Document:

THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE SOLD,
PLEDGED, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED UNLESS (a) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT, AND ANY
APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (B) EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION
OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS ARE
AVAILABLE.

    

    SENIOR SECURED CONVERTIBLE
NOTE

    

    
      	
              $1,000,000.00

            	
              November
      11, 2009

            
	 
      	
              New
      York, New York

            

    

    

    

    FOR VALUE RECEIVED, Protalex,
Inc., a Delaware corporation (the “Company”), promises to pay to the order of
Niobe Ventures, LLC (“Holder”), at the offices of Morse, Zelnick, Rose &
Lander LLP, 405 Park Avenue, Suite 1401, New York, New York 10022, the principal
sum of ONE MILLION DOLLARS (US$1,000,000.00) with interest thereon at the rate
of three percent (3%) per annum.  Any amounts that remain unpaid after
the Maturity Date shall thereafter bear interest at the rate of twelve percent
(12%) per annum.  Interest as aforesaid shall be calculated on the
basis of actual number of days elapsed over a year of 360 days.

    

    The
principal amount and all accrued interest of this Note is due on November 13,
2012 (the “Maturity Date”).

    

    This Note
is subject to the following additional provisions:

    

    Section
1.            Definitions. For the
purposes hereof, in addition to the terms defined elsewhere in this Note: (a)
capitalized terms not otherwise defined herein have the meanings given to such
terms in the Purchase Agreement, and (b) the following terms shall have the
following meanings:

    

    “Alternate
Consideration” shall have the meaning set forth in Section
4(d)(iii).

    

    “Business Day” means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday in the United States or a day on which banking institutions in the State
of New York are authorized or required by law or other government action to
close.

    

    “Common Stock” means
the common stock, par value $0.00001 per share, of the Company and stock of any
other class into which such shares may hereafter have been reclassified or
changed.

    

    “Common Stock
Equivalents” means any option, warrant, convertible note, preferred stock
or other instrument exercisable for, or convertible into, Common
Stock.

    

    “Conversion Date”
shall have the meaning set forth in Section 3(a) hereof.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    “Conversion Price”
shall have the meaning set forth in Section 3(b).

    

    “Conversion Shares”
means the shares of Common Stock issuable upon conversion of this Note or as
payment of interest, all in accordance with the terms hereof.

    

    “Event of Default”
shall have the meaning set forth in Section 5.

    

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

    

    “Fundamental
Transaction” shall have the meaning set forth in Section 3(d)(ii)
hereof.

    

    “Original Issue Date”
means the date of the first issuance of this Note regardless of the number of
transfers of any Note and regardless of the number of instruments which may be
issued to evidence such Note.

    

    “Person” means a
corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.

    

    “Purchase Agreement”
means the Note and Common Stock Purchase Agreement, dated as of November 11,
2009 to which the Company and the Holder are parties, as amended, modified or
supplemented from time to time in accordance with its terms.

    

    “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

    

    “Security Agreement”
means the Security Agreement dated as of November 11, 2009 by and between the
Company and the Holder.

    

    “Subsidiary” means any
Person in which the Company owns more than 50% of the outstanding
equity.

    

    “Transaction
Documents” means the Purchase Agreement, the Security Agreement and this
Note.

    

    Section
2.            Registration of Transfers
and Exchanges.

    

     a)       
     Different
Denominations. This Note is exchangeable for an equal aggregate principal
amount of Notes of different authorized denominations as requested by the Holder
surrendering the same, No service charge will be made for such registration of
transfer or exchange.

    

     b)        
    Investment
Representations.  This Note has been issued subject to certain
investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the
Purchase Agreement and applicable federal and state securities laws and
regulations.

    

     c)          
  Reliance
on Note Register. Prior to due presentment to the Company for transfer of
this Note, the Company and any agent of the Company may treat the Person in
whose name this Note is duly registered on the Note Register as the owner hereof
for the purpose of receiving payment as herein provided and for all other
purposes, whether or not this Note is overdue, and neither the Company nor any
such agent shall be affected by notice to the contrary.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    Section
3.          Conversion.

    

    a)            Voluntary Conversion.
Subject to any shareholder approval that may be required to authorize enough
authorized but unissued common shares under the Company’s Certificate of
Incorporation, at any time after the Original Issue Date until this Note is no
longer outstanding, the principal and accrued interest due and payable under
this Note shall be convertible into shares of Common Stock at the option of the
Holder, in whole or in part at any time and from time to time, so long and only
to the extent that after taking into consideration all issued and outstanding
common stock shares and the maximum number of shares issuable under all issued
and outstanding convertible securities at the time of conversion, there remain
enough authorized but unissued shares under the Company’s Certificate of
Incorporation that are not previously reserved for issuance under such
convertible securities to effect conversion of this Note.. The Holder shall
effect conversions by delivering to the Company the form of Notice of Conversion
attached hereto as Annex A (a “Notice of Conversion”), specifying therein the
principal amount of Note to be converted and the date on which such conversion
is to be effected (a “Conversion Date”). If no Conversion Date is specified in a
Notice of Conversion, the Conversion Date shall be the date that such Notice of
Conversion is provided hereunder. To effect conversions hereunder, the Holder
shall not be required to physically surrender the Note to the Company unless the
entire principal amount of this Note plus all accrued and unpaid interest
thereon has been so converted. Conversions hereunder shall have the effect of
lowering the outstanding principal amount of this Note in an amount equal to the
applicable conversion. The Holder and the Company shall maintain records showing
the principal amount converted and the date of such conversions. The Company
shall deliver any objection to any Notice of Conversion within 3 Business Days
of receipt of such notice. In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence of
manifest error. The Holder and any assignee, by acceptance of this Note,
acknowledge and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Note, the unpaid and unconverted
principal amount of this Note may be less than the amount stated on the face
hereof. However, at the Company’s request, the Holder shall surrender the Note
to the Company within five (5) Trading Days following such request so that a new
Note reflecting the correct principal amount may be issued to
Holder.

    

    b)            Conversion Price. The
conversion price in effect on any Conversion Date (subject to adjustment herein)
shall initially be equal to $0.046 per share.

    

    c)            Mechanics of
Conversion

    

    i.           Conversion Shares Issuable
Upon Conversion of Principal Amount. The
number of shares of Common Stock issuable upon a conversion hereunder shall be
determined by the quotient obtained by dividing (x) the amount of this Note
(whether principal or accrued but unpaid interest) to be converted by (y) the
Conversion Price.

    

    ii.           Delivery of Certificate Upon
Conversion. Not later than five Trading Days after any Conversion Date,
the Company will deliver to the Holder at an address in the United States (A) a
certificate or certificates representing the Conversion Shares representing the
number of shares of Common Stock being acquired upon the conversion of Notes
(including, if so timely elected by the Company, shares of Common Stock
representing the payment of accrued interest) and (B) a bank check or wire
transfer in the amount of accrued and unpaid interest (if the Company is
required to pay accrued interest in cash).

