AMENDEDMENT TO CONSENT AND WAIVER
 
OF HOLDERS OF SERIES C CONVERTIBLE PREFERRED STOCK AND
SERIES E CONVERTIBLE PREFERRED STOCK
OF NOVELOS THERAPEUTICS, INC.

JULY 21, 2010
 
1.            The undersigned are (i) holders (the “Series E Holders”) of the
outstanding shares of Series E Convertible Preferred Stock, par value $.00001
per share (the “Series E Preferred Stock”) of Novelos Therapeutics, Inc. (the
“Corporation”), including the Requisite Holders (as defined in the Certificate
of Designations, Preferences and Rights of the Series E Preferred Stock (the
“Series E Certificate of Designations”)) and (ii) holders (the “Series C
Holders” and, together with the Series E Holders, the “Holders”) of the
outstanding shares of Series C 8% Cumulative Convertible Preferred Stock, par
value $.00001 per share (the “Series C Preferred Stock”) of the Corporation.
 
2.            The undersigned have previously consented to the Company’s
consummation of a public offering and sale (the “Transaction”) of certain shares
of its common stock, par value $.00001 per share (the “Common Stock”), and
warrants to purchase shares of Common Stock (the “Warrants”) pursuant to a
Consent and Waiver of Holders of Series C Convertible Preferred Stock and Series
E Convertible Preferred Stock of Novelos Therapeutics, Inc. effective as of July
6, 2010 (the “Consent and Waiver”).
 
3.            The undersigned conditioned their consent on the receipt of
certain warrants to purchase shares of Common Stock, par value $.00001 per
share, of the Corporation (the “Common stock”), and now desire to modify the
terms of such consent as set forth herein.
 
4.            Capitalized terms used but not otherwise defined herein shall have
the meanings given such terms in the Consent and Waiver.

NOW THEREFORE, the parties hereto agree as follows:

1.           Amendment.

(a)          Paragraph 3 of the Consent and Wavier is hereby amended and
restated so that it reads in its entirety as follows:

“3.           Incentive Warrants.  In consideration for the consents, waivers
and covenants of the Holders contained herein, if the Transaction is consummated
and in consideration for the foregoing, the Corporation shall issue to each
Holder, not later than the 3rd Trading Day following the consummation of the
Transaction, a warrant, substantially in the form attached as Exhibit A hereto
(collectively, the “Incentive Warrants”), to purchase a number of shares of
Common Stock equal to the product of (i) such Holder’s Pro Rata Share and (ii)
the number of shares of Common Stock issuable upon exercise of the warrants
issued to the purchasers in the Transaction, each such warrant to expire on the
fifth anniversary of the date of issuance and to have an exercise price equal to
150% of the price per unit sold in the Transaction.

 
 

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Each Holder’s “Pro Rata Share” shall be a fraction, the numerator of which is
the number of shares of Common Stock issuable upon conversion of such Holder’s
Series C Preferred Stock or Series E Preferred Stock, as applicable, as of June
30, 2010, and the denominator of which is the number of shares of Common Stock
issuable upon conversion of all outstanding Series C Preferred Stock and Series
E Preferred Stock as of June 30, 2010.

“Trading Day” shall mean a day on which quotations are published on the OTC
Bulletin Board.”

(b)         Exhibit A to the Consent and Waiver is hereby removed and replaced
by Exhibit A attached hereto.

2.           Consent and Waiver In Force.  Except as expressly modified herein,
the Consent and Waiver remains in full force and effect.

3.           Choice of Law.  This Amendment shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to conflicts
of laws principles that would result in the application of the substantive laws
of another jurisdiction. Any action brought by any party against any other party
concerning this Consent and Waiver shall be brought only in the civil or state
courts of New York or in the federal courts located in New York County. THE
PARTIES AND THE INDIVIDUALS EXECUTING THIS CONSENT AND WAIVER AND OTHER
AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH ON BEHALF OF
THE CORPORATION AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND WAIVE
TRIAL BY JURY. The prevailing party shall be entitled to recover from the other
party(ies) its reasonable attorney’s fees and costs. In the event that any
provision of this Consent and Waiver or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.

