NOTE AND COMMON STOCK PURCHASE AGREEMENT
 
THIS NOTE AND COMMON STOCK PURCHASE AGREEMENT is dated effective as of November
11, 2009 (the "Effective Date") by and between Protalex, Inc., a Delaware
corporation with its principal office at 145 Union Square Drive, New Hope, PA
18938 (the "Company"), and the several purchasers identified on Exhibit A
attached hereto (individually, a "Purchaser" and collectively, the
"Purchasers").
 
NOW, THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants herein contained, the parties hereto agree as follows:
 
1.           Definitions.  As used in this Agreement, the following terms shall
have the following respective meanings:
 
(a)           "Affiliate" of a party means any corporation or other business
entity controlled by, controlling or under common control with such party.  For
this purpose "control" shall mean direct or indirect beneficial ownership of
fifty percent (50%) or more of the voting or income interest in such corporation
or other business entity.
 
(b)           "Agreement" means this Note and Common Stock Purchase Agreement.
 
(c)           “Exchange Act" means the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
 
(d)           "Closing Date" means the date of the sale and purchase of the
Notes and Common Stock acquired hereunder.
 
(e)           "Operative Agreements" shall mean the Notes and the Security
Agreement, together with this Agreement.
 
(f)           "SEC" shall mean the Securities and Exchange Commission.
 
(g)           “Security Agreement” shall mean that certain Security Agreement of
even date herewith by and among the Company and the secured party named therein
in form and substance attached hereto as Exhibit C.
 
(h)           "Securities Act" shall mean the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
 
2.           Purchase and Sale of Shares.
 
2.1           Purchase and Sale.  Subject to and upon the terms and conditions
set forth in this Agreement (including but not limited to the conditions
precedent set forth in Section 5 below), the Company agrees to issue and sell to
each Purchaser, and each Purchaser, jointly and severally, hereby agrees to
purchase from the Company, at the Closing (as defined below), the number of
shares of Common Stock set forth opposite the name of such Purchaser under the
heading "Number of Shares to be Purchased" on Exhibit A hereto, at a purchase
price of $0.046 per share.  The total purchase price payable by each Purchaser
for the number of shares of Common Stock that such Purchaser is hereby agreeing
to purchase is set forth opposite the name of such Purchaser under the heading
"Purchase Price" on Exhibit A hereto.
 
 
 

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2.2           In addition, subject to the terms and conditions of this
Agreement, each Purchaser agrees, jointly and severally, to purchase and the
Company agrees to sell and issue to each Purchaser, a Three-year Secured
Convertible Promissory Note (the "Note") in the principal amount set forth
opposite the name of such Purchaser under the heading "Loan Amount" on Exhibit A
in form and substance attached hereto as Exhibit B convertible into shares of
the Company's Common Stock at an initial conversion price equal to $0.046 per
share of the amount so converted (the "Conversion Price"). The Notes shall be a
secured obligation of the Company as provided for in the Security Agreement.  No
fractional shares shall be issued under the Notes (any fractional shares shall
be rounded down to the nearest whole number).
 
2.3           The shares of Common Stock sold to the Purchasers pursuant to this
Agreement are hereinafter referred to as the “Shares.”  The Notes to purchase
Common Stock sold hereunder are hereinafter referred to as the “Notes.” The
total amount of Common Stock and other securities issuable upon conversion of
the Notes are hereinafter referred to as the “Conversion Stock.”  The Shares,
the Notes and the Conversion Stock are hereinafter collectively referred to as
the “Securities.”
 
2.4           Closing. The initial purchase and sale of the Shares and Notes
shall take place at the offices of Morse Zelnick Rose & Lander, LLP, 405 Park
Avenue, Suite 1401, New York, NY at 10:00 A.M., effective as of the Effective
Date, or at such other time and place as the Company and the Purchasers in their
absolutely discretion shall mutually agree upon (which time and place are
designated as the “Closing”).  At the Closing, the Company shall deliver to each
Purchaser purchasing Shares and Notes a certificate representing the Shares and
a corresponding Note and Security Agreement, registered in the name of such
Purchaser, which such Purchaser is purchasing against delivery to the Company by
such Purchaser of a cashiers check or wire transfer in the aggregate amount of
the Purchase Price and Loan Amount therefor, respectively, payable to the
Company's order.
 
3.           Representations and Warranties of the Company.  Except as otherwise
described in the Disclosure Schedule attached hereto or the SEC Documents (as
defined below), including any documents incorporated by reference therein or
exhibits referenced or attached thereto, the Company hereby represents and
warrants to each of the Purchasers as of the Closing the following:
 
3.1           Incorporation.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business and is in good standing in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification, except where the failure to so qualify
would not have a material adverse effect on the business, condition (financial
or otherwise) or prospects of the Company ("Material Adverse Effect").  The
Company does not have any material subsidiaries other than those identified in
the SEC Documents (as defined below).  Except for short-term investments and
investments that are not material to the Company, the Company does not own any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, partnership, limited
liability company, joint venture, association or other entity.  Complete and
correct copies of the certificate of incorporation (the "Certificate of
Incorporation") and bylaws (the "Bylaws") of the Company as in effect on the
Effective Date have been filed by the Company with the SEC.  The Company has all
requisite corporate power and authority to carry on its business as now
conducted.
 