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    iii.           Reservation of Shares
Issuable Upon Conversion. The Company covenants that it will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock solely for the purpose of issuance upon conversion of this Note (after
taking into account all existing issued and outstanding shares of Common Stock
and all shares reserved for issuance under the Company’s issued and outstanding
convertible securities), free from preemptive rights or any other actual
contingent purchase rights of persons other than the Holder, not less than such
number of shares of the Common Stock as shall be issuable (taking into account
the adjustments and restrictions of Section 4) upon the conversion of the
outstanding principal amount and accrued interest under this Note. The Holder
acknowledges that on the issuance date of this Note, the Company does not have
adequate shares authorized to fulfill the foregoing obligation; however, the
Company covenants and agrees that it will use its commercially reasonable
efforts after the Closing to obtain stockholder approval to authorize an
amendment to its Certificate of Incorporation to provide for an adequate number
of authorized shares of Common Stock to meet the obligation set forth in this
subsection  The Company covenants that all shares of Common Stock that
are issuable upon conversion of this Note shall, upon issuance, be duly and
validly authorized, issued and fully paid and nonassessable.

    

    iv.           Fractional Shares.
Upon a conversion hereunder the Company shall not be required to issue stock
certificates representing fractions of shares of the Common Stock, but may if
otherwise permitted, make a cash payment in respect of any final fraction of a
share based on the fair market value of a share at such time. If the Company
elects not, or is unable, to make such a cash payment, the Holder shall be
entitled to receive, in lieu of the final fraction of a share, one whole share
of Common Stock.

    

    v.           Transfer Taxes. The
issuance of certificates for shares of the Common Stock on conversion of this
Note shall be made without charge to the Holder for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon conversion in a name other than that of the Holder
of such Notes so converted and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been
paid.

    

    d)      
     Mandatory
Conversion.

    

    i.           On
the third Business Day following the earlier of the day on which (a) the Company
receives, subsequent to the date of this Note, aggregate gross proceeds from the
sale of any of its equity securities in excess of $7,500,000 or (b) the Phase 1b
and RA trial of PRTX-100 in South Africa shall have demonstrated the safety and
efficacy of PRTX-100 in the RA patients following repeated dosing, the
principal, accrued and unpaid interest and any other amounts payable hereunder
shall automatically be converted into shares of Common Stock in accordance with
the provisions of Section 3(c) hereof.

    

    ii.           If,
at any time while this Note is outstanding, (A) the Company effects any merger
or consolidation of the Company with or into another Person, (B) the Company
effects any sale of all or substantially all of its assets in one or a series of
related transactions, (C) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (D) the Company effects any reclassification of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental Transaction”), then, immediately prior to the
occurrence of such Fundamental Transaction the principal and accrued but unpaid
interest payable hereunder shall automatically be converted into shares of
Common Stock in accordance with the provisions of Section 3(c)
hereof.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    Section
4.          Certain
Adjustments.

    

    a)            Stock Dividends and Stock
Splits. If the Company, at any time after the Issue Date while the Note
is outstanding: (A) shall pay a stock dividend or otherwise make a distribution
or distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock to all stockholders of
the Company (which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company pursuant to this Note, including as interest
thereon), (B) subdivide outstanding shares of Common Stock into a larger number
of shares, or (C) combine (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, then the Conversion
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
before such event and of which the denominator shall be the number of shares of
Common Stock outstanding after such event. Any adjustment made pursuant to this
Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

    

    b)            Calculations. All
calculations under this Section 4 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares of Common
Stock outstanding at any given time shall not includes shares of Common Stock
owned or held by or for the account of the Company, and the description of any
such shares of Common Stock shall be considered on issue or sale of Common
Stock. For purposes of this Section 4, the number of shares of
Common Stock deemed to be issued and outstanding as of a given date shall be the
sum of the number of shares of Common Stock (excluding treasury shares, if any)
issued and outstanding.

    

    c)            Notice to
Holder.

    

    i.           Adjustment to Conversion
Price. Whenever the Conversion Price is adjusted pursuant to any of this
Section 4, the Company shall promptly mail to each Holder a notice setting forth
the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.

    

    ii.           Notice to Allow Conversion
by Holder. If (A) the Company shall declare a dividend (or any other
distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to mailed to the Holder at
its last address as it shall appear upon the stock books of the Company, at
least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. The Holder shall be entitled to
convert this Note during the 20-day period commencing the date of such notice to
the effective date of the event triggering such notice.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    Section
5.          Events of Default.

    

    a)            Event of
Default.  Wherever used herein, means any one of the following
events (whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental
body):

    

    i.           any
default in the payment of (A) the principal, or (B) interest (including Late
Fees) on this Note as and when the same shall become due and payable (whether on
a Conversion Date or the Maturity Date or by acceleration or otherwise) which
default is not cured within ten (10) Trading Days after written notice from the
Holder;

    

    ii.           any
representation or warranty made herein, or in any other Transaction Document, or
certificate made or delivered to the Holder shall be untrue or incorrect in any
material respect as of the date when made or deemed made; or

    

    iii.           (i)
there is commenced against the Company or any Subsidiary thereof a case under
any applicable bankruptcy or insolvency laws as now or hereafter in effect or
any successor thereto, or any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company or any Subsidiary thereof which remains
undismissed for a period of 60 days; or (ii) the Company or any Subsidiary
thereof is adjudicated by a court of competent jurisdiction insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or (iii) the Company or any Subsidiary thereof suffers
any appointment of any custodian or the like for it or any substantial part of
its property which continues undischarged or unstayed for a period of 60
days.

    

    b)            Remedies Upon Event of
Default. If any Event of Default occurs, the full principal amount of
this Note, together with interest and other amounts owing in respect thereof, to
the date of acceleration shall become, at the Holder’s election, immediately due
and payable in cash. The Holder need not provide and the Company hereby waives
any presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a Note
holder until such time, if any, as the full payment under this Section shall
have been received by it. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent
thereon.

    
      
         

      

      
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    Section
6.          Miscellaneous.

    

    a)            Notices. Any and all
notices or other communications or deliveries to be provided by the Holder
hereunder, including, without limitation, any Notice of Conversion, shall be in
writing and delivered personally, by facsimile, sent by a nationally recognized
overnight courier service, addressed to the Company, at 145 Union Square Drive,
New Hope, PA 18938, attention:  Chief Financial Officer, or such other
address or facsimile number as the Company may specify for such purposes by
notice to the Holder delivered in accordance with this Section. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, sent by a
nationally recognized overnight courier service addressed to the Holder at the
facsimile, telephone number or address of such Holder appearing on the books of
the Company, or if no such facsimile telephone number or address appears, at the
principal place of business of the Holder. Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i)
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section prior to
5:30 p.m. (New York City time), (ii) the date after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section later than 5:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the second Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given.

    

    b)            Absolute Obligation.
Except as expressly provided herein, no provision of this Note shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, interest and liquidated damages (if any) on, this Note at
the time, place, and rate, and in the coin or currency, herein prescribed. This
Note is a direct debt obligation of the Company.

    

    c)            Lost or Mutilated
Note. If this Note shall be mutilated, lost, stolen or destroyed, the
Company shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Note, or in lieu of or in substitution for a lost,
stolen or destroyed Note, a new Note for the principal amount of this Note so
mutilated, lost, stolen or destroyed but only upon receipt of evidence of such
loss, theft or destruction of such Note, and of the ownership hereof; and
indemnity, if requested, all reasonably satisfactory to the
Company.