4.           Counterparts.  This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.  Counterpart signature
pages to this Amendment transmitted by facsimile transmission, by electronic
mail in “portable document format” (“.pdf”) form, or by any other electronic
means intended to preserve the original graphic and pictorial appearance of a
document, will have the same effect as physical delivery of the paper document
bearing an original signature.

[Remainder of Page Intentionally Left Blank]

 
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IN WITNESS WHEREOF the undersigned have executed this Amendment as of the date
first above written.

SERIES E HOLDERS:
         
XMARK OPPORTUNITY FUND, LTD.
 
CADUCEUS CAPITAL MASTER FUND
XMARK OPPORTUNITY FUND, L.P.
 
LIMITED
XMARK JV INVESTMENT
 
CADUCEUS CAPITAL II, L.P.
PARTNERS, LLC
 
UBS EUCALYPTUS FUND, L.L.C.
   
PW EUCALYPTUS FUND, LTD.
   
SUMMER STREET LIFE SCIENCES HEDGE FUND INVESTORS LLC

By:
/s/ Mitchell D. Kaye
   
By:
   
Name: Mitchell D. Kaye
 
Name: Samuel D. Isaly
Title: Authorized Signatory
 
Title: Managing Partner, Orbimed Advisors
Address: 90 Grove Street
 
Address: c/o OrbiMed Advisors LLC
Ridgefield, CT 06877
 
767 Third Avenue, 30th Floor
Attn: Mitchell D. Kaye
  
New York, NY 10017

KNOLL SPECIAL OPPORTUNITIES
FUND II MASTER FUND LTD.
EUROPA INTERNATIONAL, INC.

By:
   
Name: Fred Knoll
 
Title: Portfolio Manager
 
Address: c/o Knoll Capital Management
 
666 Fifth Avenue, Suite 3702
 
New York, NY 10103
 

BEACON COMPANY
 
ROSEBAY MEDICAL COMPANY, L.P.
By: Stanhope Gate Corp., its managing
 
By: Rosebay Medical Company, Inc., its
general partner
 
general partner

By:
/s/ Steven Meiklejohn
   
By:
Stephen A. Ives
 
Name: Steven Meiklejohn
 
Name: Stephen A. Ives
Title: Director
 
Title: Vice President

 
 

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SERIES C HOLDERS:

LONGVIEW FUND, LP
 
LONGVIEW EQUITY FUND, LP
     
By:
/s/ Peter T. Benz
   
By:
/s/ Peter T. Benz
 
Name: Peter T. Benz
 
Name: Peter T. Benz
Title: Manager
 
Title: Manager
Address:
 
Address:

LONGVIEW INTERNATIONAL
 
EQUITY FUND, LP
     
By:
/s/ Peter T. Benz
   
Name: Peter T. Benz
 
Title: Manager
 
Address:
 

 
 

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Agreed and accepted:
       
NOVELOS THERAPEUTICS, INC.
     
Dated:  July 21, 2010
     
By:
/s/ Harry S. Palmin
   
Name: Harry S. Palmin
 
Title: President and CEO

 
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Exhibit A
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
“COMMISSION”) OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) AND APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR (II) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.
 
Warrant No. [_]
Original Issue Date: [  ], 2010

 
NOVELOS THERAPEUTICS, INC.

FORM OF WARRANT TO PURCHASE [    ] SHARES OF
COMMON STOCK, PAR VALUE $0.00001 PER SHARE

FOR VALUE RECEIVED, _______________________ (“Warrantholder”), is entitled to
purchase, subject to the provisions of this Warrant, from NOVELOS THERAPEUTICS,
INC. a Delaware corporation (“Corporation”), at any time not later than 5:00
P.M., Eastern time, on ________________, 2015 (the “Expiration Date”), at an
exercise price per share equal to $[     ] (the exercise price in effect being
herein called the “Warrant Price”), [    ] shares (“Warrant Shares”) of the
Corporation’s Common Stock, par value $0.00001 per share (“Common Stock”).  The
number of Warrant Shares purchasable upon exercise of this Warrant and the
Warrant Price shall be subject to adjustment from time to time as described
herein.  This Warrant is one of several Warrants of like tenor issued pursuant
to that certain Consent and Waiver of Holders of Series C Convertible Preferred
Stock and Series E Convertible Preferred Stock of the Corporation dated July 6,
2010, as amended (the “Consent and Waiver”).

