Unassociated Document


    EXECUTION
COPY

    


    SECURITIES PURCHASE
AGREEMENT

    


    THIS SECURITIES PURCHASE AGREEMENT
(“Agreement”)
is made as of this 11th day of February, 2009 by and among Novelos Therapeutics,
Inc., a Delaware corporation (the “Company”)
and Purdue Pharma L.P., a Delaware limited partnership (“Purdue”).


    


    Recitals:

    


    A.           The
Company desires, pursuant to this Agreement, to raise the Investment Amount (as
defined below) through the issuance and sale of the following to Purdue (the
“Private
Placement”): (i) 200 shares (the “Preferred
Shares”) of a newly created series of the Company’s Preferred Stock,
designated “Series E Convertible Preferred Stock”, par value $0.00001 per share
(the “Preferred
Stock”), which Preferred Stock shall have the rights, preferences and
privileges set forth in the Certificate of Designations, Preferences and Rights,
in the form of Exhibit A annexed hereto and made a part hereof (the “Certificate
of Designations”), and each share of Preferred Stock shall have a stated
value of $50,000 and shall initially be convertible into shares of the Company's
Common Stock, par value $0.00001 per share (the “Common
Stock”), at a price of $0.65 per share (the “Conversion
Price”), for an aggregate of 15,384,615 shares of Common Stock; and (ii)
a warrant to acquire up to 9,230,769 shares of Common Stock, equal to 60% of the
number of shares of Common Stock underlying the Preferred Shares on the date of
issue, with an exercise price of $0.65 per share, in the form of Exhibit B
annexed hereto and made a part hereof (the “Warrant”);

    


    B.       
    Purdue desires to purchase from the Company, and the
Company desires to issue and sell to Purdue, upon the terms and conditions
stated in this Agreement, the Preferred Shares and the Warrant;

     

    C.       
    Subject to the conditions hereinafter set forth, on the
Closing Date, Purdue will purchase the Preferred Shares and Warrant in the
Private Placement for an aggregate purchase price equal to the Investment
Amount; 

    


    D.      
     The Company and Purdue are executing and
delivering this Agreement in reliance upon the exemption from securities
registration afforded by the provisions of Regulation D (“Regulation
D”), as promulgated by the U.S. Securities and Exchange Commission (the
“SEC”)
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the “1933
Act”);

    


    E.     
      Contemporaneous with the sale of the
Preferred Shares and the Warrant at the Closing, the Company and Purdue along
with the Series D Investors (as defined below) and holders of Series B Warrants
(as defined below) will enter into a Registration Rights Agreement, in the form
attached hereto as Exhibit H (the “Registration
Rights Agreement”), pursuant to which, among other things, the Company
will provide certain registration rights to Purdue, the Series D Investors and
the holders of the Series B Warrants with respect to the shares of Common Stock
issuable upon conversion or exercise, as the case may be, of the Preferred
Stock, the Warrant, the Series B Warrants and the Series D Warrants (as defined
below); and


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    F.       
    Contemporaneous with the sale of the Preferred Shares
and the Warrant at the Closing, the Company and Mundipharma International
Corporation Limited will enter into a Collaboration Agreement, in the form
attached hereto as Exhibit F (the “Collaboration
Agreement”);

    


    NOW, THEREFORE, in
consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

    


    1.           Definitions.  In
addition to those terms defined above and elsewhere in this Agreement, for the
purposes of this Agreement, the following terms shall have the meanings set
forth in this Section
1:

     

    “1933
Act” has the meaning set forth in the Recitals.

    


    “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

    


    “Affiliate”
means, with respect to any Person, any other Person which directly or indirectly
Controls, is Controlled by, or is under common Control with, such
Person.

    


    “Agreement”
has the meaning set forth in the Recitals.

    


    “Associated
Company” means, as to Purdue, 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 Purdue.  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.

    


    “Business
Day” means a day, other than a Saturday or Sunday, on which banks in New
York City are open for the general transaction of business.

    


    “Buy-In
Price” has the meaning set forth in Section
8.12.

    


    “Certificate
of Designations” has the meaning set forth in the Recitals.

    


    “Closing”
has the meaning set forth in Section
4.1.

    


    “Closing
Date” has the meaning set forth in Section
4.2.

    


    “Collaboration
Agreement” has the meaning set forth in the Recitals.

    


    “Common
Stock” has the meaning set forth in the Recitals, and also includes any
securities into which the Common Stock may be reclassified.


    
      
         


      

      
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    “Common
Stock Equivalents” means any securities of the Company or the
Subsidiaries which entitle the holder thereof to acquire Common Stock at any
time, including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

    


    “Company”
has the meaning set forth in the Recitals.

    


    “Company
Counsel” means Foley Hoag LLP, counsel to the Company.

    


    “Company’s
Knowledge,” “Knowledge
of the Company” or any like expression with respect to the Company means
the actual knowledge of the officers of the Company and the knowledge that would
be reasonably expected to be known by such individuals in the ordinary and usual
course of the performance of their professional responsibilities to the
Company.

    


    “Company
Counsel Opinion” means a legal opinion from the Company Counsel, dated as
of the Closing Date, in the form attached hereto as Exhibit E.

    


    “Confidential
Information” means trade secrets, confidential information and know-how
(including but not limited to ideas, formulae, compositions, processes,
procedures and techniques, research and development information, computer
program code, performance specifications, support documentation, drawings,
specifications, designs, business and marketing plans, and customer and supplier
lists and related information).

    


    “Control”
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

    


    “Conversion
Price” has the meaning set forth in the Recitals.

    


    “Conversion
Shares” means the shares of Common Stock issuable upon conversion of the
Preferred Shares.

    


    “Deadline
Date” has the meaning set forth in Section
8.12.

    


    “Disclosure
Schedules” has the meaning set forth in Section
5.

    


    “Environmental
Laws” has the meaning set forth in Section
5.15.


    
      
         


      

      
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    “Exempt
Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers, directors or consultants of the Company pursuant to (i) any
existing stock or option plan, or (ii) any stock or option plan duly adopted by
a majority of the non-employee members of the Board of Directors of the Company
or a majority of the members of a committee of non-employee directors
established for such purpose, (b) options issued to new employees, (c)
securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise, exchange or
conversion price of any such securities, and (d) securities issued pursuant
to acquisitions or strategic transactions or in connection with a strategic
alliance collaboration, joint venture, partnership, manufacturing, marketing,
distributing or similar arrangement of the Company with another Person which
strategic alliance, collaboration, joint venture, partnership manufacturing,
marketing, distributing or similar arrangement relates to the Company’s business
as conducted immediately prior thereto and which Person is engaged in a business
similar or related to the business of the Company, provided any such
issuance shall only be to a Person which is, itself or through its subsidiaries,
an operating company in a business synergistic with the business of the Company
and in which the Company receives benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.

    


    “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$50,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the
present value of any lease payments in excess of $50,000 due under leases
required to be capitalized in accordance with United States generally accepted
accounting principles.

    


    “Indemnified
Person” has the meaning set forth in Section
9.3.

    


    “Intellectual
Property” means all of the following: (i) patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice); (ii) trademarks, service marks, trade dress, trade names,
corporate names, logos, slogans and Internet domain names, together with all
goodwill associated with each of the foregoing; (iii) copyrights and
copyrightable works; (iv) registrations, applications and renewals for any of
the foregoing; (v) trade secrets, Confidential Information and know-how
(including, but not limited to, ideas, formulae, compositions, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, business and marketing plans, and customer
and supplier lists and related information); and (vi) computer software
(including, but not limited to, data, data bases and
documentation).

    


    “Investment
Amount” means an amount equal to $10,000,000.

    


    “License
Agreements” has the meaning set forth in Section
5.14(b).

    


    “Losses”
has the meaning set forth in Section
9.2.


    
      
         


      

      
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    “Material
Adverse Effect” means a material adverse effect on (i) the assets and
liabilities, prospects, results of operations, condition (financial or
otherwise) or business of the Company, or (ii) the ability of the Company to
issue and sell the Securities and to perform its obligations under the
Transaction Documents; provided, however, that: (A)
any adverse effect that results from general economic, business or industry
conditions, the taking by the Company of any action permitted or required by the
Agreement, or the announcement or pendency of transactions contemplated
hereunder, shall not, in and of itself, constitute a "Material Adverse Effect"
on the Company, and shall not be considered in determining whether there has
been or would be a "Material Adverse Effect" on the Company and (B) a decline in
the Company's stock price shall not, in and of itself, constitute a "Material
Adverse Effect" on the Company and shall not be considered in determining
whether there has been or would be a "Material Adverse Effect" on the
Company.

    


    “Material
Contract” means any contract of the Company (i) that was required to be
filed as an exhibit to the SEC Filings pursuant to Item 601(b)(4) or Item
601(b)(10) of, in the case of SEC Filings relating to periods prior to January
1, 2007, Regulation S-B of the 1933 Act, or otherwise, Regulation S-K of the
1933 Act, or (ii) the loss of which could reasonably be expected to have a
Material Adverse Effect.

    


    “OTCBB”  shall
mean the OTC Bulletin Board.

    


    “Person”
means an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole
proprietorship, unincorporated organization, governmental authority or any other
form of entity not specifically listed herein.

    


    “Preferred
Shares” has the meaning set forth in the Recitals.

    


    “Preferred
Stock” has the meaning set forth in the Recitals.

    


    “Press
Release” has the meaning set forth in Section
8.10.

    


    “Private
Placement” has the meaning set forth in the Recitals.

    


    “Pro Rata
Share” means with respect to each capital raising transaction to which
Section 10.1 applies an amount equal to the product obtained by multiplying (a)
an amount equal to the securities being issued in such capital raising
transaction times (b) a fraction
of which the numerator is  the number of outstanding Conversion Shares
beneficially owned by Purdue and its Associated Companies at the time the Pro
Rata Share is being determined, and the denominator is all of the Conversion
Shares issued under this Agreement, subject to adjustment of the Conversion
Shares for stock splits, stock dividends and similar capital changes affecting
the Common Stock that occur on or after the Closing Date and on or prior to the
date Pro Rata Share is being determined.

    


    “Purdue
Observer” has the meaning set forth in Section
8.7.


    
      
         


      

      
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    “Registration
Rights Agreement” has the meaning set forth in the Recitals.

    


    “Regulation
D” has the meaning set forth in the Recitals.

    


    “Requisite
Holder” shall mean that Purdue has purchased an aggregate of $10,000,000
of Preferred Stock pursuant to this Agreement and Purdue and its Associated
Companies hold at least one-half of the Preferred Stock issued to Purdue at
Closing as of the date of determination (appropriately adjusted for any stock
dividend, stock split, reverse stock split, reclassification, stock combination
or other recapitalization occurring after the date hereof).

    


    “Rule
144” has the meaning set forth in Section
8.11.

    


    “SEC”
has the meaning set forth in the Recitals.

    


    “SEC
Filings” has the meaning set forth in Section
5.6.

    


    “Securities”
means the Preferred Shares, the Conversion Shares, the shares of Common Stock or
Preferred Stock issuable as payment-in-kind dividends on the Preferred Stock in
accordance with the terms thereof, the Warrant and the Warrant
Shares.

    


    “Series B
Warrants” shall mean the warrants to purchase up to 7,500,000 shares of
Common Stock dated May 2, 2007, as amended, issued pursuant to that certain
Securities Purchase Agreement dated as of April 12, 2007, as amended on May 2,
2007.

    


    “Series D
Investors” shall mean the holders of the Series D Preferred
Stock.

    


    “Series D
Preferred Stock” shall mean the 113.5 shares of Series D Convertible
Preferred Stock, par value $.00001, issued pursuant to that certain Securities
Purchase Agreement dated as of March 26, 2008, as amended on April 9,
2008.

    


    “Series D
Warrants” shall mean the warrants dated April 11, 2008 and issued
pursuant to pursuant to that certain Securities Purchase Agreement dated as of
March 26, 2008, as amended on April 9, 2008.

    


    “Transaction
Documents” means this Agreement, the Warrant and the Registration Rights
Agreement.

    


    “Warrant
Shares” means the shares of Common Stock issuable upon exercise of the
Warrant.

    


    “Warrant”
has the meaning set forth in the Recitals.

    


    2.           Purchase and Sale of
Securities.

     

    Subject to the terms and conditions of
this Agreement, including without limitation, the conditions set forth in Section 7, there
shall be a closing at which the Company shall issue and sell, and Purdue agrees
to purchase Preferred Shares in the Private Placement by executing a counterpart
to this Agreement, shall purchase, the Preferred Shares and the Warrant in
exchange for the cash consideration set forth as the “Investment
Amount.”

     

    
      
        
        

      

      
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    3.           [Reserved.]

     

    4.           Closing.

     

    4.1          Place.  The
closings of the transactions contemplated by this Agreement (the “Closing”)
shall take place simultaneously with the execution hereof at the offices of
Company Counsel, Seaport World Trade Center West, 155 Seaport Boulevard, Boston,
MA 02210, or at such other location and on such other date as the Company and
Purdue shall mutually agree (or remotely via the electronic exchange of
documents and signatures).

    


    4.2          Closing.  Simultaneously
with the execution hereof, the Company shall hold the Closing. At the Closing,
the Company will deliver to Purdue via e-mail an electronic copy of the signed
stock certificate(s) representing the Preferred Shares registered in Purdue’s
name and a photocopy of the signed Warrant.  Following such delivery,
Purdue shall promptly initiate a wire transfer of immediately available funds
(U.S. dollars) equal to the Investment Amount to be delivered to the account of
the Company, account details of which are as set forth on Schedule
4.2 affixed hereto.

     

    4.3          Delivery of Original
Preferred Shares and Warrant.  As soon as possible after the
Closing, but no later than 5 Business Days following the Closing, the Company
will deliver by overnight mail, original certificate(s) representing the
Preferred Shares and the original Warrant.

     

    5.           
Representations and
Warranties of the Company.  The Company hereby represents and
warrants to Purdue on and as of the Closing Date, knowing and intending their
reliance hereon, that, except as set forth in the schedules delivered herewith
(collectively, the “Disclosure
Schedules”):

     

    5.1.          Organization, Good Standing
and Qualification.  The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and to own its
properties.  The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or its leasing of property makes such
qualification or licensing necessary, unless the failure to so qualify would not
have a Material Adverse Effect.  The Company has no
subsidiaries.

     

    5.2.          Authorization.  The
Company has full power and authority and has taken all requisite action on the
part of the Company, its officers, directors and stockholders necessary for (i)
the authorization, execution and delivery of the Transaction Documents and the
Certificate of Designations, (ii) authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the
Securities.  The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights
generally.


    
      
         


      

      
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    5.3.         Capitalization.

     

    (a)           Schedule 5.3 sets
forth (i) the authorized capital stock of the Company on the date hereof, (ii)
the number of shares of capital stock issued and outstanding, (iii) the number
of shares of capital stock issuable pursuant to the Company’s stock plans, and
(iv) the number of shares of capital stock issuable and reserved for issuance
pursuant to securities (other than the Securities) exercisable for, or
convertible into or exchangeable for any shares of capital stock of the
Company.  All of the issued and outstanding shares of the Company’s
capital stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of pre-emptive rights and were issued in full compliance
with applicable law and any rights of third parties.  No Person is
entitled to pre-emptive or similar statutory or contractual rights with respect
to any securities of the Company.  Except as described on Schedule 5.3, there
are no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company is or may be
obligated to issue any equity securities of any kind and, except as contemplated
by this Agreement, the Company is not currently in negotiations for the issuance
of any equity securities of any kind.  Except as described on Schedule 5.3 and
except for the Registration Rights Agreement, there are no voting agreements,
buy-sell agreements, option or right of first purchase agreements or other
agreements of any kind among the Company and any of its security holders
relating to the securities of the Company.  Except as described on
Schedule 5.3,
the Company has not granted any Person the right to require the Company to
register any of its securities under the 1933 Act, whether on a demand basis or
in connection with the registration of securities of the Company for its own
account or for the account of any other Person.