    

    d)            Security Interest.
This Note is a direct debt obligation of the Company and, pursuant to the
Security Agreement all of the Company’s obligations hereunder are secured by a
first priority perfected security interest in all of the assets of the Company
for the benefit of the Holder.

    

    e)            Governing Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Note, and any claim, controversy or dispute arising under or related to
this Note, the relationship of the parties, and/or the interpretation and
enforcement of the rights and duties of the parties hereunder shall be governed
by and construed and enforced in accordance with the internal laws of the State
of New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by any of the
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state or federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, or such
New York Courts are improper or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Note and agrees that such service shall constitute good and sufficient service
of process and notice thereof Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Note or the transactions contemplated hereby. If either
party shall commence an action or proceeding to enforce any provisions of this
Note, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorney’s fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

    
      
         

      

      
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    f)        
    Waiver. Any waiver by
the Company or the Holder of a breach of any provision of this Note shall not
operate as or be construed to be a waiver of any other breach of such provision
or of any breach of any other provision of this Note. The failure of the Company
or the Holder to insist upon strict adherence to any term of this Note on one or
more occasions shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Note. Any waiver must be in writing.

    

    g)            Severability. If any
provision of this Note is invalid, illegal or unenforceable, the balance of this
Note shall remain in effect, and if any provision is inapplicable to any person
or circumstance, it shall nevertheless remain applicable to all other persons
and circumstances. If it shall be found that any interest or other amount deemed
interest due hereunder violates applicable laws governing usury, the applicable
rate of interest due hereunder shall automatically be lowered to equal the
maximum permitted rate of interest. The Company covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law or other law which would prohibit or forgive the Company from
paying all or any portion of the principal of or interest on this Note as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this indenture, and due
Company (to the extent it may lawfully do so) hereby expressly waives all
benefits or advantage of any such law, and covenants that it will not, by resort
to any such law, binder, delay or impeded the execution of any power herein
granted to the Holder, but will suffer and permit the execution of every such as
though no such law has been enacted.

    

    h)            Next Business Day.
Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.

    

    i)       
     Headings. The
headings contained herein are for convenience only, do not constitute a part of
this Note and shall not be deemed to limit or affect any of the provisions
hereof.

    

    IN WITNESS WHEREOF, the
Company has caused this Note to be duly executed by a duly authorized officer as
of the date first above indicated.

    

    
      
        
          	
                  PROTALEX,
      INC.

                
	 
	
                  By:

                	
                  /s/ Marc Rose

                
	 
      	
                  Marc
      Rose, Chief Financial
Officer

                

        

      

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    ANNEX
A

    

    NOTICE OF
CONVERSION

    

    The
undersigned hereby elects to convert principal under the Senior Secured
Convertible Note of Protalex, Inc., a Delaware corporation (the “Company”), due
on November 9, 2012, into shares of common stock, par value $0.00001 per share
(due “Common Stock”), of the Company according to the conditions hereof, as of
the date written below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as
reasonably requested by due Company in accordance therewith. No fee will be
charged to the holder for any conversion, except for such transfer taxes, if
any.

    

    The
undersigned agrees to comply with the prospectus delivery requirements under the
applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.

    

    Conversion
calculations:

    
      
        
          
            
              	
                      Date
      to Effect Conversion:

                    
	 
      
	
                      Principal
      Amount of Notes to be Converted:

                    
	 
      
	
                      Payment
      of Interest in Common Stock_ yes _  no

                    
	
                      If
      yes, $______ of Interest Accrued on Account of

                    
	
                      Conversion
      at Issue.

                    
	 
      
	
                      Number
      of shares of Common Stock to be issued:

                    
	 
      
	
                      Signature:

                    	 
      
	 
      
	
                      Name:

                    	 
      
	 
      
	
                      Address:NOTE
AND COMMON STOCK PURCHASE AGREEMENT

     

    THIS NOTE
AND COMMON STOCK PURCHASE AGREEMENT is dated effective as of November 11, 2009
(the "Effective
Date") by and between Protalex, Inc., a Delaware corporation with its
principal office at 145 Union Square Drive, New Hope, PA 18938 (the "Company"), and the
several purchasers identified on Exhibit A attached
hereto (individually, a "Purchaser" and
collectively, the "Purchasers").

     

    NOW,
THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants herein contained, the parties hereto agree as
follows:

     

    1.           Definitions.  As
used in this Agreement, the following terms shall have the following respective
meanings:

     

    (a)           "Affiliate" of a party
means any corporation or other business entity controlled by, controlling or
under common control with such party.  For this purpose "control" shall mean
direct or indirect beneficial ownership of fifty percent (50%) or more of
the voting or income interest in such corporation or other business
entity.

     

    (b)           "Agreement" means this
Note and Common Stock Purchase Agreement.

     

    (c)           “Exchange Act" means
the Securities Exchange Act of 1934, as amended, and all of the rules and
regulations promulgated thereunder.

     

    (d)           "Closing Date" means
the date of the sale and purchase of the Notes and Common Stock acquired
hereunder.

     

    (e)           "Operative Agreements"
shall mean the Notes and the Security Agreement, together with this
Agreement.

     

    (f)           "SEC" shall mean the
Securities and Exchange Commission.

     

    (g)           “Security
Agreement” shall mean that certain Security
Agreement of even date herewith by and among the Company and the secured party
named therein in form and substance attached hereto as Exhibit
C.

     

    (h)           "Securities Act" shall
mean the Securities Act of 1933, as amended, and all of the rules and
regulations promulgated thereunder.

     

    2.           Purchase and Sale of
Shares.

     

    2.1           Purchase and
Sale.  Subject to and upon the terms and conditions set forth
in this Agreement (including but not limited to the conditions precedent set
forth in Section 5 below), the Company agrees to issue and sell to each
Purchaser, and each Purchaser, jointly and severally, hereby agrees to purchase
from the Company, at the Closing (as defined below), the number of shares of
Common Stock set forth opposite the name of such Purchaser under the heading
"Number of Shares to
be Purchased" on Exhibit A
hereto, at a purchase price of $0.046 per share.  The total purchase
price payable by each Purchaser for the number of shares of Common Stock that
such Purchaser is hereby agreeing to purchase is set forth opposite the name of
such Purchaser under the heading "Purchase Price" on
Exhibit A
hereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.2           In
addition, subject to the terms and conditions of this Agreement, each Purchaser
agrees, jointly and severally, to purchase and the Company agrees to sell and
issue to each Purchaser, a Three-year Secured Convertible Promissory Note (the
"Note") in the
principal amount set forth opposite the name of such Purchaser under the heading
"Loan Amount" on Exhibit A in form and
substance attached hereto as Exhibit B convertible
into shares of the Company's Common Stock at an initial conversion price equal
to $0.046 per share of the amount so converted (the "Conversion Price").
The Notes shall be a secured obligation of the Company as provided for in the
Security Agreement.  No fractional shares shall be issued under the
Notes (any fractional shares shall be rounded down to the nearest whole
number).

     

    2.3           The
shares of Common Stock sold to the Purchasers pursuant to this Agreement are
hereinafter referred to as the “Shares.”  The
Notes to purchase Common Stock sold hereunder are hereinafter referred to as the
“Notes.” The
total amount of Common Stock and other securities issuable upon conversion of
the Notes are hereinafter referred to as the “Conversion
Stock.”  The Shares, the Notes and the Conversion Stock are
hereinafter collectively referred to as the “Securities.”