Section 1.       Registration.  The Corporation shall maintain books for the
transfer and registration of the Warrant.  Upon the initial issuance of this
Warrant, the Corporation shall issue and register the Warrant in the name of the
Warrantholder.

 
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Section 2.       Transfers.  As provided herein, this Warrant may be transferred
only pursuant to a registration statement filed under the Securities Act, or an
exemption from such registration.  Subject to such restrictions, the Corporation
shall transfer this Warrant from time to time upon the books to be maintained by
the Corporation for that purpose, upon surrender thereof for transfer properly
endorsed or accompanied by appropriate instructions for transfer and such other
documents as may be reasonably required by the Corporation, including, if
required by the Corporation, an opinion of its counsel to the effect that such
transfer is exempt from the registration requirements of the Securities Act, to
establish that such transfer is being made in accordance with the terms hereof,
and a new Warrant shall be issued to the transferee and the surrendered Warrant
shall be canceled by the Corporation.  Notwithstanding the foregoing, the
Warrantholder may sell, transfer, assign, pledge or otherwise dispose of the
Warrant, in whole or in part, to any of its Associated Companies or any third
party subject to, (i) compliance with all applicable securities laws and (ii)
the delivery to the Corporation of such documentation to establish that such
transfer is being made in accordance with the terms hereof, and as may be
reasonably requested by the Corporation and necessary for the Corporation to
obtain a legal opinion that such disposition may lawfully be made without
registration under the Securities Act.  “Associated Company” means, as to
Warrantholder, any person, firm, trust, partnership, corporation, company or
other entity or combination thereof, which directly or indirectly (i) controls
(ii) is controlled by or (iii) is under common control with Warrantholder.  The
terms “control” and “controlled” mean ownership of 50% or more, including
ownership by trusts with substantially the same beneficial interests, of the
voting and equity rights of such person, firm, trust, partnership, corporation,
company or other entity or combination thereof or the power to direct the
management of such person, firm, trust, partnership, corporation, company or
other entity or combination thereof.

Section 3.       Exercise of Warrant.  Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part at any time prior to
its expiration upon surrender of the Warrant, together with delivery of the duly
executed Warrant exercise form attached hereto as Appendix A (the “Exercise
Agreement”) and payment by cash, certified check or wire transfer of funds for
the aggregate Warrant Price for that number of Warrant Shares then being
purchased, to the Corporation during normal business hours on any Business Day
at the Corporation’s principal executive offices (or such other office or agency
of the Corporation as it may designate by notice to the holder hereof); provided
that this Warrant shall not be exercisable at any time prior to the
effectiveness of the Amendment (as defined in the Consent and Waiver).  The
Warrant Shares so purchased shall be deemed to be issued to the holder hereof or
such holder’s designee, as the record owner of such shares, as of the close of
business on the date on which this Warrant shall have been surrendered (or
evidence of loss, theft or destruction thereof and security or indemnity
satisfactory to the Corporation), the Warrant Price shall have been paid and the
completed Exercise Agreement shall have been delivered.  Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding three (3) Business Days, after this
Warrant shall have been so exercised.  The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder.  If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Corporation shall, at its expense, at the
time of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.  If (1) a certificate representing the Warrant Shares
is not delivered to the Warrantholder within three (3) Business Days of the due
exercise of this Warrant by the Warrantholder and (2) prior to the time such
certificate is received by the Warrantholder, the Warrantholder, or any third
party on behalf of the Warrantholder or for the Warrantholder’s account,
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Warrantholder of shares represented by
such certificate (a “Buy-In”), then the Corporation shall pay in cash to the
Warrantholder (for costs incurred either directly by such Warrantholder or on
behalf of a third party) the amount by which the total purchase price paid for
Common Stock as a result of the Buy-In (including brokerage commissions, if any)
exceeds the proceeds received by such Warrantholder as a result of the sale to
which such Buy-In relates.  The Warrantholder shall provide the Corporation
written notice indicating the amounts payable to the Warrantholder in respect of
the Buy-In.

Section 4.       Compliance with the Securities Act of 1933. The Corporation may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant, unless counsel for the Corporation is of the opinion as to any
such security that such legend is unnecessary.

