this Plan, unless the Committee determines otherwise.

          (m) “Employed by, or providing service to, the Employer” shall mean employment or
service as an Employee, Key Advisor or member of the Board (so that, for purposes of exercising
Options and SARs and satisfying conditions with respect to Stock Awards, Stock Units, Performance
Units and Other Stock-Based Awards, a Participant shall not be considered to have terminated
employment or service until the Participant ceases to be both an Employee, Key Advisor and member
of the Board).

          (n) “Employer” shall mean the Company and each of its subsidiaries.

          (o) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

          (p) “Exercise Price” shall mean the per share price at which shares of Company Stock
may be purchased under an Option, as designated by the Committee.

          (q) “Fair Market Value” shall mean:

 

 

               (i) If the Company Stock is publicly traded, then the Fair Market Value per share shall be
determined as follows: (A) if the principal trading market for the Company Stock is a national
securities exchange, the closing price during regular trading hours on the relevant date or (if
there were no trades on that date) the latest preceding date upon which a sale was reported, or (B)
if the Company Stock is not principally traded on any such exchange, the last reported sale price
of a share of Company Stock during regular trading hours on the relevant date, as reported by the
OTC Bulletin Board or, if shares are not reported on the OTC Bulletin Board, as determined by the
Committee through any reasonable valuation method authorized under the Code.

               (ii) If the Company Stock is not publicly traded or, if publicly traded, is not subject to
reported transactions as set forth above, the Fair Market Value per share shall be as determined by
the Committee through any reasonable valuation method authorized under the Code.

          (r) “Grant” shall mean an Option, SAR, Stock Award, Stock Unit, Performance Unit,
Other Stock-Based Award or Bonus Award granted under the Plan.

          (s) “Grant Instrument” shall mean the written agreement that sets forth the terms and
conditions of a Grant, including all amendments thereto.

          (t) “Incentive Stock Option” shall mean an Option that is intended to meet the
requirements of an incentive stock option under section 422 of the Code.

          (u) “Key Advisor” shall mean a consultant or advisor of the Employer

          (v) “Non-Employee Director” shall mean a member of the Board who is not an Employee.

          (w) “Nonqualified Stock Option” shall mean an Option that is not intended to be taxed
as an incentive stock option under section 422 of the Code.

          (x) “Option” shall mean an option to purchase shares of Company Stock, as described in
Section 6.

          (y) “Other Stock-Based Award” shall mean any Grant based on, measured by or payable in
Company Stock, as described in Section 11.

          (z) “Plan” shall mean this NuPathe Inc. 2010 Omnibus Incentive Compensation Plan, as
in effect from time to time.

          (aa) “Participant” shall mean an Employee, Key Advisor or Non-Employee Director
designated by the Committee to participate in the Plan.

          (bb) “Performance Unit” shall mean a performance unit award, as described in Section
10.

 

 

          (cc) “SAR” shall mean a stock appreciation right, as described in Section 9.

          (dd) “Stock Award” shall mean an award of Company Stock, as described in Section 7.

          (ee) “Stock Unit” shall mean an award of a phantom unit representing a share of
Company Stock, as described in Section 8.

     Section 2. Administration

          (a) Committee. The Plan shall be administered and interpreted by the Committee;
provided, however, that any Grants to members of the Compensation Committee must be authorized by a
disinterested majority of the Board. The Committee may delegate authority to one or more
subcommittees, as it deems appropriate. To the extent that the Board or a subcommittee administers
the Plan, references in the Plan to the “Committee” shall be deemed to refer to the Board
or such subcommittee. In the absence of a specific designation by the Board to the contrary, the
Plan shall be administered by the Committee of the Board or any successor Board committee
performing substantially the same functions.

          (b) Committee Authority. The Committee shall have the sole authority to (i) determine
the individuals to whom Grants or Bonus Awards shall be made under the Plan, (ii) determine the
type, size and terms of the Grants or Bonus Awards to be made to each such individual, (iii)
determine the time when the Grants or Bonus Awards will be made, (iv) determine the duration of any
applicable exercise or restriction period, including the criteria for exercisability and the
acceleration of exercisability, (v) amend the terms of any previously issued Grant or Bonus Award,
subject to the provisions of Section 20 below, and (vi) deal with any other matters arising under
the Plan.

          (c) Committee Determinations. The Committee shall have full power and express
discretionary authority to administer and interpret the Plan, to make factual determinations and to
adopt or amend such rules, regulations, agreements and instruments for implementing the Plan and
for the conduct of its business as it deems necessary or advisable, in its sole discretion. The
Committee’s interpretations of the Plan and all determinations made by the Committee pursuant to
the powers vested in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the Committee shall be
executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in
keeping with the objectives of the Plan and need not be uniform as to similarly situated
individuals.

     Section 3. Grants

     Grants under the Plan may consist of Options as described in Section 6, Stock Awards as
described in Section 7, Stock Units as described in Section 8, SARs as described in Section 9,
Performance Units as described in Section 10 and Other Stock-Based Awards as described in Section
11. Bonus Awards may be granted as described in Section 15. All Grants and Bonus Awards shall be
subject to the terms and conditions set forth herein and to such other terms and conditions
consistent with this Plan as the Committee deems appropriate and as are specified in

 

 

writing by the Committee to the individual in the Grant Instrument. All Grants and Bonus
Awards shall be made conditional upon the Participant’s acknowledgement, in writing or by
acceptance of the Grant or Bonus Award, that all decisions and determinations of the Committee
shall be final and binding on the Participant, his or her beneficiaries and any other person having
or claiming an interest under such Grant or Bonus Award. Grants and Bonus Awards under a
particular Section of the Plan need not be uniform as among the Participants.

     Section 4. Shares Subject to the Plan

          (a) Shares Authorized. Subject to adjustment as described below, the aggregate number
of shares of Company Stock that may be issued or transferred under the Plan shall be equal to the
sum of the following: (i) 686,221 shares, plus (ii) the number of shares of Company
Stock subject to outstanding grants under the 2005 Plan as of the Effective Date, and (iii) the
number of shares of Company Stock remaining available for issuance under the 2005 Plan but not
subject to previously exercised, vested or paid Grants as of the Effective Date; provided, however,
that the aggregate number of shares of Company Stock that may be issued or transferred under the
Plan pursuant to Incentive Stock Options shall not exceed 124,767 shares of Company
Stock. In addition, as of the first trading day of January during the term of the Plan (excluding
any extensions), beginning with calendar year 2011, an additional positive number of shares of
Company Stock shall be added to the number of shares of Company Stock authorized to be issued or
transferred under the Plan and the number of shares authorized to be issued or transferred pursuant
to Incentive Stock Options, equal to five percent (5%) of the total number of shares of Company Stock
outstanding on the last trading day in December of the immediately preceding calendar year, or 499,070 shares, whichever is less.

          (b) Source of Shares; Share Counting. Shares issued or transferred under the Plan may
be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including
shares purchased by the Company on the open market for purposes of the Plan. If and to the extent
Options or SARs granted under the Plan (including options granted under the 2005 Plan) terminate,
expire or are canceled, forfeited, exchanged or surrendered without having been exercised, or if
any Stock Awards, Stock Units or Other Stock-Based Awards (including Stock Awards granted under the
2005 Plan) are forfeited, terminated or otherwise not paid in full, the shares subject to such
Grants shall again be available for purposes of the Plan. If shares of Company Stock otherwise
issuable under the Plan are surrendered in payment of the Exercise Price of an Option, then the
number of shares of Company Stock available for issuance under the Plan shall be reduced only by
the net number of shares actually issued by the Company upon such exercise and not by the gross
number of shares as to which such Option is exercised. Upon the exercise of any SAR under the
Plan, the number of shares of Company Stock available for issuance under the Plan shall be reduced
by the gross number of shares as to which such right is exercised, and not by the net number of
shares actually issued by the Company upon such exercise. If shares of Company Stock otherwise
issuable under the Plan are withheld by the Company in satisfaction of the withholding taxes
incurred in connection with the issuance, vesting or exercise of any Grant or the issuance of
Company Stock thereunder, then the number of shares of Company Stock available for issuance under
the Plan shall be reduced by the net number of shares issued, vested or exercised under such Grant,
calculated in each instance after payment of such share withholding. To the extent any Grants are
paid in cash, and not in shares

 

 

of Company Stock, any shares previously subject to such Grants shall again be available for
issuance or transfer under the Plan.

          (c) Individual Limits. Each person participating in the Plan shall be subject the
following limitations:

               (i) for Grants measured in shares of Company Stock (whether payable in Company Stock, cash or
a combination of both), the maximum number of shares of Company Stock for which such Grants may be
made to such person in any calendar year shall not exceed 124,767 shares of Company
Stock in the aggregate, and

               (ii) for Grants measured in cash dollars (whether payable in cash, Company Stock or a
combination of both), the maximum dollar amount for which such Grants may be made to such person in
any calendar year shall not exceed $3,000,000 in the aggregate, with such limitation to
be measured at the time the Grant is made.

          (d) Adjustments. If there is any change in the number or kind of shares of Company
Stock outstanding by reason of (i) a stock dividend, spinoff, recapitalization, stock split, or
combination or exchange of shares, (ii) a merger, reorganization or consolidation, (iii) a
reclassification or change in par value, or (iv) 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 spinoff or
the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of
Company Stock available for issuance under the Plan, the maximum number of shares of Company Stock
for which any individual may receive Grants in any year, the kind and number of shares covered by
outstanding Grants, the kind and number of shares issued and to be issued under the Plan, and the
price per share or the applicable market value of such Grants shall be equitably adjusted by the
Committee to reflect any increase or decrease in the number of, or change in the kind or value of,
the issued shares of Company Stock to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under the Plan and such outstanding Grants; provided, however, that
any fractional shares resulting from such adjustment shall be eliminated. In addition, in the
event of a Change of Control, the provisions of Section 14 of the Plan shall apply. Any
adjustments to outstanding Grants shall be consistent with section 409A or 424 of the Code, to the
extent applicable. The Committee shall have the sole discretion and authority to determine what
appropriate adjustments shall be made and any adjustments determined by the Committee shall be
final, binding and conclusive.

     Section 5. Eligibility for Participation

          (a) Eligible Persons. All Employees (including, for all purposes of the Plan, an
Employee who is a member of the Board) and Non-Employee Directors shall be eligible to participate
in the Plan. Key Advisors shall be eligible to participate in the Plan if the Key Advisors render
bona fide services to the Employer, the services are not in connection with the offer and sale of
securities in a capital-raising transaction and the Key Advisors do not directly or indirectly
promote or maintain a market for the Company’s securities.

 

 

          (b) Selection of Participants. The Committee shall select the Employees, Non-Employee
Directors and Key Advisors to receive Grants and shall determine the number of shares of Company
Stock subject to a particular Grant in such manner as the Committee determines.

     Section 6. Options

     The Committee may grant Options to an Employee, Non-Employee Director or Key Advisor upon such
terms as the Committee deems appropriate. The following provisions are applicable to Options:

          (a) Number of Shares. The Committee shall determine the number of shares of Company
Stock that will be subject to each Grant of Options to Employees, Non-Employee Directors and Key
Advisors.

          (b) Type of Option and Exercise Price.

               (i) The Committee may grant Incentive Stock Options or Nonqualified Stock Options or any
combination of the two, all in accordance with the terms and conditions set forth herein.
Incentive Stock Options may be granted only to employees of the Company or its parent or subsidiary
corporations, as defined in section 424 of the Code. Nonqualified Stock Options may be granted to
Employees, Non-Employee Directors and Key Advisors.

               (ii) The Exercise Price of Company Stock subject to an Option shall be determined by the
Committee and shall be equal to or greater than the Fair Market Value of a share of Company Stock
on the date the Option is granted. However, an Incentive Stock Option may not be granted to an
Employee who, at the time of grant, owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, or any parent or subsidiary corporation of the
Company, as defined in section 424 of the Code, unless the Exercise Price per share is not less
than 110% of the Fair Market Value of a share of Company Stock on the date of grant.

          (c) Option Term. The Committee shall determine the term of each Option. The term of
any Option shall not exceed ten years from the date of grant. However, an Incentive Stock Option
that is granted to an Employee who, at the time of grant, owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company, or any parent or subsidiary
corporation of the Company, as defined in section 424 of the Code, may not have a term that exceeds
five years from the date of grant.

          (d) Exercisability of Options. Options shall become exercisable in accordance with
such terms and conditions, consistent with the Plan, as may be determined by the Committee and
specified in the Grant Instrument. The Committee may accelerate the exercisability of any or all
outstanding Options at any time for any reason.

          (e) Grants to Non-Exempt Employees. Notwithstanding the foregoing, Options granted to
persons who are non-exempt employees under the Fair Labor Standards Act

 

 

of 1938, as amended, may not be exercisable for at least six months after the date of grant
(except that such Options may become exercisable, as determined by the Committee, upon the
Participant’s death, Disability or retirement, or upon a Change of Control or other circumstances
permitted by applicable regulations).

          (f) Termination of Employment, Disability or Death.

               (i) Except as provided below, an Option may only be exercised while the Participant is
employed by, or providing service to, the Employer as an Employee, member of the Board or Key
Advisor.

               (ii) In the event that a Participant ceases to be employed by, or provide service to, the
Employer for any reason other than Disability, death or termination for Cause, any Option which is
otherwise exercisable by the Participant shall terminate unless exercised within 90 days after the
date on which the Participant ceases to be employed by, or provide service to, the Employer (or
within such other period of time as may be specified by the Committee), but in any event no later
than the date of expiration of the Option term. Except as otherwise provided by the Committee, any
of the Participant’s Options that are not otherwise exercisable as of the date on which the
Participant ceases to be employed by, or provide service to, the Employer shall terminate as of
such date.

