Document:

FIFTH

    AMENDMENT

    TO
      THE

    MANAGEMENT
      AGREEMENT

     

    This
      fifth amendment (this “Amendment”) to that certain Management Agreement dated
      January 25, 2008 as amended by the Amendment to the Management Agreement, dated
      April 30, 2008, as further amended by the Second Amendment to the Management
      Agreement, dated May 30, 2008, as further amended by the Third Amendment to
      the
      Management Agreement, dated as of September 16, 2008 and as further amended
      by
      the Fourth Amendment to the Management Agreement, dated as of October 23, 2008
      (collectively, the “Agreement”) is made and entered into as of the 18th day of
      November, 2008, by and among AMERICAN REALTY CAPITAL TRUST, INC., a Maryland
      corporation (the “Company”), AMERICAN REALTY CAPITAL OPERATING PARTNERSHIP,
      L.P., a Delaware limited partnership (the “OP”, and together with the Company,
      the “Owner”), ARC ROCK17MA LLC, a Delaware limited liability company (the
“Rockland Owner”), ARC WBPCFL0001, LLC, a Delaware limited liability company
      (the “National City Owner”), ARC WBPBFL0001, LLC, a Delaware limited liability
      company (the “Pompano Owner”), ARC PANJOH54 LLC, a Delaware limited liability
      company (the “PNC1 Owner”) and ARC PA-QRS Trust, a Virginia business trust (the
“PNC2 Owner,” and together with the “PNC1 Owner,” the “PNC Owners”) and AMERICAN
      REALTY CAPITAL PROPERTIES, LLC, a Delaware limited liability company (the
“Manager”).

     

    WHEREAS,
      the OP was organized to acquire, own, operate, lease and manage real estate
      properties on behalf of the Company;

     

    WHEREAS,
      the PNC1 Owner is a subsidiary of the OP and the PNC2 Owner is a subsidiary
      of
      the Company, and each was organized to acquire, own, operate, lease and manage
      the respective PNC branch real estate property, identified in Exhibit
      A
      hereto,
      on behalf of the Company (the “PNC Property”);

     

    WHEREAS,
      the Company intends to continue to raise money from the sale of its common
      stock
      to be used, net of payment of certain offering costs and expenses, for
      investment in the acquisition or rehabilitation of income-producing real estate
      to be acquired and held by the Company, by the OP or by the Rockland Owner,
      the
      National City Owner, the Pompano Owner or the PNC Owners on behalf of the
      Company; and

     

    WHEREAS,
      Owner, the Rockland Owner, the National City Owner, the Pompano Owner and the
      PNC Owners wish to retain Manager to manage and coordinate the leasing of the
      real estate properties acquired by Owner, Rockland Owner, the National City
      Owner, the Pompano Owner and the PNC Owners, and the Manager wishes to be so
      retained, all under the terms and conditions set forth in this Management
      Agreement.

     

    NOW,
      THEREFORE, in consideration of the premises and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties hereto, intending to be legally bound hereby, do hereby agree as
      follows:

     

    
      	
              1.

            	
              Section
                1.11 will be replaced in its entirely with the
                following:

            

    

     

    “Properties
      means
      all real estate properties owned by Owner and all tracts as yet unspecified
      but
      to be acquired by Owner containing income-producing Improvements or on which
      Owner will rehabilitate income-producing Improvements, the Rockland Properties,
      the National City Property, the Pompano Property and the PNC Property.
      Properties shall be classified under four categories, residential, retail,
      industrial and office properties.”

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    2.           With
      respect to the PNC Property alone, all references to Owner herein shall be
      deemed to include the PNC Owners.