 
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3.2           Capitalization.
 
(a)           The authorized capital stock of the Company consists of (i) 
100,000,000 shares of Common Stock, of which 28,600,464 shares are outstanding
on the Effective Date.  The outstanding shares of capital stock of the Company
have been duly and validly issued and are fully paid and nonassessable, have
been issued in material compliance with all federal and state securities laws,
and were not issued in violation of any preemptive or similar rights to
subscribe for or purchase securities.
 
(b)           A list of all outstanding options to purchase shares of Common
Stock or other equity awards issued to employees and consultants of the Company
pursuant to the employee benefits plans or otherwise, which includes number of
shares covered, exercise prices and expiration dates, is set forth in Section
3.2(b) of the Disclosure Schedule.  None of such options provides for exercise
on a “cashless” or “net-issuance” basis.
 
(c)           A list of all outstanding warrants to purchase shares of Common
Stock or other equity securities of the Company, as adjusted to reflect the
transactions contemplated by this Agreement, which includes number of shares
covered, exercise prices and expiration dates of each such agreement, is set
forth in Section 3.2(c) of the Disclosure Schedule.
 
(d)           There are no existing options, warrants, calls, preemptive (or
similar) rights, subscriptions or other rights, agreements, arrangements or
commitments of any character obligating the Company to issue, transfer or sell,
or cause to be issued, transferred or sold, any shares of the capital stock of
the Company or other equity interests in the Company or any securities
convertible into or exchangeable for such shares of capital stock or other
equity interests, and there are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of its capital
stock or other equity interests.  There are no voting agreements or other
similar arrangements with respect to the Common Stock to which the Company is a
party.  The Company has not adopted a stockholder rights plan or similar
arrangement relating to accumulations of beneficial ownership of Common Stock or
a change in control of the Company.  The Company does not maintain any pension
benefit plan, or other retirement plan, subject to the Employee Retirement
Income Security Act.
 
3.3           Authorization.  All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution, delivery and performance of the Operative Agreements and the
consummation of the transactions contemplated therein has been taken.  When
executed and delivered by the Company, each of the Operative Agreements shall
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such may be limited
by bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally and by general equitable principles.  The Company has all
requisite corporate power to enter into the Operative Agreements and to carry
out and perform its obligations under the terms of the Operative Agreements.
 
 
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3.4           Valid Issuance of the Shares.  The Shares being purchased by the
Purchasers hereunder and the Conversion Stock upon conversion of the Notes will,
upon issuance pursuant to the terms hereof and thereof, be duly authorized and
validly issued, fully paid and nonassessable.  No preemptive rights or other
rights to subscribe for or purchase the Company's capital stock exist with
respect to the issuance and sale of the Securities by the Company pursuant to
this Agreement.  As of the Effective Date, except as contemplated in the Notes,
no further approval or authority of the stockholders or the Board of Directors
of the Company shall be required for the issuance and sale of the Securities by
the Company, as contemplated in the Operative Agreements. The Shares, Notes and
Conversion Stock issuable upon conversion of the Notes will, upon issuance
pursuant to the terms hereof and thereof, be free and clear from any security
interest, pledge, mortgage, lien (statutory or other), charge, option to
purchase, lease or otherwise acquire any interest or any claim, restriction or
covenant, title defect, hypothecation, assignment, deposit arrangement or other
encumbrance of any kind or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement).
 
3.5           Financial Statements.  As of their respective dates, the financial
statements of the Company included in the SEC Documents (as defined in Section
3.6 below) complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto.  Such financial statements have been prepared in accordance
with generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as permitted pursuant to Regulation G promulgated
under the Exchange Act, or (ii) in the case of unaudited interim financial
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year end audit adjustments).  Except as set
forth in the subset of SEC Documents filed and publicly available beginning with
the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2009
and prior to the date hereof, since August 31, 2009, (a) there has been no
event, occurrence or development that has had or could result in a Material
Adverse Effect, (b) the Company has not incurred any liabilities (contingent or
otherwise) other than (x) liabilities incurred in the ordinary course of
business consistent with past practice and (y) liabilities not required to be
reflected in the Company’s financial statements pursuant to generally accepted
accounting principals or required to be disclosed in filings made with the SEC,
(c) the Company has not altered its method of accounting or the identity of its
auditors and (d) the Company has not declared or made any payment or
distribution of cash or other property to its stockholders or officers or
directors (other than in compliance with existing Company stock option plans)
with respect to its capital stock, or purchased, redeemed (or made any
agreements to purchase or redeem) any shares of its capital stock.  As of the
Closing Date, the Company’s current working capital was equal to no less than
$435,000.00, where current working capital consists of current assets (cash,
cash equivalents, and accounts receivables) minus current liabilities inclusive
of accounts payable, accrued expenses, severance obligations, and future
rent/lease obligations.
 
3.6           SEC Documents.  The Company has filed all reports, schedules,
forms, statements (collectively, and in each case including all exhibits,
financial statements and schedules thereto and documents incorporated by
reference therein and including all registration statements and prospectuses
filed with the SEC) required to be filed by it with the SEC through the Closing
Date, and the Company will file, on a timely basis, all similar documents with
the SEC during the period commencing on the date hereof and ending on the
Closing Date (all of the foregoing being hereinafter referred to as the “SEC
Documents”).  As of their respective dates, the SEC Documents complied or will
comply in all material respects with the requirements of the Securities Act, the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, contained or
will contain any untrue statement of a material fact or omitted or will omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading, as of their respective filing dates.
 
