Document:

EXHIBIT 10.32

                            MASTER SECURITY AGREEMENT
                   dated as of December 23, 2002 ("Agreement")

      THIS AGREEMENT is between GENERAL ELECTRIC CAPITAL CORPORATION (together
with its successors and assigns, if any, "SECURED PARTY") and DISCOVERY
LABORATORIES, INC. ("DEBTOR"). Secured Party has an office at 401 Merritt 7
Suite 23, Norwalk, CT 06851-1177. Debtor is a corporation organized and existing
under the laws of the state of Delaware. Debtor's mailing address and chief
place of business is 350 South Main St., Suite 307, Doylestown, PA 18901.

1. CREATION OF SECURITY INTEREST.

      Debtor grants to Secured Party, its successors and assigns, a security
interest in and against all property listed on any collateral schedule now or in
the future annexed to or made a part of this Agreement ("COLLATERAL SCHEDULE"),
and in and against all additions, attachments, accessories and accessions to
such property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the "COLLATERAL"). This security interest is given to secure
the payment and performance of all debts, obligations and liabilities of any
kind whatsoever of Debtor to Secured Party, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule
(collectively "NOTES" and each a "NOTE"), and any renewals, extensions and
modifications of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the "INDEBTEDNESS").

2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

      Debtor represents, warrants and covenants as of the date of this Agreement
and as of the date of each Collateral Schedule that:

      (a) Debtor's exact legal name is as set forth in the preamble of this
Agreement and Debtor is, and will remain, duly organized, existing and in good
standing under the laws of the State set forth in the preamble of this
Agreement, has its chief executive offices at the location specified in the
preamble, and is, and will remain, duty qualified and licensed in every
jurisdiction wherever necessary to carry on its business and operations;

      (b) Debtor has adequate power and capacity to enter into, and to perform
its obligations under this Agreement, each Note and any other documents
evidencing, or given in connection with, any of the Indebtedness (all of the
foregoing are called the "DEBT DOCUMENTS");

      (c) This Agreement and the other Debt Documents have been duly authorized,
executed and delivered by Debtor and constitute legal, valid and binding
agreements enforceable in accordance with their terms, except to the extent that
the enforcement of remedies may he limited under applicable bankruptcy and
insolvency laws;

      (d) No approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any already obtained;

      (e) The entry into, and performance by, Debtor of the Debt Documents will
not (i) violate any of the organizational documents of Debtor or any judgment,
order, law or regulation applicable to Debtor, or (ii) result in any breach of
or constitute a default under any contract to which Debtor is a party, or result
in the creation of any lien, claim or encumbrance on any of Debtor's property
(except for liens in favor of Secured Party) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

      (f) There are no suits or proceedings pending in court or before any
commission, board or other administrative agency against or affecting Debtor
which could, in the aggregate, have a material adverse effect on Debtor, its
business or operations, or its ability to perform its obligations under the Debt
Documents, nor does Debtor have reason to believe that any such suits or
proceedings are threatened;

<PAGE>

      (g) All financial statements delivered to Secured Party in connection with
the Indebtedness have been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtors financial
condition;

      (h) The Collateral is not, and will not be, used by Debtor for personal,
family or household purposes;

      (i) The Collateral is, and will remain, in good condition and repair and
Debtor will not be negligent in its care and use;

      (j) Debtor is, and will remain, the sole and lawful owner, and in
possession of, the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement; and

      (k) The Collateral is, and will remain, free and clear of all liens,
claims and encumbrances of any kind whatsoever, except for (i) liens in favor of
Secured Party, (ii) liens for taxes not yet due or for taxes being contested in
good faith and which do not involve, in the judgment of Secured Party, any risk
of the sale, forfeiture or loss of any of the Collateral, and (iii) inchoate
materialmen's, mechanic's, repairmen's and similar liens arising by operation of
law in the normal course of business for amounts which are not delinquent (all
of such liens are called "PERMITTED LIENS").

3. COLLATERAL.

      (a) Until the declaration of any default, Debtor shall remain in
possession of the Collateral; except that Secured Party shall have the right to
possess (i) any chattel paper or instrument that constitutes a part of the
Collateral, and (ii) any other Collateral in which Secured Party's security
interest may be perfected only by possession. Secured Party may inspect any of
the Collateral during normal business hours after giving Debtor reasonable prior
notice. If Secured Party asks, Debtor will promptly notify Secured Party in
writing of the location of any Collateral.