     

    2.4           Closing. The initial
purchase and sale of the Shares and Notes shall take place at the offices of
Morse Zelnick Rose & Lander, LLP, 405 Park Avenue, Suite 1401, New York, NY
at 10:00 A.M., effective as of the Effective Date, or at such other time and
place as the Company and the Purchasers in their absolutely discretion shall
mutually agree upon (which time and place are designated as the “Closing”).  At the Closing,
the Company shall deliver to each Purchaser purchasing Shares and Notes a
certificate representing the Shares and a corresponding Note and Security
Agreement, registered in the name of such Purchaser, which such
Purchaser is purchasing against delivery to the Company by such Purchaser of a
cashiers check or wire transfer in the aggregate amount of the Purchase Price
and Loan Amount therefor, respectively, payable to the Company's
order.

     

    3.           Representations and
Warranties of the Company.  Except as otherwise described in
the Disclosure Schedule attached hereto or the SEC Documents (as defined below),
including any documents incorporated by reference therein or exhibits referenced
or attached thereto, the Company hereby represents and warrants to each of the
Purchasers as of the Closing the following:

     

    3.1           Incorporation.  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and is qualified to do
business and is in good standing in each jurisdiction in which the character of
its properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect on the
business, condition (financial or otherwise) or prospects of the Company ("Material Adverse
Effect").  The Company does not have any material subsidiaries
other than those identified in the SEC Documents (as defined
below).  Except for short-term investments and investments that are
not material to the Company, the Company does not own any shares of stock or any
other equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, limited liability company, joint venture,
association or other entity.  Complete and correct copies of the
certificate of incorporation (the "Certificate of
Incorporation") and bylaws (the "Bylaws") of the
Company as in effect on the Effective Date have been filed by the Company with
the SEC.  The Company has all requisite corporate power and authority
to carry on its business as now conducted.

     

    
      
         

      

      
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    3.2           Capitalization.

     

    (a)           The
authorized capital stock of the Company consists of (i)  100,000,000 shares
of Common Stock, of which 28,600,464 shares are outstanding on the Effective
Date.  The outstanding shares of capital stock of the Company have
been duly and validly issued and are fully paid and nonassessable, have been
issued in material compliance with all federal and state securities laws, and
were not issued in violation of any preemptive or similar rights to subscribe
for or purchase securities.

     

    (b)           A
list of all outstanding options to purchase shares of Common Stock or other
equity awards issued to employees and consultants of the Company pursuant to the
employee benefits plans or otherwise, which includes number of shares covered,
exercise prices and expiration dates, is set forth in Section 3.2(b) of the
Disclosure Schedule.  None of such options provides for exercise on a
“cashless” or “net-issuance” basis.

     

    (c)           A
list of all outstanding warrants to purchase shares of Common Stock or other
equity securities of the Company, as adjusted to reflect the transactions
contemplated by this Agreement, which includes number of shares covered,
exercise prices and expiration dates of each such agreement, is set forth in
Section 3.2(c) of the Disclosure Schedule.

     

    (d)           There
are no existing options, warrants, calls, preemptive (or similar) rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character obligating the Company to issue, transfer or sell, or cause to be
issued, transferred or sold, any shares of the capital stock of the Company or
other equity interests in the Company or any securities convertible into or
exchangeable for such shares of capital stock or other equity interests, and
there are no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of its capital stock or other equity
interests.  There are no voting agreements or other similar
arrangements with respect to the Common Stock to which the Company is a
party.  The Company has not adopted a stockholder rights plan or
similar arrangement relating to accumulations of beneficial ownership of Common
Stock or a change in control of the Company.  The Company does not
maintain any pension benefit plan, or other retirement plan, subject to the
Employee Retirement Income Security Act.

     

    3.3           Authorization.  All
corporate action on the part of the Company, its officers, directors and
stockholders necessary for the authorization, execution, delivery and
performance of the Operative Agreements and the consummation of the transactions
contemplated therein has been taken.  When executed and delivered by
the Company, each of the Operative Agreements shall constitute the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
and by general equitable principles.  The Company has all requisite
corporate power to enter into the Operative Agreements and to carry out and
perform its obligations under the terms of the Operative
Agreements.

     

    
      
         

      

      
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    3.4           Valid Issuance of the
Shares.  The Shares being purchased by the Purchasers hereunder
and the Conversion Stock upon conversion of the Notes will, upon issuance
pursuant to the terms hereof and thereof, be duly authorized and validly issued,
fully paid and nonassessable.  No preemptive rights or other rights to
subscribe for or purchase the Company's capital stock exist with respect to the
issuance and sale of the Securities by the Company pursuant to this
Agreement.  As of the Effective Date, except as contemplated in the
Notes, no further approval or authority of the stockholders or the Board of
Directors of the Company shall be required for the issuance and sale of the
Securities by the Company, as contemplated in the Operative Agreements. The
Shares, Notes and Conversion Stock issuable upon conversion of the Notes will,
upon issuance pursuant to the terms hereof and thereof, be free and clear from
any security interest, pledge, mortgage, lien (statutory or other), charge,
option to purchase, lease or otherwise acquire any interest or any claim,
restriction or covenant, title defect, hypothecation, assignment, deposit
arrangement or other encumbrance of any kind or any preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement).

     

    3.5           Financial
Statements.  As of their respective dates, the financial
statements of the Company included in the SEC Documents (as defined in Section
3.6 below) complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto.  Such financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as permitted pursuant to Regulation G
promulgated under the Exchange Act, or (ii) in the case of unaudited interim
financial statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year end audit adjustments).  Except
as set forth in the subset of SEC Documents filed and publicly available
beginning with the Company’s Annual Report on Form 10-K for the fiscal year
ended May 31, 2009 and prior to the date hereof, since August 31, 2009, (a)
there has been no event, occurrence or development that has had or could result
in a Material Adverse Effect, (b) the Company has not incurred any liabilities
(contingent or otherwise) other than (x) liabilities incurred in the ordinary
course of business consistent with past practice and (y) liabilities not
required to be reflected in the Company’s financial statements pursuant to
generally accepted accounting principals or required to be disclosed in filings
made with the SEC, (c) the Company has not altered its method of accounting or
the identity of its auditors and (d) the Company has not declared or made any
payment or distribution of cash or other property to its stockholders or
officers or directors (other than in compliance with existing Company stock
option plans) with respect to its capital stock, or purchased, redeemed (or made
any agreements to purchase or redeem) any shares of its capital
stock.  As of the Closing Date, the Company’s current working capital
was equal to no less than $435,000.00, where current working capital consists of
current assets (cash, cash equivalents, and accounts receivables) minus current
liabilities inclusive of accounts payable, accrued expenses, severance
obligations, and future rent/lease obligations.

     

    3.6           SEC
Documents.  The Company has filed all reports, schedules,
forms, statements (collectively, and in each case including all exhibits,
financial statements and schedules thereto and documents incorporated by
reference therein and including all registration statements and prospectuses
filed with the SEC) required to be filed by it with the SEC through the Closing
Date, and the Company will file, on a timely basis, all similar documents with
the SEC during the period commencing on the date hereof and ending on the
Closing Date (all of the foregoing being hereinafter referred to as the “SEC
Documents”).  As of their respective dates, the SEC Documents
complied or will comply in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, contained or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, as of their respective
filing dates.

