Unassociated Document


    FIRST
      AMENDMENT

    TO
      CREDIT AND SECURITY AGREEMENT

     

    THIS
      FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this
      “Agreement”)
      is
      made as of May 30, 2008 by and between DISCOVERY
      LABORATORIES,
      INC.,
      a
      Delaware corporation (“Borrower”),
      and
GE
      BUSINESS FINANCIAL SERVICES INC.
      (formerly known as Merrill Lynch Business Financial Services Inc.)
      (“Lender”).

     

    Recitals

     

    A. Lender
      and Borrower have entered into that certain Credit and Security Agreement dated
      as of May 21, 2007 (as the same may from time to time be amended, modified,
      supplemented or restated, the “Credit
      Agreement”).
      Lender has extended credit to Borrower for the purposes permitted in the Credit
      Agreement.

     

    B. Borrower
      has requested that Lender amend the Credit Agreement as more fully set forth
      herein. Lender has agreed to so amend certain provisions of the Credit
      Agreement, but only to the extent, in accordance with the terms, subject to
      the
      conditions and in reliance upon the representations and warranties set forth
      below.

     

    Agreement

     

    NOW,
      THEREFORE,
      in
      consideration of the foregoing recitals and other good and valuable
      consideration, the receipt and adequacy of which is hereby acknowledged, and
      intending to be legally bound, the parties hereto agree as follows:

     

    1. Definitions.
      Capitalized terms used but not defined in this Agreement,
      including its preamble and recitals,
      shall
      have the meanings given to them in the Credit Agreement.

    

      
        	 	
                2.

              	
                Amendments
                  to Credit Agreement.

              


      

    

     

    2.1 Section
      1(a) (Availability).
      Section
      1(a) of the Credit Agreement is hereby amended by
      adding the following sentence immediately after the last sentence of the
      Section:

     

    Notwithstanding
      the foregoing, the aggregate principal amount of Equipment Advances made during
      the period commencing on May 30, 2008 and ending on the last day of the Draw
      Period shall not exceed Three Hundred Thousand Dollars ($300,000).

     

    2.2 Section
      12 (Definitions
      and Rules of Construction).
      The
      following term and its definition in Section 12 of the Credit Agreement are
      amended and restated in their entirety as follows:

     

    “Draw
      Period”
      is the period of time from May 21, 2007 through the earlier to occur of (a)
      November 30, 2008, or (b) a Default.

     

    2.3 Notices.
      The
      addresses of Lender for all notices, requests and other communications are
      hereby changed to the following:

     

    GE
      Business Financial Services Inc.

    c/o
      GE Healthcare Financial Services, Inc., LSF

    83
      Wooster Heights Road, Fifth Floor

    Danbury,
      Connecticut 06810

    Attention:
      Senior Vice President of Risk

    Phone:
      (203) 205-5200

    Facsimile:
      (203) 205-2192

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    With
      a copy to:

     

    GE
      Business Financial Services Inc.

    c/o
      GE Healthcare Financial Services, Inc.

    Two
      Bethesda Metro Center, Suite 600

    Bethesda,
      Maryland 20814

    Attention:
      General Counsel

    Phone:
      (301) 961-1640

    Facsimile:
      (301) 664-9866

    

      
        	 	
                3.

              	
                Limitation
                  of Amendments.

              


      

    

     

    3.1 The
      amendments set forth in Section 2 above are effective for the purposes set
      forth herein and shall be limited precisely as written and shall not be deemed
      to (a) be a consent to any amendment, waiver or modification of any other
      term or condition of any Financing Document, or (b) otherwise prejudice any
      right or remedy which Lender may now have or may have in the future under or
      in
      connection with any Financing Document.

     

    3.2 This
      Agreement shall be construed in connection with and as part of the Financing
      Documents and all terms, conditions, representations, warranties, covenants
      and
      agreements set forth in the Financing Documents, are hereby ratified and
      confirmed and shall remain in full force and effect.