     

    (b)          Schedule 5.3 sets
forth a true and complete table setting forth the pro forma capitalization of
the Company on a fully diluted basis giving effect to (i) the issuance of the
Preferred Shares and the Warrant at the time of the Closing, (ii) any
adjustments in other securities resulting from the issuance of the Preferred
Shares and the Warrant at the time of the Closing, and (iii) the exercise or
conversion of all outstanding securities. Except as described on Schedule
5.3,  the issuance and sale of the Securities hereunder will
not obligate the Company to issue shares of Common Stock or other securities to
any other Person (other than Purdue) and will not result in the adjustment of
the exercise, conversion, exchange or reset price of any outstanding
security.

     

    (c)          Except
as set forth on Schedule 5.3, the
Company does not have outstanding stockholder purchase rights or any similar
arrangement in effect giving any Person the right to purchase any equity
interest in the Company upon the occurrence of certain events.

     

    (d)          Except
as set forth on Schedule 5.3, there
are no stockholder rights plans, or similar plan or arrangement in effect,
including those under which Purdue would be considered an “acquiring person” or
under which Purdue would be deemed to trigger provisions by virtue of Purdue’s
receipt of Securities under the Transaction Documents.


    
      
         


      

      
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    5.4.          Valid
Issuance.  The Preferred Shares have been duly and validly
authorized and, when issued to Purdue in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable, shall have the
rights, preferences and limitations set forth in the Certificate of Designations
and shall be free and clear of all liens, claims, encumbrances and restrictions,
except for restrictions on transfer set forth in the Transaction Documents and
the Certificate of Designations or imposed by applicable securities
laws.  Upon the due conversion of the Preferred Shares, the Conversion
Shares will be validly issued, fully paid and nonassessable, and shall be free
and clear of all liens, claims, encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents and the
Certificate of Designations or imposed by applicable securities laws. The
Warrant has been duly and validly authorized and, upon the due exercise of the
Warrant, the Warrant Shares will be validly issued, fully paid and
non-assessable, and shall be free and clear of all liens, claims, encumbrances
and restrictions, except for restrictions on transfer set forth in the
Transaction Documents and the Certificate of Designations or imposed by
applicable securities laws.  The Company has reserved a sufficient
number of shares of Common Stock for issuance upon conversion of the Preferred
Shares and exercise of the Warrant.

    


    5.5.          Consents.   The
execution, delivery and performance by the Company of the Transaction Documents
and the Certificate of Designations and the offer, issuance and sale of the
Securities require no consent of, action by or in respect of, or filing with,
any Person, governmental body, agency, or official other than those consents set
forth on Schedule
5.5 and filings that have been made pursuant to applicable state
securities laws and post-sale filings pursuant to applicable state and federal
securities laws which the Company undertakes to file within the applicable time
periods.  The Company has taken all action necessary to exempt (i) the
issuance and sale of the Securities, (ii) the issuance of the Conversion Shares
upon due conversion of the Preferred Shares, (iii) the issuance of the Warrant
Shares upon due exercise of the Warrant, and (iv) the other transactions
contemplated by the Transaction Documents from the provisions of any
anti-takeover, business combination or control share law or statute binding on
the Company or to which the Company or any of its assets and properties may be
subject or any provision of the Company’s Certificate of Incorporation, Bylaws
or any stockholder rights agreement that is or could become applicable to
Purdue, as a result of the transactions contemplated hereby, including without
limitation, the issuance of the Securities and the ownership, disposition or
voting of the Securities by Purdue or the exercise of any right granted to
Purdue pursuant to this Agreement, the Certificate of Designations or the other
Transaction Documents.

     

    5.6.           Delivery of SEC Filings;
Business.  Copies of the Company’s most recent Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2007,  the
Company’s quarterly reports on Form 10-Q for the quarters ended March 31, 2008,
June 30, 2008, and September 30, 2008, reports on Form 8-K filed by the Company
from January 1, 2008 through the Closing Date (collectively, the “SEC
Filings”) are available on EDGAR.  The SEC Filings are the only
filings required of the Company pursuant to the 1934 Act for such
period.  The Company is engaged only in the business described in the
SEC Filings and the SEC Filings contain a complete and accurate description in
all material respects of the business of the Company.


    
      
         


      

      
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    5.7           No Material Adverse
Change.  Except as contemplated herein or identified and
described on Schedule
5.7(a), since October 1, 2008, there has not been:

     

    (i)         
  any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the SEC Filings, except for changes in the
ordinary course of business which have not and could not reasonably be expected
to have a Material Adverse Effect, individually or in the
aggregate;

     

    (ii)    
      any declaration or payment of any dividend,
or any authorization or payment of any distribution, on any of the capital stock
of the Company, or any redemption or repurchase of any securities of the
Company; 

    


    (iii)    
     any material damage, destruction or loss, whether
or not covered by insurance to any assets or properties of the Company or its
Subsidiaries;

    


    (iv)    
     any waiver, not in the ordinary course of
business, by the Company of a material right or of a material debt owed to
it;

    


    (v)       
   any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results, prospects or business of the
Company;

    


    (vi)   
      any change or amendment to the Company's
Certificate of Incorporation or Bylaws, or material change to any Material
Contract or arrangement by which the Company is bound or to which any of its
assets or properties is subject;

    


    (vii)       
 any material labor difficulties or labor union organizing activities with
respect to employees of the Company;

    


    (viii)     
  any transaction entered into by the Company other than in the
ordinary course of business;

    


    (ix)     
     the loss of the services of any key employee, or
material change in the composition or duties of the senior management of the
Company;

    


    (x)       
    the loss or threatened loss of any customer which has
had or could reasonably be expected to have a Material Adverse Effect;
or

    


    (xi)          any
other event or condition of any character that has had or could reasonably be
expected to have a Material Adverse Effect.


    
      
         


      

      
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    5.8.         SEC
Filings.  At the time of filing thereof, the SEC Filings
complied as to form in all material respects with the requirements of the 1934
Act and did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.  The Company is not (with or without the lapse of time or
the giving of notice, or both) in breach or default of any Material Contract
and, to the Company’s Knowledge, no other party to any Material Contract is
(with or without the lapse of time or the giving of notice, or both) in breach
or default of any Material Contract.  The Company has not received any
notice of the intention of any party to terminate any Material
Contract.

     

    5.9.         No Conflict, Breach,
Violation or Default.  The execution, delivery and performance
of the Transaction Documents and the Certificate of Designations by the Company
and the issuance and sale of the Securities will not conflict with or result in
a breach or violation of any of the terms and provisions of, or constitute a
default under (i) the Company’s Certificate of Incorporation or Bylaws, both as
in effect on the date hereof (true and accurate copies of which have been
provided to Purdue before the date hereof), or (ii)(a) any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Companyor any of its respective assets or
properties, or (b) except as set forth on Schedule 5.9, any
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its assets or properties is subject.

     

    5.10.       Tax
Matters.  The Company has timely prepared and filed all tax
returns required to have been filed by it with all appropriate governmental
agencies and timely paid all taxes shown thereon or otherwise owed by
it.  The charges, accruals and reserves on the books of the Company in
respect of taxes for all fiscal periods are adequate in all material respects,
and there are no material unpaid assessments against the Company nor, to the
Company’s Knowledge, any basis for the assessment of any additional taxes,
penalties or interest for any fiscal period or audits by any federal, state or
local taxing authority except for any assessment which is not material to the
Company.  All taxes and other assessments and levies that the Company
is required to withhold or to collect for payment have been duly withheld and
collected and paid to the proper governmental entity or third party when
due.  There are no tax liens or claims pending or, to the Company’s
Knowledge, threatened against the Company or any of its assets or
properties.  Except as described on Schedule 5.10, there
are no outstanding tax sharing agreements or other such arrangements between the
Company and any other corporation or entity.  The Company is not
presently undergoing any audit by a taxing authority, nor has it waived or
extended any statute of limitations at the request of any taxing
authority.

     

    5.11.       Title to
Properties.  Except as disclosed in the SEC Filings or as set
forth on Schedule
5.11, the Company has good and marketable title to all real properties
and all other properties and assets owned by it, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or currently planned to be made thereof
by the Company; and except as disclosed in the SEC Filings, the Company holds
any leased real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or currently
planned to be made thereof by the Company.


    
      
         


      

      
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    5.12.       Certificates, Authorities
and Permits.  The Company possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by it, and the Company has not
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined adversely to the
Company, could reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate.

     

    5.13.       No Labor
Disputes.  No material labor dispute with the employees of the
Company exists or, to the Company’s Knowledge, is imminent.

     

    5.14.       Intellectual
Property.

     

    (a)          All
Intellectual Property of the Company is currently in compliance with all legal
requirements (including timely filings, proofs and payments of fees) and is
valid and enforceable.  Except as listed on Schedule 5.14(a), no
Intellectual Property of the Company which is necessary for the conduct of
Company’s businesses as currently conducted or as currently proposed to be
conducted has been or is now involved in any cancellation, dispute or
litigation, and, to the Company’s Knowledge, no such action is
threatened.  Except as listed on Schedule 5.14(a), no
patent of the Company has been or is now involved in any interference, reissue,
re-examination or opposition proceeding.

     

    (b)          All
of the licenses and sublicenses and consent, royalty or other agreements
concerning Intellectual Property which are necessary for the conduct of the
Company’s business as currently conducted or as currently proposed to be
conducted to which the Company is a party or by which any of its assets are
bound (other than  generally commercially available, non-custom,
off-the-shelf software application programs having a retail acquisition price of
less than $25,000 per license) (collectively, “License
Agreements”) are valid and binding obligations of the Company and, to the
Company’s Knowledge, the other parties thereto, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors’ rights generally, and
there exists no event or condition which will result in a material violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default by the Company under any such License Agreement.

     

    (c)           The
Company owns or has the valid right to use all of the Intellectual Property that
is necessary for the conduct of the Company’s business as currently conducted or
as currently proposed to be conducted, free and clear of all liens,
encumbrances, adverse claims or obligations to license all such owned
Intellectual Property and Confidential Information, other than licenses entered
into in the ordinary course of the Company’s business.  The Company
has a valid and enforceable right to use all third-party Intellectual Property
and Confidential Information used or held for use in the respective business of
the Company as currently conducted or as currently proposed to be
conducted.


    
      
         


      

      
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    (d)          To
the Company’s Knowledge, the conduct of the Company’s business as currently
conducted and as currently proposed to be conducted does not and will not
infringe any Intellectual Property rights of any third party or any
confidentiality obligation owed to a third party. To the Company’s Knowledge,
the Intellectual Property and Confidential Information of the Company which are
necessary for the conduct of Company’s business as currently conducted or as
currently proposed to be conducted are not being infringed by any third
party.  Except as set forth on Schedule 5.14(d),
there is no litigation or order pending or outstanding or, to the Company’s
Knowledge, threatened or imminent, that seeks to limit or challenge or that
concerns the ownership, use, validity or enforceability of any Intellectual
Property or Confidential Information of the Company and the Company’s use of any
Intellectual Property or Confidential Information owned by a third party, and,
to the Company’s Knowledge, there is no valid basis for the same.

     

    (e)          The
consummation of the transactions contemplated hereby will not result in the
alteration, loss, impairment of or restriction on the Company’s ownership or
right to use any of the Intellectual Property or Confidential Information which
is necessary for the conduct of the Company’s respective business as currently
conducted or as currently proposed to be conducted.

     

    (f)           To
the Company’s Knowledge, all software owned by the Company, and, to the
Company’s Knowledge, all software licensed from third parties by the Company,
(i) is free from any material defect, bug, virus, or programming, design or
documentation error; (ii) operates and runs in a reasonable and efficient
business manner; and (iii) conforms in all material respects to the
specifications and purposes thereof.

     

    (g)          The
Company has taken reasonable steps to protect its rights in its Intellectual
Property and Confidential Information.  Each employee, consultant and
contractor who has had access to Confidential Information which is necessary for
the conduct of Company’s business as currently conducted or as currently
proposed to be conducted has executed an agreement to maintain the
confidentiality of such Confidential Information and has executed appropriate
agreements that are substantially consistent with the Company’s standard forms
therefor.  To the Company’s Knowledge, there has been no material
disclosure of any of the Company’s Confidential Information to any third party
without the Company’s consent.

     

    5.15.       Environmental
Matters.  The Company (i) is not in violation of any statute,
rule, regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental
Laws”), (ii) neither owns nor operates any real property contaminated
with any substance that is subject to any Environmental Laws, (iii) is not
liable for any off-site disposal or contamination pursuant to any Environmental
Laws, and (iv) is not subject to any claim relating to any Environmental Laws;
which violation, contamination, liability or claim has had or could reasonably
be expected to have a Material Adverse Effect, individually or in the aggregate;
and there is no pending or, to the Company’s Knowledge, threatened investigation
that might lead to such a claim.

     

    5.16.       Litigation.  Except
as set forth in Schedule 5.16, there are no pending actions, suits or
proceedings against or affecting the Company or any of its properties; and to
the Company’s Knowledge, no such actions, suits or proceedings are threatened or
contemplated.


    
      
         


      

      
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    5.17.       Financial
Statements.  The financial statements of the Company included
in the SEC Filings fairly present the consolidated financial position of the
Company as of the dates shown and its consolidated results of operations and
cash flows for the periods shown, and such financial statements have been
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis.  Except as set forth in the
financial statements of the Company included in the SEC Filings filed prior to
the date hereof, the Company has not incurred any liabilities, contingent or
otherwise, except those which, individually or in the aggregate, have not had or
could not reasonably be expected to have a Material Adverse Effect.

     

    5.18.       Insurance
Coverage.  The Company maintains in full force and effect
insurance coverage and the Company reasonably believes such insurance coverage
is adequate.  The Company has no reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business on terms consistent with market for the Company’s lines of
business.

     

    5.19.       Brokers and
Finders.  Except as disclosed in Schedule 5.19, no
Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
Purdue for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of the
Company.

    


    5.20.       No Directed Selling Efforts
or General Solicitation.  Neither the Company nor any
Affiliate, nor any Person acting on its behalf has conducted any “general
solicitation” or “general advertising” (as those terms are used in Regulation D)
in connection with the offer or sale of any of the Securities.

     

    5.21.       No Integrated
Offering.  Neither the Company nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any
security, under circumstances that would cause this offering of the Securities
to be integrated with prior offerings by the Company for purposes of the 1933
Act, which would require the registration of any such securities under the 1933
Act or under the rules and regulations of the OTCBB on which any of the
securities of the company are listed or designated, including circumstances that
would adversely affect reliance by the Company on Section 4(2) of the 1933 Act
for the exemption from the registration requirements imposed under Section 5 of
the 1933 Act for the transactions contemplated hereby or would require such
registration the 1933 Act.

     

    5.22.       Private
Placement.  Subject to the accuracy of the representations and
warranties of Purdue contained in Section 6 hereof, the
offer and sale of the Securities to Purdue as contemplated hereby is exempt from
the registration requirements of the 1933 Act.