 
 

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Section 5.       Payment of Taxes.  The Corporation will pay any documentary
stamp taxes attributable to the initial issuance of Warrant Shares issuable upon
the exercise of the Warrant; provided, however, that the Corporation shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificates for Warrant
Shares in a name other than that of the registered holder of this Warrant in
respect of which such shares are issued, and in such case, the Corporation shall
not be required to issue or deliver any certificate for Warrant Shares or any
Warrant until the person requesting the same has paid to the Corporation the
amount of such tax or has established to the Corporation’s reasonable
satisfaction that such tax has been paid.  The holder shall be responsible for
income taxes due under federal, state or other law, if any such tax is due.

Section 6.       Mutilated or Missing Warrants.  In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Corporation shall issue in exchange
and substitution of and upon cancellation of the mutilated Warrant, or in lieu
of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Corporation of such
loss, theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Corporation.

Section 7.       Reservation of Common Stock.  Subject to Section 4 of the
Consent and Waiver, the Corporation hereby represents and warrants that there
have been reserved, and the Corporation shall at all applicable times keep
reserved until issued (if necessary) as contemplated by this Section 7, out of
the authorized and unissued shares of Common Stock, 100% of the number of shares
issuable upon exercise of the rights of purchase represented by this
Warrant.  The Corporation agrees that all Warrant Shares issued upon due
exercise of the Warrant shall be, at the time of delivery of the certificates
for such Warrant Shares, duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock of the Corporation.

Section 8.       Adjustments.  Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.

(a)    If the Corporation shall, at any time or from time to time while this
Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its outstanding shares of
Common Stock into a smaller number of shares or issue by reclassification of its
outstanding shares of Common Stock any shares of its capital stock (including
any such reclassification in connection with a consolidation or merger in which
the Corporation is the continuing corporation), then the number of Warrant
Shares purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Corporation so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been fully exercised immediately prior to such event upon
payment of a Warrant Price that has been adjusted to reflect a fair allocation
of the economics of such event to the Warrantholder.  Such adjustments shall be
made successively whenever any event listed above shall occur.

(b)    If any capital reorganization, reclassification of the capital stock of
the Corporation, consolidation or merger of the Corporation with another
corporation in which the Corporation is not the survivor, or sale, transfer or
other disposition of all or substantially all of the Corporation’s assets to
another corporation shall be effected, then, the Corporation shall use its best
efforts to ensure that lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise
thereof.  The Corporation shall not effect any such consolidation, merger, sale,
transfer or other disposition unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Corporation)
resulting from such consolidation or merger, or the corporation purchasing or
otherwise acquiring such assets or other appropriate corporation or entity shall
assume the obligation to deliver to the holder of the Warrant, at the last
address of such holder appearing on the books of the Corporation, such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase, and the other obligations under this
Warrant.  The provisions of this Section 8(b) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales,
transfers or other dispositions.

 
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(c)    In case the Corporation shall fix a payment date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Corporation is
the continuing corporation) of evidences of indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends or distributions referred to in Section 8(a)), or
subscription rights or warrants, the Company shall provide notice to the
Warrantholder at least 10 days in advance of the fixing of such payment date and
the Warrantholder may elect to exercise this Warrant in whole or in part prior
to such payment date in accordance with Section 3 hereof.

(d)    For the term of this Warrant, in addition to the provisions contained
above, the Warrant Price shall be subject to adjustment as provided below. An
adjustment to the Warrant Price shall become effective immediately after the
payment date in the case of each dividend or distribution and immediately after
the effective date of each other event which requires an adjustment.

(e)    In the event that, as a result of an adjustment made pursuant to this
Section 8, the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Corporation other than shares of Common Stock,
the number of such other shares so receivable upon exercise of this Warrant
shall be subject thereafter to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Warrant.

Section 9.       Fractional Interest.  The Corporation shall not be required to
issue fractions of Warrant Shares upon the exercise of this Warrant.  If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 9, be deliverable upon such exercise, the Corporation,
in lieu of delivering such fractional share, shall pay to the exercising holder
of this Warrant an amount in cash equal to the Market Price of such fractional
share of Common Stock on the date of exercise.

Section 10.     Benefits.  Nothing in this Warrant shall be construed to give
any person, firm or corporation (other than the Corporation and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Corporation
and the Warrantholder.