 
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3.7           Consents.  Except for stockholder approval as contemplated in the
Notes, all consents, approvals, orders and authorizations required on the part
of the Company in connection with the execution, delivery or performance of the
Operative Agreements and the consummation of the transactions contemplated
therein have been obtained and will be effective as of the Closing Date.
 
3.8           No Conflict.  The execution and delivery the Operative Agreements
by the Company and the consummation of the transactions contemplated thereby
will not conflict with or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the Certificate of Incorporation or Bylaws of
the Company, (ii) any material bond, debenture, note or other evidence of
indebtedness, or any material lease, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture, franchise, license or other agreement or
instrument to which the Company is a party or by which it or its property is
bound or (iii) any judgment, order, statute, law, ordinance, rule or
regulations, applicable to the Company or its respective properties or assets.
 
3.9           Brokers or Finders.  The Company has not dealt with any broker or
finder in connection with the transactions contemplated by this Agreement or
incurred any liability for any brokerage or finders' fees or agent’s commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
 
3.10         Nasdaq Stock Market.  The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is quoted on the Nasdaq Stock Market
Over-the-Counter Bulletin Board ("OTCBB") under the ticker symbol
"PRTX.OB."  The Company has taken no action designed to remove, or which, to the
Company's knowledge, is likely to have the effect of, suspending or terminating
the quotation of the Common Stock on the OTCBB.  The Company shall comply with
all requirements, if any, of the Financial Industry Regulatory Authority
(“FINRA") with respect to the issuance of the Shares and Conversion Stock and
the quoting of the Shares and Conversion Stock (when issued) on the OTCBB.
 
3.11         Absence of Litigation.  There is no action, suit or proceeding or,
to the Company's knowledge, any investigation, pending, or to the Company's
knowledge, threatened by or before any court, governmental body or regulatory
agency against the Company, or any of its assets.  The Company has not received
any written or oral notification of, or request for information in connection
with, any formal or informal inquiry, investigation or proceeding from the SEC
or the FINRA.  The foregoing includes, without limitation, any such action,
suit, proceeding or investigation that questions the Operative Agreements or the
right of the Company to execute, deliver and perform under same.

 
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3.12         Intellectual Property.
 
(a)           To the knowledge of the Company, the Company has ownership of or
license or legal right to use all patents, copyrights, trade secrets,
trademarks, domain names, customer lists, designs, manufacturing or other
processes, computer software, systems, data compilations, research results and
other intellectual property or proprietary rights (collectively, "Intellectual
Property") used in the business of the Company and material to the Company. The
Company knows of no reason why its patent applications do not or would not
comply with any statutory or legal requirements or would not issue into valid
and enforceable patents.
 
(b)           To the Company's knowledge, there is no material default by the
Company under any material licenses or other material agreements under which (i)
the Company is granted rights in Intellectual Property or (ii) the Company has
granted rights to others in Intellectual Property owned or licensed by the
Company.  There are no outstanding or threatened claims, disputes or
disagreements with respect to any such licenses or agreements.
 
(c)           To the knowledge of the Company, the present business, activities
and products of the Company do not infringe or misappropriate any Intellectual
Property of any third party.  The Company has not been notified that any
proceeding charging the Company with infringement or misappropriation of any
Intellectual Property held by any third party has been filed.  To the Company's
knowledge, there exists no patent held by any third party which includes claims
that would be infringed by the Company in the conduct of its business as
currently conducted where such infringement would have a Material Adverse
Effect.  To the knowledge of the Company, the Company is not making unauthorized
use of any confidential information or trade secrets of any third
party.  Neither the Company nor, to the knowledge of the Company, any of its
employees have any agreements or arrangements with any persons other than the
Company restricting the Company's or any such employee's engagement in business
activities that are material aspects of the Company's business as currently
conducted.
 
(d)           None of the Intellectual Property owned or, to the Company's
knowledge, licensed by the Company that is used in the business of the Company
and material to the Company, is subject to any outstanding judgment or order,
and no action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand is pending or, to the knowledge of the Company, threatened,
which challenges the validity, enforceability, scope, use, or ownership of, or
otherwise relates to, any such Intellectual Property anywhere in the world. No
Patent has been or is now involved in any interference, reissue, reexamination,
opposition, or other proceeding.
 
(e)           Each past employee of the Company has executed a confidential
information and invention assignment agreement in the form made available to
Purchasers.  No such employee has excluded works or inventions made prior to his
or her employment with the Company from his or her assignment of inventions
pursuant to such employee's confidential information and invention assignment
agreement, which works or inventions are necessary to the business of the
Company as it is proposed to be conducted.  Each consultant to the Company has
entered into an agreement containing appropriate confidentiality and invention
assignment provisions, in the form acceptable to Purchasers.  The Company does
not believe it is or will be necessary to utilize any inventions, trade secrets
or proprietary information of any of its employees made prior to their
employment by the Company, except for inventions, trade secrets or proprietary
information that have been assigned to the Company.

 
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3.13         Offering. The Company has not in the past nor will it hereafter
take any action to sell, offer for sale or solicit offers to buy any securities
of the Company which would require the offer, issuance or sale of the
Securities, as contemplated by this Agreement, to be registered under Section 5
of the Securities Act.
 