     

    [INTENTIONALLY
      LEFT BLANK]

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

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

     

    

    AMERICAN
      REALTY CAPITAL TRUST, INC., 

    a
      Maryland corporation

    

    

    

    By:  /s/
      William M. Kahane             
Name:
      William M. Kahane 
Title:   
      President

    

    

    

    AMERICAN
      REALTY CAPITAL 

    OPERATING
      PARTNERSHIP, L.P., a Delaware 

    limited
      partnership

     

    By:  American
      Realty Capital Trust, Inc., a 
Maryland
      corporation, its General Partner

    

    

    By:  /s/
      William M. Kahane             
Name:
      William M. Kahane 
Title:
      President

    

    

    

    AMERICAN
      REALTY CAPITAL PROPERTIES, 

    LLC,
      a
      Delaware limited liability company

    

    
      

      By:  /s/
        William M. Kahane             
Name:
        William M. Kahane 
Title:
        President

    

    

    

    

    

    Fifth
      Amendment to Management Agreement

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    

    ARC
      ROCK17MA LLC

    

    
      

      By:  /s/
        William M. Kahane             
Name:
        William M. Kahane 
Title:
        President

    

     

    

    ARC
      WBPCFL000l, LLC,

    a
      Delaware limited liability company

    

    By:  AMERICAN
      REALTY CAPITAL 
OPERATING
      PARTNERSHIP, L.P., a 
Delaware
      limited partnership, its sole 
member

    

    By:  Amencan
      Realty Capital Trust, Inc., a 
Maryland
      corporation, its General Partner

    

    

    
      

      By:  /s/
        William M. Kahane             
Name:
        William M. Kahane 
Title:
        President

    

    

    

    

    ARC
      WBPBFL0001, LLC,

    a
      Delaware limited liability company

    

    By:  AMERICAN
      REALTY CAPITAL 
OPERATING
      PARTNERSHIP, L.P., a 
Delaware
      limited partnership, its sole member

    

    By:  American
      Realty Capital Trust, Inc., a 
Maryland
      corporation, its General Partner

    

    
      

      By:  /s/
        William M. Kahane             
Name:
        William M. Kahane 
Title:
        President

    

    

    

    Fifth
      Amendment to Management Agreement

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    ARC
      PANJOH54 LLC,

    a
      Delaware limited liability company

    

    
      

      By:  /s/
        William M. Kahane             
Name:
        William M. Kahane 
Title:
        President

       

    

    

    

    ARC
      PA-QRS Trust, 

    a
      Virginia business trust

    

    
      

      By:  /s/
        William M. Kahane             
Name:
        William M. Kahane 
Title:
        President

    

    

    

    

    Fifth
      Amendment to Management Agreement

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    

    

    EXHIBIT
      A

    

    List
      of Properties

    

    
      	
               

              Property

              No.

            	
               

              Address

            	
               

              City

            	
               

              State

            	
              PNC

              Owner

            
	
              1.

            	
              1001
                East Erie Avenue

            	
              Philadelphia

            	
              PA

            	
              PNC2
                Owner

            
	
              2.

            	
              108
                East Main Street

            	
              Somerset

            	
              PA

            	
              PNC2
                Owner

            
	
              3.

            	
              114
                West State Street

            	
              Media

            	
              PA

            	
              PNC2
                Owner

            
	
              4.

            	
              1136-1144
                Main Street

            	
              Paterson

            	
              NJ

            	
              PNC1
                Owner

            
	
              5.

            	
              1170
                West Baltimore Pike

            	
              Media

            	
              PA

            	
              PNC2
                Owner

            
	
              6.

            	
              12
                Outwater Lane

            	
              Garfield

            	
              NJ

            	
              PNC1
                Owner

            
	
              7.

            	
              1265
                McBride Avenue

            	
              West
                Paterson

            	
              NJ

            	
              PNC1
                Owner

            
	
              8.

            	
              141
                Franklin Turnpike

            	
              Mahwah

            	
              NJ

            	
              PNC1
                Owner

            
	
              9.

            	
              1485
                Blackwood-Clementon Road

            	
              Clementon

            	
              NJ

            	
              PNC1
                Owner

            
	
              10.

            	
              150
                Paris Avenue

            	
              Northvale

            	
              NJ

            	
              PNC1
                Owner

            
	
              11.

            	
              16
                Highwood Avenue

            	
              Tenafly

            	
              NJ

            	
              PNC1
                Owner

            
	
              12.

            	
              1921
                Washington Valley Road

            	
              Bridgewater
                Township

            	
              NJ

            	
              PNC1
                Owner

            
	
              13.

            	
              1933
                Bordentown Avenue

            	
              Sayreville

            	
              NJ

            	
              PNC1
                Owner

            
	
              14.