     

    
      
         

      

      
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    3.7           Consents.  Except
for stockholder approval as contemplated in the Notes, all consents, approvals,
orders and authorizations required on the part of the Company in connection with
the execution, delivery or performance of the Operative Agreements and the
consummation of the transactions contemplated therein have been obtained and
will be effective as of the Closing Date.

     

    3.8           No
Conflict.  The execution and delivery the Operative Agreements
by the Company and the consummation of the transactions contemplated thereby
will not conflict with or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the Certificate of Incorporation or
Bylaws of the Company, (ii) any material bond, debenture, note or other
evidence of indebtedness, or any material lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture, franchise, license or other
agreement or instrument to which the Company is a party or by which it or its
property is bound or (iii) any judgment, order, statute, law, ordinance, rule or
regulations, applicable to the Company or its respective properties or
assets.

     

    3.9           Brokers or
Finders.  The Company has not dealt with any broker or finder
in connection with the transactions contemplated by this Agreement or incurred
any liability for any brokerage or finders' fees or agent’s commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.

     

    3.10         Nasdaq Stock
Market.  The Common Stock is registered pursuant to Section
12(g) of the Exchange Act and is quoted on the Nasdaq Stock Market
Over-the-Counter Bulletin Board ("OTCBB") under the
ticker symbol "PRTX.OB."  The Company has taken no action designed to
remove, or which, to the Company's knowledge, is likely to have the effect of,
suspending or terminating the quotation of the Common Stock on the
OTCBB.  The Company shall comply with all requirements, if any, of the
Financial Industry Regulatory Authority (“FINRA") with respect
to the issuance of the Shares and Conversion Stock and the quoting of the Shares
and Conversion Stock (when issued) on the OTCBB.

     

    3.11         Absence of
Litigation.  There is no action, suit or proceeding or, to the
Company's knowledge, any investigation, pending, or to the Company's knowledge,
threatened by or before any court, governmental body or regulatory agency
against the Company, or any of its assets.  The Company has not
received any written or oral notification of, or request for information in
connection with, any formal or informal inquiry, investigation or proceeding
from the SEC or the FINRA.  The foregoing includes, without
limitation, any such action, suit, proceeding or investigation that questions
the Operative Agreements or the right of the Company to execute, deliver and
perform under same.

    
      
         

      

      
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    3.12         Intellectual
Property.

     

    (a)           To
the knowledge of the Company, the Company has ownership of or license or legal
right to use all patents, copyrights, trade secrets, trademarks, domain names,
customer lists, designs, manufacturing or other processes, computer software,
systems, data compilations, research results and other intellectual property or
proprietary rights (collectively, "Intellectual
Property") used in the business of the Company and material to the
Company. The Company knows of no reason why its patent applications do not or
would not comply with any statutory or legal requirements or would not issue
into valid and enforceable patents.

     

    (b)           To
the Company's knowledge, there is no material default by the Company under any
material licenses or other material agreements under which (i) the Company is
granted rights in Intellectual Property or (ii) the Company has granted rights
to others in Intellectual Property owned or licensed by the
Company.  There are no outstanding or threatened claims, disputes or
disagreements with respect to any such licenses or agreements.

     

    (c)           To
the knowledge of the Company, the present business, activities and products of
the Company do not infringe or misappropriate any Intellectual Property of any
third party.  The Company has not been notified that any proceeding
charging the Company with infringement or misappropriation of any Intellectual
Property held by any third party has been filed.  To the Company's
knowledge, there exists no patent held by any third party which includes claims
that would be infringed by the Company in the conduct of its business as
currently conducted where such infringement would have a Material Adverse
Effect.  To the knowledge of the Company, the Company is not making
unauthorized use of any confidential information or trade secrets of any third
party.  Neither the Company nor, to the knowledge of the Company, any
of its employees have any agreements or arrangements with any persons other than
the Company restricting the Company's or any such employee's engagement in
business activities that are material aspects of the Company's business as
currently conducted.

     

    (d)           None
of the Intellectual Property owned or, to the Company's knowledge, licensed by
the Company that is used in the business of the Company and material to the
Company, is subject to any outstanding judgment or order, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand is
pending or, to the knowledge of the Company, threatened, which challenges the
validity, enforceability, scope, use, or ownership of, or otherwise relates to,
any such Intellectual Property anywhere in the world. No Patent has been or is
now involved in any interference, reissue, reexamination, opposition, or other
proceeding.

     

    (e)           Each
past employee of the Company has executed a confidential information and
invention assignment agreement in the form made available to
Purchasers.  No such employee has excluded works or inventions made
prior to his or her employment with the Company from his or her assignment of
inventions pursuant to such employee's confidential information and invention
assignment agreement, which works or inventions are necessary to the business of
the Company as it is proposed to be conducted.  Each consultant to the
Company has entered into an agreement containing appropriate confidentiality and
invention assignment provisions, in the form acceptable to
Purchasers.  The Company does not believe it is or will be necessary
to utilize any inventions, trade secrets or proprietary information of any of
its employees made prior to their employment by the Company, except for
inventions, trade secrets or proprietary information that have been assigned to
the Company.

    
      
         

      

      
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    3.13         Offering. The Company
has not in the past nor will it hereafter take any action to sell, offer for
sale or solicit offers to buy any securities of the Company which would require
the offer, issuance or sale of the Securities, as contemplated by this
Agreement, to be registered under Section 5 of the Securities Act.

     

    3.14         Investment Company.
The Company is not and, after giving effect to the offering and sale of the
Shares and the Notes, will not be required to register as, an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.

     

    3.15         No Manipulation of
Stock. The Company has not taken and will not, in violation of applicable
law, take, any action designed to or that might reasonably be expected to cause
or result in unlawful manipulation of the price of the Common
Stock.

     

    3.16         No Violations. The
Company is not in violation of its Certificate of Incorporation, Bylaws or other
organizational documents, or in violation of any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel or
authority applicable to the Company, which violation, individually or in the
aggregate, would be reasonably expected to have a Material Adverse Effect, or is
not in default (and there exists no condition which, with the passage of time or
otherwise, would constitute a default) in the performance of any material bond,
debenture, note or any other evidence of indebtedness in any indenture,
mortgage, deed of trust or any other material agreement or instrument to which
the Company is a party or by which the Company is bound or by which the property
of the Company is bound, which would be reasonably expected to have a Material
Adverse Effect.

     

    3.17         Accountants.  Grant
Thornton, LLP, who issued their report with respect to the financial statements
in the Company's Annual Report on Form 10-K for the year ended May 31, 2009 are
an independent registered public accounting firm as required by the Securities
Act.

     

    3.18         Taxes.  The
Company has filed all necessary federal, state and foreign income and franchise
tax returns, including for the period ended May 31, 2009, and has paid or
accrued all taxes shown as due thereon, and the Company has no knowledge of a
tax deficiency which has been or might be asserted or threatened against it
which would have a Material Adverse Effect

     

    3.19         Title.  The
Company has good and marketable title to all real property and good and
marketable title to all personal property owned by it which is material to the
business of the Company, in each case free and clear of all encumbrances and
defects, except such as do not have a Material Adverse Effect.  Any
facilities and items of equipment held under lease by the Company are held by it
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
facilities and items of equipment by the Company. The Company is in compliance
with all material terms of each lease to which it is a party or is otherwise
bound.