               (iii) In the event the Participant ceases to be employed by, or provide service to, the
Company on account of a termination for Cause by the Employer, any Option held by the Participant
shall terminate as of the date the Participant ceases to be employed by, or provide service to, the
Employer. In addition, notwithstanding any other provisions of this Section 6, if the Committee
determines that the Participant has engaged in conduct that constitutes Cause at any time while the
Participant is employed by, or providing service to, the Employer or after the Participant’s
termination of employment or service, any Option held by the Participant shall immediately
terminate and the Participant shall automatically forfeit all shares underlying any exercised
portion of an Option for which the Company has not yet delivered the share certificates, upon
refund by the Company of the Exercise Price paid by the Participant for such shares. Upon any
exercise of an Option, the Company may withhold delivery of share certificates pending resolution
of an inquiry that could lead to a finding resulting in a forfeiture.

               (iv) In the event the Participant ceases to be employed by, or provide service to, the
Employer because the Participant is Disabled, any Option which is otherwise exercisable by the
Participant shall terminate unless exercised within one year after the date on which the
Participant ceases to be employed by, or provide service to, the Employer (or within such other
period of time as may be specified by the Committee), but in any event no later than the date of
expiration of the Option term. Except as otherwise provided by the Committee, any of the
Participant’s Options which are not otherwise exercisable as of the date on which the Participant
ceases to be employed by, or provide service to, the Employer shall terminate as of such date.

               (v) If the Participant dies while employed by, or providing service to, the Employer or within
90 days after the date on which the Participant ceases to be employed or

 

 

provide service on account of a termination specified in Section 6(f)(ii) above (or within
such other period of time as may be specified by the Committee), any Option that is otherwise
exercisable by the Participant shall terminate unless exercised within one year after the date on
which the Participant ceases to be employed by, or provide service to, the Employer (or within such
other period of time as may be specified by the Committee), but in any event no later than the date
of expiration of the Option term. Except as otherwise provided by the Committee, any of the
Participant’s Options that are not otherwise exercisable as of the date on which the Participant
ceases to be employed by, or provide service to, the Employer shall terminate as of such date.

          (g) Exercise of Options. A Participant may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the Company. The
Participant shall pay the Exercise Price for an Option as specified by the Committee (i) in cash,
(ii) unless the Committee determines otherwise, by delivering shares of Company Stock owned by the
Participant and having a Fair Market Value on the date of exercise at least equal to the Exercise
Price or by attestation (on a form prescribed by the Committee) to ownership of shares of Company
Stock having a Fair Market Value on the date of exercise at least equal to the Exercise Price,
(iii) by payment through a broker in accordance with procedures permitted by Regulation T of the
Federal Reserve Board, or (iv) by such other method as the Committee may approve. In addition, to
the extent an Option is at the time exercisable for vested shares of Company Stock, all or any part
of that vested portion may be surrendered to the Company for an appreciation distribution payable
in shares of Company Stock with a Fair Market Value at the time of the Option surrender equal to
the dollar amount by which the then Fair Market Value of the shares of Company Stock subject to the
surrendered portion exceeds the aggregate Exercise Price payable for those shares. Shares of
Company Stock used to exercise an Option shall have been held by the Participant for the requisite
period of time necessary to avoid adverse accounting consequences to the Company with respect to
the Option. Payment for the shares to be issued or transferred pursuant to the Option, and any
required withholding taxes, must be received by the Company by the time specified by the Committee
depending on the type of payment being made, but in all cases prior to the issuance or transfer of
such shares.

          (h) Limits on Incentive Stock Options. Each Incentive Stock Option shall provide
that, if the aggregate Fair Market Value of the Company Stock on the date of the grant with respect
to which Incentive Stock Options are exercisable for the first time by a Participant during any
calendar year, under the Plan or any other stock option plan of the Company or a parent or
subsidiary, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified
Stock Option.

     Section 7. Stock Awards

     The Committee may issue or transfer shares of Company Stock to an Employee, Non-Employee
Director or Key Advisor under a Stock Award, upon such terms as the Committee deems appropriate.
The following provisions are applicable to Stock Awards:

          (a) General Requirements. Shares of Company Stock issued or transferred pursuant to
Stock Awards may be issued or transferred for consideration or for no consideration, and subject to
restrictions or no restrictions, as determined by the Committee. The Committee

 

 

may, but shall not be required to, establish conditions under which restrictions on Stock
Awards shall lapse over a period of time or according to such other criteria as the Committee deems
appropriate, including, without limitation, restrictions based upon the achievement of specific
performance goals. The period of time during which the Stock Awards will remain subject to
restrictions will be designated in the Grant Instrument as the “Restriction Period.”

          (b) Number of Shares. The Committee shall determine the number of shares of Company
Stock to be issued or transferred pursuant to a Stock Award and the restrictions applicable to such
shares.

          (c) Requirement of Employment or Service. If the Participant ceases to be employed
by, or provide service to, the Employer during a period designated in the Grant Instrument as the
Restriction Period, or if other specified conditions are not met, the Stock Award shall terminate
as to all shares covered by the Grant as to which the restrictions have not lapsed, and those
shares of Company Stock must be immediately returned to the Company. The Committee may, however,
provide for complete or partial exceptions to this requirement as it deems appropriate.

          (d) Restrictions on Transfer and Legend on Stock Certificate. During the Restriction
Period, a Participant may not sell, assign, transfer, pledge or otherwise dispose of the shares of
a Stock Award except under Section 18(a) below. Unless otherwise determined by the Committee, the
Company will retain possession of certificates for shares of Stock Awards until all restrictions on
such shares have lapsed. Each certificate for a Stock Award, unless held by the Company, shall
contain a legend giving appropriate notice of the restrictions in the Grant. The Participant shall
be entitled to have the legend removed from the stock certificate covering the shares subject to
restrictions when all restrictions on such shares have lapsed. The Committee may determine that
the Company will not issue certificates for Stock Awards until all restrictions on such shares have
lapsed.

          (e) Right to Vote and to Receive Dividends. Unless the Committee determines
otherwise, during the Restriction Period, the Participant shall have the right to vote shares of
Stock Awards and to receive any dividends or other distributions paid on such shares, subject to
any restrictions deemed appropriate by the Committee, including, without limitation, the
achievement of specific performance goals.

          (f) Lapse of Restrictions. All restrictions imposed on Stock Awards shall lapse upon
the expiration of the applicable Restriction Period and the satisfaction of all conditions, if any,
imposed by the Committee. The Committee may determine, as to any or all Stock Awards, that the
restrictions shall lapse without regard to any Restriction Period.

     Section 8. Stock Units

     The Committee may grant Stock Units, each of which shall represent one hypothetical share of
Company Stock, to an Employee, Non-Employee Director or Key Advisor upon such terms and conditions
as the Committee deems appropriate. The following provisions are applicable to Stock Units:

 

 

          (a) Crediting of Units. Each Stock Unit shall represent the right of the Participant
to receive a share of Company Stock or an amount of cash based on the value of a share of Company
Stock, if and when specified conditions are met. All Stock Units shall be credited to bookkeeping
accounts established on the Company’s records for purposes of the Plan.

          (b) Terms of Stock Units. The Committee may grant Stock Units that are payable if
specified performance goals or other conditions are met, or under other circumstances. Stock Units
may be paid at the end of a specified performance period or other period, or payment may be
deferred to a date authorized by the Committee. The Committee shall determine the number of Stock
Units to be granted and the requirements applicable to such Stock Units.

          (c) Requirement of Employment or Service. If the Participant ceases to be employed
by, or provide service to, the Employer prior to the vesting of Stock Units, or if other conditions
established by the Committee are not met, the Participant’s Stock Units shall be forfeited. The
Committee may, however, provide for complete or partial exceptions to this requirement as it deems
appropriate.

          (d) Payment With Respect to Stock Units. Payments with respect to Stock Units shall
be made in cash, Company Stock or any combination of the foregoing, as the Committee shall
determine.

     Section 9. Stock Appreciation Rights

     The Committee may grant SARs to an Employee, Non-Employee Director or Key Advisor separately
or in tandem with any Option. The following provisions are applicable to SARs:

          (a) General Requirements. The Committee may grant SARs to an Employee or Non-Employee
Director separately or in tandem with any Option (for all or a portion of the applicable Option).
Tandem SARs may be granted either at the time the Option is granted or at any time thereafter while
the Option remains outstanding; provided, however, that, in the case of an Incentive Stock Option,
SARs may be granted only at the time of the Grant of the Incentive Stock Option. The Committee
shall establish the base amount of the SAR at the time the SAR is granted. The base amount of each
SAR shall be equal to the per share Exercise Price of the related Option or, if there is no related
Option, an amount equal to or greater than the Fair Market Value of a share of Company Stock as of
the date of Grant of the SAR.

          (b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to a
Participant that shall be exercisable during a specified period shall not exceed the number of
shares of Company Stock that the Participant may purchase upon the exercise of the related Option
during such period. Upon the exercise of an Option, the SARs relating to the Company Stock covered
by such Option shall terminate. Upon the exercise of SARs, the related Option shall terminate to
the extent of an equal number of shares of Company Stock.

          (c) Exercisability. An SAR shall be exercisable during the period specified by the
Committee in the Grant Instrument and shall be subject to such vesting and other restrictions as
may be specified in the Grant Instrument. The Committee may accelerate the

 

 

exercisability of any or all outstanding SARs at any time for any reason. SARs may only be
exercised while the Participant is employed by, or providing service to, the Employer or during the
applicable period after termination of employment or service as described in Section 6(f) above. A
tandem SAR shall be exercisable only during the period when the Option to which it is related is
also exercisable.

          (d) Grants to Non-Exempt Employees. Notwithstanding the foregoing, SARs granted to
persons who are non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may
not be exercisable for at least six months after the date of grant (except that such SARs may
become exercisable, as determined by the Committee, upon the Participant’s death, Disability or
retirement, or upon a Change of Control or other circumstances permitted by applicable
regulations).

          (e) Value of SARs. When a Participant exercises SARs, the Participant shall receive
in settlement of such SARs an amount equal to the value of the stock appreciation for the number of
SARs exercised. The stock appreciation for an SAR is the amount by which the Fair Market Value of
the underlying Company Stock on the date of exercise of the SAR exceeds the base amount of the SAR
as described in subsection (a).

          (f) Form of Payment. The appreciation in an SAR shall be paid in shares of Company
Stock, cash or any combination of the foregoing, as the Committee shall determine. For purposes of
calculating the number of shares of Company Stock to be received, shares of Company Stock shall be
valued at their Fair Market Value on the date of exercise of the SAR.

     Section 10. Performance Units

     The Committee shall have the discretionary authority to make Performance Unit awards in
accordance with the terms of this Section 10. The following provisions are applicable to
Performance Unit awards:

          (a) General Requirements. A Performance Unit award shall represent a participating
interest in a special bonus pool tied to the attainment of pre-established corporate performance
objectives based on one or more performance goals or the right to receive a targeted dollar amount
tied to the attainment of pre-established corporate performance objectives based on one or more
performance goals. The amount of the bonus pool may vary with the level at which the applicable
performance objectives are attained, and the value of each Performance Unit which becomes due and
payable upon the attained level of performance shall be determined by dividing the amount of the
resulting bonus pool, if any, by the total number of Performance Units issued and outstanding at
the completion of the applicable performance period. Similarly, the targeted dollar amount may
vary with the level at which the applicable performance objectives are attained and the value of
the Performance Units which becomes due and payable upon the attained level of performance shall be
determined based on the threshold, target and maximum amounts that may be paid if the performance
goals are met.

          (b) Continued Employment or Service Requirement. Performance Units may also be
structured to include a requirement that the Participant continue to be employed by, or

 

 

providing service to, the Employer following the completion of the performance period in order
to vest in the Performance Units awarded with respect to that performance period.

          (c) Payment with Respect to Performance Units. Payments with respect to Performance
Units shall be made in cash, Company Stock or any combination of the foregoing, as the Committee
shall determine.

          (d) Requirement of Employment or Service. If a Participant ceases to be employed by,
or providing service to the Company prior to the vesting of Performance Units, or if other
conditions established by the Committee are not met, the Participant’s Performance Units shall be
forfeited. The Committee may provide for complete or partial exceptions to this requirement as it
deems appropriate.

     Section 11. Other Stock-Based Awards

     The Committee may grant Other Stock-Based Awards, which are awards (other than those described
in Sections 6, 7, 8, 9 and 10 of the Plan) that are based on or measured by Company Stock, to any
Employee, Non-Employee Director or Key Advisor, on such terms and conditions as the Committee shall
determine. Other Stock-Based Awards may be awarded subject to the achievement of performance goals
or other conditions and may be payable in cash, Company Stock or any combination of the foregoing,
as the Committee shall determine.

     Section 12. Dividend Equivalents

     The Committee may grant Dividend Equivalents in connection Stock Units or Other Stock-Based
Awards. Dividend Equivalents may be paid currently or accrued as contingent cash obligations and
may be payable in cash or shares of Company Stock, and upon such terms as the Committee may
establish, including, without limitation, the achievement of specific performance goals.

     Section 13. Qualified Performance-Based Compensation

     The Committee may determine that Stock Awards, Stock Units, Performance Units Other
Stock-Based Awards and Dividend Equivalents granted to an Employee shall be considered “qualified
performance-based compensation” under section 162(m) of the Code. The following provisions shall
apply to Grants of Stock Awards, Stock Units, Performance Units Other Stock-Based Awards and
Dividend Equivalents that are to be considered “qualified performance-based compensation” under
section 162(m) of the Code:

          (a) Performance Goals.