Section 11.     Notices to Warrantholder.  Upon the happening of any event
requiring an adjustment of the Warrant Price, the Corporation shall promptly
give written notice thereof to the Warrantholder at the address appearing in the
records of the Corporation, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.  Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject
adjustment.

Section 12.     Identity of Transfer Agent.  The Transfer Agent for the Common
Stock is American Stock Transfer & Trust Company.  Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the
Corporation’s capital stock issuable upon the exercise of the rights of purchase
represented by the Warrant, the Corporation will mail to the Warrantholder a
statement setting forth the name and address of such transfer agent.

Section 13.     Notices.  Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or facsimile, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one day after delivery to
such carrier.  All notices shall be addressed as follows: if to the
Warrantholder, at its address as set forth in the Corporation’s books and
records and, if to the Corporation, at the address as follows, or at such other
address as the Warrantholder or the Corporation may designate by ten days’
advance written notice to the other:

 
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If to the Corporation:

Novelos Therapeutics, Inc.
One Gateway Center, Suite 504
Newton, MA 02458
Attention:  Chief Executive Officer
Fax:  (617) 964-6331

With a copy to:

Foley Hoag LLP
Seaport World Trade Center West
155 Seaport Boulevard
Boston, MA 02210
Attn:  Paul Bork
Fax:  (617) 832-7000

Section 14.     Registration Rights.  The Warrantholder is entitled to the
benefit of certain registration rights with respect to the shares of Common
Stock issuable upon the exercise of this Warrant as provided in the Consent and
Waiver, and any subsequent holder hereof shall be entitled to such rights.

Section 15.     Successors.  All the covenants and provisions hereof by or for
the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.

Section 16.     Governing Law.  This Warrant shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without
reference to the choice of law provisions thereof.  The Corporation and, by
accepting this Warrant, the Warrantholder, each irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to
or arising out of this Warrant and the transactions contemplated
hereby.  Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this Warrant.  The
Corporation and, by accepting this Warrant, the Warrantholder, each irrevocably
consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court.  The Corporation and, by
accepting this Warrant, the Warrantholder, each irrevocably waives any objection
to the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.  THE
CORPORATION AND THE WARRANTHOLDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATING TO OR ARISING OUT OF THIS WARRANT
AND THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 17.     No Rights as Shareholder.  Prior to the exercise of this
Warrant, the Warrantholder shall not have or exercise any rights as a
shareholder of the Corporation by virtue of its ownership of this Warrant.

Section 18.     Cashless Exercise.  If, at any time after the six-month
anniversary of the Original Issue Date, there is no effective registration
statement covering all or any part of the Warrant Shares filed under the
Securities Act, the Warrantholder may elect to receive, without the payment by
the Warrantholder of the aggregate Warrant Price in respect of the shares of
Common Stock to be acquired upon exercise hereof, shares of Common Stock equal
to the value of this Warrant or any portion hereof being exercised pursuant to
this Section 18 by the surrender of this Warrant (or such portion of this
Warrant being so exercised) together with the Net Issue Election Notice annexed
hereto as Appendix B duly executed, at the office of the
Corporation.  Thereupon, and in no event later than three (3) Business Days
after the Corporation’s receipt of the Net Issue Election Notice, the
Corporation shall issue to the Warrantholder certificate(s) for such number of
fully paid, validly issued and nonassessable shares of Common Stock as is
computed using the formula immediately below.  The certificates so delivered
shall be in such denominations as may be requested by the holder hereof and
shall be registered in the name of such holder or such other name as shall be
designated by such holder.  If this Warrant shall have been exercised only in
part, then, unless this Warrant has expired, the Corporation shall, at its
expense, at the time of delivery of such certificates, deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.

 
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X = Y (A - B)
       A
where                      

X =           the number of shares of Common Stock to be issued to the
Warrantholder upon exercise of this Warrant pursuant to this Section 18;

Y =           the total number of shares of Common Stock covered by this Warrant
which the Warrantholder has surrendered at such time for cashless exercise
(including both shares to be issued to the Warrantholder and shares to be
canceled as payment therefor);

A =           the Market Price of one share of Common Stock as at the time the
net issue election is made; and

B =           the Warrant Price in effect under this Warrant at the time the net
issue election is made.