      (b) Debtor shall (i) use the Collateral only in its trade or business,
(ii) maintain all of the Collateral in good operating order and repair, normal
wear and tear excepted, (iii) use and maintain the Collateral only in compliance
with manufacturers recommendations and all applicable laws, and (iv) keep all of
the Collateral free and clear of all liens, claims and encumbrances (except for
Permitted Liens).

      (c) Secured Party does not authorize and Debtor agrees it shall not (i)
part with possession of any of the Collateral (except to Secured Party or for
maintenance and repair), (ii) remove any of the Collateral from the continental
United States, or (iii) sell, rent, lease, mortgage, license, grant a security
interest in or otherwise transfer or encumber (except for Permitted Liens) any
of the Collateral.

      (d) Debtor shall pay promptly when due all taxes, license fees,
assessments and public and private charges levied or assessed on any of the
Collateral, on its use, or on this Agreement or any of the other Debt Documents.
At its option, Secured Party may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on the Collateral and may pay
for the maintenance, insurance and preservation of the Collateral and effect
compliance with the terms of this Agreement or any of the other Debt Documents.
Debtor agrees to reimburse Secured Party, on demand, all costs and expenses
incurred by Secured Party in connection with such payment or performance and
agrees that such reimbursement obligation shall constitute Indebtedness.

      (e) Debtor shall, at all times, keep accurate and complete records of the
Collateral, and Secured Party shall have the right to inspect and make copies of
all of Debtor's books and records relating to the Collateral during normal
business hours, after giving Debtor reasonable prior notice.

      (f) Debtor agrees and acknowledges that any third person who may at any
time possess all or any portion of the Collateral shall be deemed to hold, and
shall hold, the Collateral as the agent of, and as pledge holder for, Secured
Party. Secured Party may at any time give notice to any third person described
in the preceding sentence that such third person is holding the Collateral as
the agent of, and as pledge holder for, the Secured Party.

<PAGE>

4. INSURANCE.

      (a) Debtor shall at all times bear the entire risk of any loss, theft,
damage to, or destruction of, any of the Collateral from any cause whatsoever.

      (b) Debtor agrees to keep the Collateral insured against loss or damage by
fire and extended coverage perils, theft, burglary, and for any or all
Collateral which are vehicles, for risk of loss by collision, and if requested
by Secured Party, against such other risks as Secured Party may reasonably
require. The insurance coverage shall be in an amount no less than the full
replacement value of the Collateral, and deductible amounts, insurers and
policies shall be acceptable to Secured Party. Debtor shall deliver to Secured
Party policies or certificates of insurance evidencing such coverage. Each
policy shall name Secured Party as a loss payee, shall provide for coverage to
Secured Party regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-insurance, and shall
provide that coverage may not be canceled or altered by the insurer except upon
thirty (30) days prior written notice to Secured Party. Debtor appoints Secured
Party as its attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to receive payment of and execute or endorse all
documents, checks or drafts in connection with insurance payments. Secured Party
shall not act as Debtor's attorney -in-fact unless Debtor is in default.
Proceeds of insurance shall be applied, at the option of Secured Party, to
repair or replace the Collateral or to reduce any of the Indebtedness.

5. REPORTS.

      (a) Debtor shall promptly notify Secured Party of (i) any change in the
name of Debtor, (ii) any change in the state of its incorporation or
registration, (iii) any relocation of its chief executive offices, (iv) any
relocation of any of the Collateral, (v) any of the Collateral being lost,
stolen, missing, destroyed, materially damaged or worn out, or (vi) any lien,
claim or encumbrance other than Permitted Liens attaching to or being made
against any of the Collateral.

      (b) Debtor will deliver to Secured Party Debtor's complete financial
statements, certified by a recognized firm of certified public accountants,
within ninety (90) days of the close of each fiscal year of Debtor. If Secured
Party requests, Debtor will deliver to Secured Party copies of Debtor's
quarterly financial reports certified by Debtor's chief financial officer,
within ninety (90) days after the close of each of Debtor's fiscal quarter.
Debtor will deliver to Secured Party copies of all Forms 10-K and 10-Q, if any,
within 30 days after the dates on which they are filed with the Securities and
Exchange Commission.