               (i) When Stock Awards, Stock Units, Performance Units, Other Stock-Based Awards or Dividend
Equivalents that are to be considered “qualified performance-based compensation” are granted, the
Committee shall establish in writing (A) the objective performance goals that must be met, (B) the
performance period during which the performance will be measured, (C) the threshold, target and
maximum amounts that may be paid if the

 

 

performance goals are met, and (D) any other conditions that the Committee deems appropriate
and consistent with the Plan and section 162(m) of the Code.

               (ii) The performance goal criteria may relate to the Participant’s business unit or the
performance of the Company and its parents and subsidiaries as a whole, or any combination of the
foregoing. The Committee shall use objectively determinable performance goals based on one or more
of the following criteria: cash flow; earnings (including gross margin, earnings before interest
and taxes, earnings before taxes, earnings before interest, taxes, depreciation, amortization and
charges for stock-based compensation, earnings before interest, taxes, depreciation and
amortization, and net earnings); earnings per share; growth in earnings or earnings per share;
stock price; return on equity or average stockholder equity; total stockholder return or growth in
total stockholder return either directly or in relation to a comparative group; return on capital;
return on assets or net assets; revenue, growth in revenue or return on sales; income or net
income; operating income, net operating income or net operating income after tax; operating profit
or net operating profit; operating margin; return on operating revenue or return on operating
profit; regulatory filings; regulatory approvals, litigation and regulatory resolution goals; other
operational, regulatory or departmental objectives; budget comparisons; growth in stockholder value
relative to established indexes, or another peer group or peer group index; development and
implementation of strategic plans and/or organizational restructuring goals; development and
implementation of risk and crisis management programs; improvement in workforce diversity;
compliance requirements and compliance relief; safety goals; productivity goals; workforce
management and succession planning goals; economic value added (including typical adjustments
consistently applied from generally accepted accounting principles required to determine economic
value added performance measures); measures of customer satisfaction, employee satisfaction or
staff development; development or marketing collaborations, formations of joint ventures or
partnerships or the completion of other similar transactions intended to enhance the Corporation’s
revenue or profitability or enhance its customer base; merger and acquisitions; and other similar
criteria consistent with the foregoing.

          (b) Establishment of Goals. The Committee shall establish the performance goals in
writing either before the beginning of the performance period or during a period ending no later
than the earlier of (i) 90 days after the beginning of the performance period or (ii) the date on
which 25% of the performance period has been completed, or such other date as may be required or
permitted under applicable regulations under section 162(m) of the Code. The performance goals
shall satisfy the requirements for “qualified performance-based compensation,” including the
requirement that the achievement of the goals be substantially uncertain at the time they are
established and that the goals be established in such a way that a third party with knowledge of
the relevant facts could determine whether and to what extent the performance goals have been met.
The Committee shall not have discretion to increase the amount of compensation that is payable upon
achievement of the designated performance goals.

          (c) Certification of Results. The Committee shall certify and announce the results
for each performance period to all Participants after the announcement of the Company’s financial
results for the performance period. If and to the extent that the Committee does not certify that
the performance goals have been met, the grants of Stock Awards, Stock Units, Performance Units,
Other Stock-Based Awards and Dividend Equivalents for the performance

 

 

period shall be forfeited or shall not be made, as applicable. If Dividend Equivalents are
granted as “qualified performance-based compensation” under section 162(m) of the Code, a
Participant may not accrue more than $1,000,000 of such Dividend Equivalents during any calendar
year.

          (d) Death, Disability or Other Circumstances. The Committee may provide that Stock
Awards, Stock Units, Performance Units, Other Stock-Based Awards and Dividend Equivalents shall be
payable or restrictions on such Grants shall lapse, in whole or in part, in the event of the
Participant’s death or Disability during the performance period, or under other circumstances
consistent with the Treasury regulations and rulings under section 162(m) of the Code.

     Section 14. Consequences of a Change of Control

          (a) Notice and Acceleration. Unless the Committee determines otherwise, effective
upon the date of the Change of Control, (i) all outstanding Options and SARs shall automatically
accelerate and become fully exercisable, (ii) the restrictions and conditions on all outstanding
Stock Awards shall immediately lapse, and (iii) all Stock Units, Performance Units, Other
Stock-Based Awards and Dividend Equivalents shall become fully vested and shall be paid at their
target values, or in such greater amounts as the Committee may determine.

          (b) Other Alternatives. Notwithstanding the foregoing, in the event of a Change of
Control, the Committee may take one or more of the following actions with respect to any or all
outstanding Grants: the Committee may (i) require that Participants surrender their outstanding
Options and SARs in exchange for one or more payments by the Company, in cash or Company Stock as
determined by the Committee, in an amount equal to the amount by which the then Fair Market Value
of the shares of Company Stock subject to the Participant’s unexercised Options and SARs exceeds
the Exercise Price of the Options or the base amount of the SARs, as applicable, (ii) after giving
Participants an opportunity to exercise their outstanding Options and SARs, terminate any or all
unexercised Options and SARs at such time as the Committee deems appropriate, or (iii) determine
that outstanding Options and SARs that are not exercised shall be assumed by, or replaced with
comparable options or rights by, the surviving corporation, (or a parent or subsidiary of the
surviving corporation), and other outstanding Grants that remain in effect after the Change of
Control shall be converted to similar grants of the surviving corporation (or a parent or
subsidiary of the surviving corporation). Such surrender or termination shall take place as of the
date of the Change of Control or such other date as the Committee may specify.

     Section 15. Bonus Awards

          (a) General Requirements. The Committee may grant Bonus Awards that shall be
considered “qualified performance-based compensation” under section 162(m) of the Code to Employees
who are executive Employees, upon such terms and conditions as the Committee deems appropriate
under this Section 15.

          (b) Target Bonus Awards and Performance Goals. When the Committee decides to make
Bonus Awards under this Section 15, the Committee shall select the executive

 

 

Employees who will be eligible for Bonus Awards, specify the performance period and establish
target Bonus Awards and performance goals for the performance period. The performance period shall
be the Company’s fiscal year or such other period (of not more than 12 months) as the Committee
determines. The Committee shall determine each Participant’s target Bonus Award based on the
Participant’s responsibility level, position or such other criteria as the Committee shall
determine. A Participant’s target Bonus Award may provide for differing amounts to be paid based
on differing thresholds of performance. The Committee shall establish in writing (i) the objective
performance goals that must be met in order for the Bonus Awards to be paid for the performance
period, (ii) the maximum amounts that may be paid if the performance goals are met, (iii) any
threshold levels of performance that must be met in order for Bonus Awards to be paid, and (iv) any
other conditions that the Committee deems appropriate and consistent with the requirements of
section 162(m) of the Code for “qualified performance-based compensation.” The performance goals
shall satisfy the requirements for “qualified performance-based compensation,” including the
requirement that the achievement of the goals be substantially uncertain at the time they are
established and that the performance goals be established in such a way that a third party with
knowledge of the relevant facts could determine whether and to what extent the performance goals
have been met. The Company shall notify each Participant of the Participant’s target Bonus Award
and the applicable performance goals for the performance period.

          (c) Criteria Used for Objective Performance Goals. The Committee shall use
objectively determinable performance goals based on one or more of the criteria described in
Section 13(a)(ii) above. The performance goals may relate to one or more business units or the
performance of the Company and its subsidiaries as a whole, or any combination of the foregoing.
Performance goals need not be uniform among Participants.

          (d) Timing of Establishment of Target Bonus Awards and Goals. The Committee shall
establish each Participant’s target Bonus Award and performance goals in writing either before the
beginning of the performance period or during a period ending no later than the earlier of (i) 90
days after the beginning of the performance period or (ii) the date on which 25% of the performance
period has been completed, or such other date as may be required or permitted under applicable
regulations under section 162(m) of the Code.

          (e) Section 162(m) Requirements. A target Bonus Award that is designated as
“qualified performance-based compensation” under section 162(m) of the Code may not be awarded as
an alternative to any other award that is not designated as “qualified performance-based
compensation,” but instead must be separate and apart from all other awards made. The Committee
shall not have discretion to increase the amount of compensation that is payable based achievement
of the performance goals, but the Committee may reduce the amount of compensation that is payable
based upon the Committee’s assessment of personal performance or other factors. Any reduction of a
Participant’s Bonus Award shall not result in an increase in any other Participant’s Bonus Award.

          (f) Certification of Results. The Committee shall certify the performance results for
the performance period after the performance period ends. The Committee shall determine the
amount, if any, to be paid pursuant to each Bonus Award based on the

 

 

achievement of the performance goals, the Committee’s exercise of its discretion to reduce
Bonus Awards and the satisfaction of all other terms of the Bonus Awards. Subject to the
provisions of Sections 15(i) and Section 16, payment of the Bonus Awards certified by the Committee
shall be made in a single lump sum cash payment on or after January 1, but not later than March 15
of the calendar year following the close of the performance period.

          (g) Limitations on Rights to Payment of Bonus Awards. No Participant shall have any
right to receive payment of a Bonus Award under the Plan for a performance period unless the
Participant remains in the employ of the Employer through the last day of the performance period;
provided, however, that the Committee may determine that if a Participant’s employment with the
Company terminates prior to the end of the performance period, the Participant may be eligible to
receive all or a prorated portion of any Bonus Award that would otherwise have been earned for the
performance period, under such circumstances as the Committee deems appropriate.

          (h) Change of Control. If a Change of Control occurs prior to the end of a
performance period, the Committee may determine that each Participant who is then an Employee and
was awarded a target Bonus Award for the performance period may receive a Bonus Award for the
performance period, in such amount and at such time as the Committee determines.

          (i) Discretionary and Other Bonuses. In addition to Bonus Awards that are designated
“qualified performance-based compensation” under section 162(m) of the Code, as described above,
the Committee may grant to executive Employees such other bonuses as the Committee deems
appropriate, which may be based on individual performance, Company performance or such other
criteria as the Committee determines. Decisions with respect to such bonuses shall be made
separate and apart from the Bonus Awards described in this Section 15.

     Section 16. Deferrals

     The Committee may permit or require a Participant to defer receipt of the payment of cash or
the delivery of shares that would otherwise be due to such Participant in connection with any Grant
or Bonus Award. If any such deferral election is permitted or required, the Committee shall
establish rules and procedures for such deferrals and may provide for interest or other earnings to
be paid on such deferrals. The rules and procedures for any such deferrals shall be consistent
with applicable requirements of section 409A of the Code.

     Section 17. Withholding of Taxes

          (a) Required Withholding. All Grants and Bonus Awards under the Plan shall be subject
to applicable federal (including FICA), state and local tax withholding requirements. The Employer
may require that the Participant or other person receiving Grants or Bonus Awards or exercising
Grants pay to the Employer the amount of any federal, state or local taxes that the Employer is
required to withhold with respect to such Grants or Bonus Awards, or the Employer may deduct from
other wages and compensation paid by the Employer the amount of any withholding taxes due with
respect to such Grants or Bonus Awards.

 

 

          (b) Election to Withhold Shares. If the Committee so permits, a Participant may elect
to satisfy the Employer’s tax withholding obligation with respect to Grants paid in Company Stock
by having shares withheld up to an amount that does not exceed the Participant’s minimum applicable
withholding tax rate for federal (including FICA), state and local tax liabilities. The election
must be in a form and manner prescribed by the Committee and may be subject to the prior approval
of the Committee.

     Section 18. Transferability of Grants

          (a) Nontransferability of Grants. Except as described in subsection (b) below, only
the Participant may exercise rights under a Grant during the Participant’s lifetime. A Participant
may not transfer those rights except (i) by will or by the laws of descent and distribution or (ii)
with respect to Grants other than Incentive Stock Options, pursuant to a domestic relations order.
When a Participant dies, the personal representative or other person entitled to succeed to the
rights of the Participant may exercise such rights. Any such successor must furnish proof
satisfactory to the Company of his or her right to receive the Grant under the Participant’s will
or under the applicable laws of descent and distribution. Bonus Awards are not transferable. If a
Participant dies, any amounts payable after the Participant’s death pursuant to a Bonus Award shall
be paid to the personal representative or other person entitled to succeed to the rights of the
Participant.

          (b) Transfer of Nonqualified Stock Options. Notwithstanding the foregoing, the
Committee may provide, in a Grant Instrument, that a Participant may transfer Nonqualified Stock
Options to family members, or one or more trusts or other entities for the benefit of or owned by
family members, consistent with the applicable securities laws, according to such terms as the
Committee may determine; provided that the Participant receives no consideration for the transfer
of an Option and the transferred Option shall continue to be subject to the same terms and
conditions as were applicable to the Option immediately before the transfer.

     Section 19. Requirements for Issuance or Transfer of Shares

     No Company Stock shall be issued or transferred in connection with any Grant hereunder unless
and until all legal requirements applicable to the issuance or transfer of such Company Stock have
been complied with to the satisfaction of the Committee. The Committee shall have the right to
condition any Grant on the Participant’s undertaking in writing to comply with such restrictions on
his or her subsequent disposition of the shares of Company Stock as the Committee shall deem
necessary or advisable, and certificates representing such shares may be legended to reflect any
such restrictions. Certificates representing shares of Company Stock issued or transferred under
the Plan may be subject to such stop-transfer orders and other restrictions as the Committee deems
appropriate to comply with applicable laws, regulations and interpretations, including any
requirement that a legend be placed thereon.

     Section 20. Amendment and Termination of the Plan

          (a) Amendment. The Board may amend or terminate the Plan at any time; provided,
however, that the Board shall not amend the Plan without stockholder approval if such

 

 

approval is required in order to comply with the Code or other applicable law, or to comply
with applicable stock exchange requirements.

          (b) Repricing of Options or SARs.