            	
              204
                Raritan Valley College Drive

            	
              Somerville

            	
              NJ

            	
              PNC1
                Owner

            
	
              15.

            	
              207
                S State Street

            	
              Clarks
                Summit

            	
              PA

            	
              PNC2
                Owner

            
	
              16.

            	
              2200
                Cottman Avenue

            	
              Philadelphia

            	
              PA

            	
              PNC2
                Owner

            
	
              17.

            	
              222
                Ridgewood Avenue

            	
              Glen
                Ridge

            	
              NJ

            	
              PNC1
                Owner

            
	
              18.

            	
              2431
                Main Street

            	
              Lawrence
                Township

            	
              NJ

            	
              PNC1
                Owner

            
	
              19.

            	
              294
                Main Avenue

            	
              Clifton

            	
              NJ

            	
              PNC1
                Owner

            
	
              20.

            	
              50
                Main Street

            	
              West
                Orange

            	
              NJ

            	
              PNC1
                Owner

            
	
              21.

            	
              31
                S Chester Road

            	
              Swarthmore

            	
              PA

            	
              PNC2
                Owner

            
	
              22.

            	
              315
                Haddon Avenue

            	
              Haddonfield

            	
              NJ

            	
              PNC1
                Owner

            
	
              23.

            	
              321
                E 33rd Street

            	
              Paterson

            	
              NJ

            	
              PNC1
                Owner

            
	
              24.

            	
              34
                East Market Street

            	
              Blairsville

            	
              PA

            	
              PNC2
                Owner

            
	
              25.

            	
              359
                Georges Road

            	
              Dayton

            	
              NJ

            	
              PNC1
                Owner

            

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    

    
      	
               

              Property

              No.

            	
               

              Address

            	
               

              City

            	
               

              State

            	
              PNC

              Owner

            
	
              26.

            	
              36
                Bergen Street

            	
              Westwood

            	
              NJ

            	
              PNC1
                Owner

            
	
              27.

            	
              401
                West Tabor Road

            	
              Philadelphia

            	
              PA

            	
              PNC2
                Owner

            
	
              28.

            	
              403
                N Baltimore Street

            	
              Dillsburg

            	
              PA

            	
              PNC2
                Owner

            
	
              29.

            	
              404
                Pennsylvania Avenue East

            	
              Warren

            	
              PA

            	
              PNC2
                Owner

            
	
              30.

            	
              410
                Main Street

            	
              Orange

            	
              NJ

            	
              PNC1
                Owner

            
	
              31.

            	
              422
                Broad Street

            	
              Bloomfield

            	
              NJ

            	
              PNC1
                Owner

            
	
              32.

            	
              425
                Boulevard

            	
              Mountain
                Lakes

            	
              NJ

            	
              PNC1
                Owner

            
	
              33.

            	
              45
                South Martine Avenue

            	
              Fanwood

            	
              NJ

            	
              PNC1
                Owner

            
	
              34.

            	
              470
                Lincoln Avenue

            	
              Pittsburgh

            	
              PA

            	
              PNC2
                Owner

            
	
              35.

            	
              49
                Little Falls Road

            	
              Fairfield

            	
              NJ

            	
              PNC1
                Owner

            
	
              36.

            	
              489
                Pleasant Valley Way

            	
              West
                Orange

            	
              NJ

            	
              PNC1
                Owner

            
	
              37.

            	
              555
                Cranbury Road

            	
              East
                Brunswick

            	
              NJ

            	
              PNC1
                Owner

            
	
              38.

            	
              572
                Pompton Avenue

            	
              Cedar
                Grove

            	
              NJ

            	
              PNC1
                Owner

            
	
              39.

            	
              583
                Kearny Avenue

            	
              Kearny

            	
              NJ

            	
              PNC1
                Owner

            
	
              40.

            	
              588
                Newark-Pompton Turnpike

            	
              Pompton
                Plains

            	
              NJ

            	
              PNC1
                Owner

            
	
              41.

            	
              5900
                N Broad Street

            	
              Philadelphia

            	
              PA

            	
              PNC2
                Owner

            
	
              42.

            	
              591
                Route 33

            	
              Millstone

            	
              NJ

            	
              PNC1
                Owner

            
	
              43.