    
      
         


      

      
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    5.23.       Questionable
Payments. Neither
the Company nor, to the Company’s Knowledge, any of its current or former
stockholders, directors, officers, employees, agents or other Persons acting on
its behalf, has on behalf of the Company or in connection with the Company’s
business: (a) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (b)
made any direct or indirect unlawful payments to any governmental officials or
employees from corporate funds; (c) established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; (d) made any false or
fictitious entries on the books and records of the Company; (e) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful
payment of any nature; or (f) violated in any material respect any provision of
the Foreign Corrupt Practices Act of 1977, as amended.

     

    5.24.       Transactions with
Affiliates.  Except as set forth on Schedule 5.24, none of the
officers or directors of the Company and, to the Company’s Knowledge, none of
the employees of the Company is presently a party to any transaction, or
presently contemplated transaction, with the Company (other than for services as
employees, officers and directors) that would be required to be disclosed
pursuant to Item 404 of Regulation S-K promulgated under the 1933
Act.

     

    5.25.       Trading
Compliance.  The Common Stock is traded on the OTCBB and the
Company has taken no action designed to, or which to the Company’s Knowledge is
likely to have the effect of, causing the Common Stock not to continue to be
traded on the OTCBB.  No order ceasing or suspending trading in any
securities of the Company or prohibiting the issuance and/or sale of the
Securities is in effect and no proceedings for such purpose are pending or
threatened.

    


    5.26.       Acknowledgment Regarding
Purdue’s Purchase of Securities. The Company acknowledges that Purdue is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by Purdue or any of their respective representatives
or agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to Purdue’s purchase of the Securities.

    


    5.27.       Sarbanes-Oxley; Internal
Accounting Controls.  The Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it
as of the Closing Date.  The Company maintains a system of internal
accounting controls 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 United States general
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.  The
Company has established disclosure controls and procedures (as defined in 1934
Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
controls and procedures to ensure that material information relating to the
Company, is made known to the certifying officers by others within those
entities, particularly during the period in which the Company’s most recently
filed periodic report under the 1934 Act, as the case may be, is being
prepared.  The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of the date prior to
the filing date of the most recently filed periodic report under the 1934 Act
(such date, the “Evaluation
Date”).  The Company presented in its most recently filed
periodic report under the 1934 Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.  Since the Evaluation Date,
there have been no significant changes in the Company’s internal controls (as
such term is defined in Item 307(b) of Regulation S-K under the 1934 Act) or, to
the Knowledge of the Company, in other factors that could significantly affect
the Company’s internal controls.


    
      
         


      

      
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    5.28.       Solvency.  Based
on the financial condition of the Company as of the Closing Date after giving
effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder, the Company’s assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability
thereof.  The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).  Except
as set forth and explained on Schedule 5.28, the
Company has no present intention to, nor does it have a present belief that it
will need to, file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction.  Schedule 5.28 sets
forth all outstanding secured and unsecured Indebtedness of the Company, or for
which the Company has commitments.  The Company is not in default with
respect to any Indebtedness.

    


    5.29.       Investment
Company.  The Company is not, and immediately after receipt of
payment for the Securities will not be, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

    


    6.           
Representations and
Warranties of Purdue.  Purdue hereby represents and warrants to
the Company on and as of the Closing Date, knowing and intending that the
Company rely thereon, that:

     

    6.1.         Authorization.  The
execution, delivery and performance by Purdue of the Transaction Documents to
which Purdue is a party have been duly authorized and will each constitute the
valid and legally binding obligation of Purdue, enforceable against Purdue in
accordance with their respective terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights
generally.

     

    6.2.         Purchase Entirely for Own
Account.  The Securities to be received by Purdue hereunder
will be acquired for Purdue’s own account, not as nominee or agent, and not with
a view to the resale or distribution of any part thereof in violation of the
1933 Act, and Purdue has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of the 1933
Act.  Purdue is not a registered broker dealer or an entity engaged in
the business of being a broker dealer.

     

    6.3.         Investment
Experience.  Purdue acknowledges that it can bear the economic
risk and complete loss of its investment in the Securities and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated
hereby.  Purdue has significant experience in making private
investments, similar to the purchase of the Securities
hereunder.


    
      
         


      

      
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    6.4.         Disclosure of
Information.  Purdue has had an opportunity to receive all
additional information related to the Company requested by it and to ask
questions of and receive answers from the Company regarding the Company, its
business and the terms and conditions of the offering of the
Securities.  Purdue acknowledges receipt of copies of and its
satisfactory review of the SEC Filings.  Neither such inquiries nor
any other due diligence investigation conducted by Purdue shall modify, amend or
affect Purdue’s right to rely on the Company’s representations and warranties
contained in this Agreement.

     

    6.5.         Restricted
Securities.  Purdue understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.

     

    6.6.      
   Legends.

     

    (a)           It
is understood that, except as provided below, certificates evidencing such
Securities may bear the following or any similar legend:

     

    “THE
SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES
HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, OR (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES
LAWS.”

     

    (b)          If
required by the authorities of any state in connection with the issuance of sale
of the Securities, the legend required by such state authority.

     

    (c)          From
and after the first anniversary of the Closing Date in the case of the
Conversion Shares and the first anniversary of the date of exercise of a Warrant
in the case of the Warrant Shares, provided, in each case, that Purdue is not an
Affiliate of the Company and has not been an Affiliate for a period of ninety
days, the Company shall, upon Purdue's written request, promptly cause
certificates evidencing such Securities to be replaced with certificates which
do not bear such restrictive legends.  When the Company is required to
cause unlegended certificates to replace previously issued legended
certificates, if unlegended certificates are not delivered to an Investor within
three (3) Business Days of submission by Purdue of legended certificate(s) to
the Company’s transfer agent together with a representation letter in customary
form, the Company shall be liable to Purdue for liquidated damages equal to 1.5%
of the aggregate purchase price of the Securities evidenced by such
certificate(s) for each 30-day period (or portion thereof) beyond such three (3)
Business Day-period that the unlegended certificates have not been so
delivered.


    
      
         


      

      
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    (d)    
      Purdue agrees that the removal of the
restrictive legend from certificates representing Securities as set forth in
this Section 6.6 is predicated upon the warranty of Purdue to sell any
Securities pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption
therefrom.

    


    (e)     
     Notwithstanding any restrictions on transfer set
forth in this Section 6.6, Purdue may sell, transfer, assign, pledge or
otherwise dispose of the Securities, 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 the conditions set forth in this Section 6.6 and
(ii) the delivery to the Company of such documentation as may be reasonably
requested by the Company and reasonably necessary for the Company to obtain a
legal opinion that such disposition may lawfully be made without registration
under the Securities Act.

    


    6.7.  
       Accredited
Investor.  Purdue is an “accredited investor” as defined in
Rule 501(a) of Regulation D.

     

    6.8.   
      No General
Solicitation.  Purdue did not learn of the investment in the
Securities as a result of any “general advertising” or “general solicitation” as
those terms are contemplated in Regulation D.

     

    6.9.   
      Brokers and
Finders.  Other than as disclosed on Schedule 5.19, no
Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
Purdue for any commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of
Purdue.

     

    7            
Conditions to Closing.

     

    7.1.         Conditions to Purdue’s
Obligations. The obligation of Purdue to purchase the Securities at
Closing is subject to the fulfillment to Purdue’s satisfaction, on or prior to
the Closing Date, of the following conditions, any of which may be waived in
writing by Purdue:

     

    (a)          The
representations and warranties made by the Company in Section 5 hereof that
are qualified as to materiality shall be true and correct in all respects, and
those not so qualified shall be true and correct in all material respects, at
all times prior to and on the Closing Date.  The Company shall have
performed in all material respects all obligations herein required to be
performed or observed by it on or prior to the Closing Date;

     

    (b)          The
Company shall have obtained in a timely fashion any and all consents, permits,
approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Securities then being issued and sold, and all
of which shall be and remain so long as necessary in full force and
effect;

     

    (c)     
     The Company shall have executed, obtained and
delivered an otherwise fully executed counterpart to the Registration Rights
Agreement to Purdue;

     

    (d)       
   No judgment, writ, order, injunction, award or decree of or by
any court, or judge, justice or magistrate, including any bankruptcy court or
judge, or any order of or by any governmental authority, shall have been issued,
and no action or proceeding shall have been instituted by any governmental
authority, or self-regulatory organization enjoining or preventing the
consummation of the transactions contemplated hereby or in the other Transaction
Documents;


    
      
         


      

      
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    (e)        
  The Company shall have delivered a Certificate, executed on behalf
of the Company by its Chief Executive Officer or its Chief Financial Officer,
dated as of the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (a), (b), (d), (f), (g) and (h) of this Section
7.1;

     

    (f)    
       The Company shall have delivered a
Certificate, executed on behalf of the Company by its Secretary, dated as of the
Closing Date, certifying the resolutions adopted by the Board of Directors of
the Company approving the transactions contemplated by this Agreement and the
other Transaction Documents and the issuance and sale of the Securities,
certifying the current versions of the Certificate of Incorporation and Bylaws
of the Company and certifying as to the signatures and authority of persons
signing the Transaction Documents and all related documents on behalf of the
Company;

     

    (g)           The
Company shall have entered into and delivered to Purdue an exchange and consent
agreement with the holders of the Series D Preferred Stock, dated on or before
the Closing Date, whereby such holders consent to the issuance of the Preferred
Shares and Warrants, the filing of the Certificate of Designations, agree to
exchange all of their shares of Series D Preferred Stock, plus accumulated but
unpaid dividends for shares of the Preferred Stock, and agree to waive any all
liquidated damages such holders are due as of the Closing Date as a result of
the Company’s failure register shares of common stock issuable upon exercise of
the Series D Warrants and common stock issuable upon conversion of the Series D
Preferred Stock.  Such consent and exchange agreement shall be
substantially in the form attached hereto as Exhibit C;

     

    (h)     
     The Company shall have obtained and delivered to
Purdue a duly executed consent from the holders of the Company’s Series C
Convertible Preferred Stock, dated on or before the Closing Date, whereby such
holders consent to issuance of the Preferred Stock, the filing of the
Certificate of Designations, such consent to be substantially in the form
attached hereto as Exhibit D;

     

    (i)     
      Purdue shall have received the applicable
Company Counsel Opinion;

     

    (j)      
     No stop order or suspension of trading shall have
been imposed by any Person with respect to public trading in the Common
Stock;

     

    (k)      
    The Company shall have delivered evidence satisfactory
to Purdue of the filing of the Certificate of Designations with the Secretary of
State of the State of Delaware; and

    


    (l)     
      The Company shall have delivered to Purdue a
duly executed Collaboration Agreement, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit F.


    
      
         


      

      
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    7.2.   
      Conditions to Obligations of
the Company. The Company's obligation to sell and issue the Securities at
Closing is subject to the fulfillment to the satisfaction by the Company on or
prior to the Closing Date of the following conditions, any of which may be
waived in writing by the Company:

     

    (a)      
    The representations and warranties made by Purdue in
Section 6
hereof that are qualified as to materiality shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects, at all times prior to and on the Closing Date.  Purdue shall
have performed in all material respects all obligations herein required to be
performed or observed by it on or prior to the relevant Closing;

     

    (b)   
       Purdue shall have delivered to the
Company a duly executed Collaboration Agreement, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit F;

    


    (c)    
      Purdue shall have executed and delivered the
Registration Rights Agreement to the Company;

    


    (d)     
     Purdue shall have delivered the Investment Amount
to the Company as described in Section 4.2;

     

    (e)      
    No judgment, writ, order, injunction, award or decree of
or by any court, or judge, justice or magistrate, including any bankruptcy court
or judge, or any order of or by any governmental authority, shall have been
issued, and no action or proceeding shall have been instituted by any
governmental authority, or self-regulatory organization enjoining or preventing
the consummation of the transactions contemplated hereby or in the other
Transaction Documents; and

     

    (f)           Purdue
shall have delivered to the Company a completed Purchaser Questionnaire in the
form attached hereto as Exhibit G.

    


    8.           
Covenants and
Agreements of the Company.

     

    8.1.         Reservation of Common
Stock.  The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the conversion of the Preferred Shares and the
exercise of the Warrant, such number of shares of Common Stock as shall from
time to time equal 100% of the number of shares sufficient to permit the
conversion of the Preferred Shares and the exercise of the Warrant issued
pursuant to this Agreement in accordance with their respective terms, without
regard to any exercise limitations contained therein.

     

    8.2.         [Reserved.]

     

    8.3.         No Conflicting
Agreements.  The Company will not take any action, enter into
any agreement or make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to Purdue under the Transaction
Documents.

     

    8.4.         Insurance.  The
Company shall not materially reduce the insurance coverages described in Section
5.18.


    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    8.5.   
      Compliance with
Laws.  The Company will comply in all material respects with
all applicable laws, rules, regulations, orders and decrees of all governmental
authorities, except to the extent non-compliance would not have a Material
Adverse Effect.

     

    8.6.   
      Termination of Certain
Covenants.  The provisions of Sections 8.3 through
8.5 shall
terminate and be of no further force and effect upon the date on which the
Company’s obligations under the Registration Rights Agreement to register and
maintain the effectiveness of any registration statement covering the
Registrable Securities (as such term is defined in the Registration Rights
Agreement) shall terminate.  The provisions of Sections 8.7 through
8.18 shall
survive indefinitely.

     

    8.7   
       Board Observer
Rights.  From and after the Closing until such time as Purdue
or its Associated Companies are no longer a Requisite Holder Purdue shall have
the right to designate one (1) observer to attend all meetings of the Company’s
Board of Directors, committees thereof and access to all information made
available to members of the Board (the “Purdue
Observer”). The Purdue Observer
shall have the same rights as those who customarily attend such
position.  Notwithstanding the foregoing, the Company reserves the
right to exclude the Purdue Observer from access to any material, meeting or
portion thereof if the Company reasonably believes, that such access could
result in a conflict of interest due to the actions of Purdue or its Associated
Companies that trigger the right of the Company to terminate the Collaboration
Agreement pursuant to Section 13.2.1 thereof, or believe, on advice of its
counsel, that such exclusion is necessary to preserve attorney-client, work
product or similar privilege.  The Purdue Observer shall hold in
confidence and trust and not use or disclose any confidential information
provided to or learned by him or her in connection with the Purdue Observer’s
rights hereunder for any purpose other than the monitoring and administration of
the transactions contemplated hereby, unless otherwise required by law, so long
as such information is not in the public domain.  If requested by the
Company, the Purdue Observer shall execute a standard confidentiality agreement
prior to attending any meetings.  The initial Purdue Observer shall be
Jim Dolan.

    


    8.8. 
        Trading.  The
Company shall promptly following the Closing Date take all actions necessary and
continue to take all actions necessary as contemplated in this Agreement or
otherwise to ensure that the Conversion Shares and the Warrant Shares are
authorized to be traded on the OTCBB, including the timely filing of all SEC
Filings as required under Section 8.15.

    


    8.9.   
      Use of
Proceeds.  The Company will use the proceeds from the sale of
the Securities to fund its operating activities pursuant to the budget set forth
in Schedule
8.9.  The Company shall not use the proceeds from the sale of
the Securities for (i) the repayment of any outstanding indebtedness for
borrowed money of the Company, (ii) redemption or repurchase of any of the
Company’s equity securities.  Furthermore, until the Company submits
the New Drug Application concerning the use of NOV-002 for non-small cell lung
cancer to the U.S. Food and Drug Administration, the Company shall not use its
current assets or the proceeds from the sale of the Securities for (A) clinical
activities other than those (x) relating to the Novelos Trials (as defined in
the Collaboration Agreement attached as Exhibit F), (y) approved by the JCC (as
defined in the Collaboration Agreement) and (z) relating to the New Drug
Application concerning the use of NOV-002 for non-small cell lung cancer or (B)
the payment of salaries, bonuses or other compensation other than those amounts
set forth in Schedule
8.9.