               (i) The Committee shall have the authority to effect, at any time and from time to time, with
the consent of the affected holders, the cancellation of any or all outstanding Options or SAR
(including outstanding options transferred from the 2005 Plan) and to grant in exchange one or more
of the following: (A) new Options or SARs covering the same or a different number of shares of
Company Stock but with an Exercise Price or base amount per share not less than the Fair Market
Value per share of Company Stock on the new grant date or (B) cash or shares of Company Stock,
whether vested or unvested, equal in value to the value of the cancelled Options or SARs.

               (ii) The Committee shall also have the authority, exercisable at any time and from time to
time, with the consent of the affected holders, to reduce the Exercise Price or base amount of one
or more outstanding Options or SARs to the then current Fair Market Value per share of Company
Stock or issue new Options or SARs with a lower Exercise Price or base amount on immediate
cancellation of outstanding Options or SARs with a higher Exercise Price or base amount.

          (c) Stockholder Approval Requirements.

               (i) The Plan is intended to comply with the transition relief set forth at Treas. Reg.
§1.162-27(f)(1) for companies that become publicly held in connection with an initial public
offering, and shall be approved by the stockholders of the Company no later than the first to occur
of (A) the expiration of the Plan, (B) a material modification of the Plan within the meaning of
section 162(m) and the regulations thereunder, (C) the issuance of all Company Stock authorized
under the Plan, or (D) the first meeting of stockholders at which directors are to be elected that
occurs after the close of the third calendar year following the calendar year in which the initial
public offering occurs (the period commencing on the initial public offering and ending on the
first to occur of the foregoing events shall be hereinafter referred to as the “Reliance
Period”).

               (ii) Following the Reliance Period, if Grants are made as “qualified performance-based
compensation” under Section 13 above or if Bonus Awards are made under Section 15 above, the Plan
must be reapproved by the stockholders no later than the first stockholders meeting that occurs in
the fifth year following the year in which the stockholders previously approved the provisions of
Sections 13 and 15, if additional Grants are to be made under Section 13 or if additional Bonus
Awards are made under Section 15 and if required by section 162(m) of the Code or the regulations
thereunder.

          (d) Termination of Plan. The Plan shall terminate on the day immediately preceding
the tenth anniversary of its Effective Date, unless the Plan is terminated earlier by the Board or
is extended by the Board with the approval of the stockholders.

 

 

          (e) Termination and Amendment of Outstanding Grants. A termination or amendment of
the Plan that occurs after a Grant or Bonus Award is made shall not materially impair the rights of
a Participant unless the Participant consents or unless the Committee acts under Section 21(f)
below. The termination of the Plan shall not impair the power and authority of the Committee with
respect to an outstanding Grant or Bonus Award. Whether or not the Plan has terminated, an
outstanding Grant or Bonus Award may be terminated or amended under Section 21(f) below or may be
amended by agreement of the Company and the Participant consistent with the Plan.

     Section 21. Miscellaneous

          (a) Grants in Connection with Corporate Transactions and Otherwise. Nothing contained
in the Plan shall be construed to (i) limit the right of the Committee to make Grants under the
Plan in connection with the acquisition, by purchase, lease, merger, consolidation or otherwise, of
the business or assets of any corporation, firm or association, including Grants to employees
thereof who become Employees, or (ii) limit the right of the Company to grant stock options or make
other awards outside of the Plan. The Committee may make a Grant to an employee of another
corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of
stock or property, reorganization or liquidation involving the Company, in substitution for a stock
option or stock awards grant made by such corporation. Notwithstanding anything in the Plan to the
contrary, the Committee may establish such terms and conditions of the new Grants as it deems
appropriate, including setting the Exercise Price of Options or the base price of SARs at a price
necessary to retain for the Participant the same economic value as the prior options or rights.

          (b) Governing Document. The Plan shall be the controlling document. No other
statements, representations, explanatory materials or examples, oral or written, may amend the Plan
in any manner. The Plan shall be binding upon and enforceable against the Company and its
successors and assigns.

          (c) Funding of the Plan. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other segregation of assets to
assure the payment of any Grants or Bonus Awards under the Plan.

          (d) Rights of Participants. Nothing in the Plan shall entitle any Employee,
Non-Employee Director, Key Advisor or other person to any claim or right to receive a Grant or
Bonus Award under the Plan. Neither the Plan nor any action taken hereunder shall be construed as
giving any individual any rights to be retained by or in the employ of the Employer or any other
employment rights.

          (e) No Fractional Shares. No fractional shares of Company Stock shall be issued or
delivered pursuant to the Plan or any Grant. Except as otherwise provided under the Plan, the
Committee shall determine whether cash, other awards or other property shall be issued or paid in
lieu of such fractional shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.

 

 

          (f) Compliance with Law.

               (i) The Plan, the exercise of Options and SARs and the obligations of the Company to issue or
transfer shares of Company Stock under Grants shall be subject to all applicable laws and
regulations, and to approvals by any governmental or regulatory agency as may be required. With
respect to persons subject to section 16 of the Exchange Act, it is the intent of the Company that
the Plan and all transactions under the Plan comply with all applicable provisions of Rule 16b-3 or
its successors under the Exchange Act. In addition, it is the intent of the Company that Incentive
Stock Options comply with the applicable provisions of section 422 of the Code, that Grants of
“qualified performance-based compensation” and Bonus Awards comply with the applicable provisions
of section 162(m) of the Code and that, to the extent applicable, Grants and Bonus Awards comply
with the requirements of section 409A of the Code. To the extent that any legal requirement of
section 16 of the Exchange Act or section 422, 162(m) or 409A of the Code as set forth in the Plan
ceases to be required under section 16 of the Exchange Act or section 422, 162(m) or 409A of the
Code, that Plan provision shall cease to apply. The Committee may revoke any Grant or Bonus Award
if it is contrary to law or modify a Grant or Bonus Award to bring it into compliance with any
valid and mandatory government regulation. The Committee may also adopt rules regarding the
withholding of taxes on payments to Participants. The Committee may, in its sole discretion, agree
to limit its authority under this Section.

               (ii) The Plan is intended to comply with the requirements of section 409A of the Code, to the
extent applicable. Each Grant shall be construed and administered such that the Grant either (A)
qualifies for an exemption from the requirements of section 409A of the Code or (B) satisfies the
requirements of section 409A of the Code. If a Grant is subject to section 409A of the Code, (I)
distributions shall only be made in a manner and upon an event permitted under section 409A of the
Code, (II) payments to be made upon a termination of employment shall only be made upon a
“separation from service” under section 409A of the Code, (III) unless the Grant specifies
otherwise, each installment payment shall be treated as a separate payment for purposes of section
409A of the Code, and (IV) in no event shall a Grantee, directly or indirectly, designate the
calendar year in which a distribution is made except in accordance with section 409A of the Code.

               (iii) Any Grant that is subject to section 409A of the Code and that is to be distributed to a
Key Employee (as defined below) upon separation from service shall be administered so that any
distribution with respect to such Award shall be postponed for six months following the date of the
Participant’s separation from service, if required by section 409A of the Code. If a distribution
is delayed pursuant to section 409A of the Code, the distribution shall be paid within 15 days
after the end of the six-month period. If the Grantee dies during such six-month period, any
postponed amounts shall be paid within 90 days of the Grantee’s death. The determination of Key
Employees, including the number and identity of persons considered Key Employees and the
identification date, shall be made by the Committee or its delegate each year in accordance with
section 416(i) of the Code and the “specified employee” requirements of section 409A of the Code.

 

 

               (iv) Notwithstanding anything in the Plan or any Grant agreement to the contrary, each Grantee
shall be solely responsible for the tax consequences of Grants under the Plan, and in no event
shall the Company have any responsibility or liability if a Grant does not meet any applicable
requirements of section 409A of the Code. Although the Company intends to administer the Plan to
prevent taxation under section 409A of the Code, the Company does not represent or warrant that the
Plan or any Grant complies with any provision of federal, state, local or other tax law.

          (g) Employees Subject to Taxation Outside the United States. With respect to
Participants who are believed by the Committee to be subject to taxation in countries other than
the United States, the Committee may make Grants on such terms and conditions, consistent with the
Plan, as the Committee deems appropriate to comply with the laws of the applicable countries, and
the Committee may create such procedures, addenda and subplans and make such modifications as may
be necessary or advisable to comply with such laws.

          (h) Clawback Rights. Subject to the requirements of applicable law, the Committee may
provide in any Grant Instrument that, if a Participant breaches any restrictive covenant agreement
between the Participant and the Employer or otherwise engages in activities that constitute Cause
either while employed by, or providing service to, the Employer or within a specified period of
time thereafter, all Grants held by the Participant shall terminate, and the Company may rescind
any exercise of an Option or SAR and the vesting of any other Grant and delivery of shares upon
such exercise or vesting, as applicable on such terms as the Committee shall determine, including
the right to require that in the event of any such rescission, (i) the Participant shall return to
the Company the shares received upon the exercise of any Option or SAR and/or the vesting and
payment of any other Grant or, (ii) if the Participant no longer owns the shares, the Participant
shall pay to the Company the amount of any gain realized or payment received as a result of any
sale or other disposition of the shares (or, in the event the Participant transfers the shares by
gift or otherwise without consideration, the Fair Market Value of the shares on the date of the
breach), net of the price originally paid by the Participant for the shares. Payment by the
Participant shall be made in such manner and on such terms and conditions as may be required by the
Committee. The Employer shall be entitled to set off against the amount of any such payment any
amounts otherwise owed to the Participant by the Employer.

          (i) Governing Law. The validity, construction, interpretation and effect of the Plan
and Grant Instruments issued under the Plan shall be governed and construed by and determined in
accordance with the laws of the State of Delaware, without giving effect to the conflict of laws
provisions thereof.

 

 

NUPATHE INC.

2010 OMNIBUS INCENTIVE COMPENSATION PLAN

FORM OF

INCENTIVE STOCK OPTION GRANT

     This INCENTIVE STOCK OPTION GRANT AGREEMENT (this “Agreement”), dated as of [                  ],
20[    ] (the “Date of Grant”), is delivered by NuPathe Inc. (the “Company”) to [    ] (the
“Grantee”).

RECITALS

     A. The NuPathe Inc. 2010 Omnibus Incentive Compensation Plan (the “Plan”) provides for the
grant of options to purchase shares of common stock of the Company. The Board of Directors of the
Company (the “Board”) has decided to make a stock option grant as an inducement for the Grantee to
promote the best interests of the Company and its stockholders. A copy of the prospectus has been
delivered to the Grantee and the Grantee acknowledges receipt of such prospectus.

     B. The Board is authorized to appoint a committee to administer the Plan. If a committee is
appointed, all references in this Agreement to the “Board” shall be deemed to refer to the
committee.

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

1. Grant of Option.

     (a) Subject to the terms and conditions of this Agreement and the Plan, the Company hereby
grants to the Grantee an incentive stock option (the “Option”) to purchase [    ] shares of
common stock of the Company (“Shares”) at an exercise price of $[     ] per Share. The Option
shall become exercisable according to Paragraph 2 below.

     (b) The Option is designated as an incentive stock option, as described in Paragraph 5 below.
However, if and to the extent the Option exceeds the limits for an incentive stock option, as
described in Paragraph 5, the Option shall be a nonqualified stock option.

2. Vesting and Exercisability of Option.

     (a) The Option shall become vested and exercisable on the following dates, if the Grantee is
employed by, or providing service to, the Employer (as defined in the Plan) on the applicable
vesting date (each, a “Vesting Date”):

	 	 	 
	 	 	Shares for Which the Option is
	Vesting Date	 	Exercisable on the Vesting Date
	[    ]

	 	[    ]
	[    ]

	 	[    ]
	[    ]

	 	[    ]
	[    ]

	 	[    ]

 

The vesting and exercisability of the Option is cumulative, but shall not exceed 100% of the Shares
subject to the Option. If the foregoing schedule would produce fractional Shares, the number of
Shares for which the Option becomes vested and exercisable shall be rounded up to the nearest whole
Share.

3. Term of Option.

     (a) The Option shall have a term of ten years from the Date of Grant and shall terminate at
the expiration of that period, unless it is terminated at an earlier date pursuant to the
provisions of this Agreement or the Plan.

     (b) The Option shall automatically terminate upon the happening of the first of the following
events:

          (i) The expiration of the 90-day period after the Grantee ceases to be employed by, or provide
service to, the Employer, if the termination is for any reason other than Disability, death or
Cause (as defined in the Plan).

          (ii) The expiration of the one-year period after the Grantee ceases to be employed by, or
provide service to, the Employer on account of the Grantee’s Disability.

          (iii) The expiration of the one-year period after the Grantee ceases to be employed by, or
provide service to, the Employer, if the Grantee dies while employed by, or providing service to,
the Employer or within 90 days after the Grantee ceases to be so employed or provide services on
account of a termination described in subparagraph (i) above.

          (iv) The date on which the Grantee ceases to be employed by, or provide service to, the
Employer for Cause. In addition, notwithstanding the prior provisions of this Paragraph 3, if the
Grantee engages in conduct that constitutes Cause after the Grantee’s employment or service
terminates, the Option shall immediately terminate, and the Grantee shall automatically forfeit all
Shares underlying any exercised portion of the Option for which the Company has not yet delivered
the Share certificates, upon refund by the Company of the exercise price paid by the Grantee for
such Shares.

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is
immediately before the tenth anniversary of the Date of Grant. Any portion of the Option that is
not exercisable at the time the Grantee ceases to be employed by, or provide service to, the
Employer shall immediately terminate.