            	
              640
                E. Landis Avenue

            	
              Vineland

            	
              NJ

            	
              PNC1
                Owner

            
	
              44.

            	
              510
                North 6th Street

            	
              Philadelphia

            	
              PA

            	
              PNC2
                Owner

            
	
              45.

            	
              7811
                Tylersville Road

            	
              West
                Chester

            	
              OH

            	
              PNC1
                Owner

            
	
              46.

            	
              82
                Greenbrook Road

            	
              Dunellen

            	
              NJ

            	
              PNC1
                Owner

            
	
              47.

            	
              8340
                Germantown Avenue

            	
              Philadelphia

            	
              PA

            	
              PNC2
                Owner

            
	
              48.

            	
              9
                West Somerset Street

            	
              Raritan

            	
              NJ

            	
              PNC1
                Owner

            
	
              49.

            	
              1001
                Cooper Street

            	
              Deptford

            	
              NJ

            	
              PNC1
                Owner

            
	
              50.

            	
              RR1
                Box 640 (Route 611)

            	
              Tannersville

            	
              PA

            	
              PNC2
                Owner

            

    

    

    
      
        
        

      

      
        -7-CERTIFICATE
OF DESIGNATIONS, PREFERENCES AND RIGHTS

     

    OF

     

    SERIES E
CONVERTIBLE PREFERRED STOCK

     

    OF

     

    NOVELOS
THERAPEUTICS, INC.

    

    (Pursuant
to Section 151 of the

    Delaware
General Corporation Law)

     

    Novelos
Therapeutics, Inc. (the “Corporation”),
a corporation organized and existing under the laws of the State of Delaware,
hereby certifies that, pursuant to authority conferred on its Board of Directors
(the “Board”)
by the Certificate of Incorporation of the Corporation, the following resolution
was adopted by the Board at a meeting of the Board duly held on January 26,
2009, which resolution remains in full force and effect on the date
hereof:

     

    RESOLVED, that there is hereby
established a series of the Corporation’s authorized Preferred Stock (the “Preferred
Stock”) having a par value of $0.00001 per share, which series shall be
designated as “Series E Convertible Preferred Stock” (the “Series E
Preferred Stock”) and shall consist of Seven Hundred Thirty Five (735)
shares.  The shares of Series E Preferred Stock shall have the voting
powers, designations, preferences and other special rights, and qualifications,
limitations and restrictions thereof set forth below:

     

    1.     
      Certain
Definitions.  As used herein,
the following terms shall have the following meanings:

     

    (a)           “Affiliate”
shall mean, with respect to any Person, any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person.  For the purposes of this definition, “control,”
when used with respect to any Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms “controlling”
and “controlled”
have meanings correlative to the foregoing.

     

    (b)           “Associated
Company” means, as to Purdue, any person, firm, trust, partnership,
corporation, company or other entity or combination thereof, which directly or
indirectly (i) controls (ii) is controlled by or (iii) is under
common control with Purdue.  The terms “control” and “controlled” mean
ownership of 50% or more, including ownership by trusts with substantially the
same beneficial interests, of the voting and equity rights of such person, firm,
trust, partnership, corporation, company or other entity or combination thereof
or the power to direct the management of such person, firm, trust, partnership,
corporation, company or other entity or combination thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (d)           “Fair
Market Value” shall mean, with respect to any listed security, its Market
Price, and with respect to any property or assets other than cash or listed
securities, the fair value thereof determined in good faith by the Board and the
Requisite Holders.

     

    (e)           “Initial
Issue Date” shall mean the date that shares of Series E Preferred Stock
are first issued by the Corporation.

    

    (f)   
        “Investors”
shall mean, collectively, the Lead Series E Preferred Investors (as defined
below) and Knoll Special Opportunities Fund II Master Fund, Ltd., a Cayman
Islands investment company, Europa International, Inc., a Delaware corporation,
and Hunt-BioVentures, L.P., a Delaware limited partnership.

