Unassociated Document


    Exhibit
      10.1

     

    STOCK
      ISSUANCE AGREEMENT

    


    STOCK
      ISSUANCE AGREEMENT (this “Agreement”)
      dated
      as of October 30, 2007 (the “Effective
      Date”),
      between DISCOVERY LABORATORIES, INC., a Delaware corporation (the “Company”),
      and
      Grantee.

    


    WHEREAS,
      Grantee is an employee of the Company; and

     

    
      WHEREAS,
        in order to reward Grantee for Grantee’s efforts, the Company has agreed to
        grant to Grantee that number of restricted shares (the “Restricted
        Shares”)
        of the
        common stock, par value $0.001 per share, of the Company (the “Common
        Stock”)
        specified in the Notice of Grant, subject to the terms, conditions and
        restrictions set forth in this Agreement and in the Stock Issuance Program
        set
        forth in Article
        III of the Company’s Amended and Restated 1998 Stock Incentive Plan (the
“Plan”).
        

    

    


    NOW,
      THEREFORE, in consideration of the above premises and the mutual covenants
      set
      forth herein, and for other good and valuable consideration, the receipt and
      sufficiency of which is hereby acknowledged, the parties hereto, intending
      to be
      legally bound, hereby agree as follows:

    


    SECTION
      1. Grant
      of Restricted Shares.
      On the
      date hereof, the Company hereby grants to Grantee that number of Restricted
      Shares of Common Stock of the Company specified in the Notice of Grant. All
      Restricted Shares granted pursuant to this Section 1 are subject to the terms,
      conditions and restrictions set forth in this Agreement and in the
      Plan.

    


    SECTION
      2. Vesting
      Schedule.
      Subject
      to the earlier cancellation of the Restricted Shares as provided in Section
      4
      below, the Restricted Shares awarded to Grantee shall fully vest on the date
      that Surfaxin®
      for RDS
      first becomes widely commercially available, as such date is determined by
      the
      Company.

    


    Notwithstanding
      the foregoing, upon the occurrence of any Corporate Transaction or Change in
      Control (as such terms are defined in the Plan) all of the Restricted Shares
      that have not yet vested shall vest as of the effective date of such Corporate
      Transaction or Change in Control 

    


    SECTION
      3. Restrictions
      on Transfer.
      Grantee
      agrees that, in addition to any restrictions on transfer that may be imposed
      under applicable state and federal securities laws, the Restricted Shares shall
      be subject to the following restrictions on transfer:

    


    (a) Grantee
      shall not, without the prior written consent of the Company, offer, transfer,
      sell, pledge, assign, hypothecate or otherwise encumber or dispose of any
unvested
      Restricted Shares. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (b) Any
      attempted assignment, transfer, pledge, hypothecation or other disposition
      of
      the Restricted Shares contrary to the provisions hereof, and the levy of any
      execution, attachment or similar process upon the Restricted Shares, shall
      be
      null and void and without effect.

    


    SECTION
      4. Cancellation
      of Restricted Shares.
      If
      Grantee’s employment with the Company is terminated for any reason, all unvested
      Restricted Shares granted hereunder shall automatically be cancelled and void
      and be of no further force or effect without the need for any further action
      on
      behalf of the Company. Upon any cancellation of the Restricted Shares, the
      Grantee shall deliver to the Company the certificate(s) representing such
      Restricted Shares.

    


    SECTION
      5. [Reserved]

    


    SECTION
      6. Voting
      Rights.
      Grantee
      shall be entitled to vote the Restricted Shares, whether or not they are then
      vested. 

    


    SECTION
      7. Stock
      Certificates.

    


     (a) Certificates.
      The
      Company shall hold the Restricted Shares in custody with the transfer agent
      in
      book-entry form until they shall have vested. When the Restricted Shares are
      fully vested, the Company will cause the transfer agent to issue a certificate
      evidencing the Restricted Shares.

    


    (b) Stock
      Legends.
      The
      Restricted Shares shall be held by the transfer agent subject to the following
      restriction (in addition to any restriction (s) required under applicable state
      or federal securities laws):

    


    THESE
      RESTRICTED SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS
      OF CANCELLATION AS SET FORTH IN A STOCK ISSUANCE AGREEMENT, DATED OCTOBER 30,
      2007, BETWEEN DISCOVERY LABORATORIES, INC. (THE “CORPORATION”) AND THE
      SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION.
      

    


    SECTION
      8. Representations
      and Warranties.
      Grantee
      represents to the Company that:

     

    (a) GRANTEE
      ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THIS AGREEMENT
      IS
      EARNED ONLY THROUGH GRANTEE’S CONTINUED AND SATISFACTORY SERVICE TO THE COMPANY
      THROUGH THE VESTING DATE AND NOT THROUGH THE GRANT OF RESTRICTED SHARES
      HEREUNDER.

    


    (b) Grantee
      acknowledges and agrees that this Agreement is not a contract of employment
      and
      that nothing in this Agreement shall confer upon Grantee any right with respect
      to continuation of service to the Company, nor shall it interfere in any way
      with Grantee’s right or the Company’s right to terminate Grantee’s service to
      the Company at any time, with or without cause.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (c) Grantee
      hereby accepts this Stock Issuance Agreement subject to all of the terms and
      provisions hereof. Grantee has reviewed this Agreement in its entirety, has
      had
      an opportunity to obtain the advice of counsel prior to executing this
      Agreement, and fully understands all provisions of this Agreement.

