SUBSCRIPTION AGREEMENT

1.    This Subscription Agreement, including the Terms and Conditions for Purchase of Units attached hereto as Annex I (collectively, this “ Agreement ”) is made as of the date set forth below between the Company and the Investor.

2.    The Company has authorized the sale and issuance to certain investors of up to an aggregate of 14,000,000 units (the “ Units ”), subject to adjustment by the Company’s Board of Directors or a committee thereof, with each Unit consisting of (i) one share (the “ Share ,” collectively, the “ Shares ”) of its common stock, par value $0.001 per share (the “ Common Stock ”), and (ii) one warrant (the “ Warrant ,” collectively, the “ Warrants ”) to purchase 0.50 shares of Common Stock (and the fractional amount being the “ Warrant Rati o”), in substantially the form attached hereto as Exhibit B , for a purchase price of $0.81 per Unit (the “ Purchase Price ”).  Units will not be issued or certificated.  The Shares and Warrants are immediately separable and will be issued separately. The shares of Common Stock issuable upon exercise of the Warrants are referred to herein as the “ Warrant Shares ” and, together with the Units, the Shares and the Warrants, are referred to herein as the “Securities”).

3.    The offering and sale of the Units (the “ Offering ”) are being made pursuant to (a) an effective Registration Statement on Form S-3, No. 333-151654 (the “ Registration Statement ”) filed by the Company with the Securities and Exchange Commission (the “ Commission ”), including the Prospectus contained therein (the “ Base Prospectus ”), (b) if applicable, certain “free writing prospectuses” (as that term is defined in Rule 405 under the Securities Act of 1933, as amended (the “ Act ”)), that have been or will be filed, if required, with the Commission and delivered to the Investor on or prior to the date hereof  (the “ Issuer Free Writing Prospectus ”), containing certain supplemental information regarding the Units, the terms of the Offering and the Company   and (c) a Prospectus Supplement (the “ Prospectus Supplement ” and, together with the Base Prospectus, the “ Prospectus ”) containing only certain supplemental information regarding the Units and terms of the Offering that will be filed with the Commission and delivered to the Investor prior to the Closing.

4.    The Company and the Investor agree that the Investor will purchase from the Company and the Company will issue and sell to the Investor the Units set forth below for the aggregate purchase price set forth below.  The Units shall be purchased pursuant to the Terms and Conditions for Purchase of Units attached hereto as Annex I and incorporated herein by this reference as if fully set forth herein.  The Investor acknowledges that the Offering is not being underwritten by Lazard Capital Markets LLC (“ LCM ” or the “ Placement Agent ”) and that there is no minimum offering amount.

5.    The manner of settlement of the Shares included in the Units purchased by the Investor shall be determined by such Investor as follows ( check one ):

JPMorgan Chase Bank, N.A.

ABA # 021000021

Account Name: Discovery Laboratories, Inc.

Account Number:  N/A

Attention : Audrey Cohen

Tel: (212) 623-5078

– OR –

IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY OF DWAC OR DVP IN A TIMELY MANNER.  IF THE INVESTOR DOES NOT DELIVER THE AGGREGATE PURCHASE PRICE FOR THE UNITS OR DOES NOT MAKE PROPER ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES AND WARRANTS MAY NOT BE DELIVERED AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING ALTOGETHER .

6.    The executed Warrant shall be delivered in accordance with the terms thereof.

7.    The Investor represents that, except as set forth below, (a) it has had no position, office or other material relationship within the past three years with the Company or persons known to it to be affiliates of the Company, (b) it is not a member of the Financial Industry Regulatory Authority, Inc. or an Associated Person (as such term is defined under the NASD Membership and Registration Rules Section 1011) as of the Closing, and (c) neither the Investor nor any group of Investors (as identified in a public filing made with the Commission) of which the Investor is a part in connection with the Offering of the Units, acquired, or obtained the right to acquire, 20% or more of the Common Stock (or securities convertible into or exercisable for Common Stock) or the voting power of the Company on a post-transaction basis.  Exceptions:

8.    The Investor represents that it has received (or otherwise had made available to it by the filing by the Company of an electronic version thereof with the Commission) the Base Prospectus, dated June 18, 2008, which is a part of the Company’s Registration Statement and the documents incorporated by reference therein (collectively, the “ Disclosure Package ”), prior to or in connection with the receipt of this Agreement.  The Investor acknowledges that, prior to the delivery of this Agreement to the Company, the Investor will receive certain additional information regarding the Offering, including pricing information (the “ Offering Information ”). Such information may be provided to the Investor by any means permitted under the Act, including the Prospectus Supplement, a free writing prospectus and oral communications.

9.    No offer by the Investor to buy Units will be accepted and no part of the Purchase Price will be delivered to the Company until the Investor has received the Offering Information and the Company has accepted such offer by countersigning a copy of this Agreement, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time prior to the Company (or the Placement Agent on behalf of the Company) sending (orally, in writing or by electronic mail) notice of its acceptance of such offer.  An indication of interest will involve no obligation or commitment of any kind until the Investor has been delivered the Offering Information and this Agreement is accepted and countersigned by or on behalf of the Company.

10.    The Company acknowledges that the only material, non-public information relating to the Company it has provided to the Investor in connection with the Offering prior to the date hereof is the existence of the Offering.

1.   Authorization and Sale of the Units.   Subject to the terms and conditions of this Agreement, the Company has authorized the sale of the Units.

2.   Agreement to Sell and Purchase the Units; Placement Agent.

2.1    At the Closing (as defined in Section 3.1 ), the Company will sell to the Investor, and the Investor will purchase from the Company, upon the terms and conditions set forth herein, the number of Units set forth on the last page of the Agreement to which these Terms and Conditions for Purchase of Units are attached as Annex I (the “ Signature Page ”) for the aggregate purchase price therefor set forth on the Signature Page.

2.2    The Company anticipates that other investors (the “ Other Investors ” will participate in the Offering, and expects to complete sales of Units to them.  The Company agrees that such Other Investors will execute substantially the same form of Subscription Agreement as this Agreement.  The Investor and the Other Investors are hereinafter sometimes collectively referred to as the “ Investors ,” and this Agreement and the Subscription Agreements executed by the Other Investors are hereinafter sometimes collectively referred to as the “ Agreements .”

2.3    Investor acknowledges that the Company has agreed to pay Lazard Capital Markets LLC (“ LCM ” or the “ Placement Agent ”) a fee of six percent (6.0%) (the “ Placement Fee ”) in respect of the sale of Shares to the Investor.

2.4    The Company has entered into a Placement Agent Agreement, dated May 8, 2009 (the “ Placement Agreement ”), with the Placement Agent that contains certain representations, warranties, covenants and agreements of the Company that may be relied upon by the Investor, which shall be a third party beneficiary thereof.

3.   Closing and Delivery of the Shares, Warrants and Funds.

3.1    Closing .   The completion of the purchase and sale of the Units (the “ Closing ”) shall occur at a place and time (the “ Closing Date ”) to be specified by the Company and LCM, and of which the Investors will be notified in advance by LCM, in accordance with Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).  At the Closing, (a) the Company shall cause the Transfer Agent to deliver to the Investor the number of Shares set forth on the Signature Page registered in the name of the Investor or, if so indicated on the Investor Questionnaire attached hereto as Exhibit A , in the name of a nominee designated by the Investor, (b) the Company shall cause to be delivered to the Investor a Warrant to purchase a number of whole Warrant Shares determined by multiplying the number of Shares set forth on the signature pa