    
      
         


      

      
        21

        
          

        

      

      
         


      

    

    


    8.10.   
    Form 8-K
Filing.  The Company will file a Current Report on Form 8-K
(the “8-K”)
with the SEC describing the terms of the Transaction Documents (and including as
exhibits to such Current Report on Form 8-K the material Transaction Documents
(including, without limitation, this Agreement and the form of
Warrant)).  The 8-K will be filed within four (4) Business Days of
signing of this Agreement.

    


    8.11. 
      Furnishing of
Information.  As long as Purdue own Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the 1934 Act.  As long as
Purdue owns Preferred Shares, the Warrant or the Warrant Shares, if the Company
is not required to file reports pursuant to such laws, it will prepare and
furnish to the Investors and make publicly available in accordance with Rule
144(c) promulgated by the SEC pursuant to the 1933 Act, as such Rule may be
amended from time to time, such information as is required for the Investors to
sell the Preferred Shares and Warrant Shares under Rule 144 promulgated by the
SEC pursuant to the 1933 Act, as such Rule may be amended from time to time
(“Rule
144”). The Company further covenants that it will take such further
action as Purdue may reasonably request, all to the extent required from time to
time to enable Purdue to sell the Preferred Shares and Warrant Shares without
registration under the 1933 Act and without the volume restrictions imposed by
Rule 144.

    


    8.12.    
   Buy-In.  If
the Company shall fail for any reason or for no reason to issue to Purdue
unlegended certificates within three (3) Business Days of receipt of documents
necessary for the removal of the legend set forth above (the “Deadline
Date”), then, in addition to all other remedies available to Purdue, if
on or after the Business Day immediately following such three (3) Business Day
period, Purdue or Purdue’s broker, acting on behalf of Purdue, purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the holder of shares of Common Stock that Purdue
anticipated receiving from the Company without any restrictive legend, then the
Company shall, within three (3) Business Days after Purdue’s request and in
Purdue’s sole discretion, either (i) pay cash to Purdue in an amount equal to
Purdue’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to deliver to Purdue a certificate or certificates
representing such shares of Common Stock and pay cash to Purdue in an amount
equal to the excess (if any) of the Buy-In Price over the product of (a) such
number of shares of Common Stock, times (b) the closing bid price on the
Deadline Date.

    


    8.13.   
    No
Integration.  Neither the Company nor any of its Affiliates,
nor any Person acting on its or their behalf shall, directly or indirectly, make
any offers or sales of any Company security or solicit any offers to buy any
security, under circumstances that would adversely affect reliance by the
Company on Section 4(2) of the 1933 Act for the exemption from the registration
requirements imposed under Section 5 of the 1933 Act for the transactions
contemplated hereby or would require such registration the 1933
Act.


    
      
         


      

      
        22

        
          

        

      

      
         


      

    

    


    8.14.      
 SEC
Filings.  The Company shall timely file all SEC Filings and
ensure that they comply as to form in all material respects with the
requirements of the 1934 Act and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading.

    


    8.15.  
     Financial
Statements.  The financial statements of the Company included
in each SEC Filing shall fairly present the consolidated financial position of
the Company as of the dates shown and its consolidated results of operations and
cash flows for the periods shown, and such financial statements shall be
prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis.  Except as set forth in the
financial statements of the Company included in the SEC Filings, the Company has
not incurred any liabilities, contingent or otherwise, except those which,
individually or in the aggregate, have not had, or could not reasonably be
expected to have a Material Adverse Effect.

    


    8.16.  
     Compliance with Applicable
Law.  The Company shall use its best efforts (i) to comply in
all material respects with all statutes, laws, regulations, rules, judgments,
orders and decrees of all governmental entities applicable to it that relate to
its  business, (ii) to maintain all permits that are required in order
to permit it to carry on its business as it is presently conducted and (iii) to
comply in all material respects with all applicable provisions of the
Sarbanes-Oxley Act of 2002.

    


    8.17.    
   Warrant Expiration
Notice.  The Company will use best efforts to send Purdue a
notice 30 days in advance of the expiration of the Warrant.

    


    8.18.   
    Cooperation.  The
Company agrees to use commercially reasonable efforts to cooperate with Purdue
in selling its Securities pursuant to Rule 144.

    


    8.19.    
   Exemption from Investment
Company Act of 1940.  The Company shall conduct its business in
a manner so that it will not become subject to the Investment Company Act of
1940.

    .

    9.            Survival and
Indemnification.

     

    9.1.    
     Survival.  Subject
to Section 9.6,
all representations, warranties, covenants and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants and
agreements as of the date hereof and shall survive the Closing Date until the
third anniversary thereof; provided, however, that the
provisions contained in: (a) Sections 5.4, 9.1, 9.2 and 9.3 hereof shall
survive indefinitely; and (b) Sections 5.10 and
5.15 shall
survive until 90 days after the applicable statute of limitations.

     

    9.2.  
       Indemnification.  The
Company agrees to indemnify and hold harmless, Purdue and its Associated
Companies and the directors, officers, employees and agents of Purdue and its
Associated Companies, from and against any and all losses, claims, damages,
liabilities and expenses (including without limitation reasonable attorney fees
and disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement hereof) (collectively, “Losses”)
to which such Person may become subject as a result of any breach of
representation, warranty, covenant or agreement made by, or to be performed on
the part of, the Company under the Transaction Documents, and will reimburse any
such Person for all such amounts as they are incurred by such
Person.


    
      
         


      

      
        23

        
          

        

      

      
         


      

    


    9.3.     
    Conduct of Indemnification
Proceedings.  Promptly
after receipt by any Person (the “Indemnified
Person”) of notice of any demand, claim or circumstances which would or
might give rise to a claim or the commencement of any action, proceeding or
investigation in respect of which indemnity may be sought pursuant to Section 9.2, such
Indemnified Person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses; provided, however, that the failure of any
Indemnified Person so to notify the Company shall not relieve the Company of its
obligations hereunder except to the extent that the Company is actually and
materially prejudiced by such failure to notify.  In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; (ii) in the reasonable
judgment of counsel to such Indemnified Person (A) representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them, or (B) the Company shall have failed to
promptly assume the defense of such proceeding.  The Company shall not
be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned, but if settled with such consent, or if there be a final judgment
for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any Losses by reason of such settlement or
judgment.  Without the prior written consent of the Indemnified
Person, which consent shall not be unreasonably withheld, delayed or
conditioned, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such
proceeding.


    
      
         


      

      
        24

        
          

        

      

      
         


      

    


    10.          Miscellaneous.

     

    10.1.   
    Right of Purdue to
Participate in Future Transactions.  Purdue will have a right
to participate, on the terms and conditions set forth in this Section 10.1, in
all sales by the Company of any of Common Stock or Common Stock Equivalents in
each capital raising transaction, if any, that occurs at any time when the
Preferred Stock, Warrant or any instrument issued upon transfer or split up
thereof, remains outstanding (in whole or in part), other than any such sale
that is a public offering underwritten on a firm commitment basis and registered
with the SEC under the 1933 Act with proceeds to the Company of at least twenty
(20) million U.S. Dollars, other than a Exempt Issuance.  For any such
transaction during such period, the Company shall give at least ten (10)
Business Days advance written notice to Purdue prior to any offer or sale of any
of the Company’s securities in such transaction by providing to Purdue a term
sheet which (i) contains all significant business terms of such proposed
transaction, (ii) is sufficiently detailed so as to reasonably permit Purdue the
opportunity to determine whether or not to exercise its rights under this
Section 10.1 and (iii) is at least as detailed as the term sheet or summary of
such transaction as the Company shall furnish to any offeree or broker in such
transaction.  Purdue shall have the right to participate in such
proposed transaction and to purchase its and its Associated Companies’ Pro Rata
Share of such
securities which are the subject of such proposed transaction for the same
consideration and on the same terms and conditions as contemplated for sales to
third parties in such transaction (or such lesser portion thereof as specified
by Purdue).  If Purdue elects to exercise its rights hereunder for a
particular transaction, it shall deliver written notice to the Company within
ten (10) Business Days following receipt from the Company of the notice and term
sheet meeting the requirements of this Section 10.1, which notice from Purdue
shall be conditional upon (i) Purdue’s receipt of satisfactory definitive
documents for such transaction from the Company if the Company has not furnished
final, definitive documents for such transaction to Purdue at or before the time
the Company gives such notice of such transaction to Purdue, and (ii) the
satisfaction of the other conditions precedent to the obligations of purchasers
generally in such transaction to complete such transaction.  If,
subsequent to the Company giving notice to Purdue hereunder but prior to any of
(a) Purdue exercising its right to participate, (b) the expiration of the four
Business Day period without response from Purdue or (c) the rejection of such
offer for such financing by Purdue, the terms and conditions of the proposed
sale to third parties in such transaction are changed from those disclosed in
the term sheet provided to Purdue, the Company shall be required to provide a
new notice and term sheet meeting the requirements of this Section 10.1,
reflecting such revised terms, to Purdue hereunder and Purdue shall have the
right, which must be exercised within ten (10) Business Days of the date Purdue
receives such new notice and such revised term sheet, to exercise its rights to
purchase the securities on such changed terms and conditions and otherwise as
provided hereunder.  If Purdue does not exercise its rights hereunder
with respect to a proposed transaction within the period or periods provided, or
affirmatively declines to engage in such proposed transaction with the Company,
then the Company may proceed with such proposed transaction on the same terms
and conditions as noticed to Purdue (assuming Purdue has consented to the
transaction, if required, pursuant to this Agreement and such transaction does
not violate any other term or provision of the Transaction Documents), provided that if such
proposed transaction is not consummated within 180 days following the Company’s
notice hereunder or the terms and conditions of the proposed sale to third
parties are changed from those disclosed in the term sheet, then the rights
hereunder shall again be afforded to Purdue for such proposed
transaction.  The rights and obligations of this Section 10.1 shall in
no way limit or restrict the other rights of Purdue pursuant to this
Agreement.  Notwithstanding anything herein to the contrary, failure
of Purdue to affirmatively elect in writing to participate in any proposed
transaction within the required time frames shall be deemed to be the equivalent
of Purdue’s decision not to participate in such proposed
transaction.  Notwithstanding the foregoing, this Section 10.1 shall
not apply in respect of an Exempt Issuance.  The rights of Purdue
under this Section 10.1 shall apply to all capital raising transactions
described in Section 10.1 that occur during the period specified in this Section
10.1.


    
      
         


      

      
        25

        
          

        

      

      
         


      

    


    10.2.   
    Successors and
Assigns.  This Agreement may not be assigned by a party hereto
without the prior written consent of the Company and Purdue; provided, however, that Purdue
may assign its rights and delegate its duties hereunder in whole or in part to a
third party acquiring some or all of its Securities in a private transaction
with the prior written consent of the Company, after notice duly given by Purdue
to the Company, such consent not to be reasonably withheld by the Company and
that no such assignment or obligation shall affect the obligations of Purdue
hereunder; and provided further that Purdue
may assign its rights and delegate its duties hereunder in whole or in part to
an Associated Company acquiring some or all of its Securities in a private
transaction without the prior written consent of the Company, after notice duly
given by Purdue to the Company and that no such assignment or obligation shall
affect the obligations of Purdue hereunder.  The provisions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties.  Except for
provisions of this Agreement expressly to the contrary, nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this
Agreement.

     

    10.3. 
      Counterparts;
Faxes.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  This Agreement
may also be executed via facsimile, which shall be deemed an
original.

     

    10.4.  
     Titles and
Subtitles.  The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

     

    10.5.   
    Notices.  Unless
otherwise provided, any notice required or permitted under this Agreement 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 telecopier, 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 (3) Business Days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by a nationally recognized overnight air courier, then such notice shall
be deemed given one (1) Business Day after delivery to such
carrier.  All notices shall be addressed to the party to be notified
at the address as follows, or at such other address as such party may designate
by ten (10) days’ advance written notice to the other party:

    


    If to the
Company:

    


    Novelos
Therapeutics, Inc.

    One
Gateway Center, Suite 504

    Newton,
MA 02458

    USA

    Attention:  Chief
Executive Officer

    Fax:  (617)
964-6331

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    With a
copy to:

    


    Foley
Hoag LLP

    Seaport
World Trade Center West

    155
Seaport Boulevard

    Boston,
MA 02210

    USA

    Attn:  Paul
Bork

    Fax:  (617)
832-7000


    


    If to
Purdue:

    


    Purdue
Pharma L.P.

    One
Stamford Forum

    201
Tresser Blvd.

    Stamford,
CT 06901-3431

    USA

    Attention:  Edward
B. Mahony, Chief Financial Officer

    


    With a
copy to:

    


    Chadbourne
& Parke LLP

    30
Rockefeller Plaza

    New York,
New York 10112

    USA

    Telefacsimile:
(212) 541-5369

    Attention:  Stuart
D. Baker

    


    10.6.        Consent.  Purdue
hereby consents to the filing with the Secretary of State of the State of
Delaware, following the issuance of the Series E Preferred Stock pursuant to
this Agreement, of a Certificate of Elimination, pursuant to which all matters
set forth in the Certificate of Designations, Preferences and Rights of Series D
Convertible Preferred Stock of Novelos Therapeutics, Inc. with respect to the
Series D Preferred Stock will be eliminated from the Company’s Certificate of
Incorporation and the shares that were designated as Series D Preferred Stock
will be returned to the status of authorized but unissued shares of preferred
stock of the Company, without designation as to series, in the form attached
hereto as Exhibit I.

     

    10.7.        Amendments and
Waivers.  This Agreement shall not be amended and the
observance of any term of this Agreement shall not be waived (either generally
or in a particular instance and either retroactively or prospectively) without
the prior written consent of the Company and Purdue. Any amendment or waiver
effected in accordance with this Section 10.7 shall be
binding upon each holder of any Securities purchased under this Agreement at the
time outstanding, each future holder of all such Securities, and the
Company.


    
      
         


      

      
        27

        
          

        

      

      
         


      

    


    10.8.        Publicity.  Except
as provided in Section
10.8, no public release or announcement concerning the transactions
contemplated hereby shall be issued by the Company or Purdue without the prior
consent of the Company (in the case of a release or announcement by Purdue) or
Purdue (in the case of a release or announcement by the Company) (which consents
shall not be unreasonably delayed or withheld), except as such release or
announcement may be required by law or the applicable rules or regulations of
any securities exchange or securities market on which the Securities are then
listed and trading, in which case the Company or Purdue, as the case may be,
shall allow the other, to the extent reasonably practicable in the
circumstances, reasonable time to comment on such release or announcement in
advance of such issuance.

     

    10.9.        Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.  To the
extent permitted by applicable law, the parties hereby waive any provision of
law which renders any provision hereof prohibited or unenforceable in any
respect.

     

    10.10.      Entire
Agreement.  This Agreement, including the Exhibits and
Disclosure Schedules, and the other Transaction Documents constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.  Prior drafts or versions of this Agreement shall not be used
to interpret this Agreement.

     

    10.11.      Further
Assurances.  The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.

     

    10.12.      Governing Law; Consent to
Jurisdiction.  This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York without
regard to the choice of law principles thereof.  Each of the parties
hereto 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 Agreement 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 Agreement.  Each of the parties hereto 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.  Each party
hereto 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 COMPANY AND PURDUE
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY.