     

    3.20   
     Foreign Corrupt
Practices.  To the knowledge of the Company, neither the
Company, nor any director, officer, agent, employee or other person acting on
behalf of the Company, has in the course of its actions for, or on behalf of,
the Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made
any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made
any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or
employee.

     

    
      
         

      

      
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    3.21         Employee
Relations.  The Company is not involved in any union labor
dispute, nor, to the knowledge of the Company, is any such dispute
threatened.  The Company is not a party to a collective bargaining
agreement, and the Company believes that its relations with its employees are
good.

     

    3.22         Internal Accounting
Controls.  The Company maintains a system of internal
accounting controls (as such term is defined in Rule 13a-14 and 15d-14 under the
Exchange Act) sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

     

    3.23         Disclosure
Controls.  The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 and 15d-14 under
the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its
consolidated subsidiaries, if any, is made known to the Company’s Chief
Executive Officer and its Chief Financial Officer by others within those
entities, and such disclosure controls and procedures are effective to perform
the functions for which they were established; the Company’s auditors and the
Audit Committee of the Board of Directors have been advised of: (i) any
significant deficiencies in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize, and
report financial data; and (ii) any fraud, whether or not material, that
involves management or other employees who have a role in the Company’s internal
controls; any material weaknesses in internal controls have been identified for
the Company’s auditors; since the date of the most recent evaluation of such
disclosure controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect internal
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses; the principal executive officers (or their
equivalents) and principal financial officers (or their equivalents) of the
Company have made all certifications required by the Sarbanes Oxley Act of 2002
(the “Sarbanes Oxley
Act”) and any related rules and regulations promulgated by the
Commission, and the statements contained in any such certification are complete
and correct; and the Company is otherwise in compliance in all material respects
with all applicable effective provisions of the Sarbanes Oxley Act.

     

    3.24         Disclosure.  Neither
the Operative Agreements, any of the schedules or exhibits hereto or thereto,
nor any other document or certificate provided by the Company to the Purchasers
in connection herewith or therewith contains any untrue statement of a material
fact or, when considered as a whole, omits a material fact necessary to make the
statements contained herein or therein, in light of the circumstances in which
they were made, not misleading.

    
      
         

      

      
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    3.25         Real Property Holding
Corporation.  The Company is not a real property holding
corporation within the meaning of Section 897(c)(2) of the Internal Revenue Code
of 1986, as amended (the “Code”) and any regulations promulgated
thereunder.

     

    4.           Representations and
Warranties of the Purchasers.  Each Purchaser severally and
jointly with the other Purchasers, represents and warrants to the Company as
follows:

     

    4.1           Authorization.  All
action on the part of such Purchaser and, if applicable, its officers,
directors, partners, members and stockholders necessary for the authorization,
execution, delivery and performance of the Operative Agreements and the
consummation of the transactions contemplated therein has been
taken.  When executed and delivered by the Company and such Purchaser,
each of the Operative Agreements will constitute the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally and by
general equitable principles.  Such Purchaser has all requisite power
to enter into each of the Operative Agreements and to carry out and perform its
obligations under the terms of the Operative Agreements.  Such
Purchaser has the knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in the
Securities and has the ability to bear the economic risks of an investment in
the Securities for an indefinite period of time. Furthermore, the Purchaser
acknowledges that the Company has made no representations or warranties except
as set for in this Agreement.

     

    4.2           Purchase Entirely for Own
Account.  Each Purchaser is acquiring the Securities being
purchased by it hereunder for investment, for its own account, and not for
resale or with a view to distribution thereof in violation of the Securities
Act. Such Purchaser has not entered into an agreement or understanding with any
other party to resell or distribute such Securities.

     

    4.3           Investor Status;
Etc.  Such Purchaser certifies and represents to the Company
that it is an “Accredited Investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act and was not organized for the purpose of
acquiring the Securities.  Such Purchaser’s financial condition is
such that it is able to bear the risk of holding the Securities for an
indefinite period of time and the risk of loss of its entire
investment.  Subject to the truth and accuracy of the representations
and warranties of the Company set forth in Section 3 of this Agreement (as
modified by the Company Disclosure Schedule), such Purchaser has received,
reviewed and considered all information it deems necessary in making an informed
decision to make an investment in the Securities and has been afforded the
opportunity to ask questions of and receive answers from the management of the
Company concerning this investment and has sufficient knowledge and experience
in investing in companies similar to the Company in terms of the Company’s stage
of development so as to be able to evaluate the risks and merits of its
investment in the Company.

     

    4.4           [Intentionally
omitted]

     

    4.5           Securities Not
Registered.  Such Purchaser understands that the Securities
have not been registered under the Securities Act, by reason of their issuance
by the Company in a transaction exempt from the registration requirements of the
Securities Act, and that the Securities must continue to be held by such
Purchaser unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration.  The Purchaser
understands that the exemptions from registration afforded by Rule 144 (the
provisions of which are known to it) promulgated under the Securities Act depend
on the satisfaction of various conditions, and that, if applicable, Rule 144 may
afford the basis for sales only in limited amounts.

     

    
      
         

      

      
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    4.6           No
Conflict.  The execution and delivery of the Operative
Agreements by such Purchaser and the consummation of the transactions
contemplated thereby will not conflict with or result in any violation of or
default by such Purchaser (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit under (i) any provision
of the organizational documents of such Purchaser, (ii) any material
agreement or instrument, permit, franchise, or license or (iii) any judgment,
order, statute, law, ordinance, rule or regulations, applicable to such
Purchaser or its respective properties or assets.

     

    4.7           Brokers.  Such
Purchaser has not retained, utilized or been represented by any broker or finder
in connection with the transactions contemplated by this Agreement.

     

    4.8           Consents.  All
consents, approvals, orders and authorizations required on the part of such
Purchaser in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated herein have been
obtained and are effective as of the Closing Date.

     

    5.           Conditions
Precedent.

     

    5.1           Conditions to the Obligation
of the Purchasers to Consummate the Closing.  The obligation of
each Purchaser to consummate the Closing and to purchase and pay for the
Securities being purchased by it pursuant to this Agreement is subject to the
satisfaction of the following conditions precedent unless waived in writing by
the Purchasers:

     

    (a)           The
representations and warranties of the Company contained herein shall be true and
correct on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date (it being understood and agreed by each
Purchaser that, in the case of any representation and warranty of the Company
contained herein which is not hereinabove qualified by application thereto of a
materiality standard, such representation and warranty need be true and correct
only in all material respects in order to satisfy as to such representation or
warranty the condition precedent set forth in the foregoing provisions of this
Section 5.1(a)).

     

    (b)           The
Notes shall have been executed and delivered by the Company.

     

    (c)           The
Company shall not have been adversely affected in any material way prior to the
Closing Date; and the Company shall have performed all obligations and
conditions herein required to be performed or observed by the Company on or
prior to the Closing Date.