6. FURTHER ASSURANCES.

      (a) Debtor shall, upon request of Secured Party, furnish to Secured Party
such further information, execute and deliver to Secured Party such documents
and instruments (including, without limitation, Uniform Commercial Code
financing statements) and shall do such other acts and things as Secured Party
may at any time reasonably request relating to the perfection or protection of
the security interest created by this Agreement or for the purpose of carrying
out the intent of this Agreement. Without limiting the foregoing, Debtor shall
cooperate and do all acts deemed necessary or advisable by Secured Party to
continue in Secured Party a perfected first security interest in the Collateral,
and shall obtain and furnish to Secured Party any subordinations, releases,
landlord waivers, lessor waivers, mortgagee waivers, or control agreements, and
similar documents as may be from time to time requested by, and in form and
substance satisfactory to, Secured Party.

      (b) Debtor authorizes Secured Party to file a financing statement and
amendments thereto describing the Collateral and containing any other
information required by the applicable Uniform Commercial Code. Debtor
irrevocably grants to Secured Party the power to sign Debtor's name and
generally to act on behalf of Debtor to execute and file applications for title,
transfers of title, financing statements, notices of lien and other documents
pertaining to any or all of the Collateral; this power is coupled with Secured
Party's interest in the Collateral. Debtor shall, if any certificate of title be
required or permitted by law for any of the Collateral, obtain and promptly
deliver to Secured Party such certificate showing the lien of this Agreement
with respect to the Collateral. Debtor ratifies its prior authorization for
Secured Party to file financing statements and amendments thereto describing the
Collateral and containing any other information required by the Uniform
Commercial Code if filed prior to the date hereof.

      (c) Debtor shall indemnify and defend the Secured Party, its successors
and assigns, and their respective directors, officers and employees, from and
against all claims, actions and suits (including, without limitation, related
attorney fees) of any kind whatsoever arising, directly or indirectly, in
connection with any of the Collateral.

<PAGE>

7. DEFAULT AND REMEDIES.

      (a) Debtor shall be in default under this Agreement and each of the other
Debt Documents if:

            (i) Debtor breaches its obligation to pay when due any installment
      or other amount due or coming due under any of the Debt Documents;

            (ii) Debtor, without the prior written consent of Secured Party,
      attempts to or does sell, rent, lease, license, mortgage, grant a security
      interest in, or otherwise transfer or encumber (except for Permitted
      Liens) any of the Collateral;

            (iii) Debtor breaches any of its insurance obligations under
     Section 4;

            (iv) Debtor breaches any of its other obligations under any of the
      Debt Documents and fails to cure that breach within thirty (30) days after
      written notice from Secured Party;

            (v) Any warranty, representation or statement made by Debtor in any
      of the Debt Documents or otherwise in connection with any of the
      Indebtedness shall be false or misleading in any material respect;

            (vi) Any of the Collateral is subjected to attachment, execution,
      levy, seizure or confiscation in any legal proceeding or otherwise, or if
      any legal or administrative proceeding is commenced against Debtor or any
      of the Collateral, which in the good faith judgment of Secured Party
      subjects any of the Collateral to a material risk of attachment,
      execution, levy, seizure or confiscation and no bond is posted or
      protective order obtained to negate such risk;

            (vii) Debtor breaches or is in default under any other agreement
      between Debtor and Secured Party;

           (viii) Debtor or any guarantor or other obligor for any of the
Indebtedness (collectively "Guarantor") dissolves, terminates its existence,
becomes insolvent or ceases to do business as a going concern;

            (ix) If Debtor or any Guarantor is a natural person, Debtor or any
      such Guarantor dies or becomes incompetent;

            (x) A receiver is appointed for all or of any part of the property
      of Debtor or any Guarantor, or Debtor or any Guarantor makes any
      assignment for the benefit of creditors;

            (xi) Debtor or any Guarantor files a petition under any bankruptcy,
      insolvency or similar law, or any such petition is filed against Debtor or
      any Guarantor and is not dismissed within forty-five (45) days; or

            (xii) Debtor's improper filing of an amendment or termination
      statement relating to a filed financing statement describing the
      Collateral.

      (b) If Debtor is in default the Secured Party, at its option, may declare
any or all of the Indebtedness to be immediately due and payable, without demand
or notice to Debtor or any Guarantor. The accelerated obligations and
liabilities shall bear interest (both before and after any judgment) until paid
in full at the lower of eighteen percent (18%) per annum or the maximum rate not
prohibited by applicable law.