4. Exercise Procedures.

     (a) Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or
all of the exercisable Option by giving the Company written notice of intent to exercise in the
manner provided in this Agreement, specifying the number of Shares as to which the Option is to be
exercised and the method of payment. Payment of the exercise price shall be made in accordance
with procedures established by the Board from time to time based on type of
payment being made but, in any event, prior to issuance of the Shares. The Grantee shall pay
the exercise price (i) in cash, (ii) unless the Board determines otherwise, by delivering Shares
owned

-2-

 

by the Grantee and having a Fair Market Value (as defined in the Plan) on the date of
exercise at least equal to the exercise price or by attestation (on a form prescribed by the Board)
to ownership of Shares having a Fair Market Value on the date of exercise at least equal to the
exercise price, (iii) by payment through a broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board, or (iv) by such other method as the Board may approve.
The Board may impose from time to time such limitations as it deems appropriate on the use of
Shares of the Company to exercise the Option.

     (b) The obligation of the Company to deliver Shares upon exercise of the Option shall be
subject to all applicable laws, rules, and regulations and such approvals by governmental agencies
as may be deemed appropriate by the Board, including such actions as Company counsel shall deem
necessary or appropriate to comply with relevant securities laws and regulations.

     (c) All obligations of the Company under this Agreement shall be subject to the rights of the
Company as set forth in the Plan to withhold amounts required to be withheld for any taxes, if
applicable. Subject to Board approval, the Grantee may elect to satisfy any tax withholding
obligation of the Employer with respect to the Option by having Shares withheld up to an amount
that does not exceed the minimum applicable withholding tax rate for federal (including FICA),
state and local tax liabilities.

5. Designation as Incentive Stock Option.

     (a) This Option is designated an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”). If the aggregate fair market value of the stock on
the date of the grant with respect to which incentive stock options are exercisable for the first
time by the Grantee during any calendar year, under the Plan or any other stock option plan of the
Company or a parent or subsidiary, exceeds $100,000, then the Option, as to the excess, shall be
treated as a nonqualified stock option that does not meet the requirements of Section 422 of the
Code. If and to the extent that the Option fails to qualify as an incentive stock option under the
Code, the Option shall remain outstanding according to its terms as a nonqualified stock option.

     (b) The Grantee understands that favorable incentive stock option tax treatment is available
only if the Option is exercised while the Grantee is an employee of the Company or a parent or
subsidiary of the Company or within a period of time specified in the Code after the Grantee ceases
to be an employee. The Grantee understands that the Grantee is responsible for the income tax
consequences of the Option, and, among other tax consequences, the Grantee understands that he or
she may be subject to the alternative minimum tax under the Code in the year in which the Option is
exercised. The Grantee will consult with his or her tax adviser regarding the tax consequences of
the Option.

     (c) The Grantee agrees that the Grantee shall immediately notify the Company in writing if the
Grantee sells or otherwise disposes of any Shares acquired upon the exercise of the Option and such
sale or other disposition occurs on or before the later of (i) two years after the
Date of Grant or (ii) one year after the exercise of the Option. The Grantee also agrees to
provide the Company with any information requested by the Company with respect to such sale or
other disposition.

-3-

 

6. Change of Control. The provisions of the Plan applicable to a Change of Control shall
apply to the Option, and, in the event of a Change of Control, the Board may take such actions as
it deems appropriate pursuant to the Plan.

7. Restrictions on Exercise. Only the Grantee may exercise the Option during the Grantee’s
lifetime. After the Grantee’s death, the Option shall be exercisable (subject to the limitations
specified in the Plan) solely by the legal representatives of the Grantee, or by the person who
acquires the right to exercise the Option by will or by the laws of descent and distribution, to
the extent that the Option is exercisable pursuant to this Agreement.

8. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan, the terms of
which are incorporated herein by reference, and in all respects shall be interpreted in accordance
with the Plan. The grant and exercise of the Option are subject to interpretations, regulations
and determinations concerning the Plan established from time to time by the Board in accordance
with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights
and obligations with respect to withholding taxes, (b) the registration, qualification or listing
of the Shares, (c) changes in capitalization of the Company and (d) other requirements of
applicable law. The Board shall have the authority to interpret and construe the Option pursuant
to the terms of the Plan, and its decisions shall be conclusive as to any questions arising
hereunder.

9. No Employment or Other Rights. The grant of the Option shall not confer upon the
Grantee any right to be retained by or in the employ or service of the Employer and shall not
interfere in any way with the right of the Employer to terminate the Grantee’s employment or
service at any time. The right of the Employer to terminate the Grantee’s employment or service at
any time for any reason is specifically reserved.

10. No Stockholder Rights. Neither the Grantee, nor any person entitled to exercise the
Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges
of a stockholder with respect to the Shares subject to the Option, until certificates for Shares
have been issued upon the exercise of the Option.

11. Assignment and Transfers. The rights and interests of the Grantee under this Agreement
may not be sold, assigned, encumbered or otherwise transferred except, in the event of the death of
the Grantee, by will or by the laws of descent and distribution. In the event of any attempt by
the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any
right hereunder, except as provided for in this Agreement, or in the event of the levy or any
attachment, execution or similar process upon the rights or interests hereby conferred, the Company
may terminate the Option by notice to the Grantee, and the Option and all rights hereunder shall
thereupon become null and void. The rights and protections of the Company hereunder shall extend
to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and
affiliates. This Agreement may be assigned by the Company without the Grantee’s consent.

12. Applicable Law. The validity, construction, interpretation and effect of this
instrument shall be governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to the conflicts of laws provisions thereof.

13. Notice. Any notice to the Company provided for in this instrument shall be addressed
to the Company in care of the President at 227 Washington Avenue, Suite 200, Conshohocken, PA

-4-

 

19428, 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 the Grantee may designate to the
Employer in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a
properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a
post office regularly maintained by the United States Postal Service.

[SIGNATURE PAGE FOLLOWS]

-5-

 

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

	 	 	 	 	 	 	 

	 	 	NUPATHE INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the
Plan and this Agreement. I hereby further agree that all the decisions and determinations of the
Board shall be final and binding.

	 	 	 	 	 
	 	Grantee:                                        

 	 
	 	 	 
	 	 	 
	 	 	 

-6-

 

	 	 	 	 	 

NUPATHE INC.

2010 OMNIBUS INCENTIVE COMPENSATION PLAN

FORM OF

NONQUALIFIED STOCK OPTION GRANT

     This NONQUALIFIED STOCK OPTION GRANT AGREEMENT (this “Agreement”), dated as of [               ],
20[    ] (the “Date of Grant”), is delivered by NuPathe Inc.
 (the “Company”) to [    ]
(the “Grantee”).

RECITALS

     A. The NuPathe Inc. 2010 Omnibus Incentive Compensation Plan (the “Plan”) provides for the
grant of options to purchase shares of common stock of the Company. The Board of Directors of the
Company (the “Board”) has decided to make a stock option grant as an inducement for the Grantee to
promote the best interests of the Company and its stockholders. A copy of the prospectus has been
delivered to the Grantee and the Grantee acknowledges receipt of such prospectus

     B. The Board is authorized to appoint a committee to administer the Plan. If a committee is
appointed, all references in this Agreement to the “Board” shall be deemed to refer to the
committee.

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

1. Grant of Option. Subject to the terms and conditions of Agreement and the Plan, the
Company hereby grants to the Grantee a nonqualified stock option (the “Option”) to purchase
[    ] shares of common stock of the Company (“Shares”) at an exercise price of $[    ]
per Share. The Option shall become exercisable according to Paragraph 2 below.

2. Vesting and Exercisability of Option.

     (a) The Option shall become vested and exercisable on the following dates, if the Grantee is
employed by, or providing service to, the Employer (as defined in the Plan) on the applicable
vesting date (each, a “Vesting Date”):

	 	 	 
	 	 	Shares for Which the Option is
	Vesting Date	 	Exercisable on the Vesting Date
	[    ]

	 	[    ]
	[    ]

	 	[    ]
	[    ]

	 	[    ]
	[    ]

	 	[    ]

The vesting and exercisability of the Option is cumulative, but shall not exceed 100% of the Shares
subject to the Option. If the foregoing schedule would produce fractional Shares, the

 

number of Shares for which the Option becomes vested and exercisable shall be rounded up to the
nearest whole Share.

3. Term of Option.

     (a) The Option shall have a term of ten years from the Date of Grant and shall terminate at
the expiration of that period, unless it is terminated at an earlier date pursuant to the
provisions of this Agreement or the Plan.

     (b) The Option shall automatically terminate upon the happening of the first of the following
events:

          (i) The expiration of the 90-day period after the Grantee ceases to be employed by, or provide
service to, the Employer, if the termination is for any reason other than Disability, death or
Cause (as defined in the Plan).

          (ii) The expiration of the one-year period after the Grantee ceases to be employed by, or
provide service to, the Employer on account of the Grantee’s Disability.

          (iii) The expiration of the one-year period after the Grantee ceases to be employed by, or
provide service to, the Employer, if the Grantee dies while employed by, or providing service to,
the Employer or within 90 days after the Grantee ceases to be so employed or provide such services
on account of a termination described in subparagraph (i) above.

          (iv) The date on which the Grantee ceases to be employed by, or provide service to, the
Employer for Cause. In addition, notwithstanding the prior provisions of this Paragraph 3, if the
Grantee engages in conduct that constitutes Cause after the Grantee’s employment or service
terminates, the Option shall immediately terminate, and the Grantee shall automatically forfeit all
Shares underlying any exercised portion of the Option for which the Company has not yet delivered
the Share certificates, upon refund by the Company of the exercise price paid by the Grantee for
such Shares.

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is
immediately before the tenth anniversary of the Date of Grant. Any portion of the Option that is
not exercisable at the time the Grantee ceases to be employed by, or provide service to, the
Employer shall immediately terminate.

4. Exercise Procedures.

     (a) Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or
all of the exercisable Option by giving the Company written notice of intent to exercise in the
manner provided in this Agreement, specifying the number of Shares as to which the Option is to be
exercised and the method of payment. Payment of the exercise price shall be made in accordance
with procedures established by the Board from time to time based on type of payment being made but,
in any event, prior to issuance of the Shares. The Grantee shall pay the exercise price (i) in
cash, (ii) unless the Board determines otherwise, by delivering Shares owned by the Grantee and
having a Fair Market Value (as defined in the Plan) on the date of exercise at least equal to the
exercise price or by attestation (on a form prescribed by the Board) to

-2-

 

ownership of Shares having a Fair Market Value on the date of exercise at least equal to the
exercise price, (iii) by payment through a broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board, or (iv) by such other method as the Board may approve.
The Board may impose from time to time such limitations as it deems appropriate on the use of
Shares of the Company to exercise the Option.

     (b) The obligation of the Company to deliver Shares upon exercise of the Option shall be
subject to all applicable laws, rules, and regulations and such approvals by governmental agencies
as may be deemed appropriate by the Board, including such actions as Company counsel shall deem
necessary or appropriate to comply with relevant securities laws and regulations.

     (c) All obligations of the Company under this Agreement shall be subject to the rights of the
Company as set forth in the Plan to withhold amounts required to be withheld for any taxes, if
applicable. Subject to Board approval, the Grantee may elect to satisfy any tax withholding
obligation of the Employer with respect to the Option by having Shares withheld up to an amount
that does not exceed the minimum applicable withholding tax rate for federal (including FICA),
state and local tax liabilities.

5. Change of Control. The provisions of the Plan applicable to a Change of Control shall
apply to the Option, and, in the event of a Change of Control, the Board may take such actions as
it deems appropriate pursuant to the Plan.

6. Restrictions on Exercise. Except as the Board may otherwise permit pursuant to the
Plan, only the Grantee may exercise the Option during the Grantee’s lifetime and, after the
Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan)
solely by the legal representatives of the Grantee, or by the person who acquires the right to
exercise the Option by will or by the laws of descent and distribution, to the extent that the
Option is exercisable pursuant to this Agreement.

7. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan, the terms of
which are incorporated herein by reference, and in all respects shall be interpreted in accordance
with the Plan. The grant and exercise of the Option are subject to interpretations, regulations
and determinations concerning the Plan established from time to time by the Board in accordance
with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights
and obligations with respect to withholding taxes, (b) the registration, qualification or listing
of the Shares, (c) changes in capitalization of the Company and (d) other requirements of
applicable law. The Board shall have the authority to interpret and construe the Option pursuant
to the terms of the Plan, and its decisions shall be conclusive as to any questions arising
hereunder.

8. No Employment or Other Rights. The grant of the Option shall not confer upon the
Grantee any right to be retained by or in the employ or service of the Employer and shall not
interfere in any way with the right of the Employer to terminate the Grantee’s employment or
service at any time. The right of the Employer to terminate the Grantee’s employment or service at
any time for any reason is specifically reserved.

-3-

 

9. No Stockholder Rights. Neither the Grantee, nor any person entitled to exercise the
Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges
of a stockholder with respect to the Shares subject to the Option, until certificates for Shares
have been issued upon the exercise of the Option.

10. Assignment and Transfers. Except as the Board may otherwise permit pursuant to the
Plan, the rights and interests of the Grantee under this Agreement may not be sold, assigned,
encumbered or otherwise transferred except, in the event of the death of the Grantee, by will or by
the laws of descent and distribution. In the event of any attempt by the Grantee to alienate,
assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as
provided for in this Agreement, or in the event of the levy or any attachment, execution or similar
process upon the rights or interests hereby conferred, the Company may terminate the Option by
notice to the Grantee, and the Option and all rights hereunder shall thereupon become null and
void. The rights and protections of the Company hereunder shall extend to any successors or
assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreement
may be assigned by the Company without the Grantee’s consent.

11. Applicable Law. The validity, construction, interpretation and effect of this
instrument shall be governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to the conflicts of laws provisions thereof.

12. Notice. Any notice to the Company provided for in this instrument shall be addressed
to the Company in care of the President at 227 Washington Avenue, Suite 200, Conshohocken, PA,
19428, 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 the Grantee may designate to the
Employer in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a
properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a
post office regularly maintained by the United States Postal Service.