    
      
         


      

      
        28

        
          

        

      

      
         


      

    


    [Signature
Page Follows]


    
      
         


      

      
        29

        
          

        

      

      
         


      

    


    Signature
Page

    


    IN WITNESS WHEREOF, each of the
undersigned has executed this Securities Purchase Agreement or caused its duly
authorized officers to execute this Securities Purchase Agreement as of the date
first above written.

    


    
      
        
          
            
              
                
                  	
                          NOVELOS
      THERAPEUTICS, INC.

                        
	 
      	 
      
	
                          By: 

                        	
                          /s/ Harry S. Palmin

                        
	Name:  Harry
      S. Palmin
	Title:  President
      and
CEO


                

              

            

          

        

      

    

    


    
      
        
          
            
              
                
                  
                    
                      	PURDUE
      PHARMA L.P.
	 
      	 
      
	By:  Purdue
      Pharma Inc.,
	its
      general partner
	 
      	 
      
	
                              By: 

                            	
                              /s/ Edward B. Mahony

                            
	Name:  Edward
      B. Mahony
	Title:   
      Executive Vice President,
	            
      Chief Financial
Officer


                    

                  

                

              

            

          

        

      

    

     

    
      
         


      

      
        30

        
          

        

      

      
         


      

    

     

    Exhibits

    


    
      
        
          	
                  Exhibit
      A

                	
                  Form
      of Certificate of Designations

                
	
                  Exhibit
      B

                	
                  Form
      of Warrant

                
	
                  Exhibit
      C

                	
                  Form
      of Agreement to Exchange and Consent

                
	
                  Exhibit
      D

                	
                  Form
      of Consent of Series C Holders

                
	
                  Exhibit
      E

                	
                  Form
      of Company Counsel Opinion

                
	
                  Exhibit
      F

                	
                  Form
      of Collaboration Agreement

                
	
                  Exhibit
      G

                	
                  Form
      of Purchaser Questionnaire

                
	
                  Exhibit
      H

                	
                  Form
      of Registration Rights Agreement

                
	
                  Exhibit
      I

                	
                  Form
      of Series D Certificate of
Elimination

                


        

      

    

    


    Schedules

    


    
      
        
          	
                  Schedule
      4.2

                	
                  Company
      Wire Instructions

                
	
                  Schedule
      5.3

                	
                  Capitalization

                
	
                  Schedule
      5.5

                	
                  Consents

                
	
                  Schedule
      5.7(a)

                	
                  Material
      Adverse Changes

                
	
                  Schedule
      5.9

                	
                  Conflicts

                
	
                  Schedule
      5.10

                	
                  Taxes

                
	
                  Schedule
      5.11

                	
                  Title
      to Properties

                
	
                  Schedule
      5.14(a)

                	
                  Intellectual
      Property

                
	
                  Schedule
      5.14(d)

                	
                  IP
      Litigation

                
	
                  Schedule
      5.16

                	
                  Litigation

                
	
                  Schedule
      5.19

                	
                  Brokers
      and Finders

                
	
                  Schedule
      5.24

                	
                  Affiliate
      Transactions

                
	
                  Schedule
      5.28

                	
                  Indebtedness

                
	
                  Schedule
      8.9

                	
                  Novelos
      Budget

                


        

      

    

     

    
      
         


      

      
        31

        
          

        

      

      
         


      

    


    Exhibit
A

    


    Form
of Certificate of Designations

    


    [See
Exhibit 4.1 to this filing]



    
      
         


      

      
        32

        
          

        

      

      
         


      

    


    Exhibit
B

    


    Form
of Warrant

    


    [See
Exhibit 4.2 to this filing]



    
      
         


      

      
        33

        
          

        

      

      
         


      

    


    Exhibit
C

    


    Form
of Agreement to Exchange and Consent

    


    [See
Exhibit 10.3 to this filing]


    
      
         


      

      
        34

        
          

        

      

      
         


      

    

    


    Exhibit
D

    


    Form
of Consent of Series C Holders

    


    NOVELOS
THERAPEUTICS, INC.

    


    CONSENT
AND AGREEMENT OF HOLDERS OF SERIES C PREFERRED STOCK


     

    This
Consent and Agreement (the “Agreement”), dated as
of February 10, 2009, is entered into by and among Novelos Therapeutics, Inc., a
Delaware corporation (the “Company”), and each
of the signatories hereto (collectively, the “Series C Investors”)
(the Company and Series C Investors are sometimes referred to herein
individually as “Party” and collectively as the “Parties”).

     

    WHEREAS,
each of the Series C Investors is the holder of shares of the Company’s Series C
8% Cumulative Convertible Preferred Stock, $.00001 par value per share (the
“Series C Preferred
Stock”);

     

    WHEREAS,
the Series C Preferred Stock’s Certificate of Designations (“Series C Certificate of
Designations”) provides that it is senior with respect to the payment of
dividends and liquidation preference to all shares of the Company’s capital
stock other than the Company’s Series B Convertible Preferred Stock, $.00001 par
value per share (the “Series B Preferred
Stock”), entitled to seniority as to the payment of dividends or
liquidation preference in relation to the Series C Preferred Stock;

     

    WHEREAS,
the Company previously exchanged all of the issued and outstanding shares of
Series B Preferred Stock for shares of the Company’s Series D Convertible
Preferred Stock, par value $0.00001 per share (the “Series D Preferred
Stock”);

     

    WHEREAS,
the Series C Investors have previously consented and agreed that the Series D
Preferred Stock would be senior to the Series C Preferred Stock with respect to
the payment of dividends and liquidation preferences;

     

    WHEREAS,
pursuant to a securities purchase agreement (the “Purdue Securities Purchase
Agreement”) substantially in the form attached hereto as Exhibit A, the
Company expects to issue and sell 200 shares of a newly created series of the
Company’s preferred stock, designated Series E Convertible Preferred Stock, par
value $0.00001 per share (the “Series E Preferred
Stock”) to Purdue Pharma L.P., (“Purdue”), which
Series E Preferred Stock shall have the relative rights, privileges and
preferences set forth in the Certificate of Designations, Rights and Preferences
of the Series E Convertible Preferred Stock of Novelos Therapeutics, Inc., in
the form attached hereto as Exhibit B (the “Series E Certificate of
Designations”) and this Agreement is a condition to closing as stated in
the Purdue Securities Purchase Agreement; and

     

    WHEREAS,
as a condition to closing the Purdue Securities Purchase Agreement, the Company
and the holders of Series D Preferred Stock (the “Series D Investors”)
are entering into a Series D Preferred Stock Consent and Agreement to Exchange
pursuant to which each outstanding share of Series D Preferred Stock and
accumulated dividends thereon will be exchanged (the “Series D Exchange”)
for no more than 1.083 shares of Series E Preferred Stock and as a condition of
consummating the Series D Exchange, the Series D Investors have required that
the Company enter into this Agreement;


    
      
         


      

      
        35

        
          

        

      

      
         


      

    

     

    NOW, THEREFORE, in consideration of the
promises referred to below, the Series C Investors, hereby agree with the
Company, severally and not jointly, as follows:

     

    1.     
      Consent and Acknowledgement.

     

    (a)           Each
of the Series C Investors hereby consents to the filing of the Series E
Certificate of Designations, the execution of the Series D Preferred Stock
Consent Exchange Agreement substantially in the form attached hereto as Exhibit C (the “Series D Exchange
Agreement”), the execution of the Purdue Securities Purchase Agreement
and the consummation of the Series D Exchange.

     

    (b)           Each
of the Series C Investors hereby consents to the filing, with the Secretary of
State of the State of Delaware, of a Certificate of Elimination pursuant to
which all matters set forth in the Certificate of Designations, Preferences and
Rights of Series B Convertible Preferred Stock of Novelos Therapeutics, Inc.
with respect to the Company’s Series B Convertible Preferred Stock, $0.00001
(the “Series B
Preferred Stock”) will be eliminated from the Company’s Certificate of
Incorporation and the shares that were designated as Series B Preferred Stock
will be returned to the status of authorized but unissued shares of preferred
stock of the Company, without designation as to series, in the form attached
hereto as Exhibit
D (the “Series
B Certificate of Elimination”).

     

     (c)           Each
of the Series C Investors hereby consents to the filing, with the Secretary of
State of the State of Delaware, following consummation of the Series D Exchange,
of a Certificate of Elimination pursuant to which all matters set forth in the
Series D Certificate of Designations with respect to the Series D Preferred
Stock will be eliminated from the Company’s Certificate of Incorporation and the
shares that were designated as Series D Preferred Stock will be returned to the
status of authorized but unissued shares of preferred stock of the Company,
without designation as to series, in the form attached hereto as Exhibit E (the “Series D Certificate of
Elimination”).

     

    (e)           Each
of the Series C Investors hereby acknowledges and agrees that it will not be
entitled to an adjustment to either the conversion price of the shares of Series
C Preferred Stock or an adjustment to the exercise price of warrants issued to
it in connection with the sale of Series A Preferred Stock, as a result of the
Series D Exchange or the sale of Series E Preferred Stock to
Purdue.  For the avoidance of doubt, this acknowledgement is limited
to the transactions contemplated hereby and does not affect the rights,
privileges and preferences of the Series C Preferred Stock, except as expressly
provided herein.

     

    2.     
      Seniority of Series E
Preferred Stock.  Each of the Series C Investors hereby agree
that the Series E Preferred Stock will be entitled to seniority as to the
payment of dividends and liquidation preference in relation to the Series C
Preferred Stock and that all references to Series B Preferred Stock in the
Series C Certificate of Designations shall be deemed to be references to the
Series E Preferred Stock.

     

    3.     
      Transferees.  Each
of the Series C Investors hereby agree that any transferees of any Series C
Preferred Stock, other than a transferee who is already a Party, shall be
required as a condition of such transfer to agree in writing that they will
receive and hold such shares of Series C Preferred Stock subject to the
provisions of this Agreement.

     

    4.     
      Representations and
Warranties of Company.  The Company represents and warrants to
and agrees with each Series C Investor that:

     

    (a)           after
the issuance of the Series E Preferred Stock and the filing of the Series E
Certificate of Designations, the Series C Preferred Stock shall rank junior to
the Series E Preferred Stock but shall rank senior to any and all other
outstanding preferred stock or equity securities of the
Company;


    
      
         


      

      
        36

        
          

        

      

      
         


      

    


    (b)           Following
the Series D Exchange, the Company will not reissue any shares of Series B
Preferred Stock or Series D Preferred Stock.

     

    5.      
     Further
Assurances.  Each Party hereto shall do and perform or cause to
be done and performed all such further acts and shall execute and deliver all
such other agreements, certificates, instruments and documents as any other
Party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby and thereby.

     

    6.    
       Choice of
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to conflicts of
laws principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either Party against the other
concerning the transactions contemplated by this Agreement 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 AGREEMENT AND OTHER
AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH ON BEHALF OF
THE COMPANY 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
its reasonable attorney's fees and costs. In the event that any provision of
this Agreement 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.

     

    7.        
   Notices.  Unless
otherwise provided, any notice required or permitted under this Agreement 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 telecopier, 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 (3) Business Days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by a nationally recognized overnight air courier, then such notice shall
be deemed given one (1) Business Day after delivery to such
carrier.  All notices shall be addressed to the Party to be notified
at the address as follows, or at such other address as such Party may designate
by ten (10) days’ advance written notice to the other Party:

     

    If to the
Company:

     

    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

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    Boston,
MA 02210

    Attn:  Paul
Bork

    Fax:  (617)
832-7000

     

    If to any
of the Series C Investors:

     

    To the
addresses set forth on the signature page hereto.

     

    With a
copy to:

     

    Grushko
& Mittman, P.C.

    551 Fifth
Avenue, Suite 1601

    New York,
NY 10176

    Attn:  Edward
Grushko, Esq.

    Fax:  (212)
697-3575

     

    8.        
    Counterparts.  This
Agreement 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 Agreement.  Counterpart signature pages to this Agreement
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.

     

    9.   
        This Agreement shall be null and
void and of no further force and effect if the filing of the Series E
Certificate of Designations, the execution of the Series D Exchange Agreement,
the execution of the Purdue Securities Purchase Agreement and the consummation
of the Series D Exchange do not occur on or before 5:00 p.m., New York time, on
February 27, 2009.


    
      
         


      

      
        38

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, each of the Parties has executed this Agreement as of the date
first written above.


     

    
      
        
          
            	
                    NOVELOS
      THERAPEUTICS, INC.

                  
	 
      	 
      
	
                    By:

                  	 
      
	
                    Name: 

                  	
                    Harry
      S. Palmin

                  
	
                     

                  	
                    
                      Title:
      President and Chief Executive
  Officer

                    

                  


          

        

      

    

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          LONGVIEW
      FUND, LP

                                        	 
      	
                                          LONGVIEW
      EQUITY FUND, LP

                                        
	 
      	 
      	 
      
	
                                          By:

                                        	 
      	 
      	
                                          By:

                                        	 
      
	
                                          Name: 

                                        	 
      	 
      	
                                          Name: 

                                        	 
      
	
                                          Title:

                                        	 
      	 
      	
                                          Title:

                                        	 
      
	
                                          Address:

                                        	 
      	
                                          Address:

                                        
	 
      	 
      	 
      
	
                                          SUNRISE
      EQUITY PARTNERS, LP

                                        	 
      	
                                          LONGVIEW
      INTERNATIONAL EQUITY FUND, LP

                                        
	 
      	 
      	 
      
	
                                          By:

                                        	 
      	 
      	
                                          By:

                                        	 
      
	
                                          Name:

                                        	 
      	 
      	
                                          Name:

                                        	 
      
	
                                          Title:

                                        	 
      	 
      	
                                          Title:

                                        	 
      
	
                                          Address:

                                        	 
      	
                                          Address:

                                        


                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         


      

      
        39

        
          

        

      

      
         


      

    


    Exhibit
E

    


    Form
of Company Counsel Opinion

     

    February
___, 2009

    


    Purdue
Pharma L.P.

    One
Stamford Forum

    201
Tresser Blvd.

    Stamford,
CT  06901-3431

    


    
      	
            	
              Re:

            	
              Securities
      Purchase Agreement

            


    

    


    Ladies
and Gentlemen:

     

    We have acted as counsel for Novelos
Therapeutics, Inc., a Delaware corporation (the “Company”), in
connection with the negotiation of (i) the Securities Purchase Agreement by and
between Purdue Pharma, L.P. (the “Purchaser”) and the
Company dated as of the date hereof (the “Purchase Agreement”)
and (ii) the Registration Rights Agreement between the Purchaser, the Company
and certain other parties thereto dated as of the date hereof (the “Registration Rights
Agreement” and, together with the Purchase Agreement, the “Transaction
Documents”). The Purchase Agreement provides for the issuance and sale by
the Company of (i) 200 shares of a newly created series of the Company’s
Preferred Stock, designated “Series E Convertible Preferred Stock,” par value
$0.00001 per share (the “Preferred Stock”),
which Preferred Stock shall have the rights, preferences and privileges set
forth in the Certificate of Designations, Preferences and Rights of such
Preferred Stock (the “Certificate of
Designations”), shall have a stated value of $50,000.00 per share and
shall initially be convertible into shares of the Company's Common Stock, par
value $0.00001 per share (the “Common Stock”), at a
price of $0.65 per share for an aggregate of 15,384,615 shares of Common Stock,
and (ii) a warrant to purchase up to 9,230,769 shares of Common Stock of the
Company (the “Warrant”).  The
shares of Common Stock issuable upon conversion of the Preferred Stock are
referred to herein as the “Conversion Shares”
and the shares of Common Stock issuable upon exercise of the Warrant are
referred to herein as the “Warrant
Shares”.  All terms used herein have the meanings defined for
them in the Purchase Agreement unless otherwise defined herein.