3.14         Investment Company. The Company is not and, after giving effect to
the offering and sale of the Shares and the Notes, will not be required to
register as, an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.
 
3.15         No Manipulation of Stock. The Company has not taken and will not,
in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price
of the Common Stock.
 
3.16         No Violations. The Company is not in violation of its Certificate
of Incorporation, Bylaws or other organizational documents, or in violation of
any law, administrative regulation, ordinance or order of any court or
governmental agency, arbitration panel or authority applicable to the Company,
which violation, individually or in the aggregate, would be reasonably expected
to have a Material Adverse Effect, or is not in default (and there exists no
condition which, with the passage of time or otherwise, would constitute a
default) in the performance of any material bond, debenture, note or any other
evidence of indebtedness in any indenture, mortgage, deed of trust or any other
material agreement or instrument to which the Company is a party or by which the
Company is bound or by which the property of the Company is bound, which would
be reasonably expected to have a Material Adverse Effect.
 
3.17         Accountants.  Grant Thornton, LLP, who issued their report with
respect to the financial statements in the Company's Annual Report on Form 10-K
for the year ended May 31, 2009 are an independent registered public accounting
firm as required by the Securities Act.
 
3.18         Taxes.  The Company has filed all necessary federal, state and
foreign income and franchise tax returns, including for the period ended May 31,
2009, and has paid or accrued all taxes shown as due thereon, and the Company
has no knowledge of a tax deficiency which has been or might be asserted or
threatened against it which would have a Material Adverse Effect
 
3.19         Title.  The Company has good and marketable title to all real
property and good and marketable title to all personal property owned by it
which is material to the business of the Company, in each case free and clear of
all encumbrances and defects, except such as do not have a Material Adverse
Effect.  Any facilities and items of equipment held under lease by the Company
are held by it under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such facilities and items of equipment by the Company.
The Company is in compliance with all material terms of each lease to which it
is a party or is otherwise bound.
 
3.20         Foreign Corrupt Practices.  To the knowledge of the Company,
neither the Company, nor any director, officer, agent, employee or other person
acting on behalf of the Company, has in the course of its actions for, or on
behalf of, the Company, used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity;
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or made any unlawful bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or
employee.
 
 
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3.21         Employee Relations.  The Company is not involved in any union labor
dispute, nor, to the knowledge of the Company, is any such dispute
threatened.  The Company is not a party to a collective bargaining agreement,
and the Company believes that its relations with its employees are good.
 
3.22         Internal Accounting Controls.  The Company maintains a system of
internal accounting controls (as such term is defined in Rule 13a-14 and 15d-14
under the Exchange Act) sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
 
3.23         Disclosure Controls.  The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule 13a-14 and
15d-14 under the Exchange Act); such disclosure controls and procedures are
designed to ensure that material information relating to the Company, including
its consolidated subsidiaries, if any, is made known to the Company’s Chief
Executive Officer and its Chief Financial Officer by others within those
entities, and such disclosure controls and procedures are effective to perform
the functions for which they were established; the Company’s auditors and the
Audit Committee of the Board of Directors have been advised of: (i) any
significant deficiencies in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize, and
report financial data; and (ii) any fraud, whether or not material, that
involves management or other employees who have a role in the Company’s internal
controls; any material weaknesses in internal controls have been identified for
the Company’s auditors; since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses; the principal executive officers (or their
equivalents) and principal financial officers (or their equivalents) of the
Company have made all certifications required by the Sarbanes Oxley Act of 2002
(the “Sarbanes Oxley Act”) and any related rules and regulations promulgated by
the Commission, and the statements contained in any such certification are
complete and correct; and the Company is otherwise in compliance in all material
respects with all applicable effective provisions of the Sarbanes Oxley Act.
 
3.24         Disclosure.  Neither the Operative Agreements, any of the schedules
or exhibits hereto or thereto, nor any other document or certificate provided by
the Company to the Purchasers in connection herewith or therewith contains any
untrue statement of a material fact or, when considered as a whole, omits a
material fact necessary to make the statements contained herein or therein, in
light of the circumstances in which they were made, not misleading.

 
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3.25         Real Property Holding Corporation.  The Company is not a real
property holding corporation within the meaning of Section 897(c)(2) of the
Internal Revenue Code of 1986, as amended (the “Code”) and any regulations
promulgated thereunder.
 
4.           Representations and Warranties of the Purchasers.  Each Purchaser
severally and jointly with the other Purchasers, represents and warrants to the
Company as follows:
 
4.1           Authorization.  All action on the part of such Purchaser and, if
applicable, its officers, directors, partners, members and stockholders
necessary for the authorization, execution, delivery and performance of the
Operative Agreements and the consummation of the transactions contemplated
therein has been taken.  When executed and delivered by the Company and such
Purchaser, each of the Operative Agreements will constitute the legal, valid and
binding obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles.  Such Purchaser has all requisite power to
enter into each of the Operative Agreements and to carry out and perform its
obligations under the terms of the Operative Agreements.  Such Purchaser has the
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the Securities and has the
ability to bear the economic risks of an investment in the Securities for an
indefinite period of time. Furthermore, the Purchaser acknowledges that the
Company has made no representations or warranties except as set for in this
Agreement.
 