     

    (g)           “Lead
Series E Preferred  Investors” shall mean,
collectively,  Xmark Opportunity Fund, L.P., a Delaware limited
partnership (“Xmark
LP”), Xmark Opportunity Fund, Ltd., a Cayman Islands exempted company
(“Xmark
Ltd”), Xmark JV Investment Partners, LLC, a Delaware limited liability
company (“Xmark
LLC”),  Caduceus Master Fund Limited, a Bermuda corporation
(“Caduceus
Master”), Caduceus Capital II, L.P., a Delaware limited partnership
(“Caduceus
Capital”), Summer Street Life Sciences Hedge Fund Investors, LLC a
Delaware limited liability company (“Summer
Street”), UBS Eucalyptus Fund, L.L.C., a Delaware registered investment
company (“UBS
Eucalyptus”), PW Eucalyptus Fund, Ltd., a Cayman Islands investment
company (“PW
Eucalyptus”)and
Purdue Pharma L.P., a Delaware limited partnership (or any of its successors or
assigns) (“Purdue”).

     

    (h)           “Market
Price”, as of a particular date (the “Valuation
Date”), shall mean the following with respect to any class of listed
securities: (A) if such security is then listed on a national stock exchange,
the Market Price shall be the closing sale price of one share of such security
on such exchange on the last trading day prior to the Valuation Date, provided
that if such security has not traded in the prior ten (10) trading sessions, the
Market Price shall be the average closing price of such security in the most
recent ten (10) trading sessions during which such security has traded; (B) if
such security is then included in the OTC Bulletin Board, the Market Price shall
be the closing sale price of one share of such security on the OTC Bulletin
Board on the last trading day prior to the Valuation Date or, if no such closing
sale price is available, the average of the high bid and the low ask price
quoted on the OTC Bulletin Board as of the end of the last trading day prior to
the Valuation Date, provided that if such stock has not traded in the prior ten
(10) trading sessions, the Market Price shall be the average closing price of
one share of such security in the most recent ten (10) trading sessions during
which such security has traded; or (C) if such security is then included in the
“pink sheets,” the Market Price shall be the closing sale price of one share of
such security on the “pink sheets” on the last trading day prior to the
Valuation Date or, if no such closing sale price is available, the average of
the high bid and the low ask price quoted on the “pink sheets” as of the end of
the last trading day prior to the Valuation Date, provided that if such stock
has not traded in the prior ten (10) trading sessions, the Market Price shall be
the average closing price of one share of such security in the most recent ten
(10) trading sessions during which such security has traded.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (i)     
      “OrbiMed
Entities” shall mean, collectively Caduceus Master, Caduceus Capital,
Summer Street, UBS Eucalyptus and PW Eucalyptus or any of their respective
successors or assigns.

     

    (j)    
       “Person”
shall mean any individual, partnership, company, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated
organization, government or agency or political subdivision thereof, or other
entity.

     

    (k)           “Principal
Market” means the Trading Market on which the Common Stock is primarily
listed on and quoted for trading, which, as of the Initial Issue Date means the
OTC Bulletin Board (“OTCBB”).

     

    (l)        
   “Requisite
Holders” shall mean the holders of at least a majority of the then
outstanding shares of Preferred Stock which majority must include (i) the Xmark
Entities, provided such collectively Xmark Entities hold at least one-third of
the Series E Preferred Stock issued to the Xmark Entities (appropriately
adjusted for any stock dividend, stock split, reverse stock split,
reclassification, stock combination or other recapitalization occurring after
the date hereof), (ii) the OrbiMed Entities, provided such OrbiMed Entities
collectively hold at least one-third of the Series E Preferred Stock issued to
the OrbiMed Entities (appropriately adjusted for any stock dividend, stock
split, reverse stock split, reclassification, stock combination or other
recapitalization occurring after the date hereof) , (iii) Purdue, provided that
Purdue or its Associated Companies holds at least one-half of the Series E
Preferred Stock issued to Purdue ( appropriately adjusted for any stock
dividend, stock split, reverse stock split, reclassification, stock combination
or other recapitalization occurring after the date hereof).

     

    (m)          “SEC”
shall mean the U.S. Securities and Exchange Commission.

     

    (n)           “Series E
Stated Value” shall mean, with respect to each share of Series E
Preferred Stock, Fifty Thousand Dollars ($50,000), which Series E Stated Value
shall be subject to appropriate adjustment from time to time in the event of any
stock dividend, stock split, reverse stock split, reclassification, stock
combination or other recapitalization affecting the Series E Preferred
Stock.