     

    This opinion is furnished to you
pursuant to the Purchase Agreement.  In rendering the opinions
expressed below, we have examined originals or copies of: (i) the Transaction
Documents, (ii) the Warrant, (iii) the Certificate of Designations, (iv) the
Company’s Certificate of Incorporation, as amended through the date hereof
(“Certificate of
Incorporation”), (v) the Company’s By-laws, as in effect on the date
hereof (the “By-laws”), (vi) a
Secretary’s Certificate from the Company, dated as of the date hereof, issued
pursuant to Section 7.1(f) of the Purchase Agreement and (vii) a Certificate
executed by the Company’s Chief Executive Officer or its Chief Financial
Officer, dated as of the date hereof, and issued pursuant to Section 7.1 of the
Purchase Agreement, and we have examined and considered such corporate records,
certificates and matters of law as we have deemed appropriate as a basis for our
opinions set forth below.  In rendering the opinions expressed below,
we have relied, as to factual matters, upon the representations and warranties
of the Company contained in the Transaction Documents.


    
      
         


      

      
        40

        
          

        

      

      
         


      

    


    Based upon and subject to the
foregoing, we are of the opinion that:

     

    1.      
     The Company is a corporation validly existing and
in good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as it is currently being
conducted, to own, lease and operate its properties and assets, and to enter
into and perform its obligations under the Transaction Documents and the
Warrant.  The Company is qualified as a foreign corporation to do
business and is in good standing in the Commonwealth of
Massachusetts.

     

    2.   
        The authorized capital stock of
the Company consists of 150,000,000 shares of Common Stock and 7,000 shares of
preferred stock, $.00001 par value per share.

     

    3.    
       The execution, delivery and
performance by the Company of the Transaction Documents, the issuance of the
Preferred Stock and the Warrant, the issuance of the Conversion Shares upon due
conversion of the Preferred Stock and the issuance of the Warrant Shares upon
due exercise of the Warrant have been duly authorized or reserved for issuance
by all requisite corporate action on the part of the Company and do not require
any further approval of its directors or stockholders.

     

    4.     
      Each of the Transaction Documents and the
Warrant has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms.

     

    5.   
        The Certificate of Designations
has been duly executed on behalf of the Company and filed with the Secretary of
State of the State of Delaware.

     

    6.    
       The execution and delivery by the
Company of each of the Transaction Documents, the issuance of the Preferred
Stock and Warrant, the issuance of the Conversion Shares upon due conversion of
the Preferred Stock and the issuance of the Warrant Shares upon due exercise of
the Warrant and the performance by the Company of the Transaction Documents will
not violate or contravene or be in conflict with (a) any provision of the
Certificate of Incorporation or By-laws; (b) any provision of the General
Corporation Law of the State of Delaware and any provision of any federal or
Massachusetts law, rule or regulation applicable to the Company in transactions
of the nature contemplated by the Transaction Documents and the Warrant;
(c) any order, judgment or decree of any court or other governmental agency
which is known to us and which is binding on the Company or any of its property;
or (d) any agreement, indenture or other written agreement or understanding to
which the Company is a party which has been identified as a material agreement
in the certificate of the Chief Executive Officer of the Company attached hereto
(collectively, “Material Agreements”)
or cause any acceleration under, or cause the creation of any lien, charge or
encumbrance upon the property or assets of the Company pursuant to any of the
Material Agreements.


    
      
         


      

      
        41

        
          

        

      

      
         


      

    


    7.        
   No further consents, approvals, authorizations, registrations,
declarations or filings are required to be obtained or made by the Company from
or with any federal or Massachusetts governmental authority or pursuant to the
General Corporation Law of the State of Delaware or from any other Person under
any Material Agreement in order for it to execute and deliver each of the
Transaction Documents, to issue the Preferred Stock and Warrant, to issue the
Conversion Shares upon due conversion of the Preferred Stock, to issue the
Warrant Shares upon due exercise of the Warrant and to perform its obligations
under the Transaction Documents, other than those consents, approvals,
authorizations, registrations, declarations or filings that have already been
obtained and remain in full force and effect and except for (a)  the filing
of a Form D (the “Form D”) with
the Securities and Exchange Commission pursuant to Regulation D promulgated
under the Securities Act of 1933, as amended (the “Securities Act”) and
(b) the filing of the Form D with requisite state
jurisdictions.

     

    8.     
      The shares of Preferred Stock, upon payment
as provided in the Purchase Agreement, will be validly issued, fully paid and
non-assessable. The Conversion Shares and the Warrant Shares have been duly
authorized and, upon issuance and delivery upon conversion or exercise, as the
case may be, will be validly issued, fully paid and nonassessable.

     

    9.      
     Assuming the accuracy of the representations and
warranties of the Purchaser set forth in Section 6 of the Purchase Agreement,
the offer, issuance and sale to the Purchaser pursuant to the Purchase Agreement
of (i) the Preferred Stock and Warrant, (ii) the Conversion Shares if the
Preferred Stock were converted by the Purchaser on the date hereof and (iii) the
Warrant Shares issuable upon exercise of the Warrant if the Warrant were
exercised by the Purchaser on the date hereof, are exempt from the registration
requirements of the Securities Act.

     

    10.           The
issuance of the Preferred Stock, Warrant, Conversion Shares upon due conversion
of the Preferred Stock and Warrant Shares upon due exercise of the Warrant are
not subject to any preemptive or similar statutory rights under the General
Corporation Law of the State of Delaware, the Certificate of Incorporation or
the By-laws, or similar contractual rights granted by the Company (except for
any such contractual rights as have been waived) pursuant to any Material
Agreement.

     

    11.           The
Company is not, and as a result of and immediately upon consummation of the
transactions contemplated herein will not be an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

     

    The
opinions expressed herein are subject to the following assumptions, limitations,
qualifications and exceptions:

     

    (a)           We
have made such legal and factual examinations and inquiries as we have deemed
advisable or necessary for the purpose of rendering this opinion.

     

    (b)           We
have examined, among other things, originals or copies of such corporate records
of the Company, certificates of public officials and such other documents and
questions of law that we consider necessary or advisable for the purpose of
rendering this opinion.  In such examination we have assumed the
genuineness of all signatures or original documents, the authenticity and
completeness of all documents submitted to us as originals, the conformity to
original documents of all copies submitted to us as copies thereof, the legal
capacity of natural persons, and the due execution and delivery of all documents
(except as to due execution and delivery by the Company) where due execution and
delivery are a prerequisite to the effectiveness thereof.


    
      
         


      

      
        42

        
          

        

      

      
         


      

    


    (c)           For
purposes of this opinion, we have assumed that you have all requisite power and
authority, and have taken any and all necessary corporate action, to execute and
deliver the Transaction Documents, and we are assuming that the representations
and warranties made by the Purchaser in the Transaction Documents and pursuant
thereto are true and correct.

     

    (d)           Our
opinion is based upon our knowledge of the facts as of the date hereof and
assumes no event will take place in the future which would affect the opinions
set forth herein other than future events contemplated by the Transaction
Documents.  We assume no duty to communicate with you with respect to
any change in law or facts which comes to our attention hereafter.

     

    (e)           In
rendering the opinion in paragraph 1 with respect to legal existence and good
standing of the Company in the State of Delaware, we have relied solely upon a
certificate of the Secretary of State of Delaware and we express such opinion as
of the date of such certificate.  In rendering the opinion in
paragraph 1 with respect to the qualification and good standing of the Company
in The Commonwealth of Massachusetts, we have relied solely upon a certificate
of the Secretary of State of Massachusetts and we express such opinion as of the
date of such certificate.  We express no opinion as to the tax good
standing of the Company.

     

    We have
made such examination of Massachusetts law, federal law, and the Delaware
General Corporation Law as we have deemed necessary for the purpose of this
opinion.  In rendering opinions concerning the Delaware General
Corporation Law, we have, with your consent, relied exclusively upon a review of
published statutes.  We express no opinion herein as to the laws of
any jurisdiction other than The Commonwealth of Massachusetts, the federal laws
of the United States of America and the Delaware General Corporation
Law.  We note that the Transaction Documents and the Warrant purport
to be governed by the laws of the State of New York.  To the extent
that any of the opinions expressed above relate to or may require application of
any law of the State of New York, we have assumed, with your permission, that
the applicable New York law is equivalent to Massachusetts law.

    


    The
opinions expressed herein are qualified to the extent that (1) the
enforceability of any provisions of the Transaction Documents or any instrument
or of any right granted thereunder may be subject to or affected by any
bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or
other similar law of general application relating to or affecting the rights or
remedies of creditors generally, which law may be in effect from time to time;
(2) the remedy of specific performance or any other equitable remedy may be
unavailable or may be withheld as a matter of judicial discretion; (3) equitable
principles and principles of public policy may be applied in construing or
enforcing the provisions of the Transaction Documents or of any other agreement,
instrument or document; and (4) the enforceability, validity or binding effect
of any remedial provision of the Transaction Documents may be limited by
applicable law which may limit particular rights and remedies.  In
addition, the opinions expressed herein are subject to the qualification that
the enforcement of any of your rights are in all cases subject to your implied
duty of good faith and fair dealing.


    
      
         


      

      
        43

        
          

        

      

      
         


      

    


    We
express no opinion herein as to the validity or enforceability of any provision
of the Transaction Documents or any other instrument or document to the extent
that such provision purports to (1) constitute a waiver by the Company of any
statutory right except where advance waiver is expressly permitted by the
relevant statute; (2) require the Company to indemnify or to hold harmless you
or any other person or entity from the consequences of any negligent or other
wrongful act or omission of you or such other person or entity; (3) provide for
indemnification or contribution by the Company in connection with the
Transaction Documents, the transactions contemplated thereby or otherwise to the
extent such indemnification or contribution may be limited by applicable laws or
as a matter of public policy; or (4) constitute a waiver of any right to a
hearing on or adjudication of any issue or the right to trial by
jury.

     

    This
opinion shall be interpreted in accordance with the Legal Opinions Principles
issued by the Committee on Legal Opinions of the American Bar Association’s
Business Law Section as published in 53 Business Lawyer 831 (May
1998).

     

    This
opinion is furnished to the Purchaser solely for its benefit in connection with
the transactions described above and, except as otherwise expressly set forth
herein, may not be relied upon by any other person or for any other purpose
without our prior written consent.

     

    
      
        
          
            
              
                	
                        Very
      truly yours,

                      
	 
      	 
      
	
                        FOLEY
      HOAG LLP

                      
	 
      	 
      
	
                        By: 

                      	 
      
	 
      	
                        A
      Partner

                      


              

            

          

        

      

    

     

    
      
         


      

      
        44

        
          

        

      

      
         


      

    


    Exhibit
F

    


    Form
of Collaboration Agreement

    


    [To
be filed]



    
      
         


      

      
        45

        
          

        

      

      
         


      

    


    Exhibit
G

    


    Novelos
Therapeutics, Inc.

    Confidential
Purchaser Questionnaire

     

    Before
any sale of Securities by Novelos Therapeutics, Inc. can be made to you, this
Questionnaire must be completed and returned to Novelos Therapeutics, One
Gateway Center, Suite 504, Newton, MA 02458; Attention: Joanne
Protano.

     

    
      	
              1.

            	
              IF
      YOU ARE AN INDIVIDUAL PLEASE FILL IN THE IDENTIFICATION QUESTIONS IN (A)
      IF YOU ARE AN ENTITY PLEASE FILL IN THE IDENTIFICATION QUESTIONS IN
      (B)

            


    

     

    A.           INDIVIDUAL
IDENTIFICATION QUESTIONS

     

    Name

    (Exact
name as it should appear on stock certificate)

    


    Residence
Address

    


    Home
Telephone Number

    


    Fax
Number

    


    Date of Birth


     

    Social Security Number

     

    B.          
IDENTIFICATION QUESTIONS FOR ENTITIES

     

    Name
(Exact name as it will appear on stock certificate)

    


    Address
of Principal Place of Business

    


    State (or
Country) of Formation or Incorporation

    


    Contact
Person

    


    Telephone
Number (  )

    


    Type of
Entity

      (corporation,
partnership, trust, etc.)

    


    Was
entity formed for the purpose of this investment?   Yes:
____    No: ____

    


    2.           
DESCRIPTION
OF INVESTOR

     

    The
following information is required to ascertain whether you would be deemed an
“accredited investor” as defined in Rule 501 of Regulation D under the
Securities Act.  Please check whether you are any of the
following:

     

    
      	
               
      

            	
               ̈

            	
              a
      corporation or partnership with total assets in excess of $5,000,000, not
      organized for the purpose of this particular
  investment

            


    

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
               ̈

            	
              private
      business development company as defined in Section 202(a)(22) of the
      Investment Advisers Act of 1940, a U.S. venture capital fund which invests
      primarily through private placements in non-publicly traded securities and
      makes available (either directly or through co-investors) to the portfolio
      companies significant guidance concerning management, operations or
      business objectives

            


    

     

    
      	
               
      

            	
               ̈

            	
              a
      Small Business Investment Company licensed by the U.S. Small Business
      Administration under Section 301(c) or (d) of the Small Business
      Investment Act of 1958

            


    

     

    
      	
               
      

            	
               ̈

            	
              an
      investment company registered under the Investment Company Act of 1940 or
      a business development company as defined in Section 2(a)(48) of that
      Act

            


    

     

    
      	
               
      

            	
               ̈

            	
              a
      trust not organized to make this particular investment, with total assets
      in excess of $5,000,000 whose purchase is directed by a sophisticated
      person as described in Rule 506(b)(2)(ii) of the Securities Act of
      1933 and who completed item 4 below of this
  questionnaire

            


    

     

    
      	
               
      

            	
               ̈

            	
              a
      bank as defined in Section 3(a)(2) or a savings and loan association
      or other institution defined in Section 3(a)(5)(A) of the Securities
      Act of 1933 acting in either an individual or fiduciary
      capacity

            


    

     

    
      	
               
      

            	
               ̈

            	
              an
      insurance company as defined in Section 2(13) of the Securities Act
      of 1933

            


    

     

    
      	
               
      

            	
               ̈

            	
              an
      employee benefit plan within the meaning of Title I of the Employee
      Retirement Income Security Act of 1974 (i) whose investment decision
      is made by a fiduciary which is  either a bank, savings and loan
      association, insurance company, or registered investment advisor, or
      (ii) whose total assets exceed $5,000,000, or (iii) if a
      self-directed plan, whose investment decisions are made solely by a person
      who is an accredited investor and who completed Part I of this
      questionnaire;

            


    

     

    
      	
               
      

            	
               ̈

            	
              a
      charitable, religious, educational or other organization described in
      Section 501(c)(3) of the Internal Revenue Code, not formed for the
      purpose of this investment, with total assets in excess of
      $5,000,000

            


    

     

    
      	
               
      

            	
               ̈

            	
              an
      entity not located in the U.S. none of whose equity owners are U.S.
      citizens or U.S. residents

            


    

     

    
      	
               
      

            	
               ̈

            	
              a
      broker or dealer registered under Section 15 of the Securities
      Exchange Act of 1934

            


    

     

    
      	
               
      

            	
               ̈

            	
              a
      plan having assets exceeding $5,000,000 established and maintained by a
      government agency for its employees

            


    

     

    
      	
               
      

            	
               ̈

            	
              an
      individual who had individual income from all sources during each of the
      last two years in excess of $200,000 or the joint
      income of you and your spouse (if married) from all sources during each of
      such years in excess of $300,000 and who reasonably excepts that either your own
      income from all sources during the current year will exceed $200,000 or the joint
      income of you and your spouse (if married) from all sources during the
      current year will exceed $300,000

            


    

     

    
      	
               
      

            	
               ̈

            	
              an
      individual whose net worth as of the date you purchase the securities
      offered, together with the net worth of your spouse, be in excess of
      $1,000,000

            


    

     

    
      	
               
      

            	
               ̈

            	
              an
      entity in which all of the equity owners are accredited
      investors

            


    

     

    3.      
     BUSINESS,
INVESTMENT AND EDUCATIONAL EXPERIENCE

     

    Occupation

    


    Number of Years

    


    Present Employer

    


    Position/Title

    


    Educational
Background

    


    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    Frequency
of prior investment (check one in each column):

     

    
      
        
          
            
              
                	 
      	 	
                        Stocks
      & Bonds

                      	 	
                        Venture
      Capital Investments

                      
	
                        Frequently

                      	 	 
      	 	 
      
	
                        Occasionally

                      	 	 
      	 	 
      
	
                        Never

                      	 	 
      	 	 
      


              

            

          

        

      

    

     

    4.           SIGNATURE

     

    The above
information is true and correct.  The undersigned recognizes that the
Company and its counsel are relying on the truth and accuracy of such
information in reliance on the exemption contained in Subsection 4(2) of
the Securities Act of 1933, as amended, and Regulation D promulgated
thereunder.  The undersigned agrees to notify the Company promptly of
any changes in the foregoing information which may occur prior to the
investment.