4.2           Purchase Entirely for Own Account.  Each Purchaser is acquiring
the Securities being purchased by it hereunder for investment, for its own
account, and not for resale or with a view to distribution thereof in violation
of the Securities Act. Such Purchaser has not entered into an agreement or
understanding with any other party to resell or distribute such Securities.
 
4.3           Investor Status; Etc.  Such Purchaser certifies and represents to
the Company that it is an “Accredited Investor” as defined in Rule 501 of
Regulation D promulgated under the Securities Act and was not organized for the
purpose of acquiring the Securities.  Such Purchaser’s financial condition is
such that it is able to bear the risk of holding the Securities for an
indefinite period of time and the risk of loss of its entire
investment.  Subject to the truth and accuracy of the representations and
warranties of the Company set forth in Section 3 of this Agreement (as modified
by the Company Disclosure Schedule), such Purchaser has received, reviewed and
considered all information it deems necessary in making an informed decision to
make an investment in the Securities and has been afforded the opportunity to
ask questions of and receive answers from the management of the Company
concerning this investment and has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the Company’s stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company.
 
4.4           [Intentionally omitted]
 
4.5           Securities Not Registered.  Such Purchaser understands that the
Securities have not been registered under the Securities Act, by reason of their
issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act, and that the Securities must continue to be
held by such Purchaser unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration.  The Purchaser
understands that the exemptions from registration afforded by Rule 144 (the
provisions of which are known to it) promulgated under the Securities Act depend
on the satisfaction of various conditions, and that, if applicable, Rule 144 may
afford the basis for sales only in limited amounts.
 
 
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4.6           No Conflict.  The execution and delivery of the Operative
Agreements by such Purchaser and the consummation of the transactions
contemplated thereby will not conflict with or result in any violation of or
default by such Purchaser (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit under (i) any provision of the
organizational documents of such Purchaser, (ii) any material agreement or
instrument, permit, franchise, or license or (iii) any judgment, order, statute,
law, ordinance, rule or regulations, applicable to such Purchaser or its
respective properties or assets.
 
4.7           Brokers.  Such Purchaser has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
 
4.8           Consents.  All consents, approvals, orders and authorizations
required on the part of such Purchaser in connection with the execution,
delivery or performance of this Agreement and the consummation of the
transactions contemplated herein have been obtained and are effective as of the
Closing Date.
 
5.           Conditions Precedent.
 
5.1           Conditions to the Obligation of the Purchasers to Consummate the
Closing.  The obligation of each Purchaser to consummate the Closing and to
purchase and pay for the Securities being purchased by it pursuant to this
Agreement is subject to the satisfaction of the following conditions precedent
unless waived in writing by the Purchasers:
 
(a)           The representations and warranties of the Company contained herein
shall be true and correct on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date (it being understood and
agreed by each Purchaser that, in the case of any representation and warranty of
the Company contained herein which is not hereinabove qualified by application
thereto of a materiality standard, such representation and warranty need be true
and correct only in all material respects in order to satisfy as to such
representation or warranty the condition precedent set forth in the foregoing
provisions of this Section 5.1(a)).
 
(b)           The Notes shall have been executed and delivered by the Company.
 
(c)           The Company shall not have been adversely affected in any material
way prior to the Closing Date; and the Company shall have performed all
obligations and conditions herein required to be performed or observed by the
Company on or prior to the Closing Date.
 
(d)           No proceeding challenging the Operative Agreements or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be pending.
 
 
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(e)           The purchase of and payment for the Securities by the Purchasers
shall not be prohibited by any law or governmental order or regulation.  All
necessary consents, approvals, licenses, permits, orders and authorizations of,
or registrations, declarations and filings with, any governmental or
administrative agency or of any other person with respect to any of the
transactions contemplated hereby shall have been duly obtained or made and shall
be in full force and effect.
 
(f)           All instruments and corporate proceedings in connection with the
transactions contemplated by the Operative Agreement to be consummated at the
Closing shall be satisfactory in form and substance to such Purchaser. Such
Purchaser shall have received such certificates of the Company's officers as
such Purchaser may have reasonably requested in connection with such
transactions.
 
(g)           The officers and directors of Company shall have resigned from
such positions effective as of the Closing, and the Board shall have authorized
the appointments as Directors of the Company of Arnold Kling effective
immediately after the Closing; provided, however, Frank Dougherty shall remain
in office until the expiration of ten days after Company files with the SEC, and
mails to its shareholders of record, an Information Statement pursuant to Rule
14f-1 of the Exchange Act.
 
(h)           The Company (i) shall have filed or caused to be filed with the
Delaware Secretary of State and the United States Patent and Trademark Office
(the “PTO”)  a formal discharge of all security interests in the Intellectual
Property and any other asset of the Company,  and (ii) shall have filed a UCC-1
Financing Statement with the Delaware Secretary of State and the appropriate
form, if applicable, with the PTO, in order to perfect the security interest of
the Purchasers as forth in the Notes and Security Agreement.
 
(i)           Each of the that certain September 18, 2003 Investor Rights
Agreement and that certain May 25, 2005 Registration Rights Agreement shall have
been terminated and the Company shall have no further rights, obligations or
liabilities thereunder.
 