    


    (d) Grantee
      acknowledges that, as a condition to the vesting of the Restricted Shares,
      the
      representations and warranties of this Section 8 shall be true and correct
      as of
      the vesting date as if they had been made on such date with respect to vested
      Restricted Shares.

    


    (e) Grantee
      acknowledges that the grant of the Restricted Shares hereunder does not create
      any contractual or other right to receive future awards or benefits in lieu
      of
      awards, and all future awards, if any, and the terms and conditions thereof,
      will be at the sole discretion of the Company. 

    


    (f) Grantee
      acknowledges that the future value of the Restricted Shares is unknown and
      cannot be predicted with certainty. 

    


    (g) Grantee
      acknowledges that the Company and its counsel are entitled to rely on the
      representations made above.

    


    SECTION
      9. Tax
      Consequences.
      Grantee
      has reviewed with Grantee’s own tax advisors the federal, state, local and
      foreign tax consequences of this Agreement. Grantee is relying solely on such
      advisors and not on any statements or representations of the Company or any
      of
      its agents. Grantee understands that Grantee (and not the Company) shall be
      responsible for Grantee’s own tax liability that may arise as result of the
      transactions contemplated by this Agreement. Grantee understands that Section
      83
      of the Code, taxes as ordinary income the fair market value, as defined by
      the
      Code, of the Restricted Shares as of the date they become “substantially vested”
within the meaning of Section 1.83-3(b) of the regulations promulgated pursuant
      to Code Section 83. Grantee understands that Grantee may elect to be taxed
      at
      the time the Restricted Shares are granted, rather than at the time, if any,
      that they become substantially vested, by filing an election under Section
      83(b)
      of the Code with the Internal Revenue Service within 30 days from the date
      of
      grant. 

    


    GRANTEE
      ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO
      FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF GRANTEE REQUESTS THE
      COMPANY, OR ITS REPRESENTATIVES, TO MAKE THIS FILING ON GRANTEE’S
      BEHALF.

    


    SECTION
      10. Notices.
      Any
      notice required to be given or delivered to the Company under the terms of
      this
      Agreement shall be in writing and addressed to the Company at 2600 Kelly Road,
      Suite 100, Warrington, Pennsylvania 18976, Attention: David L. Lopez, C.P.A.,
      Esq., Senior Vice President, General Counsel, or to such other address as shall
      be provided in writing to Grantee. Any notice required to be given or delivered
      to Grantee shall be in writing and addressed to the most recent address of
      Grantee, as set forth in the books and records of the Company. All notices
      shall
      be deemed effective upon personal delivery against receipt therefor; one day
      after being sent by Federal Express or similar overnight delivery; or three
      days
      after being mailed registered or certified mail, postage prepaid, and properly
      addressed to the party to be notified.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    SECTION
      11. Withholding.
      Grantee
      shall pay to the Company, or make arrangements satisfactory to the Company
      regarding the payment of, any applicable Federal, state or local income or
      employment taxes, including withholding taxes, arising in connection with the
      grant or vesting of any of the Restricted Shares. The Company, in its
      discretion, may allow the satisfaction of any withholding taxes by retention
      of
      Restricted Shares or delivery of already owned shares of Common Stock in
      accordance with procedures determined by the Company’s Plan Administrator. The
      Company shall have the right to deduct from any payment of any kind otherwise
      due to Grantee, including payments of Grantee’s salary, any taxes required to be
      withheld by the Company with respect to the Restricted Shares. 

    


    SECTION
      12. Entire
      Agreement.
      This
      Agreement and the Plan contain the entire understanding between the parties
      concerning the subject matter contained herein and therein. There are no
      representations, agreements, arrangements or understandings, oral or written,
      between the parties hereto, relating to the subject matter of this Agreement
      and
      the Plan that are not fully expressed herein or therein.

    


    SECTION
      13. Counterparts.
      This
      Agreement may be signed in one or more counterparts, all of which shall be
      considered one and the same agreement.

    


    SECTION
      14. Further
      Assurances.
      Each
      party to this Agreement agrees to perform all further acts and to execute and
      deliver all further documents as may be reasonably necessary to carry out the
      intent of this Agreement.

    


    SECTION
      15. Construction.
      Whenever used in this Agreement, the singular number will include the plural,
      and the plural number will include the singular, and the masculine or neuter
      gender shall include the masculine, feminine, or neuter gender. The headings
      of
      the Sections of this Agreement have been inserted for purposes of convenience
      and shall not be used for interpretive purposes.

    


    SECTION
      16. Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Delaware, without regard to the conflicts of laws principles of such
      state. 

    


    SECTION
      17. Successors.
      The
      rights and obligations of the Company under this Agreement shall be transferable
      to any successor thereto. The rights and obligations of Grantee under this
      Agreement may only be assigned with the prior written consent of the Company.
      

    


    SECTION
      18. Amendment.
      This
      Agreement may only be amended by the written consent of the parties to this
      Agreement at the time of such amendment.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    SECTION
      19. No
      Waiver.
      Either
      party’s failure to enforce any of the provisions of this Agreement shall not in
      any way be construed as a waiver of any such provision, nor prevent that party
      from thereafter enforcing any other provision of this Agreement. The rights
      granted both parties hereunder are cumulative and shall not constitute a waiver
      of either party’s right to assert any other available legal remedy.

    


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

    
      	 	 	 
	 	 	 
	 	 	 
	 	 
	 	
              
Grantee
	 	 
	 	 
	 	DISCOVERY LABORATORIES, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name: Robert
              J. Capetola, Ph.D.
	 	Title: President
              and CEO