     

    Executed at ___________________, on ____________,
2009


     

    
      
        
          	 
      
	
                  (Signature)

                


        

      

    

     

    
      
         


      

      
        48

        
          

        

      

      
         


      

    


    Exhibit
H

    


    Form
of Registration Rights Agreement

    


    [See
Exhibit 10.2 to this filing]


    
      
         


      

      
        49

        
          

        

      

      
         


      

    


    Exhibit
I

    


    Form
of Series D Certificate of Elimination

    


    [See
Exhibit 4.1 to this filing]


    
      
         


      

      
        50

        
          

        

      

      
         


      

    

    


    Schedule
4.2

    


    Company
Wire Instructions


    


    
      
        	
                Bank:

              	
                Citizens
      Bank RI

              
	
                Bank
      Address:

              	
                1
      Citizens Drive, Riverside, RI 02915, USA

              
	 
      	
                617-527-8059

              
	
                Account
      Name:

              	
                Novelos
      Therapeutics, Inc.

              
	
                Account
      Address:

              	
                One
      Gateway Center, Suite 504

              
	 
      	
                Newton,
      MA 02458, USA

              
	
                ABA
      (Routing) #:

              	
                011500120

              
	
                Swift
      Code:

              	
                CTZIUS33

              
	
                Account
      #:

              	
                1132895348

              


      

    

     

    
      
         


      

      
        51

        
          

        

      

      
         


      

    


    Schedule
5.3

    


    Capitalization

    


    5.3(a)(i)  At
the date hereof authorized capital stock of the Company consists of 150,000,000
shares of $.00001 par value common stock and 7,000 shares of preferred
stock.

    


    5.3(a)(ii)
At the date hereof there are 43,975,656 shares of common stock outstanding and
685.5 shares of preferred stock outstanding.

    


    5.3(a)(iii)
At the date hereof there are 7,279,825 shares of common stock issuable pursuant
to the Company’s stock plans.

    


    5.3(a)(iv)
At the date hereof, the following shares are reserved for future issuance upon
exercise of stock options or warrants or conversion of preferred
stock:

    


    
      
        
          
            	
                    Stock
      Options

                  	 	 	7,279,825	 
	
                    Warrants

                  	 	 	28,102,033	 
	
                    Preferred
      stock

                  	 	 	36,829,192	 
	 
      	 	 	 	 
	
                    Total
      shares reserved for future issuance

                  	 	 	72,211,050	 


          

        

      

    

    


    5.3(a)

    


    As of the
date hereof, the Company has the following outstanding warrants:

    


    
      
        
          
            
              
                
                  	
                          Offering

                        	 	
                          Outstanding

                        	 	 	
                          Exercise 

                          Price

                        	 	
                          Expiration Date

                        
	 
      	 	 	 	 	 	 	 
      
	
                          2005
      Bridge Loans

                        	 	 	720,000	 	 	$	0.625	 	
                          April
      1, 2010

                        
	
                          2005
      PIPE - Placement agents and finders

                        	 	 	1,046,143	 	 	$	0.65	 	
                          August
      9, 2010

                        
	
                          Series
      A Preferred (1):

                        	 	 	 	 	 	 	 	 	 
      
	
                               Investors
      – September 30, 2005 closing

                        	 	 	909,090	 	 	$	0.65	 	
                          September
      30, 2010

                        
	
                               Investors
      – October 3, 2005 closing

                        	 	 	60,606	 	 	$	0.65	 	
                          October
      3, 2010

                        
	
                          2006
      PIPE – Investors and placement agents

                        	 	 	11,267,480	 	 	$	2.00	 	
                          March
      7, 2011

                        
	
                          Series
      B Preferred:

                        	 	 	 	 	 	 	 	 	 
      
	
                               Investors

                        	 	 	7,500,000	 	 	$	0.65	 	
                          April
      11, 2013

                        
	
                               Placement
      agents

                        	 	 	900,000	 	 	$	1.25	 	
                          May
      2, 2012

                        
	
                          Series
      C Exchange

                        	 	 	1,333,333	 	 	$	1.25	 	
                          May
      2, 2012

                        
	
                          Series
      D Preferred

                        	 	 	4,365,381	 	 	$	0.65	 	
                          April
      11, 2013

                        
	 
      	 	 	 	 	 	 	 	 	 
      
	
                          Total

                        	 	 	28,102,033	 	 	 	 	 	 
      


                

              

            

          

        

      

    

     

    
      
         


      

      
        52

        
          

        

      

      
         


      

    


    As of the
date hereof, the Company has the following outstanding stock
options:

    


    
      
        
          
            	
                    Issued
      pursuant to the 2000 Option Plan

                  	 	 	56,047	 
	
                    Issued
      during 2004 and 2005 pursuant to no formalized plan

                  	 	 	2,453,778	 
	
                    Issued
      pursuant to the 2006 Option Plan

                  	 	 	4,770,000	 
	
                              Total
      outstanding options

                  	 	 	7,279,825	 


          

        

      

    

    


    As of the
date hereof, the Company has the following convertible preferred stock
outstanding:

    


    272 shares of Series C Preferred
Stock -  The shares of Series C preferred stock are convertible
into a total of 5,021,537 shares of common stock.  The Series C
Preferred Stock has an annual dividend rate of 8% until October 1, 2008 and
thereafter has an annual dividend rate of 20%.  The dividends are
payable quarterly after all outstanding dividends on the Series D Preferred
Stock have been paid.  Additional details regarding the Series C
preferred stock may be found in the Certificate of Designations of Series
C  Cumulative Convertible Preferred Stock and the Agreement to
Exchange and Consent dated May 1, 2007.

    


    413.5
shares of Series D Preferred Stock -
The shares of Series D Preferred Stock are convertible any time after
issuance at the option of the holder at $0.65 per share of common stock into a
total of 31,807,655 shares of common stock.  If there is an effective
registration statement covering the shares of common stock underlying the Series
D Preferred Stock and the VWAP, as defined in the Series D Certificate of
Designations, of the Company’s common stock exceeds $2.00 for 20 consecutive
trading days, then the outstanding Series D Preferred Stock will automatically
convert into common stock at the conversion price then in effect.  The
conversion price will be subject to adjustment for stock dividends, stock splits
or similar capital reorganizations. The holders of Series D Preferred Stock are
entitled to vote on all matters on which the holders of common stock are
entitled to vote.  The Series D Preferred Stock has an annual dividend
rate of 9%, payable semi-annually on June 30 and December 31.  Such
dividends may be paid in cash or in registered shares of the Company’s common
stock at the Company’s option, subject to certain conditions. The Series D
Preferred Stock ranks senior to all other outstanding series of preferred stock
and common stock as to the payment of dividends and the distribution of assets
upon voluntary or involuntary liquidation, dissolution or winding up of the
Company’s affairs.  The holders of the Series D Preferred Stock have
certain registration rights that are described in the Registration Rights
Agreement dated April 11, 2008, the Registration Rights Agreement dated May 2,
2007 and the Amendment to Registration Rights Agreement dated April 11, 2008.
Additional details regarding the Series D Preferred Stock and the rights of the
Series D stockholders may be found in Certificate of Designations of Series D
Convertible Preferred Stock and the Securities Purchase Agreement dated March
26, 2008.

    


    As of the
date hereof, the following rights existed with respect to shares of common stock
issued in connection with the Securities Purchase Agreement dated August 14,
2008:

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    On August
15, 2008, the Company sold 4,615,384 shares of its common stock to two related
accredited investors for gross proceeds of approximately $3 million, pursuant to
a securities purchase agreement (the “Common Stock Purchase Agreement”) dated
August 14, 2008. The Common Stock Purchase Agreement provides that on and after
six months following the closing, if there is not an available exemption from
Rule 144 under the Securities Act to permit the sale of the common stock by the
purchasers, then the Company will use its best efforts to file a registration
statement (the “Registration Statement”) under the Securities Act with the SEC
covering the resale of the common stock.  It further provides that the
Company will use its best efforts to maintain the effectiveness of the
Registration Statement until one year from closing or until all the common stock
has been sold or transferred, whichever occurs first.  The Common
Stock Purchase Agreement also provides that if, prior to the public announcement
of the conclusion of the Company’s NOV-002 Phase III clinical trial in non-small
cell lung cancer (the “Announcement Date”), the Company completes a Subsequent
Equity Financing (as defined therein) and the holders of shares of our Series D
Preferred Stock (the “Series D Shares”) receive a reduction in the effective
conversion price or exercise price, as applicable, of the Series D Shares or
common stock purchase warrants issued in connection with the issuance of the
Series D Shares or receive additional shares of common stock, as consideration
in connection with any consent given by the holders of the Series D Shares, then
the purchasers shall be entitled to receive substantially equivalent
consideration, on a proportional basis, in the form of additional shares of
common stock based on the formula detailed in the Common Stock Purchase
Agreement.

     

    The
following is a listing of the Company’s documents relating to the rights of
stockholders, or holders of securities convertible into or exercisable for the
Company’s common stock as related to the Company’s warrants, stock options,
convertible preferred stock and common stock described above.

    
      


      
        
          
            	 
      	 
      	
                    EDGAR
      Reference

                  	 
      	 
      
	
                    Description

                  	 
      	
                    Form

                  	 
      	
                    Filing Date

                  	 
      	
                    Exhibit

                    No.

                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                    Agreement
      and plan of merger among Common Horizons, Inc., Nove Acquisition, Inc. and
      Novelos Therapeutics, Inc. dated May 26, 2005

                  	 
      	
                    8-K

                  	 
      	
                    June
      2, 2005

                  	 
      	
                    99.2

                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                    Agreement
      and plan of merger between Common Horizons and Novelos Therapeutics, Inc.
      dated June 7, 2005

                  	 
      	
                    10-QSB

                  	 
      	
                    August
      15, 2005

                  	 
      	
                    2.2

                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                    Amended
      and Restated Certificate of Incorporation filed as Exhibit A to the
      Certificate of Merger merging Nove Acquisition, Inc. with and into Novelos
      Therapeutics, Inc. dated May 26, 2005

                  	
                      

                  	
                    10-QSB

                  	
                      

                  	
                    August
      10, 2007

                  	
                      

                  	
                    3.1

                  


          

        

      

       

      
        
          
          

        

        
          54

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              	 
      	 
      	
                      EDGAR
      Reference

                    	 
      	 
      
	
                      Description

                    	 
      	
                      Form

                    	 
      	
                      Filing Date

                    	 
      	
                      Exhibit

                      No.

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Certificate
      of Merger merging Common Horizons, Inc. with and into Novelos
      Therapeutics, Inc. dated June 13, 2005

                    	 
      	
                      10-QSB

                    	 
      	
                      August
      10, 2007

                    	 
      	
                      3.2

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Certificate
      of Correction dated March 3, 2006

                    	 
      	
                      10-QSB

                    	 
      	
                      August
      10, 2007

                    	 
      	
                      3.3

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Certificate
      of Amendment to Amended and Restated Certificate of Incorporation dated
      July 16, 2007

                    	 
      	
                      10-QSB

                    	 
      	
                      August
      10, 2007

                    	 
      	
                      3.4

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Certificate
      of Designations of Series B  convertible preferred
      stock

                    	 
      	
                      10-QSB

                    	 
      	
                      August
      10, 2007

                    	 
      	
                      3.5

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Certificate
      of Designations of Series C  cumulative convertible preferred
      stock

                    	 
      	
                      10-QSB

                    	 
      	
                      August
      10, 2007

                    	 
      	
                      3.6

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Certificate
      of Designations of Series D convertible preferred stock

                    	 
      	
                      8-K

                    	 
      	
                      April
      14, 2008

                    	 
      	
                      4.1

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Certificate
      of Elimination Series A 8% Cumulative Convertible Preferred Stock of
      Novelos Therapeutics, Inc.

                    	 
      	
                      8-K

                    	 
      	
                      April
      14, 2008

                    	 
      	
                      4.2

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      By-Laws

                    	 
      	
                      8-K

                    	 
      	
                      June
      17, 2005

                    	 
      	
                      2

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      2000
      Stock Option and Incentive Plan

                    	 
      	
                      SB-2

                    	 
      	
                      November
      16, 2005

                    	 
      	
                      10.2

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Form
      of 2004 non-plan non-qualified stock option

                    	 
      	
                      SB-2

                    	 
      	
                      November
      16, 2005

                    	 
      	
                      10.3

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Form
      of non-plan non-qualified stock option used from February to May
      2005

                    	 
      	
                      SB-2

                    	 
      	
                      November
      16, 2005

                    	 
      	
                      10.4

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Form
      of non-plan non-qualified stock option used after May 2005

                    	 
      	
                      SB-2

                    	 
      	
                      November
      16, 2005

                    	 
      	
                      10.5

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Form
      of common stock purchase warrant issued in March 2005

                    	
                        

                    	
                      SB-2

                    	
                        

                    	
                      November
      16, 2005

                    	
                        

                    	
                      10.6

                    


            

          

        

      

       

      
        
          
          

        

        
          55

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              
                	 
      	 
      	
                        EDGAR
      Reference

                      	 
      	 
      
	 	 	 	 	 	 	 
	
                        Description

                      	 
      	
                        Form

                      	 
      	
                        Filing Date

                      	 
      	
                        Exhibit

                        No.