(j)           The Company’s incoming directors and officers shall be covered by
a valid and enforceable directors and officers liability insurance policy, on
terms reasonably satisfactory to the Purchasers, for a policy period covering at
least one year from the date of this Agreement.
 
(k)           The Company shall not have modified the terms of any severance
agreement entered into with its former officers and/or employees and shall not
have accelerated the payment of any amount payable under any such agreement.
 
5.2           Conditions to the Obligation of the Company to Consummate the
Closing.  The obligation of the Company to consummate the Closing and to issue
and sell to each of the Purchasers the Securities to be purchased by it at the
Closing is subject to the satisfaction of the following conditions precedent:
 
(a)           The representations and warranties contained herein of such
Purchaser shall be true and correct on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date (it being
understood and agreed by the Company that, in the case of any representation and
warranty of each Purchaser contained herein which is not hereinabove qualified
by application thereto of a materiality standard, such representation and
warranty need be true and correct only in all material respects in order to
satisfy as to such representation or warranty the condition precedent set forth
in the foregoing provisions of this Section 5.2(a)).
 
 
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(b)           The applicable Notes shall have been executed and delivered by
each Purchaser.
 
(c)           Each Purchaser shall have performed all obligations and conditions
herein required to be performed or observed by such Purchaser on or prior to the
Closing Date.
 
(d)           No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the Closing, shall have been instituted before any court, arbitrator or
governmental body, agency or official and shall be pending.
 
(e)           The sale of the Securities by the Company shall not be prohibited
by any law or governmental order or regulation.  All necessary consents,
approvals, licenses, permits, orders and authorizations of, or registrations,
declarations and filings with, any governmental or administrative agency or of
any other person with respect to any of the transactions contemplated hereby
shall have been duly obtained or made and shall be in full force and effect.
 
(f)           All instruments and corporate proceedings in connection with the
transactions contemplated by this Agreement to be consummated at the Closing
shall be satisfactory in form and substance to the Company, and the Company
shall have received counterpart originals, or certified or other copies of all
documents, including without limitation records of corporate or other
proceedings, which it may have reasonably requested in connection therewith.
 
(g)           The Company shall have received executed Purchase Agreements
representing an aggregate Purchase Price of $2,000,000 and principal Loan
Amounts of $1,000,000.
 
(h)           Each Purchaser shall have irrevocably delivered such Purchaser’s
Purchase Price and Loan Amount to the Company in immediately available funds.
 
6.           Transfer, Legends; Piggyback Registration Rights.
 
6.1           Securities Law Transfer Restrictions.
 
(a)           Each Purchaser acknowledges that the certificates or instruments
representing the Securities shall bear restrictive legends substantially as
follows:
 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS
EXEMPT FROM SAID ACT.”
 
 
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“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE PURSUANT TO A PURCHASE AGREEMENT, A COPY OF WHICH MAY
BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.”
 
(b)           Each Purchaser understands that the Securities have not been
registered under the Securities Act or any state securities laws.  In that
connection, such Purchaser is aware of Rule 144 under the Securities Act and the
restrictions imposed thereby.  Such Purchaser will not engage in hedging or
other similar transactions which would include, without limitation, effecting
any short sale or having in effect any short position (whether or not such sale
or position is against the box and regardless of when such position was entered
into) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to the Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from the
Common Stock of the Company.
 
6.2.          Piggyback Registration Rights.

(a)           If, at any time the Company shall determine to register any of its
securities either for its own account or for the account of a security holder or
for any of its Affiliate other than (i) a registration relating solely to
employee benefit plans, or (ii) a registration relating solely to a Rule 145 (or
its successor rule under the Securities Act) transaction, or (iii) a
registration on any registration form that does not permit secondary sales (such
as Form S-4 or S-8) the Company will:

 
(A)
at least five (5) business days prior to filing any such registration statement
under the Securities Act, give to each Purchaser written notice thereof; and

 
(B)
use its commercially reasonable efforts to include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Shares and Conversion Stock specified in
a written request or requests, made by any Purchaser and received by the Company
within five (5) days after the written notice from the Company described in
clause (A) above is mailed or delivered by the Company.  Such written request
may specify all or a part of a Purchaser's Shares and Conversion
Stock.  Piggyback registration rights shall be afforded to such Purchasers in
accordance with the priorities set forth in Section 6.2(d) hereof.

 
 
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(b)           If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Purchasers as a part of the written notice given pursuant to Section
6.2(a).  In such event, the right of any Purchaser to registration pursuant to
this Section 6.2 shall be conditioned upon such Purchaser's participation in
such underwriting and the inclusion of such Purchaser's Shares and Conversion
Stock in the underwriting to the extent provided herein. All Purchasers
proposing to distribute their securities through such underwriting shall
(together with the Company and the other Purchasers of securities of the Company
with registration rights to participate therein distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form for offerings of the type proposed with the representative of the
underwriter or underwriters selected by the Company.