     

    (d)           No
proceeding challenging the Operative Agreements or the transactions contemplated
hereby, or seeking to prohibit, alter, prevent or materially delay the Closing,
shall have been instituted before any court, arbitrator or governmental body,
agency or official and shall be pending.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (e)           The
purchase of and payment for the Securities by the Purchasers shall not be
prohibited by any law or governmental order or regulation.  All
necessary consents, approvals, licenses, permits, orders and authorizations of,
or registrations, declarations and filings with, any governmental or
administrative agency or of any other person with respect to any of the
transactions contemplated hereby shall have been duly obtained or made and shall
be in full force and effect.

     

    (f)           All
instruments and corporate proceedings in connection with the transactions
contemplated by the Operative Agreement to be consummated at the Closing shall
be satisfactory in form and substance to such Purchaser. Such Purchaser shall
have received such certificates of the Company's officers as such Purchaser may
have reasonably requested in connection with such transactions.

     

    (g)           The
officers and directors of Company shall have resigned from such positions
effective as of the Closing, and the Board shall have authorized the
appointments as Directors of the Company of Arnold Kling effective immediately
after the Closing; provided, however, Frank Dougherty shall remain in office
until the expiration of ten days after Company files with the SEC, and mails to
its shareholders of record, an Information Statement pursuant to Rule 14f-1 of
the Exchange Act.

     

    (h)           The
Company (i) shall have filed or caused to be filed with the Delaware Secretary
of State and the United States Patent and Trademark Office (the “PTO”)  a
formal discharge of all security interests in the Intellectual Property and any
other asset of the Company,  and (ii) shall have filed a UCC-1
Financing Statement with the Delaware Secretary of State and the appropriate
form, if applicable, with the PTO, in order to perfect the security interest of
the Purchasers as forth in the Notes and Security Agreement.

     

    (i)           Each
of the that certain September 18, 2003 Investor Rights Agreement and that
certain May 25, 2005 Registration Rights
Agreement shall have been terminated and the Company shall have no further
rights, obligations or liabilities thereunder.

     

    (j)           The
Company’s incoming directors and officers shall be covered by a valid and
enforceable directors and officers liability insurance policy, on terms
reasonably satisfactory to the Purchasers, for a policy period covering at least
one year from the date of this Agreement.

     

    (k)           The
Company shall not have modified the terms of any severance agreement entered
into with its former officers and/or employees and shall not have accelerated
the payment of any amount payable under any such agreement.

     

    5.2           Conditions to the Obligation
of the Company to Consummate the Closing.  The obligation of
the Company to consummate the Closing and to issue and sell to each of the
Purchasers the Securities to be purchased by it at the Closing is subject to the
satisfaction of the following conditions precedent:

     

    (a)           The
representations and warranties contained herein of such Purchaser shall be true
and correct on and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date (it being understood and agreed by the
Company that, in the case of any representation and warranty of each Purchaser
contained herein which is not hereinabove qualified by application thereto of a
materiality standard, such representation and warranty need be true and correct
only in all material respects in order to satisfy as to such representation or
warranty the condition precedent set forth in the foregoing provisions of this
Section 5.2(a)).

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (b)           The
applicable Notes shall have been executed and delivered by each
Purchaser.

     

    (c)           Each
Purchaser shall have performed all obligations and conditions herein required to
be performed or observed by such Purchaser on or prior to the Closing
Date.

     

    (d)           No
proceeding challenging this Agreement or the transactions contemplated hereby,
or seeking to prohibit, alter, prevent or materially delay the Closing, shall
have been instituted before any court, arbitrator or governmental body, agency
or official and shall be pending.

     

    (e)           The
sale of the Securities by the Company shall not be prohibited by any law or
governmental order or regulation.  All necessary consents, approvals,
licenses, permits, orders and authorizations of, or registrations, declarations
and filings with, any governmental or administrative agency or of any other
person with respect to any of the transactions contemplated hereby shall have
been duly obtained or made and shall be in full force and effect.

     

    (f)           All
instruments and corporate proceedings in connection with the transactions
contemplated by this Agreement to be consummated at the Closing shall be
satisfactory in form and substance to the Company, and the Company shall have
received counterpart originals, or certified or other copies of all documents,
including without limitation records of corporate or other proceedings, which it
may have reasonably requested in connection therewith.

     

    (g)           The
Company shall have received executed Purchase Agreements representing an
aggregate Purchase Price of $2,000,000 and principal Loan Amounts of
$1,000,000.

     

    (h)           Each
Purchaser shall have irrevocably delivered such Purchaser’s Purchase Price and
Loan Amount to the Company in immediately available funds.

     

    6.           Transfer, Legends; Piggyback
Registration Rights.

     

    6.1           Securities Law Transfer
Restrictions.

     

    (a)           Each
Purchaser acknowledges that the certificates or instruments representing the
Securities shall bear restrictive legends substantially as follows:

     

    “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS
EXEMPT FROM SAID ACT.”

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    “THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE PURSUANT TO A PURCHASE AGREEMENT, A COPY OF WHICH MAY
BE OBTAINED AT THE PRINCIPAL OFFICE OF THE COMPANY.”

     

    (b)           Each
Purchaser understands that the Securities have not been registered under the
Securities Act or any state securities laws.  In that connection, such
Purchaser is aware of Rule 144 under the Securities Act and the restrictions
imposed thereby.  Such Purchaser will not engage in hedging or other
similar transactions which would include, without limitation, effecting any
short sale or having in effect any short position (whether or not such sale or
position is against the box and regardless of when such position was entered
into) or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to the Securities or with
respect to any security (other than a broad-based market basket or index) that
includes, relates to or derives any significant part of its value from the
Common Stock of the Company.

     

    6.2.          Piggyback
Registration Rights.

    

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

    

    
      	
               
      

            	
              (A)

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

            

    

    

    
      	
               
      

            	
              (B)

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

            

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

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

    

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

    

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

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (e)           Notwithstanding the above, this Section 6.2 shall not
apply to registrations of the Company’s securities that are not underwritten
public offerings (x) when the Shares or Conversion Stock, as the case may be,
are covered by an effective registration statement or (y) where with respect to
any Purchaser, all of such Purchaser’s Shares or Conversion Stock, as the case
may be, may be sold without restriction under Rule 144 (or its successor rule
under the Securities Act).

     

    7.           Termination; Liabilities
Consequent Thereon.  This Agreement may be terminated and the
transactions contemplated hereunder abandoned at any time prior to the Closing
only as follows:

     

    (a)           at
any time by mutual written agreement of the Company and the Purchasers;
or

     

    (b)           by
the Purchasers, if there has been any breach of any representation or warranty
or any material breach of any covenant of the Company (including but not limited
to the conditions to Closing set forth in Section 5) contained herein and the
same has not been cured within 15 days after written notice thereof (it being
understood and agreed by each Purchaser that, in the case of any representation
or warranty of the Company contained herein which is not hereinabove qualified
by application thereto of a materiality standard, such representation or
warranty will be deemed to have been breached for purposes of this Section
7.1(b) only if such representation or warranty was not true and correct in all
material respects at the time such representation or warranty was made by the
Company); or

     

    (c)           by
the Company with respect to all Purchasers, if there has been any breach of any
representation, warranty or any material breach of any covenant of any Purchaser
contained herein  (including but not limited to the conditions to
Closing set forth in Section 5) and the same has not been cured within 15 days
after written notice thereof (it being understood and agreed by the Company
that, in the case of any representation and warranty of any Purchaser contained
herein which is not hereinabove qualified by application thereto of a
materiality standard, such representation or warranty will be deemed to have
been breached for purposes of this Section 7.1(c) only if such representation or
warranty was not true and correct in all material respects at the time such
representation or warranty was made by any Purchaser).