[SIGNATURE PAGE FOLLOWS]

-4-

 

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

	 	 	 	 	 	 	 

	 	 	NUPATHE INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the
Plan and this Agreement. I hereby further agree that all the decisions and determinations of the
Board shall be final and binding.

	 	 	 	 	 
	 	Grantee:                                        

 	 
	 	 	 
	 	 	 
	 	 	 

-5-

 

	 	 	 	 	 

NUPATHE INC.

2010 OMNIBUS INCENTIVE COMPENSATION PLAN

FORM OF

RESTRICTED STOCK GRANT

     This RESTRICTED STOCK GRANT AGREEMENT (this “Agreement”), dated as of [        ] (the
“Date of Grant”), is delivered by NuPathe Inc. (the “Company”), to [        ] (the
“Grantee”).

RECITALS

     A. The NuPathe Inc. 2010 Omnibus Incentive Compensation Plan (the “Plan”) provides for the
grant of restricted stock in accordance with the terms and conditions of the Plan. The Board of
Directors of the Company (the “Board”) has decided to make a restricted stock grant as an
inducement for the Grantee to promote the best interests of the Company and its stockholders. A
copy of the prospectus has been delivered to the Grantee and the Grantee acknowledges receipt of
such prospectus.

     B. The Board is authorized to appoint a committee to administer the Plan. If a committee is
appointed, all references in this Agreement to the “Board” shall be deemed to refer to the
committee.

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

1. Restricted Stock Grant. Subject to the terms and conditions set forth in this Agreement
and the Plan, the Company hereby grants the Grantee [    ] shares of common stock of the
Company, subject to the restrictions set forth below and in the Plan (the “Restricted Stock”).
Shares of Restricted Stock may not be transferred by the Grantee or subjected to any security
interest until the shares have become vested pursuant to this Agreement and the Plan.

2. Vesting and Nonassignability of Restricted Stock.

     (a) The shares of Restricted Stock shall become vested, and the restrictions described in
Sections 2(b) and 2(c) shall lapse, according to the following vesting schedule, if the Grantee
continues to be employed by, or provide service to, the Employer (as defined in the Plan) from the
Date of Grant until the applicable vesting date:

	 	 	 
	Vesting Date	 	Shares Vested on Vesting Date
	[    ]

	 	[    ]

	[    ]

	 	[    ]

	[    ]

	 	[    ]

	[    ]

	 	[    ]

 

 

The vesting of the Restricted Stock shall be cumulative, but shall not exceed 100% of the shares.
If the foregoing schedule would produce fractional shares, the number of shares of Restricted Stock
that vest shall be rounded down to the nearest whole share.

     (b) If the Grantee ceases to be employed by, or provide service to, the Employer for any
reason before the Restricted Stock fully vests, the shares of Restricted Stock that are not then
vested shall be forfeited and must be immediately returned to the Company.

     (c) During the period before the shares of Restricted Stock vest (the “Restriction Period”),
the non-vested Restricted Stock may not be assigned, transferred, pledged or otherwise disposed of
by the Grantee. Any attempt to assign, transfer, pledge or otherwise dispose of the shares
contrary to the provisions hereof, and the levy of any execution, attachment or similar process
upon the shares, shall be null, void and without effect.

3. Issuance of Certificates.

     (a) Stock certificates representing the Restricted Stock may be issued by the Company and held
in escrow by the Company until the Restricted Stock vests, or the Company may hold non-certificated
shares until the Restricted Stock vests. During the Restriction Period, the Grantee shall receive
any cash dividends with respect to the shares of Restricted Stock, may vote the shares of
Restricted Stock and may participate in any distribution pursuant to a plan of dissolution or
complete liquidation of the Company. In the event of a dividend or distribution payable in stock
or other property or a reclassification, split up or similar event during the Restriction Period,
the shares or other property issued or declared with respect to the non-vested shares of Restricted
Stock shall be subject to the same terms and conditions relating to vesting as the shares to which
they relate.

     (b) When the Grantee obtains a vested right to shares of Restricted Stock, a certificate
representing the vested shares shall be issued to the Grantee, free of the restrictions under
Section 2 of this Agreement.

     (c) The obligation of the Company to deliver shares upon the vesting of the Restricted Stock
shall be subject to all applicable laws, rules, and regulations and such approvals by governmental
agencies as may be deemed appropriately to comply with relevant securities laws and regulations.

4. Change of Control. The provisions of the Plan applicable to a Change of Control (as
defined in the Plan) shall apply to the Restricted Stock, and, in the event of a Change of Control,
the Board may take such actions as it deems appropriate pursuant to the Plan.

5. Grant Subject to Plan Provisions. This grant is made pursuant to the Plan, the terms of
which are incorporated herein by reference, and in all respects shall be interpreted in accordance
with the Plan. The grant is subject to interpretations, regulations and determinations concerning
the Plan established from time to time by the Board in accordance with the provisions of the Plan,
including, but not limited to, provisions pertaining to (a) rights and obligations with respect to
withholding taxes, (b) the registration, qualification or listing of the shares, (c) changes in
capitalization of the Company, and (d) other requirements of applicable law. The Board shall

-2-

 

have the authority to interpret and construe the grant pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.

6. Withholding. The Grantee shall be required to pay to the Company, or make other
arrangements satisfactory to the Company to provide for the payment of, any federal, state, local
or other taxes that the Employer is required to withhold with respect to the grant or vesting of
the Restricted Stock. Subject to Board approval, the Grantee may elect to satisfy any tax
withholding obligation of the Employer with respect to the Restricted Stock by having shares
withheld up to an amount that does not exceed the minimum applicable withholding tax rate for
federal (including FICA), state, local and other tax liabilities.

7. Section 83(b) Election. The Grantee hereby acknowledges that the Grantee has been
informed that, with respect to the Restricted Stock, the Grantee may file an election with the
Internal Revenue Service, within 30 days of the execution of this Agreement, electing pursuant to
Section 83(b) of the Internal Revenue Code of 1986, as amended, (the “Code”) to be taxed currently
on any difference between the purchase price of the Restricted Stock and their fair market value on
the date of purchase. Absent such an election, taxable income will be measured and recognized by
the Grantee at the time or times at which the forfeiture restrictions on the Restricted Stock
lapse. The Grantee is strongly encouraged to seek the advice of his own tax consultants in
connection with the issuance of the Restricted Stock and the advisability of filing of the election
under Section 83(b) of the Code. A form of Election under Section 83(b) is attached hereto as
Exhibit A for reference.

THE GRANTEE ACKNOWLEDGES THAT IT IS NOT THE COMPANY’S, BUT RATHER THE GRANTEE’S SOLE RESPONSIBILITY
TO FILE THE ELECTION UNDER SECTION 83(b) TIMELY.

8. No Employment or Other Rights. This grant shall not confer upon the Grantee any right
to be retained by or in the employ or service of the Employer and shall not interfere in any way
with the right of the Employer to terminate the Grantee’s employment or service at any time. The
right of the Employer to terminate at will the Grantee’s employment or service at any time for any
reason is specifically reserved.

9. Assignment by Company. The rights and protections of the Company hereunder shall extend
to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and
affiliates. This Agreement may be assigned by the Company without the Grantee’s consent.

10. Applicable Law. The validity, construction, interpretation and effect of this
instrument shall be governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to the conflicts of laws provisions thereof.

11. Notice. Any notice to the Company provided for in this instrument shall be addressed
to the Company in care of the President at 227 Washington Avenue, Suite 200, Conshohocken, PA
19428, 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 the Grantee may designate to the
Employer in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in

-3-

 

a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in
a post office regularly maintained by the United States Postal Service.

[SIGNATURE PAGE FOLLOWS]

-4-

 

     IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute and attest
this instrument, and the Grantee has placed his or her signature hereon, effective as of the Date
of Grant.

	 	 	 	 	 	 	 

	 	 	NUPATHE INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

I hereby accept the grant of Restricted Stock described in this Agreement, and I agree to be bound
by the terms of the Plan and this Agreement. I hereby further agree that all of the decisions and
determinations of the Board shall be final and binding.

	 	 	 	 	 
	 	Grantee:                                        

 	 
	 	 	 
	 	 	 
	 	 	 

-5-

 

	 	 	 	 	 

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED

     The undersigned taxpayer hereby makes an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations thereunder (the “Regulations”), and
in connection with this election supplies the following information:

	 	(1)	 	Name of taxpayer making election:                                         

Address:                                                            

Social Security Number:                                                            

Tax Year for which election is being made:                    

     (2) The property with respect to which the election is being made consists of                      shares of common
stock of NuPathe Inc. (the “Company”).

     (3) Date the property was transferred:                      (the “Date of Grant”).

     (4) The stock is subject to forfeiture to the Company if the taxpayer ceases to be employed
by, or provide service to, the Company during the restriction period. The restriction period
lapses according to the following schedule, if the taxpayer is employed by, or providing service
to, the Company from the Date of Grant until the applicable vesting date:

	 	 	 
	Vesting Date	 	Shares Vested on Vesting Date
	                                        

	 	                                                            
	                                        

	 	                                                            
	                                        

	 	                                                            
	                                        

	 	                                                            

     (5) The fair market value at the time of the transfer of the stock (determined without regard
to any restriction other than a restriction which by its terms will never lapse) is $                     per share.

     (6) The amount paid for the stock is $                     per share ( $                     aggregate consideration).

     (7) A copy of this statement has been furnished to the Company (and to the transferee of the
Stock, if different from the taxpayer) as required by §1.83-2(d) of the Regulations.

     (8) This statement is executed as of                                          .

     

                                        

Taxpayer

-6-

 

INSTRUCTIONS FOR FILING SECTION 83(B) ELECTION

     Attached is a form of election under section 83(b) of the Internal Revenue Code. If you wish
to make such an election, you should complete, sign and date the election and then proceed as
follows:

1. Execute three counterparts of your completed election (plus one extra counterpart for each
person other than you, if any who receives property that is the subject of your election),
retaining at least one photocopy for your records.

2. Send one counterpart to the Internal Revenue Service Center with which you will file your
Federal income tax return for the current year (e.g., Kansas City, Missouri for
Pennsylvania residents) via certified mail, return receipt requested. THE ELECTION SHOULD BE SENT
IMMEDIATELY, AS YOU ONLY HAVE 30 DAYS FROM THE ISSUANCE/PURCHASE/GRANT DATE WITHIN WHICH TO MAKE
THE ELECTION — NO WAIVERS, LATE FILINGS OR EXTENSIONS ARE PERMITTED.

3. Deliver one counterpart of the completed election to the Company for its files.

4. If anyone other than you (e.g., one of your family members) will receive property that
is the subject of your election, deliver one counterpart of the completed election to each such
person.

5. Attach one counterpart of the completed election to your Federal income tax return for this
year when you file that return next year.

-7-exv10w14

Exhibit 10.14

NUPATHE INC.

2010 EMPLOYEE STOCK PURCHASE PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	1. Purpose of the Plan
	 	 	1	 
	 
	 	 	 	 
	2. Definitions
	 	 	1	 
	 
	 	 	 	 
	3. Administration of the Plan
	 	 	4	 
	 
	 	 	 	 
	4. Stock Subject to Plan
	 	 	4	 
	 
	 	 	 	 
	5. Offering Periods
	 	 	4	 
	 
	 	 	 	 
	6. Eligibility
	 	 	5	 
	 
	 	 	 	 
	7. Payroll Deductions
	 	 	6	 
	 
	 	 	 	 
	8. Purchase Rights
	 	 	7	 
	 
	 	 	 	 
	9. Accrual Limitations
	 	 	9	 
	 
	 	 	 	 
	10. Effective Date and Term of the Plan
	 	 	10	 
	 
	 	 	 	 
	11. Amendment and Termination
	 	 	11	 
	 
	 	 	 	 
	12. General Provisions
	 	 	11	 
	 
	 	 	 	 
	Schedule A
	 	 	A-1	 

i

 

     1. PURPOSE OF THE PLAN

          The NuPathe Inc. 2010 Employee Stock Purchase Plan is intended to promote the interests of the
Company (as defined in Article 2) by providing Eligible Employees (as defined in Article 2) of a
Participating Employer (as defined in Article 2) with the opportunity to acquire a proprietary
interest in the Company through participation in a payroll deduction-based employee stock purchase
plan designed to qualify under section 423 of the Internal Revenue Code of 1986, as amended. The
Plan (as defined in Article 2) is not intended and shall not be construed as constituting an
“employee benefit plan,” within the meaning of section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended.

     2. DEFINITIONS

          (a) “1933 Act” shall mean the Securities Act of 1933, as amended.

          (b) “Board” shall mean the Company’s Board of Directors.

          (c) “Change of Control” shall be deemed to have occurred if:

          (i) Any “person” (as such term is used in sections 13(d) and 14(d) of the
Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 50% of the voting power of the then outstanding securities of the Company;
provided that a Change of Control shall not be deemed to occur as a result of a
transaction in which the Company becomes a subsidiary of another corporation and in
which the stockholders of the Company, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such
stockholders to more than 50% of all votes to which all stockholders of the parent
corporation would be entitled in the election of directors; or

          (ii) The consummation of (A) a merger or consolidation of the Company with
another corporation where the stockholders of the Company, immediately prior to the
merger or consolidation, will not beneficially own in substantially the same
proportion as ownership immediately prior to the merger or consolidation,
immediately after the merger or consolidation, shares entitling such stockholders to
more than 50% of all votes to which all stockholders of the surviving corporation
would be entitled in the election of directors, or where the members of the Board,
immediately prior to the merger or consolidation, would not, immediately after the
merger or consolidation, constitute a majority of the board of directors of the
surviving corporation, (B) a sale or other disposition of all or substantially all
of the assets of the Company, or (C) a liquidation or dissolution of the Company.