     

    4. Representations
      and Warranties.
      To
      induce Lender to enter into this Agreement, Borrower hereby represents and
      warrants to Lender as follows:

     

    4.1 Immediately
      after giving effect to this Agreement (a) the representations and warranties
      contained in the Financing Documents are true, accurate and complete in all
      material respects as of the date hereof (except to the extent such
      representations and warranties relate to an earlier date, in which case they
      are
      true and correct as of such date), and (b) no Default or Event of Default
      has occurred and is continuing;

     

    4.2 Borrower
      has the power and due authority to execute and deliver this Agreement and to
      perform its obligations under the Credit Agreement, as amended
      hereby;

     

    4.3 The
      execution and delivery by Borrower of this Agreement and the performance by
      Borrower of its obligations under the Credit Agreement, as amended hereby,
      have
      been duly authorized by all necessary action on the part of Borrower;


     

    4.4 The
      organizational documents of Borrower most recently delivered to Lender remain
      true, accurate and complete and have not been amended, supplemented or restated
      and are and continue to be in full force and effect;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.5 The
      execution and delivery by Borrower of this Agreement and the performance by
      Borrower of its obligations under the Credit Agreement, as amended hereby,
      do
      not and will not contravene (a) any law or regulation binding on or
      affecting Borrower, (b) any material contractual restriction with a Person
      binding on Borrower, (c) any order, judgment or decree of any court or
      other governmental or public body or authority, or subdivision thereof, binding
      on Borrower, or (d) the organizational documents of Borrower;

     

    4.6 The
      execution and delivery by Borrower of this Agreement and the performance by
      Borrower of its obligations under the Credit Agreement, as amended hereby,
      do
      not require any order, consent, approval, license, authorization or validation
      of, or filing, recording or registration with, or exemption by any governmental
      or public body or authority, or subdivision thereof, binding on Borrower, except
      as already has been obtained or made;

     

    4.7 This
      Agreement has been duly executed and delivered by Borrower and is the binding
      obligation of Borrower, enforceable against Borrower in accordance with its
      terms, except as such enforceability may be limited by bankruptcy, insolvency,
      reorganization, liquidation, moratorium or other similar laws of general
      application and equitable principles relating to or affecting creditors’
rights.

     

    5. Counterparts.
      This
      Agreement may be executed in any number of counterparts and all of such
      counterparts taken together shall be deemed to constitute one and the same
      instrument. Delivery of an executed counterpart of this Agreement by facsimile
      or other electronic method of transmission shall be equally as effective as
      delivery of an original executed counterpart of this Agreement. Any party
      delivering an executed counterpart of this Agreement by facsimile or other
      electronic method of transmission also shall deliver an original executed
      counterpart of this Agreement but the failure to deliver an original executed
      counterpart shall not affect the validity, enforceability or binding effect
      of
      this Agreement.

     

    6. Consent
      Fee.
      Borrower hereby agrees to pay to Lender a non-refundable consent fee in the
      amount of One Thousand Five Hundred Dollars ($1,500) in connection with the
      amendments set forth herein to be paid by wire transfer on or before the date
      hereof.

     

    7. Effectiveness.
      This
      Agreement shall be deemed effective upon (a) the due execution and delivery
      to
      Lender of this Agreement by each party hereto and (b) Borrower’s
      payment of the Consent Fee.

     

    8. Attorneys’
      Fees and Expenses.
      Borrower hereby agrees to pay all of Lender’s legal fees and expenses in
      connection with the negotiation and preparation of this Agreement in an amount
      not to exceed $2,000. The foregoing cap on legal fees and expenses relates
      only
      to the negotiation and preparation of this Agreement, and not to any other
      legal
      fees or expenses related to the Loan.

     

    9. Governing
      Law.
      This
      Agreement and the rights and obligations of the parties hereto shall be governed
      by and construed in accordance with the laws of the State of New York.


     

    10. Integration.
      This
      Agreement and the Financing Documents represent the entire agreement about
      this
      subject matter and supersede prior negotiations or agreements. All prior
      agreements, understandings, and negotiations between the parties about the
      subject matter of this Agreement, and the Financing Documents merge into this
      Agreement and the Financing Documents.

     

    [Signature
      page follows immediately.]

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the
      parties hereto have caused this Agreement to be duly executed and delivered
      as
      of the date first written above.

     

    
      	 	BORROWER:
	 	 	 
	 	
              DISCOVERY
                LABORATORIES,
                INC.

            
	 
 	 
 	 
 
	
            	By:  	/s/ John
              G.
              Cooper
	 	
              
Name:
              John G. Cooper
	 	Title:
              Executive
              Vice President and Chief Financial
              Officer


    

    
       

      
        	 	LENDER:
	 	 	 
	 	
                
                  GE
                    BUSINESS FINANCIAL SERVICES INC. 
                    

                  (formerly
                    known as Merrill Lynch Business Financial Services
                    Inc.)

                

              
	 
 	 
 	 
 
	
              	By:  	/s/ Scott
                R.
                Towers
	 	
                
Name:
                Scott R. Towers
	 	Title:
                Its Duly Authorized Signatory