The Warrant Shares issued pursuant to this Section 18 shall be deemed to be
issued to the exercising holder or such holder’s designee, as the record owner
of such shares, as of the close of business on the date on which the Net Issue
Election Notice shall have been surrendered (or evidence of loss, theft or
destruction thereof and security or indemnity satisfactory to the Corporation)
to the Corporation.  Notwithstanding the foregoing, this Warrant shall not be
exercisable at any time prior to the effectiveness of the Amendment (as defined
in the Consent and Waiver).

“Market Price” as of a particular date (the “Valuation Date”) shall mean the
following: (a) if the Common Stock is then listed on a national stock exchange,
the Market Price shall be the closing sale price of one share of Common Stock on
such exchange on the last trading day prior to the Valuation Date, provided that
if such stock has not traded in the prior ten (10) trading sessions, the Market
Price shall be the average closing price of one share of Common Stock in the
most recent ten (10) trading sessions during which the Common Stock has traded;
(b) if the Common Stock is then included in the OTC Bulletin Board (the
“OTCBB”), the Market Price shall be the closing sale price of one share of
Common Stock on the OTCBB on the last trading day prior to the Valuation Date
or, if no such closing sale price is available, the average of the high bid and
the low ask price quoted on the OTCBB as of the end of the last trading day
prior to the Valuation Date, provided that if such stock has not traded in the
prior ten (10) trading sessions, the Market Price shall be the average closing
price of one share of Common Stock in the most recent ten (10) trading sessions
during which the Common Stock has traded, (c) if the Common Stock is then
included in the “pink sheets,” the Market Price shall be the closing sale price
of one share of Common Stock on the “pink sheets” on the last trading day prior
to the Valuation Date or, if no such closing sale price is available, the
average of the high bid and the low ask price quoted on the “pink sheets” as of
the end of the last trading day prior to the Valuation Date, provided that if
such stock has not traded in the prior ten (10) trading sessions, the Market
Price shall be the average closing price of one share of Common Stock in the
most recent ten (10) trading sessions during which the Common Stock has
traded.  The Board of Directors of the Corporation shall respond promptly, in
writing, to an inquiry by the Warrantholder prior to the exercise hereunder as
to the Market Price of a share of Common Stock as determined by the Board of
Directors of the Corporation.

 
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Section 19.      Restrictions on Exercise of Warrant.

(a) Notwithstanding anything herein to the contrary, in no event shall the
Warrantholder be entitled to exercise any portion of the Warrant per Section 3
so held by such Warrantholder in excess of that portion upon exercise of which
the sum of (1) the number of shares of Common Stock beneficially owned by such
Warrantholder and its Associated Companies (other than shares of Common Stock
which may be deemed beneficially owned through ownership of the unexercised
Warrant or portion thereof or the unexercised or unconverted portion of any
other security of the Warrantholder subject to a limitation on exercise
analogous to the limitations contained herein) and (2) the number of shares of
Common Stock issuable upon the exercise of that portion of the Warrant with
respect to which the determination of this proviso is being made, would result
in beneficial ownership by such Warrantholder and its Associated Companies of
any amount greater than 4.99% of the then outstanding shares of Common Stock
(whether or not, at the time of such conversion, the Warrantholder and its
Associated Companies beneficially own more than 4.99% of the then outstanding
shares of Common Stock).  The waiver by the Warrantholder of any limitation
contained in an option or convertible security now or hereafter held by such
holder that is similar or analogous to the limitations set forth in this Section
19(a) shall not be deemed a waiver or otherwise effect the limitation set forth
in this Section 19(a), unless such waiver expressly states it is a waiver of the
provisions of this Section 19(a).  For purposes of this Section 19(a),
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulations 13D-G thereunder,
except as otherwise provided in clause (1) of such proviso.  The Warrantholder
may waive the limitations set forth herein by sixty-one (61) days written notice
to the Corporation or immediately preceding a Change of Control of the
Corporation.  For purposes of Sections 19(a) and 19(b), the term “Change of
Control” shall mean (1) any sale, lease or other transfer of substantially all
of the Corporation’s assets, in one or a series of transactions; (2) any merger,
consolidation or similar business combination transaction, in which the
Corporation is not the survivor or, if the Corporation is the survivor, then
only if the holders of a majority of the Common Stock outstanding immediately
before such transaction cease to own a majority of the Common Stock immediately
after the transaction; (3) if one or a series of events, any change in the
majority of the members of the Corporation’s Board of Directors (the “Board”),
unless the replacement directors were nominated by the majority of the Board
immediately preceding such change; and (4) if any person or entity (other than
Purdue) shall acquire or become the “beneficial owner” (as that term is defined
in Rule 13d-3 of the Exchange Act) of more than 50% of the Corporation’s
outstanding stock.