          (iii) A change in the composition of the Board over a period of twelve (12)
consecutive months or less such that a majority of the Board members

1

 

ceases, by reason of one or more contested elections for Board membership, to
be comprised of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time the Board
approved such election or nomination.

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

          (e) “Common Stock” shall mean the common stock of the Company.

          (f) “Company Affiliate” shall mean any parent or subsidiary corporation of the Company (as
determined in accordance with Code section 424), whether now existing or subsequently established.

          (g) “Company” shall mean NuPathe Inc., a Delaware corporation, and any corporate successor to
all or substantially all of the assets or voting stock of NuPathe Inc. that shall adopt the Plan.

          (h) “Cash Compensation” shall mean (i) the regular base salary paid to a Participant by one or
more Participating Employers during the Participant’s period of participation in one or more
Offering Periods under the Plan plus (ii) all overtime payments, bonuses and commissions received
during such period. Such Cash Compensation shall be calculated before deduction of (A) any income
or employment tax withholdings or (B) any contributions made by the Participant to any Code section
401(k) salary deferral plan, any Code section 125 cafeteria benefit program or any Code section
132(f)(4) transportation fringe benefit program now or hereafter established by the Company or any
Company Affiliate. However, Cash Compensation shall not include any contributions made by the
Company or any Company Affiliate on the Participant’s behalf to any employee benefit or welfare
plan now or hereafter established (other than Code section 401(k), Code section 125, or Code
section 132(f)(4) contributions deducted from such Cash Compensation).

          (i) “Effective Date” shall mean the date at which the registration statement  for the initial public
offering of the Company’s Common Stock is declared effective by the Securities and Exchange Commission and
the Common Stock is priced for the initial public offering of such Common Stock. Any Company
Affiliate that becomes a Participating Employer after such Effective Date shall designate an
effective date with respect to its employees.

          (j) “Eligible Employee” shall mean any person who is employed by a Participating Employer on a
basis under which he or she is regularly expected to render more than 20 hours of service per week
and for more than five months per calendar year, for earnings considered wages under Code section
3401(a).

          (k) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

2

 

          (l) “Fair Market Value” per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:

          (i) If the Common Stock is at the time traded on a national securities
exchange, then the Fair Market Value shall be the closing selling price per share of
Common Stock during regular trading hours on the date in question, on the stock
exchange determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange and published in The Wall Street Journal. If there is
no closing selling price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price during regular trading hours on the
last preceding date for which such quotation exists.

          (ii) If the initial Offering Period begins at the Effective Date, for purposes
of such Offering Period, the Fair Market Value shall be deemed to be equal to the
price per share at which the Common Stock is sold in the initial public offering
pursuant to the Underwriting Agreement.

          (m) “Offering Period” shall mean the period during which shares of Common Stock shall be
offered for purchase under the Plan as described in Section 5.

          (n) “Participant” shall mean any Eligible Employee of a Participating Employer who is actively
participating in the Plan.

          (o) “Participating Employer” shall mean the Company and such Company Affiliates as may be
authorized from time to time by the Board to extend the benefits of the Plan to their Eligible
Employees. The Participating Employers in the Plan are listed in the attached Schedule A.

          (p) “Plan” shall mean the NuPathe Inc. 2010 Employee Stock Purchase Plan, as set forth in this
document, and as amended from time to time.

          (q) “Plan Administrator” shall mean the Compensation Committee of the Board.

          (r) “Purchase Date” shall mean the last business day of each Purchase Interval. The initial
Purchase Date shall be such date as the Plan Administrator determines.

          (s) “Purchase Interval” shall mean each successive six-month period (or other period
designated by the Plan Administrator) within a particular Offering Period, at the end of which
purchased shares of Common Stock shall be purchased on behalf of each Participant.

          (t) “Underwriting Agreement” shall mean the agreement between the Company and the underwriters
managing the initial public offering of the Common Stock.

3

 

     3. ADMINISTRATION OF THE PLAN

          The Plan Administrator shall have full discretionary authority to interpret and construe any
provision of the Plan and to adopt such rules and regulations for administering the Plan as it may
deem necessary in order to comply with the requirements of Code section 423. Decisions of the Plan
Administrator shall be final and binding on all parties having an interest in the Plan. As a
condition of participating in the Plan, all Participants must acknowledge, in writing or by
completing the enrollment forms to participate in the Plan, that all decisions and determinations
of the Plan Administrator shall be final and binding on the Participant, his or her beneficiaries
and any other person having or claiming an interest under the Plan on behalf of the Participant.
The Plan Administrator may delegate its ministerial duties to one or more subcommittees or to a
third party administrator, as it deems appropriate.

     4. STOCK SUBJECT TO PLAN

          (a) Number of Shares. Subject to adjustment as described below, the aggregate number of
shares of Common Stock that may be issued or transferred under the Plan is the sum of:

          (i) 124,767 shares, plus

          (ii) as of the first trading day in January each year during the term of the
Plan as described in Section 10(b), beginning January, 2011, there shall be
automatically added to the number of authorized shares under the Plan an additional
positive number equal to the lesser of 1% of the shares of Common Stock
outstanding on the last trading day of the immediately preceding December, or 62,383 shares, whichever is less.

The stock purchasable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares of Common Stock purchased on the open market.

          (b) Adjustment. If there is any change in the number or kind of shares of Common Stock
outstanding by reason of any stock split or reverse stock split, stock dividend, spinoff,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Company’s receipt of consideration, the Plan
Administrator shall make appropriate adjustments to (i) the maximum number and class of securities
issuable under the Plan, (ii) the maximum number and class of securities purchasable per
Participant on any Purchase Date, (iii) the maximum number and class of securities purchasable in
total by all Participants on any Purchase Date, and (iv) the number and class of securities and the
price per share in effect under each outstanding purchase right, in order to prevent the dilution
or enlargement of benefits thereunder. In addition, the Plan Administrator shall have discretion
to make the foregoing equitable adjustments in any circumstances in which an adjustment is not
mandated by this subsection (b) or applicable law. Any adjustments made by the Plan Administrator
shall be consistent with section 423 of the Code and shall be final, binding and conclusive.

4

 

     5. OFFERING PERIODS

          (a) Limitations. Shares of Common Stock shall be offered for purchase under the Plan through
a series of overlapping Offering Periods until such time as (i) the maximum number of shares of
Common Stock available for issuance under the Plan shall have been purchased or (ii) the Plan shall
have been sooner terminated.

          (b) Duration of Offering Period. Each Offering Period shall be of such duration (not to
exceed 27 months) as shall be determined by the Plan Administrator prior to the beginning of such
Offering Period. Unless the Plan Administrator determines otherwise before the beginning of the
Offering Period, Offering Periods shall commence at six-month intervals on each January 1 and July
1 (or the next business day, if such date is not a business day) over the term of the Plan, and
each Offering Period shall last for 24 months, ending on December 31 or June 30, as the case may be
(or the next business day, if such date is not a business day). Accordingly, two separate Offering
Periods shall commence in each calendar year during which the Plan remains in existence. However,
the initial Offering Period shall commence at the Effective Date or such other date as the Plan
Administrator determines, in its sole discretion, and terminate on December 31, 2011 or such other
date as the Plan Administrator determines, in its sole discretion.

          (c) Purchase Intervals. Each Offering Period shall consist of a series of one or more
successive Purchase Intervals. Unless the Plan Administrator determines otherwise, Purchase
Intervals shall run from January 1 to June 30 and from July 1 to December 31 (or the next business
day, if the designated date is not a business day). However, the first Purchase Interval in effect
under the initial Offering Period shall commence at the Effective Date or such other date as the
Plan Administrator determines, in its sole discretion, and terminate on December 31, 2010 or such
other date as the Plan Administrator determines, in its sole discretion.

          (d) Plan Administrator Discretion. Notwithstanding the foregoing, the Plan Administrator may
establish shorter Offering Periods or different (shorter or longer) Purchase Intervals, before the
beginning of the applicable Offering Period, as the Plan Administrator deems appropriate.

          (e) Transfer from One Offering Period to Another. If the Fair Market Value per share of
Common Stock on any Purchase Date within a particular Offering Period is less than the Fair Market
Value per share of Common Stock on the start date of that Offering Period, then immediately after
the purchase of shares of Common Stock on the Purchase Date, the Eligible Employees participating
in such Offering Period shall be transferred from that Offering Period and automatically enrolled
in the next Offering Period commencing after such Purchase Date.

     6. ELIGIBILITY

          (a) Commencement of Participation. Each individual who is an Eligible Employee on the start
date of any Offering Period under the Plan may enter that Offering Period on such start date.
However, an Eligible Employee may participate in only one Offering Period

5

 

at a time. If the initial Offering Period commences at the Effective Date, each individual
who is an Eligible Employee at that time shall automatically be enrolled as a Participant with a
contribution rate equal to 5% of the Eligible Employee’s Cash Compensation.

          (b) Limitation on Participation. Under no circumstances shall purchase rights be granted
under the Plan to any Eligible Employee if such individual would, immediately after the grant, own
(within the meaning of section 424(d) of the Code) or hold outstanding options or other rights to
purchase, stock possessing 5% or more of the total combined voting power or value of all classes of
stock of the Company or any Company Affiliate.

          (c) Enrollment Forms. Except as otherwise provided in Section 6(a) above, in order to
participate in the Plan for a particular Offering Period, an Eligible Employee must complete an
enrollment form prescribed by the Plan Administrator (including a stock purchase agreement and a
payroll deduction authorization) and file such forms with the Plan Administrator (or its designate)
at such time on or before the beginning of that Offering Period, as determined by the Plan
Administrator.

     7. PAYROLL DEDUCTIONS

          (a) Elections. The payroll deduction authorized by the Participant for purposes of acquiring
shares of Common Stock during an Offering Period may be any multiple of 1% of the Cash
Compensation paid to the Participant during each Purchase Interval within that Offering Period, up
to a maximum of 10% of Cash Compensation. The deduction rate so authorized shall continue in
effect throughout the Offering Period, except to the extent such rate is changed in accordance with
the following guidelines:

          (i) The Participant may, at any time during the Offering Period, reduce his or
her rate of payroll deduction (or, to the extent applicable, the percentage of Cash
Compensation to serve as his or her lump sum contribution for the initial Purchase
Interval of the first Offering Period, as described in Section 7(c)) to become
effective as soon as possible after filing the appropriate form with the Plan
Administrator. The Participant may not, however, effect more than one such
reduction per Purchase Interval.

          (ii) Prior to the commencement of any new Purchase Interval within the Offering
Period, a Participant may increase the rate of his or her payroll deduction by
filing the appropriate form with the Plan Administrator. The new rate (which may
not exceed the 10% of Cash Compensation maximum) shall become effective on the
start date of the first Purchase Interval following the filing of such form.

          (b) Commencement. Payroll deductions shall begin on the first pay day as of which
commencement is administratively feasible following the beginning of the Offering Period and shall
(unless sooner terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of that Offering Period. The amounts so collected shall be
credited to a book account established on the Company’s records for the

6

 

Participant, but no interest shall be paid on the balance from time to time outstanding in
such account. The amounts collected from the Participant shall not be required to be held in any
segregated account or trust fund and may be commingled with the general assets of the Company and
used for general corporate purposes.

          (c) Special Rule for Initial Purchase Interval. This Section 7(c) shall apply if the initial
Offering Period commences at the Effective Date. For the initial Purchase Interval of the first
Offering Period under the Plan, no payroll deductions shall be required of the Participant until
such time as the Participant affirmatively elects to commence such payroll deductions following his
or her receipt of the 1933 Act prospectus for the Plan. In the absence of such payroll deductions,
the Participant will be required to contribute the applicable percentage of his or her Cash
Compensation to the Plan in a lump sum payment immediately prior to the close of the initial
Purchase Interval, should the Participant elect to have shares of Common Stock purchased on his or
her behalf on the Purchase Date for that initial Purchase Interval.

          (d) Cessation of Payroll Deductions. Payroll deductions shall automatically cease upon the
termination of the Participant’s purchase right in accordance with the Plan.

          (e) No Requirement to Purchase. The Participant’s acquisition of Common Stock under the Plan
on any Purchase Date shall neither limit nor require the Participant’s acquisition of Common Stock
on any subsequent Purchase Date, whether within the same or a different Offering Period.

     8. PURCHASE RIGHTS

          (a) Grant of Purchase Rights. A Participant shall be granted a separate purchase right for
each Offering Period in which he or she is enrolled. The purchase right shall be granted on the
first day of the Offering Period and shall provide the Participant with the right to purchase
shares of Common Stock, in a series of successive installments during that Offering Period, upon
the terms set forth below. The Participant shall execute a stock purchase agreement embodying such
terms and such other provisions (not inconsistent with the Plan) as the Plan Administrator may deem
advisable.

          (b) Exercise of the Purchase Right. Each purchase right shall be automatically exercised in
installments on each successive Purchase Date within the Offering Period, and shares of Common
Stock shall accordingly be purchased on behalf of each Participant on each such Purchase Date. The
purchase shall be effected by applying the Participant’s payroll deductions (or, to the extent
applicable, his or her lump sum contribution) for the Purchase Interval ending on the Purchase Date
to the purchase of whole shares of Common Stock at the purchase price in effect for the Participant
for that Purchase Date.

          (c) Purchase Price. Unless the Plan Administrator determines otherwise prior to the beginning
of the Offering Period, the purchase price per share at which Common Stock will be purchased on the
Participant’s behalf on each Purchase Date within the Offering Period in which he or she is
enrolled shall be equal to 85% of the lower of (i) the Fair Market Value per

7

 

share of Common Stock on the first day of that Offering Period or (ii) the Fair Market Value
per share of Common Stock on the Purchase Date.