      (c) After default, Secured Party shall have all of the rights and remedies
of a Secured Party under the Uniform Commercial Code, and under any other
applicable law. Without limiting the foregoing, Secured Party shall have the
right to (i) notify any account debtor of Debtor or any obligor on any
instrument which constitutes part of the Collateral to make payment to the
Secured Party, (ii) with or without legal process, enter any premises where the
Collateral may be and take possession of and remove the Collateral from the
premises or store it on the premises, (iii) sell the Collateral at public or
private sale, in whole or in part, and have the right to bid and purchase at
said sale, or (iv) lease or otherwise dispose of all or part of the Collateral,
applying proceeds from such disposition to the obligations then in default. If
requested by Secured Party, Debtor shall promptly assemble the Collateral and
make it available to Secured Party at a place to be designated by Secured Party
which is reasonably convenient to both parties. Secured Party may also render
any or all of the Collateral unusable at the Debtor's premises and may dispose
of such Collateral on such premises without liability for rent or costs. Any
notice that Secured Party is

<PAGE>

required to give to Debtor under the Uniform Commercial Code of the time and
place of any public sale or the time after which any private sale or other
intended disposition of the Collateral is to be made shall be deemed to
constitute reasonable notice if such notice is given to the last known address
of Debtor at least five (5) days prior to such action.

      (d) Proceeds from any sale or lease or other disposition shall be applied:
first, to all costs of repossession, storage, and disposition including without
limitation attorneys', appraisers', and auctioneers' fees; second, to discharge
the obligations then in default; third, to discharge any other Indebtedness of
debtor to Secured Party, whether as obligor, endorser, guarantor, surety or
indemnitor; fourth, to expenses incurred in paying or settling liens and claims
against the Collateral; and lastly, to Debtor, if there exists any surplus.
Debtor shall remain fully liable for any deficiency.

      (e) Debtor agrees to pay all reasonable attorneys' fees and other costs
incurred by Secured Party in connection with the enforcement, assertion, defense
or preservation of Secured Party's rights and remedies under this Agreement, or
if prohibited by law, such lesser sum as may be permitted. Debtor further agrees
that such fees and costs shall constitute Indebtedness.

      (f) Secured Party's rights and remedies under this Agreement or otherwise
arising are cumulative and may be exercised singularly or concurrently. Neither
the failure nor any delay on the part of the Secured Party to exercise any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege preclude
any other or further exercise of that or any other right, power or privilege.
SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER SIGNED BY DEBTOR
UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY SECURED PARTY. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion.

      (g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED
HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

8. MISCELLANEOUS.

      (a) This Agreement, any Note and/or any of the other Debt Documents may be
assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor agrees not to assert against any such assignee, or assignee's assigns,
any defense, set-off, recoupment claim or counterclaim which Debtor has or may
at any time have against Secured Party for any reason whatsoever. Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. Debtor also agrees to confirm in
writing receipt of the notice of assignment as may be reasonably requested by
Secured Party or assignee.

      (b) All notices to be given in connection with this Agreement shall be in
writing, shall be addressed to the parties at their respective addresses set
forth in this Agreement (unless and until a different address may be specified
in a written notice to the other party), and shall be deemed given (i) on the
date of receipt if delivered in hand or by facsimile transmission, (ii) on the
next business day after being sent by express mail, and (iii) on the fourth
business day after being sent by regular, registered or certified mail. As used
herein, the term "business day" shall mean and include any day other than
Saturdays, Sundays, or other days on which commercial banks in New York, New
York are required or authorized to be closed.

<PAGE>

      (c) Secured Party may correct patent errors and fill in all blanks in this
Agreement or in any Collateral Schedule consistent with the agreement of the
parties.

      (d) Time is of the essence of this Agreement. This Agreement shall be
binding, jointly and severally, upon all parties described as the "Debtor" and
their respective heirs, executors, representatives, successors and assigns, and
shall inure to the benefit of Secured Party, its successors and assigns.

      (e) This Agreement and its Collateral Schedules constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior understandings (whether written, verbal or
implied) with respect to such subject matter. THIS AGREEMENT AND ITS COLLATERAL
SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT
ONLY BY A WRITING SIGNED BY BOTH PARTIES. Section headings contained in this
Agreement have been included for convenience only, and shall not affect the
construction or interpretation of this Agreement.