(c)           Notwithstanding any other provision of this Section 6.2, if the
managing underwriter(s) advises the Company in writing that marketing factors
require a limitation on the number of Shares to be underwritten, the managing
underwriter(s) may limit the number of Registrable Securities to be included in
the registration and underwriting in accordance with Section 6.2(d) hereof;
provided, however, that to the extent the Company proposed the underwriting, the
Company shall have first priority to have all of its securities included in such
underwriting without cutback and the rest of the underwriting shall be allocated
pro rata among the selling shareholders (including the Purchasers); provided,
further, to the extent any selling shareholder (including any Purchaser)
demanded the underwriting, all selling shareholder shall have first priority to
have all of their securities included in such underwriting (pro rata) without
cutback, then all securities to be registered by the Company.  If any Purchaser
does not agree to the terms of any such underwriting, such Purchaser shall be
excluded therefrom by written notice from the Company or the underwriter.  Any
Shares, Conversion Stock or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.  If securities are so
withdrawn from the registration and if the number of shares of Shares and
Conversion Stock to be included in such registration was previously reduced as a
result of marketing factors, the Company shall then offer to all persons who
have retained the right to include securities in the registration the right to
include additional securities in the registration in an aggregate amount equal
to the number of shares so withdrawn, with such shares to be allocated among the
persons requesting additional inclusion in accordance with Section 6.2(d)
hereof.

(d)           In any circumstance in which all of the Shares and Conversion
Stock and other securities of the Company with registration rights (the "Other
Shares") requested to be included in a registration on behalf of the Purchasers
or other selling shareholder cannot be so included due to marketing factors or
other reasons, the following rules of priority shall apply: (a) the Company may
limit, to the extent so advised by the managing underwriter(s), the amount of
securities (including Shares and Conversion Stock) to be included in the
registration by the Company's shareholders (including the Purchasers), or may
exclude, to the extent so advised by the underwriter(s), such underwritten
securities entirely from the registration.  The Company shall so advise all
Purchasers of securities requesting registration, and, subject to the preceding
sentence, the number of shares of securities that are entitled to be included in
the registration and underwriting shall be allocated first to the Company for
securities being sold for its own account and thereafter to the Purchasers for
the Shares and Conversion Stock and the holders of the Other Shares electing to
include shares in the registration on a pro rata basis.  If any Purchaser or
other selling shareholder does not request inclusion of the maximum number of
shares of Shares, Conversion Stock and Other Shares allocated to him pursuant to
the above-described procedure, the remaining portion of such person's allocation
shall be reallocated among those requesting Purchasers and other selling
shareholders whose allocations did not satisfy their requests pro rata on the
basis of the number of shares of Shares, Conversion Stock and Other Shares which
would be held by such Purchasers and other selling shareholders, assuming
conversion, and this procedure shall be repeated until all of the Shares,
Conversion Stock and Other Shares which may be included in the registration on
behalf of the Purchasers and other selling shareholders have been so
allocated.  The Company shall not limit the number of Shares and Conversion
Stock to be included in a registration pursuant to this Agreement in order to
include Shares held by shareholders with no registration rights or to include
any shares issued to employees, officers, directors, or consultants pursuant to
any of the Company's employee stock option plans.

 
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(e)           Notwithstanding the above, this Section 6.2 shall not apply to
registrations of the Company’s securities that are not underwritten public
offerings (x) when the Shares or Conversion Stock, as the case may be, are
covered by an effective registration statement or (y) where with respect to any
Purchaser, all of such Purchaser’s Shares or Conversion Stock, as the case may
be, may be sold without restriction under Rule 144 (or its successor rule under
the Securities Act).
 
7.           Termination; Liabilities Consequent Thereon.  This Agreement may be
terminated and the transactions contemplated hereunder abandoned at any time
prior to the Closing only as follows:
 
(a)           at any time by mutual written agreement of the Company and the
Purchasers; or
 
(b)           by the Purchasers, if there has been any breach of any
representation or warranty or any material breach of any covenant of the Company
(including but not limited to the conditions to Closing set forth in Section 5)
contained herein and the same has not been cured within 15 days after written
notice thereof (it being understood and agreed by each Purchaser that, in the
case of any representation or warranty of the Company contained herein which is
not hereinabove qualified by application thereto of a materiality standard, such
representation or warranty will be deemed to have been breached for purposes of
this Section 7.1(b) only if such representation or warranty was not true and
correct in all material respects at the time such representation or warranty was
made by the Company); or
 
(c)           by the Company with respect to all Purchasers, if there has been
any breach of any representation, warranty or any material breach of any
covenant of any Purchaser contained herein  (including but not limited to the
conditions to Closing set forth in Section 5) and the same has not been cured
within 15 days after written notice thereof (it being understood and agreed by
the Company that, in the case of any representation and warranty of any
Purchaser contained herein which is not hereinabove qualified by application
thereto of a materiality standard, such representation or warranty will be
deemed to have been breached for purposes of this Section 7.1(c) only if such
representation or warranty was not true and correct in all material respects at
the time such representation or warranty was made by any Purchaser).
 
Any termination pursuant to this Section 7 shall be without liability on the
part of any party, unless such termination is the result of a material breach of
this Agreement by a party to this Agreement in which case such breaching party
shall remain liable for such breach notwithstanding any termination of this
Agreement.
 
 
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8.           Miscellaneous Provisions.
 
8.1           Further Assurances.  Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
the other parties to better evidence and reflect the transactions described
herein and contemplated hereby, and to carry into effect the intents and
purposes of this Agreement.
 