          (d) Number of Purchasable Shares. The number of shares of Common Stock purchasable by a
Participant on each Purchase Date during the particular Offering Period in which he or she is
enrolled shall be the number of whole shares obtained by dividing the amount collected from the
Participant through payroll deductions during the Purchase Interval ending with that Purchase Date
(or, to the extent applicable, his or her lump sum contribution for that Purchase Interval) by the
purchase price in effect for the Participant for that Purchase Date. However, the maximum number
of shares of Common Stock that may be purchased by a Participant on any one Purchase Date shall not
exceed 4,990 shares, subject to adjustment as described in Section 4(b). In
addition, the maximum number of shares of Common Stock that may be purchased in total by all
Participants in the Plan on any Purchase Date shall not exceed 49,907 shares,
subject to adjustment as described in Section 4(b). The Plan Administrator shall have the
discretionary authority, exercisable prior to the start of any Offering Period, to increase or
decrease the limitations to be in effect for the number of shares that may be purchased by a
Participant and in total by all Participants on each Purchase Date that occurs during the Offering
Period.

          (e) Excess Payroll Deductions. Any payroll deductions that are not applied to the purchase of
shares of Common Stock on any Purchase Date because they are not sufficient to purchase a whole
share of Common Stock shall be held for the purchase of Common Stock on the next Purchase Date.
However, any payroll deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable per Participant or in total by all
Participants on the Purchase Date shall be promptly refunded.

          (f) Suspension of Payroll Deductions. In the event that a Participant is, by reason of the
accrual limitations in Article 9, precluded from purchasing additional shares of Common Stock on
one or more Purchase Dates during an Offering Period, then no further payroll deductions shall be
collected from such Participant with respect to those Purchase Dates. The suspension of such
deductions shall not terminate the Participant’s purchase right for the Offering Period in which he
or she is enrolled, and payroll deductions shall automatically resume on behalf of such Participant
when he or she is again able to purchase shares during that Offering Period in compliance with the
accrual limitations of Article 9.

          (g) Withdrawal from Offering Period. The following provisions shall govern the Participant’s
withdrawal from an Offering Period:

          (i) A Participant may withdraw from the Offering Period in which he or she is
enrolled at any time prior to the next scheduled Purchase Date (or by such other
date as the Plan Administrator determines) by filing the appropriate form with the
Plan Administrator (or its designee) within 3 days prior to the next scheduled
Purchase Date (or such other date as the Plan Administrator determines), and no
further payroll deductions shall be collected from the Participant with respect to
that Offering Period. Any payroll deductions collected during the Purchase Interval
in which such withdrawal occurs shall, at the

8

 

Participant’s election, be immediately refunded or held for the purchase of
shares on the next Purchase Date. If no such election is made at the time of such
withdrawal, then the payroll deductions collected from the Participant during the
Purchase Interval in which such withdrawal occurs shall be refunded as soon as
administratively possible.

          (ii) The Participant’s withdrawal from an Offering Period shall be irrevocable,
and the Participant may not subsequently rejoin that Offering Period at a later
date. In order to resume participation in any subsequent Offering Period, the
Participant must re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before the beginning of that Offering Period.

          (h) Termination of Purchase Right. The following provisions shall govern the termination of
outstanding purchase rights:

          (i) If a Participant ceases to be an Eligible Employee for any reason
(including death, disability or change in status) while his or her purchase right
remains outstanding, the Participant’s purchase right shall immediately terminate,
and all of the Participant’s payroll deductions for the Purchase Interval in which
the purchase right so terminates shall be immediately refunded to the Participant.

          (ii) If a Participant ceases to remain in active service by reason of an
approved unpaid leave of absence, then the Participant shall have the right,
exercisable up until the last business day of the Purchase Interval in which such
leave commences, to (A) withdraw all the payroll deductions collected to date on his
or her behalf for that Purchase Interval or (B) have such funds held for the
purchase of shares on his or her behalf on the next scheduled Purchase Date. In no
event, however, shall any further payroll deductions be collected on the
Participant’s behalf during such leave. Upon the Participant’s return to active
service (x) within three (3) months following the commencement of such leave or (y)
prior to the expiration of any longer period for which such Participant has a right
to reemployment with the Corporation provided by statute or contract, his or her
payroll deductions under the Plan shall automatically resume at the rate in effect
at the time the leave began, unless the Participant withdraws from the Plan prior to
his or her return. An individual who returns to active employment following a leave
of absence that exceeds in duration the applicable (x) or (y) time period will be
treated as a new Eligible Employee for purposes of subsequent participation in the
Plan and must accordingly re-enroll in the Plan (by making a timely filing of the
prescribed enrollment forms) on or before his or her scheduled start date into the
applicable Offering Period.

          (i) Change of Control. Unless the Plan Administrator determines otherwise, immediately prior
to the effective date of any Change of Control, each outstanding purchase right shall automatically
be exercised by applying the payroll deductions of each Participant for the Purchase Interval in
which the Change of Control occurs to the purchase of whole shares of

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Common Stock at a purchase price per share equal to (unless the Plan Administrator determines
otherwise prior to the beginning of the particular Offering Period) 85% of the lower of (i) the
Fair Market Value per share of Common Stock on the first day of the Offering Period in which such
Participant is enrolled at the time of the Change of Control or (ii) the Fair Market Value per
share of Common Stock immediately prior to the effective date of the Change of Control. The
applicable limitation on the number of shares of Common Stock purchasable per Participant shall
continue to apply to any such purchase, but not the limitation applicable to the maximum number of
shares of Common Stock purchasable in total by all Participants on any one Purchase Date. The
Company shall use its best efforts to provide at least ten days’ prior written notice of the
occurrence of any Change of Control, and Participants shall, following the receipt of such notice,
have the right to terminate their outstanding purchase rights prior to the effective date of the
Change of Control.

          (j) Proration of Purchase Rights. If the total number of shares of Common Stock to be
purchased pursuant to outstanding purchase rights on any particular date exceeds the number of
shares then available for issuance under the Plan, the Plan Administrator shall make a pro-rata
allocation of the available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate purchase price payable for
the Common Stock pro-rated to such Participant, shall be refunded.

          (k) Assignability. A purchase right shall be exercisable only by the Participant and shall
not be assignable or transferable by the Participant.

          (l) Stockholder Rights. A Participant shall have no stockholder rights with respect to the
shares subject to his or her outstanding purchase right until the shares are purchased on the
Participant’s behalf in accordance with the provisions of the Plan and the Participant has become a
holder of record of the purchased shares.

          (m) ESPP Brokerage Account. The shares of Common Stock purchased on behalf of each
Participant shall be deposited directly into a brokerage account which the Company shall establish
for the Participant at a Company-designated brokerage firm. The account will be known as the ESPP
Brokerage Account. The following policies and procedures shall be in place for any shares
deposited into the Participant’s ESPP Brokerage Account until those shares have been held for the
requisite period necessary to avoid a disqualifying disposition under U.S. federal tax laws:

          (i) Shares must be held in the ESPP Brokerage Account until the later of the
following two periods: (x) the end of the two (2)-year period measured from the
start date of the Offering Period in which the shares were purchased and (y) the end
of the one (1)-year period measured from the actual purchase date of those shares.

          (ii) The deposited shares shall not be transferable (either electronically or
in certificate form) from the ESPP Brokerage Account until the required holding
period for those shares is satisfied. Such limitation shall apply both to transfers
to different accounts with the same ESPP broker and to transfers

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to other brokerage firms. Any shares held for the required holding period may
be transferred (either electronically or in certificate form) to other accounts or
to other brokerage firms.

          (iii) The foregoing procedures shall not in any way limit when the Participant
may sell his or her shares. Those procedures are designed solely to assure that any
sale of shares prior to the satisfaction of the required holding period is made
through the ESPP Brokerage Account. In addition, the Participant may request a
stock certificate or share transfer from his or her ESPP Brokerage Account prior to
the satisfaction of the required holding period should the Participant wish to make
a gift of any shares held in that account. However, shares may not be transferred
(either electronically or in certificate form) from the ESPP Brokerage Account for
use as collateral for a loan, unless those shares have been held for the required
holding period.

          (iv) The foregoing procedures shall apply to all shares purchased by the
Participant under the Plan, whether or not the Participant continues in employee
status.

     9. ACCRUAL LIMITATIONS

          (a) Dollar Limitation. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the extent that such
accrual, when aggregated with (i) rights to purchase Common Stock accrued under any other purchase
right granted under this Plan and (ii) similar rights accrued under other employee stock purchase
plans (within the meaning of Code section 423) of the Company or any Company Affiliate, would
otherwise permit the Participant to purchase more than $25,000 worth of stock of the Company or any
Company Affiliate (determined on the basis of the Fair Market Value per share on the date or dates
such rights are granted) for each calendar year in which such rights are at any time outstanding.

          (b) Application of Dollar Limitation. For purposes of applying such accrual limitations to
the purchase rights granted under the Plan, the following provisions shall apply:

          (i) The right to acquire Common Stock under each outstanding purchase right
shall accrue in a series of installments on each successive Purchase Date during the
Offering Period in which such right remains outstanding.

          (ii) No right to acquire Common Stock under any outstanding purchase right
shall accrue to the extent the Participant has already accrued in the same calendar
year the right to acquire Common Stock under one or more other purchase rights at a
rate equal to $25,000 worth of Common Stock (determined on the basis of the Fair
Market Value per share on the date or dates of grant) for each calendar year in
which such rights were at any time outstanding.

11

 

          (c) Refund. If by reason of such accrual limitations, any purchase right of a Participant
does not accrue for a particular Purchase Interval, then the payroll deductions that the
Participant made during that Purchase Interval with respect to such purchase right shall be
promptly refunded.

          (d) Conflict. In the event there is any conflict between the provisions of this Article and
one or more provisions of the Plan or any instrument issued thereunder, the provisions of this
Article shall be controlling.

     10. EFFECTIVE DATE AND TERM OF THE PLAN

          (a) Effective Date. The Plan was adopted by the Board on June
27, 2010, and shall become
effective at the Effective Date, provided that no purchase rights granted under the Plan shall be
exercised, and no shares of Common Stock shall be purchased hereunder, until (i) the Plan shall
have been approved by the stockholders of the Company and (ii) the Company shall have complied with
all applicable requirements of the 1933 Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement filed with the Securities and
Exchange Commission), all applicable listing requirements of any stock exchange on which the Common
Stock is listed for trading and all other applicable requirements established by law or regulation
have been met. In the event such stockholder approval is not obtained, or such compliance is not
effected, within 12 months after the date on which the Plan is adopted by the Board, the Plan shall
terminate and have no further force or effect, and all sums collected from Participants during the
initial Offering Period (if such Offering Period commences at the Effective Date) hereunder shall
be refunded.

          (b) Term. Unless sooner terminated by the Board, the Plan shall terminate upon the earliest
of (i) June 27, 2020, (ii) the date on which all shares available for issuance under the Plan
shall have been sold pursuant to purchase rights exercised under the Plan or (iii) the date on
which all purchase rights are exercised in connection with a Change of Control. No further
purchase rights shall be granted or exercised, and no further payroll deductions shall be
collected, under the Plan following such termination.

     11. AMENDMENT AND TERMINATION

          (a) Amendment; Termination. The Board may alter, amend, suspend or terminate the Plan at any
time, to become effective immediately following the close of any Purchase Interval. In the event of
Plan termination, any outstanding payroll deductions that are not used to purchase Common Stock on
a Purchase Date pursuant to the Plan shall be refunded to such Participants as soon as
administratively possible.

          (b) Stockholder Approval. In no event may the Board effect any of the following amendments or
revisions to the Plan without the approval of the Company’s stockholders: (i) increase the number
of shares of Common Stock issuable under the Plan, except for permissible adjustments in the event
of certain changes in the Company’s capitalization, (ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common

12

 

Stock purchasable under the Plan or (iii) modify the eligibility requirements for
participation in the Plan.

     12. GENERAL PROVISIONS

          (a) Death; Beneficiary. In the event of the death of a Participant, the Company shall deliver
any shares of Common Stock, cash or both shares of Common Stock and cash held for the benefit of
Participant to the executor or administrator of the estate of the Participant.

          (b) Expenses. All costs and expenses incurred in the administration of the Plan shall be paid
by the Company; however, each Plan Participant shall bear all costs and expenses incurred by such
individual in the sale or other disposition of any shares purchased under the Plan.

          (c) No Right of Employment. Nothing in the Plan shall confer upon the Participant any right
to continue in the employ of the Company or any Company Affiliate or interfere with or otherwise
restrict in any way the rights of the Company (or any Company Affiliate) or of the Participant,
which rights are hereby expressly reserved by each, to terminate such person’s employment at any
time for any reason, with or without cause.

          (d) Withholding. If and to the extent that any stock purchases or sales under this Plan are
subject to federal, state or local taxes, the Company is authorized to withhold all applicable
taxes from shares issuable under the Plan or from other compensation payable to Participant.

          (e) Transferability. Neither payroll deductions credited to a Participant nor any rights with
regard to the exercise a purchase right under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will or the laws of descent and distribution) by
the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to withdraw funds from a
Purchase Period in accordance with Section 8(g).

          (f) Voting. The Participant shall have no voting rights in shares that he or she may purchase
pursuant to Section 8(d) until such shares of Common Stock have actually be purchased by the
Participant.

          (g) Use of Funds. All payroll deductions received or held by the Company under the Plan may
be used by the Company for any corporate purpose, and the Company shall not be obligated to
segregate such payroll deductions.

          (h) Governing Law. The validity, construction, interpretation and effect of the Plan shall be
governed and construed by and determined in accordance with the laws of the State of Delaware,
without giving effect to the conflict of laws provisions thereof.

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Schedule A

Participating Employers

NuPathe Inc.

A-1

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