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Form
      of securities purchase agreement dated May 2005

                      	 
      	
                        8-K

                      	 
      	
                        June
      2, 2005

                      	 
      	
                        99.1

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Form
      of subscription agreement dated September 30, 2005

                      	 
      	
                        8-K

                      	 
      	
                        October
      3, 2005

                      	 
      	
                        99.1

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Form
      of Class A common stock purchase warrant dated September 30,
      2005

                      	 
      	
                        8-K

                      	 
      	
                        October
      3, 2005

                      	 
      	
                        99.3

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Form
      of securities purchase agreement dated March 2, 2006

                      	 
      	
                        8-K

                      	 
      	
                        March
      3, 2006

                      	 
      	
                        99.2

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Form
      of common stock purchase warrant dated March 2006

                      	 
      	
                        8-K

                      	 
      	
                        March
      3, 2006

                      	 
      	
                        99.3

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        2006
      Stock Incentive Plan

                      	 
      	
                        10-QSB

                      	 
      	
                        November
      6, 2006

                      	 
      	
                        10.1

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Form
      of Incentive Stock Option under Novelos Therapeutics, Inc.’s 2006 Stock
      Incentive Plan

                      	 
      	
                        8-K

                      	 
      	
                        December
      15, 2006

                      	 
      	
                        10.1

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Form
      of Non-Statutory Stock Option under Novelos Therapeutics, Inc.’s 2006
      Stock Incentive Plan

                      	 
      	
                        8-K

                      	 
      	
                        December
      15, 2006

                      	 
      	
                        10.2

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Form
      of Non-Statutory Director Stock Option under Novelos Therapeutics, Inc.’s
      2006 Stock Incentive Plan

                      	 
      	
                        8-K

                      	 
      	
                        December
      15, 2006

                      	 
      	
                        10.3

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Securities
      Purchase Agreement dated April 12, 2007

                      	 
      	
                        10-QSB

                      	 
      	
                        May
      8, 2007

                      	 
      	
                        10.1

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Letter
      Amendment dated May 2, 2007 to the Securities Purchase
      Agreement

                      	 
      	
                        10-QSB

                      	 
      	
                        May
      8, 2007

                      	 
      	
                        10.2

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Registration
      Rights Agreement dated May 2, 2007

                      	 
      	
                        10-QSB

                      	 
      	
                        May
      8, 2007

                      	 
      	
                        10.3

                      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                        Agreement
      to Exchange and Consent dated May 1, 2007

                      	
                          

                      	
                        10-QSB

                      	
                          

                      	
                        May
      8, 2007

                      	
                          

                      	
                        10.5

                      


              

            

          

        

      

       

      
        
          
          

        

        
          56

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              	 
      	 
      	
                      EDGAR
      Reference

                    	 
      	 
      
	 	 	 	 	 	 	 
	
                      Description

                    	 
      	
                      Form

                    	 
      	
                      Filing Date

                    	 
      	
                      Exhibit

                      No.

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Form
      of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the
      Securities Purchase Agreement dated April 12, 2007

                    	 
      	
                      10-QSB

                    	 
      	
                      May
      8, 2007

                    	 
      	
                      4.1

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Form
      of Common Stock Purchase Warrant dated May 2, 2007 issued pursuant to the
      Agreement to Exchange and Consent dated May 2, 2007

                    	 
      	
                      10-QSB

                    	 
      	
                      May
      8, 2007

                    	 
      	
                      4.2

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Securities
      Purchase Agreement dated March 26, 2008

                    	 
      	
                      8-K

                    	 
      	
                      April
      14, 2008

                    	 
      	
                      10.1

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Amendment
      to Securities Purchase Agreement dated April 9, 2008

                    	 
      	
                      8-K

                    	 
      	
                      April
      14, 2008

                    	 
      	
                      10.2

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Registration
      Rights Agreement dated April 11, 2008

                    	 
      	
                      8-K

                    	 
      	
                      April
      14, 2008

                    	 
      	
                      10.3

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Form
      of Common Stock Purchase Warrant dated April 11, 2008 issued pursuant to
      the Securities Purchase Agreement dated March 26, 2008

                    	 
      	
                      8-K

                    	 
      	
                      April
      14, 2008

                    	 
      	
                      4.3

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Warrant
      Amendment Agreement dated April 11, 2008

                    	 
      	
                      8-K

                    	 
      	
                      April
      14, 2008

                    	 
      	
                      10.5

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Amendment
      to Registration Rights Agreement dated April 11, 2008

                    	 
      	
                      8-K

                    	 
      	
                      April
      14, 2008

                    	 
      	
                      10.4

                    
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Securities
      Purchase Agreement dated August 14, 2008

                    	
                        

                    	
                      8-K

                    	
                        

                    	
                      August
      18, 2008

                    	
                        

                    	
                      10.1

                    


            

          

        

      

      


      
        
          
          

        

        
          57

          
            

          

        

        
          
          

        

      

    

    


    Schedule 5.3
(continued)

    


    5.3(b)
Adjustments

    


    The
following table sets forth the pro forma capitalization of the Company on a
fully diluted basis giving effect to (i) the issuance of Preferred Shares and
the Warrant at the time of Closing, (ii) any adjustments in other securities
resulting from the issuance of the Preferred Shares and the Warrant at the time
of Closing, and (iii) the exercise or conversion of all outstanding
securities:

    

      NVLT
- Capital Structure - Pro forma for Purdue Transaction

      


      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	 	
                                  Common Stock Equivalents

                                	 	 	 	 	 	 	 	  
	  	 	
                                  Prior to Transaction

                                	 	 	 	 	 	
                                  Exer./Conv.

                                	 	 	 	 	
                                  Warrant

                                
	  	 	 	 	 	
                                  Pro Forma

                                	 	 	
                                  Price

                                	 	 	
                                  Total cash

                                	 	
                                  Expiration

                                
	  	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                  Cash,
      cash equivalents1

                                	 	 	 	 	 	 	 	 	 	 	$	1,262,452	 	 
      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                  Common
      stock outstanding

                                	 	 	43,975,656	 	 	 	43,975,656	 	 	 	 	 	 	 	 	 
      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                  Preferred
      stock

                                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                  Series
      C

                                	 	 	5,021,537	 	 	 	5,021,537	 	 	$	0.65	 	 	 	 	 	 
      
	
                                  Series
      E (prior D holders)2

                                	 	 	31,807,655	 	 	 	34,264,799	 	 	$	0.65	 	 	 	 	 	 
      
	
                                  Series
      E (Purdue)3

                                	 	 	 	 	 	 	15,384,615	 	 	$	0.65	 	 	$	9,100,000	 	 
      
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                  Warrants

                                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                  2005
      PIPE Placement Agent

                                	 	 	1,046,143	 	 	 	1,046,143	 	 	$	0.65	 	 	$	679,993	 	
                                  August 2010

                                
	
                                  Series
      C

                                	 	 	969,696	 	 	 	969,696	 	 	$	0.65	 	 	$	630,302	 	
                                  October 2010

                                
	
                                  2006
      PIPE4

                                	 	 	11,267,480	 	 	 	12,379,880	 	 	$	1.82	 	 	$	22,531,382	 	
                                  March 2011

                                
	
                                  2005
      Bridge Financing (Pre-IPO)

                                	 	 	720,000	 	 	 	720,000	 	 	$	0.625	 	 	
                                  cashless

                                	 	
                                  April
      2010

                                
	
                                  Series
      C

                                	 	 	1,333,333	 	 	 	1,333,333	 	 	$	1.25	 	 	
                                  cashless

                                	 	
                                  May
      2012

                                
	
                                  Series
      D5

                                	 	 	12,765,381	 	 	 	12,765,381	 	 	$	0.65	 	 	$	8,297,498	 	
                                  12/31/2015

                                
	
                                  Series
      E (Purdue)6

                                	 	 	 	 	 	 	9,230,769	 	 	$	0.65	 	 	$	6,000,000	 	
                                  12/31/2015

                                
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                  Stock
      options outstanding

                                	 	 	7,279,825	 	 	 	7,279,825	 	 	$	0.5987	 	 	$	4,358,720	 	 
      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	$	52,860,346	 	 
      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                  Fully
      diluted shares

                                	 	 	116,186,706	 	 	 	144,371,634	 	 	 	 	 	 	 	 	 	 
      


                        

                      

                    

                  

                

              

            

          

        

      

      


      
        
          	
                  1

                	
                  Represents
      cash at 12/31/08.

                


        

      

      
        
          	
                  2

                	
                  Pro
      forma includes 2,457,144 shares of common stock issuable upon conversion
      of 31.9428750 shares of Series E preferred stock to be issued in exchange
      for dividends accrued from 4/1/08
      through 2/9/09.

                


        

      

      
        
          	
                  3

                	
                  Pro
      forma represents common stock issuable upon the conversion of 200 shares
      of Series E preferred stock to be issued to Purdue in the proposed
      transaction. Estimated proceeds are net of estimated
      transaction costs.

                


        

      

      
        
          	
                  4

                	
                  Pro
      forma includes additional 1,112,400 warrants to be issued pursuant to
      anti-dilution provisions; decrease in warrant strike price from $2.00 to
      $1.82.

                


        

      

      
        
          	
                  5

                	
                  Change
      in expiration and removal of forced exercise provision in connection with
      proposed transaction.

                


        

      

      
        
          	
                  6

                	
                  Pro
      forma includes warrants to be issued in connection with proposed
      transaction.

                


        

      

    

     

    5.3(c) Arrangements
that provide rights for any Person to purchase an equity interest in the Company
consist of the stock options and warrants, previously disclosed in schedule
5.3(a).

    


    5.3(d)
None.


    
      
         


      

      
        58

        
          

        

      

      
         


      

    


    Schedule
5.5

    


    Consents


    


    In
connection with the closing of the preferred stock and warrant financing, we
have received consents from the holders of the Company’s Series C Convertible
Preferred Stock and holders of the Company’s Series D Preferred
Stock.



    
      
         


      

      
        59

        
          

        

      

      
         


      

    


    Schedule
5.7(a)

    


    Material
Adverse Changes

    


    None.


    
      
         


      

      
        60

        
          

        

      

      
         


      

    


     Schedule
5.9

    


    Conflicts

    


    The
Series C Preferred Stock’s Certificate of Designations contains certain
prohibitions on amendments to the Company’s Certificate of Incorporation which
would create a series of capital stock entitled to seniority as to the payment
of dividends or liquidation preference in relation to the Series C Preferred
Stock other than the Series B Preferred Stock.

     

    We have
received a consent from the holders of the Company’s Series C Convertible
Preferred Stock whereby each holder has consented to the issuance of the Series
D Preferred Stock and the filing of the Certificate of Designations setting
forth the relative rights, privileges and preferences of the Series E
Preferred.

     

    The
Series D Preferred Stock’s Certificate of Designations contains certain
prohibitions on the issuance of a security that is senior as to the rights and
preferences of the Series D.

     

    We have
received an executed consent and exchange agreement from the holders of the
Company’s Series D Convertible Preferred Stock whereby each holder has consented
to the issuance of the Series E Preferred Stock and Warrants and the filing of
the Certificate of Designations setting forth the relative rights, privileges
and preferences of the Series E Preferred and will exchange all shares of Series
D Preferred Stock for shares of Series E Preferred Stock effective upon
Closing.


    
      
         


      

      
        61

        
          

        

      

      
         


      

    


    Schedule
5.10

    


    Taxes

    


    None.


    
      
         


      

      
        62

        
          

        

      

      
         


      

    


    Schedule
5.11

    


    Title
to Properties

    


    None.


    
      
         


      

      
        63

        
          

        

      

      
         


      

    


    Schedule 5.14
(a)

    


    Intellectual
Property

    


    None.


    
      
         


      

      
        64

        
          

        

      

      
         


      

    


    Schedule 5.14
(d)

    


    IP
Litigation

    


    None.


    
      
         


      

      
        65

        
          

        

      

      
         


      

    


    Schedule
5.16

    


    Litigation

    


    None.



    
      
         


      

      
        66

        
          

        

      

      
         


      

    


    Schedule
5.19

    


    Brokers
and Finders

    


    Ferghana
Partners, Inc. will be entitled to receive a cash payment of 7% of the proceeds
received by the Company in connection with the sale of Preferred Stock and
Warrants.


    
      
         


      

      
        67

        
          

        

      

      
         


      

    


    Schedule
5.24

    


    Affiliate
Transactions

    


    None.



    
      
         


      

      
        68

        
          

        

      

      
         


      

    


    Schedule
5.28

    


    Indebtedness

    


    None.


    
      
         


      

      
        69

        
          

        

      

      
         


      

    


    Schedule
8.9

    


    Novelos
Budget

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            	
                                                                                     

                                                                                  	 	
                                                                                    2009

                                                                                  	 	 	
                                                                                    2010

                                                                                  	 
	
                                                                                    Compound
      / Indication

                                                                                  	 	 	
                                                                                    Q1

                                                                                  	 	 	 	
                                                                                    Q2

                                                                                  	 	 	 	
                                                                                    Q3

                                                                                  	 	 	 	
                                                                                    Q4

                                                                                  	 	 	 	
                                                                                    Q1

                                                                                  	 	 	 	
                                                                                    Q2

                                                                                  	 	 	 	
                                                                                    Q3

                                                                                  	 	 	 	
                                                                                    Q4

                                                                                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                    NOV-002
      / Lung Cancer

                                                                                  	 	
                                                                                    --------------------Ph3:
      SPA+Fast Track-------------------

                                                                                  	 	 	 	 	 	 	
                                                                                    NDA

                                                                                  	 	 	
                                                                                    -------FDA
      App-------

                                                                                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                    NOV-002
      / Breast Cancer

                                                                                  	 	
                                                                                    ------------------------------------------------------------Phase
      2-----------------------------------

                                                                                  	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                    NOV-002 /
      Cancers1

                                                                                  	 	
                                                                                    ----------------------------------------------------Additional
      Phase
      2s--------------------------------------------------------------------

                                                                                  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                    NOV-002 / Anemia1

                                                                                  	 	
                                                                                  	 	 	 	 	 	 	 	 	 	 	 	-----------------------------------------------------Phase
      2-------------------------
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                    NOV-205 / Hepatitis
      C1

                                                                                  	 	
                                                                                    --------------------------Next
      trial-----------------------------------------------

                                                                                  	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                    Burn estimate2

                                                                                  	 	 	4.3	 	 	 	3.2	 	 	 	2.8	 	 	 	3.5	 	 	 	1.1	 	 	 	1.2	 	 	 	0.9	 	 	 	0.9	 
	
                                                                                    cumulative

                                                                                  	 	 	 	 	 	 	7.5	 	 	 	10.3	 	 	 	13.8	 	 	 	15.0	 	 	 	16.1	 	 	 	17.0	 	 	 	17.9	 
	
                                                                                    funding
      requirement

                                                                                  	 	 	3.1	 	 	 	6.3	 	 	 	9.1	 	 	 	12.6	 	 	 	13.8	 	 	 	14.9	 	 	 	15.8	 	 	 	16.7	 
	
                                                                                    Cash –
      12/31/08

                                                                                  	 	 	1.2	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 


                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    Notes

    


    1Not
included in budget; initiation subject to additional funding

    


    2Estimated
cash burn in 2009 assumes vendor obligations are paid in full by year-end.
Quarterly burn in 2009 may shift between quarters depending on the timing of
vendor payments.

    


    
      
        
          
            	 
      	 	
                    Total

                  	 
	
                    The
      above 2009 annual budget includes:

                  	 	
                    (millions)

                  	 
	 
      	 	 	 
	
                    General
      & administrative costs (excluding rent, utilities and overhead) 3

                  	 	 	1.3	 
	
                    Research
      & development - administrative 4

                  	 	 	1.8	 
	 
      	 	 	3.1	 


          

        

      

    

    


    3Administrative
costs include $1.9 million in employee salaries and bonuses.

    4 Research
& development administrative costs include approximately $250,000 in
consultant costs



    
      
         


      

      
        70