     

    Any
termination pursuant to this Section 7 shall be without liability on the part of
any party, unless such termination is the result of a material breach of this
Agreement by a party to this Agreement in which case such breaching party shall
remain liable for such breach notwithstanding any termination of this
Agreement.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    8.           Miscellaneous
Provisions.

     

    8.1           Further
Assurances.  Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurances, as may be reasonably requested by
the other parties to better evidence and reflect the transactions described
herein and contemplated hereby, and to carry into effect the intents and
purposes of this Agreement.

     

    8.2           Rights
Cumulative.  Each and all of the various rights, powers and
remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have at
law or in equity in the event of the breach of any of the terms of this
Agreement.  The exercise or partial exercise of any right, power or
remedy shall neither constitute the exclusive election thereof nor the waiver of
any other right, power or remedy available to such party.

     

    8.3           Pronouns.  All
pronouns or any variation thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural, as the identity of the person, persons,
entity or entities may require.

     

    8.4           Notices.  Any
notices, reports or other correspondence (hereinafter collectively referred to
as "correspondence")
required or permitted to be given hereunder shall be in writing and shall be
sent by postage prepaid first class mail, courier or telecopy or delivered by
hand to the party to whom such correspondence is required or permitted to be
given hereunder, and shall be deemed sufficient upon receipt when delivered
personally or by courier, overnight delivery service or confirmed facsimile, or
three (3) business days after being deposited in the regular mail as certified
or registered mail (airmail if sent internationally) with postage prepaid, if
such notice is addressed to the party to be notified at such party's address or
facsimile number as set forth below:

     

    (a)          All
correspondence from the Purchasers or the Company involving matters related
prior to and as of the Closing shall be addressed as follows:

     

    Reed
Smith LLP

    101
2nd
Street, Suite 2000

    San
Francisco, CA 94111

    Attention:      Donald
C. Reinke, Esq.

    Facsimile:      (415) 391.8269

    

    (b)          All
correspondence to any Purchaser shall be sent to such Purchaser at the address
set forth in Exhibit A, with a copy,
in each instance to:

     

    Morse,
Zelnick, Rose & Lander, LLP

    405 Park
Avenue, Suite 1401

    New York,
NY 10022

    Attention:      Kenneth
S. Rose, Esq.

    Facsimile:      (212)
208-6809

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    (c)           Any
party may change the address to which correspondence to it is to be addressed by
written notification as provided for herein.

     

    8.5           Captions.  The
captions and paragraph headings of this Agreement are solely for the convenience
of reference and shall not affect its interpretation.

     

    8.6           Severability.  Should
any part or provision of this Agreement be held unenforceable or in conflict
with the applicable laws or regulations of any jurisdiction, the invalid or
unenforceable part or provisions shall be replaced with a provision which
accomplishes, to the extent possible, the original business purpose of such part
or provision in a valid and enforceable manner, and the remainder of this
Agreement shall remain binding upon the parties hereto.

     

    8.7           Governing Law; Injunctive
Relief.

     

    (a)           This
Agreement shall be governed by and construed in accordance with the internal and
substantive laws of the State of Delaware and without regard to any conflicts of
laws concepts which would apply the substantive law of some other jurisdiction.
Venue for all purposes hereunder shall be in the applicable state or federal
court located within the State of Delaware.

     

    (b)           Each
of the parties hereto acknowledges and agrees that damages will not be an
adequate remedy for any material breach or violation of this Agreement if such
material breach or violation would cause immediate and irreparable harm (an
"Irreparable
Breach").  Accordingly, in the event of a threatened or ongoing
Irreparable Breach, each party hereto shall be entitled to seek, equitable
relief of a kind appropriate in light of the nature of the ongoing or threatened
Irreparable Breach, which relief may include, without limitation, specific
performance or injunctive relief; provided, however, that if the
party bringing such action is unsuccessful in obtaining the relief sought, the
moving party shall pay the non-moving party's reasonable costs, including
attorney's fees, incurred in connection with defending such
action.  Such remedies shall not be the parties' exclusive remedies,
but shall be in addition to all other remedies provided in this
Agreement.

     

    8.8           Amendments. This
Agreement may be not be amended or modified except pursuant to an instrument in
writing signed by the Purchasers and the Chairman of the Board or the Chief
Executive Officer of the Company in office immediately prior to the
Closing.

     

    8.9           Waiver.  No
waiver of any term, provision or condition of this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or be
construed as, a further or continuing waiver of any such term, provision or
condition or as a waiver of any other term, provision or condition of this
Agreement.

     

    8.10         Expenses.  The
Company will bear the costs and expenses of all parties in connection with this
Agreement; provided, however that the reimbursement of the Purchasers’ expenses,
which shall occur at the Closing, shall not exceed $100,000.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    8.11         Assignment.  The
rights and obligations of the parties hereto shall inure to the benefit of and
shall be binding upon the authorized successors and permitted assigns of each
party.  Neither party may assign its rights or obligations under this
Agreement or designate another person (i) to perform all or part of its
obligations under this Agreement or (ii) to have all or part of its rights and
benefits under this Agreement, in each case without the prior written consent of
the other party.  In the event of any assignment in accordance with
the terms of this Agreement, the assignee shall specifically assume and be bound
by the provisions of the Agreement by executing and agreeing to an assumption
agreement reasonably acceptable to the other party.

     

    8.12         Survival.  The
respective representations and warranties given by the parties hereto, and the
other covenants and agreements contained herein, shall survive the Closing Date
and the consummation of the transactions contemplated herein for a period of one
year, without regard to any investigation made by any party.

     

    8.13         Counterpart. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one
instrument.

     

    8.14         Entire
Agreement.  This Agreement and the Notes constitute the entire
agreement between the parties hereto respecting the subject matter hereof and
supersede all prior agreements, negotiations, understandings, representations
and statements respecting the subject matter hereof, whether written or
oral.  No modification, alteration, waiver or change in any of the
terms of this Agreement shall be valid or binding upon the parties hereto unless
made in writing and duly executed by the Purchasers and the Chairman of the
Board or the Chief Executive Officer of the Company in office immediately prior
to the Closing.

     

    [Signature
Page to Follow]

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Note and Common Stock
Purchase Agreement as of the day and year first above written.

     

    
      
        	 
      	
                PROTALEX,
      INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Marc Rose

              
	 
      	 
      	
                Marc
      Rose, Chief Financial Officer

              
	 
      	 
      	 
      
	 
      	
                NIOBE
      VENTURES, LLC

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Arnold Kling

              
	 
      	 
      	
                Arnold
      Kling, Manager

              

      

    

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    Exhibit
A

     

    SCHEDULE OF
PURCHASERS

     

    
      
        
          
            	
                    Purchaser Name and

                    Address

                  	 	
                    Number of Shares to be

                    Purchased

                  	 	 	
                    Aggregate Share

                    Purchase Price

                  	 	 	
                    Loan Amount

                  	 
	 
      	 	 	 	 	 	 	 	 	 
	
                    Niobe
      Ventures, LLC

                  	 	 	43,478,260	 	 	$	2,000,000.00	 	 	$	1,000,000.00

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