     

    (o)           “Trading
Day” means any day on which the Common Stock is purchased and sold on the
Principal Market.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (p)           “VWAP”
on a Trading Day means the volume weighted average price of the Common Stock for
such Trading Day on the Principal Market as reported by Bloomberg Financial
Markets or, if Bloomberg Financial Markets is not then reporting such prices, by
a comparable reporting service of national reputation selected by the Requisite
Holders and reasonably satisfactory to the Corporation.  If VWAP cannot be
calculated for the Common Stock on such Trading Day on any of the foregoing
bases, then the Corporation shall submit such calculation to an independent
investment banking firm of national reputation reasonably acceptable to the
Requisite Holders, and shall cause such investment banking firm to perform such
determination and notify the Corporation and the Requisite Holders of the
results of determination no later than two (2) Business Days from the time such
calculation was submitted to it by the Corporation.  All such
determinations shall be appropriately adjusted for any stock dividend, stock
split or other similar transaction during such period.

     

    (q)           “Xmark
Entities” shall mean, collectively, Xmark LP, Xmark Ltd. and Xmark LLC or
any of their respective successors or assigns.

     

    2.      
     Designation;
Preference and Ranking.  The Series E
Preferred Stock shall consist of Seven Hundred Thirty Five (735)
shares.  The preferences of each share of Series E Preferred Stock
with respect to dividend payments and distributions of the Corporation's assets
upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation shall be equal to the preferences of every other share of Series E
Preferred Stock from time to time outstanding in every
respect.  Notwithstanding the terms and conditions of any series of
Preferred Stock now or hereafter existing providing that the Series E Preferred
Stock shall rank junior or senior thereto, the Series E Preferred Stock shall
rank senior to all other outstanding series of Preferred Stock and senior to the
Common Stock, par value $0.00001 per share (the “Common
Stock”), of the Corporation as to the payment of dividends and the
distribution of assets upon voluntary or involuntary liquidation, dissolution or
winding up of the Corporation.  No other equity or equity-linked
securities shall be permitted to rank pari passu with the Series E Preferred
Stock without express written approval of the Requisite Holders.

    

    3.       
    Dividend
Rights.  (a) Each holder of Series E Preferred Stock, in
preference and priority to the holders of all other classes of stock, shall be
entitled to receive, with respect to each share of Series E Preferred Stock then
outstanding and held by such holder of Series E Preferred Stock, dividends,
commencing from the date of issuance of such share of Series E Preferred Stock,
at the rate of nine percent (9%) per annum of the Series E Stated Value (the
“Series E
Preferred Dividends”).  The Series E Preferred Dividends shall
be cumulative, whether or not earned or declared, and shall be paid
semi-annually in arrears beginning on June 30, 2009 and then on the last day of
June and December in each year.  The Series E Preferred Dividends
shall be paid to each holder of Series E Preferred Stock in (1) cash, out of
legally available funds; (2) at the Corporation’s election, in Common Stock, but
only if the Common Stock underlying such dividends are, on the payment date,
subject to an effective Registration Statement (as defined in the Registration
Rights Agreement), based on the lesser of (x) the Conversion Price (as defined
below) then in effect, and (y) the Fair Market Value of the Common Stock on the
Business Day preceding the payment date or (3) at the Corporation’s election, in
Series E Preferred Stock, based on the Series E Stated Value. If shares of
Series E Preferred Stock are transferred in between the scheduled Series E
Preferred Stock dividend payment dates, each of the transferor and transferee of
the Series E Preferred Stock are entitled to their respective pro rata portion
of such Series E Preferred Dividends as of the date of transfer.  Any
election by the Corporation to pay dividends in cash or shares of Common Stock
shall be made uniformly with respect to all outstanding shares of Series E
Preferred Stock for a given dividend period.

     

    
      
        
        

      

      
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    (b)           No
dividends shall be paid on any Common Stock of the Corporation or any other
capital stock of the Corporation during any fiscal year of the Corporation until
all Series E Preferred Dividends (with respect to the current fiscal year and
all prior fiscal years) shall have been paid, or declared and set apart for
payment, when due to the holders of Series E Preferred Stock.