      (f) This Agreement shall continue in full force and effect until all of
the Indebtedness has been indefeasibly paid in full to Secured Party or its
assignee. The surrender, upon payment or otherwise, of any Note or any of the
other documents evidencing any of the Indebtedness shall not affect the right of
Secured Party to retain the Collateral for such other Indebtedness as may then
exist or as it may be reasonably contemplated will exist in the future. This
Agreement shall automatically be reinstated if Secured Party is ever required to
return or restore the payment of all or any portion of the Indebtedness (all as
though such payment had never been made).

      (g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT.

      IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.

SECURED PARTY:                                 DEBTOR:

GENERAL ELECTRIC CAPITAL CORPORATION           DISCOVERY LABORATORIES, INC.

By:    /s/ John Edel                           By:  /s/ John G. Cooper
   ----------------------------------          --------------------------------
Name:     John Edel                            Name:    John G. Cooper
Title:    SVP                                  Title:   Senior VP, CFOEXHIBIT 10.33

                                    AMENDMENT

      THIS AMENDMENT is made as of the 23 day of December 2002, between General
Electric Capital Corporation ("Secured Party") and Discovery Laboratories, Inc.
("Debtor") in connection with that certain Master Security Agreement, dated as
of December 23, 2002 ("Agreement"). The terms of this Amendment are hereby
incorporated into the Agreement as though fully set forth therein. Section
references below refer to the section numbers of the Agreement. The Agreement is
hereby amended as follows:

      1. CREATION OF SECURITY INTEREST.

      This Section I is hereby amended and replaced with the following:

      "Debtor grants to Secured Party, its successors and assigns, a security
      interest in and against all property listed on any collateral schedule now
      or in the future annexed to or made a part of this Agreement ("COLLATERAL
      SCHEDULE"), and in and against all additions, attachments, accessories and
      accessions to such property, all substitutions, replacements or exchanges
      therefor, and all insurance and/or other proceeds thereof (all such
      property is individually and collectively called the "COLLATERAL"). The
      lien is not contemplated to include intellectual property. This security
      interest is given to secure the payment and performance of all debts,
      obligations and liabilities of any kind whatsoever of Debtor to Secured
      Party, now existing or arising in the future, including but not limited to
      the payment and performance of certain Promissory Notes from time to time
      identified on any Collateral Schedule (collectively "NOTES" and each a
      "NOTE"), and any renewals, extensions and modifications of such debts,
      obligations and liabilities (such Notes, debts, obligations and
      liabilities are called the "INDEBTEDNESS")."

      3. COLLATERAL.

      Subsection (b) is hereby amended and replaced with the following:

      "(b) Debtor shall (i) use the Collateral only in its trade or business,
      (ii) maintain all of the Collateral in good operating order and repair,
      normal wear and tear excepted, (iii) use and maintain the Collateral in a
      manner that would not violate the manufacturers recommendations and all
      applicable laws, and (iv) keep all of the Collateral free and clear of all
      liens, claims and encumbrances (except for Permitted Liens)."

      4. INSURANCE.

      Subsection (b) is hereby amended and replaced with the following:

      "(b) Debtor agrees to keep the Collateral insured against loss or damage
      by fire and extended coverage perils, theft, burglary, and for any or all
      Collateral which are vehicles, for risk of loss by collision, and if
      requested by Secured Party, against such other risks as Secured Party may
      reasonably require. The insurance coverage shall be in an amount no less
      than the full replacement value of the Collateral, and deductible amounts,
      insurers and policies shall be acceptable to Secured Party. Debtor shall
      deliver to Secured Party policies or certificates of insurance evidencing
      such coverage. Each policy shall name Secured Party as a loss payee, shall
      provide for coverage to Secured Party regardless of the breach by Debtor
      of any warranty or representation made therein, shall not be subject to
      coinsurance, and shall provide that coverage may not be canceled or
      altered by the insurer except upon thirty (30) days prior written notice
      to Secured Party. Debtor appoints Secured Party as its attorney-in-fact to
      make proof of loss, claim for insurance and adjustments with insurers, and
      to receive payment of and execute or endorse all documents, checks or
      drafts in connection with insurance payments. Secured Party shall not act
      as Debtor's attorney-in-fact unless Debtor is in default. So long as
      Debtor is not in default under the Agreement, proceeds of insurance less
      than $50,000 shall be applied at the Debtor's option, to repair or replace
      the Collateral or to reduce any of the Indebtedness, otherwise insurance
      proceeds shall be applied, at the option of Secured Party, to repair or
      replace the Collateral or to reduce any of the Indebtedness."

