ADDENDUM
TO
STOCK OPTION AGREEMENT
The following provisions are hereby incorporated into, and are
hereby made a part of, that certain Stock Option Agreement (the "Option
Agreement") by and between Discovery Laboratories, Inc. (the "Corporation") and
______________________ ("Optionee") evidencing the stock option (the "Option")
granted on ___________________, 199__ to Optionee under the terms of the
Corporation's 1998 Stock Incentive Plan, and such provisions shall be effective
immediately. All capitalized terms in this Addendum, to the extent not otherwise
defined herein, shall have the meanings assigned to them in the Option
Agreement.
INVOLUNTARY TERMINATION
FOLLOWING CORPORATE TRANSACTION
1. To the extent the Option does not accelerate, in connection with
a Corporate Transaction, the Option shall continue, over Optionee's period of
Service after the Corporate Transaction, to become exercisable for the Option
Shares in one or more installments in accordance with the provisions of the
Option Agreement. However, immediately upon an Involuntary Termination of
Optionee's Service within twelve (12) months following such Corporate
Transaction, the Option (or any replacement grant), to the extent outstanding at
the time but not otherwise fully exercisable, shall automatically accelerate so
that the Option shall become immediately exercisable for all the Option Shares
at the time subject to the Option and may be exercised for any or all of those
Option Shares as fully vested shares.
2. The Option as accelerated under Paragraph 1 shall remain so
exercisable until the earlier of (i) the Expiration Date or (ii) the expiration
of the one (1)-year period measured from the date of the Optionee's Involuntary
Termination.
3. For purposes of this Addendum, an Involuntary Termination shall
mean the termination of Optionee's Service by reason of:
(A) Optionee's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(B) Optionee's voluntary resignation following (A) a
change in Optionee's position with the Corporation (or Parent or
Subsidiary employing Optionee) which materially reduces Optionee's
duties and responsibilities or the level of management to which
Optionee reports, (B) a reduction in Optionee's level of
compensation (including base salary, fringe benefits and target
bonus under any corporate-performance-based bonus or incentive
programs) by more than fifteen
percent (15%) or (C) a relocation of Optionee's place of employment
by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Corporation without
Optionee's consent.
4. The provisions of Paragraph 2 of this Addendum shall govern the
period for which the Option is to remain exercisable following the Involuntary
Termination of Optionee's Service within twelve (12) months after the Corporate
Transaction and shall supersede any provisions to the contrary in Paragraph 5 of
the Option Agreement.
IN WITNESS WHEREOF, Discovery Laboratories, Inc. has caused this
Addendum to be executed by its duly-authorized officer, and Optionee has
executed this Addendum, all as of the Effective Date specified below.
DISCOVERY LABORATORIES, INC.
By:
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Title:
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OPTIONEE
EFFECTIVE DATE:___________________, 199__
2.