(b)  Notwithstanding anything herein to the contrary, in no event shall the
Warrantholder be entitled to exercise any portion of the Warrant per Section 3
so held by such Warrantholder in excess of that portion upon exercise of which
the sum of (1) the number of shares of Common Stock beneficially owned by such
Warrantholder and its Associated Companies (other than shares of Common Stock
which may be deemed beneficially owned through ownership of the unexercised
Warrant or portion thereof or the unexercised or unconverted portion of any
other security of the Warrantholder subject to a limitation on exercise
analogous to the limitations contained herein) and (2) the number of shares of
Common Stock issuable upon the exercise of that portion of the Warrant with
respect to which the determination of this proviso is being made, would result
in beneficial ownership by such Warrantholder and its Associated Companies of
any amount greater than 9.99% of the then outstanding shares of Common Stock
(whether or not, at the time of such conversion, the Warrantholder and its
Associated Companies beneficially own more than 9.99% of the then outstanding
shares of Common Stock).  The waiver by the Warrantholder of any limitation
contained in an option or convertible security now or hereafter held by such
holder that is similar or analogous to the limitations set forth in this Section
19(b) shall not be deemed a waiver or otherwise effect the limitation set forth
in this Section 19(b), unless such waiver expressly states it is a waiver of the
provisions of this Section 19(b).  For purposes of this Section 19(b),
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulations 13D-G thereunder,
except as otherwise provided in clause (1) of such proviso.  The Warrantholder
may waive the limitations set forth herein by sixty-one (61) days written notice
to the Corporation or immediately preceding a Change of Control of the
Corporation.

Section 20.     Amendments.  This Warrant shall not be amended without the prior
written consent of the Corporation and the Warrantholder.

Section 21.     Section Headings.  The section headings in this Warrant are for
the convenience of the Corporation and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.

 
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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed,
as of the [     ] day of [   ], 2010.

 
NOVELOS THERAPEUTICS, INC.
     
By:
     
Name:
Harry S. Palmin
 
Title:
President and CEO

 
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APPENDIX A
NOVELOS THERAPEUTICS, INC.
WARRANT EXERCISE FORM

To: NOVELOS THERAPEUTICS, INC.

The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant (“Warrant”) for, and to purchase thereunder by
the payment of the Warrant Price and surrender of the Warrant, _______________
shares of Common Stock (“Warrant Shares”) provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:

       
Name
         
Address
               
Federal Tax ID or Social Security No.
 

and delivered by

q              certified mail to the above address, or
q              electronically (provide DWAC Instructions:___________________),
or
q              other (specify: __________________________________________).

and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares purchasable upon exercise of this Warrant be registered in
the name of the undersigned Warrantholder or the undersigned’s Assignee as below
indicated and delivered to the address stated below.

Dated: ___________________, ____

Note:  The signature must correspond with
   
the name of the registered holder as written
 
Signature:______________________
on the first page of the Warrant in every
 
______________________________
particular, without alteration or enlargement
 
Name (please print)
or any change whatever, unless the Warrant
   
has been assigned.
 
______________________________
   
______________________________
   
Address
   
______________________________
   
Federal Identification or
   
Social Security No.
         
Assignee:
   
_______________________________
   
_______________________________
   
_______________________________

 

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APPENDIX B
NOVELOS THERAPEUTICS, INC.
NET ISSUE ELECTION NOTICE

To: NOVELOS THERAPEUTICS, INC.

Date:_________________________

The undersigned hereby elects under Section 18 of the Warrant to surrender the
right to purchase ____________ shares of Common Stock pursuant to this Warrant
and hereby requests the issuance of _____________ shares of Common Stock.  The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below.

       
Signature
               
Name for Registration
               
Mailing Address
 

 

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