<PAGE>

      5. REPORTS.

      Subsection (b) is hereby amended and replaced with the following:

      "(b) Debtor will deliver to Secured Party financial statements as follows.
      If Debtor is a privately held company, then Debtor agrees to provide
      monthly financial statements, certified by Debtor's president or chief
      financial officer including a balance sheet, statement of operations and
      cash flow statement within 30 days of each month end and its complete
      audited annual financial statements, certified by a recognized firm of
      certified public accountants, within 120 days of fiscal year end or at
      such time as Debtor's Board of Directors receives the audit. If Debtor is
      a publicly held company, then Debtor agrees to provide quarterly unaudited
      statements and annual audited statements, certified by a recognized firm
      of certified public accountants, within 10 days after the statements are
      provided to the Securities and Exchange Commission ("SEC"). All such
      statements are to be prepared using generally accepted accounting
      principles ("GAAP") and, if Debtor is a publicly held company, are to be
      in compliance with SEC requirements."

      7. DEFAULT AND REMEDIES.

      Subsection (a) is hereby amended and replaced with the following:

      "(a) Debtor shall be in default under this Agreement and each of the other
      Debt Documents if.

            (i) Debtor breaches its obligation to pay when due any installment
            or other amount due or coming due under any of the Debt Documents;

            (ii) Debtor, without the prior written consent of Secured Party,
            attempts to or does sell, rent, lease, license, mortgage, grant a
            security interest in, or otherwise transfer or encumber (except for
            Permitted Liens) any of the Collateral;

            (iii) Debtor breaches any of its insurance obligations under Section
            4;

            (iv) Debtor breaches any of its other obligations under any of the
            Debt Documents and fails to cure that breach within thirty (30) days
            after written notice from Secured Party;

            (v) Any warranty, representation or statement made by Debtor in any
            of the Debt Documents or otherwise in connection with any of the
            Indebtedness shall be false or misleading in any material respect;

            (vi) Any of the Collateral is subjected to attachment, execution,
            levy, seizure or confiscation in any legal proceeding or otherwise,
            or if any legal or administrative proceeding is commenced against
            Debtor or any of the Collateral, which in the good faith judgment of
            Secured Party subjects any of the Collateral to a material risk of
            attachment, execution, levy, seizure or confiscation and no bond is
            posted or protective order obtained to negate such risk;

            (vii) Debtor breaches or is in default under any other agreement
            between Debtor and Secured Party;

            (viii) Debtor or any guarantor or other obligor for any of the
            Indebtedness (collectively "GUARANTOR") dissolves, terminates its
            existence, becomes insolvent or ceases to do business as a going
            concern;

            (ix) If Debtor or any Guarantor is a natural person, Debtor or any
            such Guarantor dies or becomes incompetent;

<PAGE>

            (x) A receiver is appointed for all or of any part of the property
            of Debtor or any Guarantor, or Debtor or any Guarantor makes any
            assignment for the benefit of creditors;

            (xi) Debtor or any Guarantor files a petition under any bankruptcy,
            insolvency or similar law, or any such petition is filed against
            Debtor or any Guarantor and is not dismissed within forty-five (45)
            days;

            (xii) Debtor's improper filing of an amendment or termination
            statement relating to a filed financing statement describing the
            Collateral; or

            (xiii) There is a material adverse change in the Debtor's financial
            condition, other than changes in cash reserves in the ordinary
            course of business on a stand alone basis, as determined solely by
            Secured Party."

            (xiv) At any time during the term of this Agreement Debtor sells
            more than 50% of its equity interest in the company to another
            corporation or business or all or substantially all of its assets
            without Secured Party's prior written consent.

      TERMS USED, BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN
TO THEM IN THE AGREEMENT. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE AGREEMENT
SHALL REMAIN IN FULL FORCE AND EFFECT. IF THERE IS ANY CONFLICT BETWEEN THE
PROVISIONS OF THE AGREEMENT AND THIS AMENDMENT, THEN THIS AMENDMENT SHALL
CONTROL.

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment
simultaneously with the Agreement by signature of their respective authorized
representative set forth below.

GENERAL ELECTRIC CAPITAL CORPORATION           DISCOVERY LABORATORIES, INC.

By:    /s/ John Edel                           By:   /s/ John G. Cooper
   ---------------------------------           --------------------------------
Name:      John Edel                          Name:      John G. Cooper
Title:     SVP                                Title:     Senior VP, CFO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00050-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00050-of-00352.parquet"}]]