8.2           Rights Cumulative.  Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement.  The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
 
8.3           Pronouns.  All pronouns or any variation thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
 
8.4           Notices.  Any notices, reports or other correspondence
(hereinafter collectively referred to as "correspondence") required or permitted
to be given hereunder shall be in writing and shall be sent by postage prepaid
first class mail, courier or telecopy or delivered by hand to the party to whom
such correspondence is required or permitted to be given hereunder, and shall be
deemed sufficient upon receipt when delivered personally or by courier,
overnight delivery service or confirmed facsimile, or three (3) business days
after being deposited in the regular mail as certified or registered mail
(airmail if sent internationally) with postage prepaid, if such notice is
addressed to the party to be notified at such party's address or facsimile
number as set forth below:
 
(a)          All correspondence from the Purchasers or the Company involving
matters related prior to and as of the Closing shall be addressed as follows:
 
Reed Smith LLP
101 2nd Street, Suite 2000
San Francisco, CA 94111
Attention:      Donald C. Reinke, Esq.
Facsimile:      (415) 391.8269

(b)          All correspondence to any Purchaser shall be sent to such Purchaser
at the address set forth in Exhibit A, with a copy, in each instance to:
 
Morse, Zelnick, Rose & Lander, LLP
405 Park Avenue, Suite 1401
New York, NY 10022
Attention:      Kenneth S. Rose, Esq.
Facsimile:      (212) 208-6809
 
 
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(c)           Any party may change the address to which correspondence to it is
to be addressed by written notification as provided for herein.
 
8.5           Captions.  The captions and paragraph headings of this Agreement
are solely for the convenience of reference and shall not affect its
interpretation.
 
8.6           Severability.  Should any part or provision of this Agreement be
held unenforceable or in conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provisions shall be replaced
with a provision which accomplishes, to the extent possible, the original
business purpose of such part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the parties
hereto.
 
8.7           Governing Law; Injunctive Relief.
 
(a)           This Agreement shall be governed by and construed in accordance
with the internal and substantive laws of the State of Delaware and without
regard to any conflicts of laws concepts which would apply the substantive law
of some other jurisdiction. Venue for all purposes hereunder shall be in the
applicable state or federal court located within the State of Delaware.
 
(b)           Each of the parties hereto acknowledges and agrees that damages
will not be an adequate remedy for any material breach or violation of this
Agreement if such material breach or violation would cause immediate and
irreparable harm (an "Irreparable Breach").  Accordingly, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled to
seek, equitable relief of a kind appropriate in light of the nature of the
ongoing or threatened Irreparable Breach, which relief may include, without
limitation, specific performance or injunctive relief; provided, however, that
if the party bringing such action is unsuccessful in obtaining the relief
sought, the moving party shall pay the non-moving party's reasonable costs,
including attorney's fees, incurred in connection with defending such
action.  Such remedies shall not be the parties' exclusive remedies, but shall
be in addition to all other remedies provided in this Agreement.
 
8.8           Amendments. This Agreement may be not be amended or modified
except pursuant to an instrument in writing signed by the Purchasers and the
Chairman of the Board or the Chief Executive Officer of the Company in office
immediately prior to the Closing.
 
8.9           Waiver.  No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be, or be construed as, a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
 
8.10         Expenses.  The Company will bear the costs and expenses of all
parties in connection with this Agreement; provided, however that the
reimbursement of the Purchasers’ expenses, which shall occur at the Closing,
shall not exceed $100,000.
 
 
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8.11         Assignment.  The rights and obligations of the parties hereto shall
inure to the benefit of and shall be binding upon the authorized successors and
permitted assigns of each party.  Neither party may assign its rights or
obligations under this Agreement or designate another person (i) to perform all
or part of its obligations under this Agreement or (ii) to have all or part of
its rights and benefits under this Agreement, in each case without the prior
written consent of the other party.  In the event of any assignment in
accordance with the terms of this Agreement, the assignee shall specifically
assume and be bound by the provisions of the Agreement by executing and agreeing
to an assumption agreement reasonably acceptable to the other party.
 
8.12         Survival.  The respective representations and warranties given by
the parties hereto, and the other covenants and agreements contained herein,
shall survive the Closing Date and the consummation of the transactions
contemplated herein for a period of one year, without regard to any
investigation made by any party.
 
8.13         Counterpart. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
 
8.14         Entire Agreement.  This Agreement and the Notes constitute the
entire agreement between the parties hereto respecting the subject matter hereof
and supersede all prior agreements, negotiations, understandings,
representations and statements respecting the subject matter hereof, whether
written or oral.  No modification, alteration, waiver or change in any of the
terms of this Agreement shall be valid or binding upon the parties hereto unless
made in writing and duly executed by the Purchasers and the Chairman of the
Board or the Chief Executive Officer of the Company in office immediately prior
to the Closing.
 
[Signature Page to Follow]
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Note and Common Stock
Purchase Agreement as of the day and year first above written.
 

 
PROTALEX, INC.
       
By:
/s/ Marc Rose
   
Marc Rose, Chief Financial Officer
       
NIOBE VENTURES, LLC
       
By:
/s/ Arnold Kling
   
Arnold Kling, Manager

 
 
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Exhibit A
 
SCHEDULE OF PURCHASERS
 
Purchaser Name and
Address
 
Number of Shares to be
Purchased
   
Aggregate Share
Purchase Price
   
Loan Amount
                     
Niobe Ventures, LLC
    43,478,260     $ 2,000,000.00     $ 1,000,000.00  

 
 

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