    

    (c)           In
the event that the Corporation shall at any time pay a dividend on the Common
Stock (other than a dividend payable solely in shares of Common Stock) or any
other class or series of capital stock of the Corporation (except for Series C
Preferred Stock), the Corporation shall, at the same time, pay to each holder of
Series E Preferred Stock a dividend equal to the dividend that would have been
payable to such holder if the shares of Series E Preferred Stock held by such
holder had been converted into Common Stock on the date of determination of
holders of Common Stock entitled to receive such dividends.

    

    4.          
 Liquidation
Rights. (a)  In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
Series E Preferred Stock shall be entitled to receive, on a pro rata basis,
prior and in preference to any distribution of any of the assets or surplus
funds of the Corporation to the holders of the Common Stock, or any other class
of capital stock of the Corporation, an amount equal to the Series E Stated
Value for each share of Series E Preferred Stock then held by such holder, plus
an amount equal to all declared but unpaid dividends, and all accrued but unpaid
dividends set forth in Section 3(a) above, on each such share of Series E
Preferred Stock (the “Liquidation
Preference Payment”).  If, upon the occurrence of any such
liquidation, dissolution or winding up of the Corporation, the assets and funds
to be distributed among the holders of Series E Preferred Stock shall be
insufficient to permit the payment to such holders of the full Liquidation
Preference Payment, then the entire assets and
funds of the Corporation legally available for distribution shall be distributed
ratably among the holders of Series E Preferred Stock in proportion to the
Liquidation Preference Payment each such holder is entitled to receive, and no
assets of the Corporation shall be distributed to the holders of the Common
Stock or any other class or series of capital stock of the Corporation in
respect of such Common Stock or such other stock unless and until the
Liquidation Preference Payment payable to all holders of the Series E Preferred
Stock has been paid in full.

    

    (b)          After
payment of the full Liquidation Preference Payment to the holders of the Series
E Preferred Stock as set forth in Section 4(a) above and subject to any other
distribution that may be required with respect to any future series of Preferred
Stock that may from time to time come into existence, the remaining assets and
funds of the Corporation, if any, available for distribution to stockholders
shall be distributed (i) in connection with a Liquidation Event pursuant to
Section 4(c)(1)
below, ratably among the holders of the Series E Preferred Stock, any other
class or series of capital stock that participates with the Common Stock in the
distribution of assets upon such Liquidation Event and the Common Stock, with
the holders of the Series E Preferred Stock deemed to hold that number of shares
of Common Stock into which such shares of Series E Preferred Stock are then
convertible and (ii) in connection with a Liquidation Event pursuant to Sections
4(c)(2)-(5) below, ratably
among the holders of Common Stock.

     

    
      
        
        

      

      
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    (c)           The
Requisite Holders, by written notice to the Corporation at least two (2)
Business Days prior to the effective date thereof, may elect to treat any
of the following transactions as a dissolution or winding up of the Corporation
(each a “Liquidation
Event”) for the purposes of this Section 4:  (1) any
dissolution, winding up or liquidation of the Corporation; (2) any sale, lease
or other transfer of substantially all of the Corporation’s assets, in one or a
series of transactions; (3) any merger, consolidation or similar business
combination transaction, in which the Corporation is not the survivor or, if the
Corporation is the survivor, then only if the holders of a majority of the
Common Stock outstanding immediately before such transaction cease to own a
majority of the Common Stock immediately after the transaction; (4) in one or a
series of events, any change in the majority of the members of the Corporation’s
Board of Directors (the “Board”),
unless the replacement directors were nominated by the majority of the Board
immediately preceding such change; and (5) if any person or entity (other than
the holders of Series E Preferred Stock) shall acquire or become the “beneficial
owner” (as that term is defined in Rule 13d-3 of the Exchange Act) of more than
50% of the Corporation’s outstanding stock.

    

    (d)           Distributions Other than
Cash.  Whenever the distributions provided for in this Section
4 shall be payable in property other than cash, the value of such distribution
shall be the Fair
Market Value thereof.  All distributions (including distributions
other than cash) made hereunder shall be made pro rata to the holders
of Series E Preferred Stock, based on the number of shares of Series E Preferred
Stock held by each such holder.

    

    (e)           Right to
Convert.  Nothing in this Section 4 shall affect in any way the
right of each holder of Series E Preferred Stock to convert such shares at any
time and from time to time into Common Stock in accordance with Section 6 hereof
prior to the Liquidation Event.

     

    
      
        
        

      

      
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    5.       
    Voting
Rights; Protective Provisions; Covenants.

    

    (a)           Except
as otherwise provided herein or as required by applicable law, the holders of
Series E Preferred Stock shall be entitled to vote on all matters on which the
holders of Common Stock shall be entitled to vote, in the same manner and with
the same effect as the holders of Common Stock, voting together with the holders
of Common Stock as a single class.  For this purpose, the holders of
Series E Preferred Stock shall be given notice of any meeting of stockholders as
to which the holders of Common Stock are given notice in accordance with the
by-laws of the Corporation.  As to any matter on which the holders of
Series E Preferred Stock shall be entitled to vote, each holder of Series E
Preferred Stock shall have a number of votes per share of Series E Preferred
Stock held of record by such holder on the record date for the meeting of
stockholders, if such matter is subject to a vote at a meeting of stockholders,
or on the effective date of any written consent, if such matter is subject to a
written consent of the stockholders without a meeting of stockholders, equal to
the number of shares of Common Stock into which such share of Series E Preferred
Stock is then convertible on such record date or effective date, as the case may
be, in accordance with Section 6 hereof (subject to the limitations on
conversion set forth in Sections 6(l) below).

    

    (b)           So
long as all or any portion of the Series E Preferred Stock remain outstanding,
without the prior written consent of the Requisite Holders, the Corporation
shall not, directly or indirectly, take any of the following actions or agree to
take any of the following actions:

     

    (1)           amend,
alter or repeal (whether by merger, consolidation or otherwise) any provision of
the Corporation’s certificate of incorporation or the bylaws;

     

    (2)           create
or authorize the creation of or issue any equity security, or any security
convertible into or exercisable for any equity security, unless the per share
price of such securities is equal to or exceeds $0.65 in cash and such
securities rank junior to the Series E Preferred Stock; provided that the
Company may issue shares of Common Stock or options to employees, consultants,
officers or directors of the Company pursuant to any stock or option plan duly
adopted by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of non-employee
directors established for such purpose;

     

    (3)           increase
the number of authorized shares of Series E Preferred Stock or authorize the
issuance of or issue any shares of Series E Preferred Stock (other than in
connection with the payment of Series E Preferred Dividends in accordance with
Section 3 hereof);

     

    (4)           sell,
lease, convey, license or otherwise grant any rights with respect to, all or
substantially all of its assets (and in the case of licensing, any material
intellectual property) or business of the Corporation and shall not effect any
merger or consolidation with any other company unless as a result thereof and
after giving effect thereto (a) the Corporation shall be the surviving
corporation, (b) the Series E Preferred Stock shall continue to be outstanding,
(c) there shall be no change in the preference, privileges or other rights and
restrictions with respect to the Series E Preferred Stock and (d) there shall
not be created or thereafter exist as a result of thereof any new class of
shares having preference over the Series E Preferred Stock with respect to
dividends, distribution of assets or rights upon liquidation;

     

    
      
        
        

      

      
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    (5)           except
for a declaration or payment of dividends on the  Series E Preferred
Stock and the Series C Preferred Stock (at such time as all accrued and unpaid
dividends on shares of Series E Preferred Stock then due have been paid), the
Corporation shall not declare or pay any dividends on any common stock,
preferred stock or other capital stock of the Corporation;

     

    (6)           except
for a redemption or repurchase of the Series E Preferred Stock or of the
Warrants issued pursuant to a Securities Purchase Agreement dated April 12, 2007
as amended May 2, 2007, issued pursuant to a Securities Purchase Agreement dated
March 26, 2008, as amended April 9, 2008 and issued pursuant to a Securities
Purchase Agreement dated February 11, 2009, the Corporation shall not redeem or
repurchase any of its capital stock (or security exercisable, convertible or
exchangeable for any of its capital stock), except relating to settlement with
departing employees pursuant to written employment agreements in effect on the
Initial Issue Date;

    

    (7)           incur
any debt for borrowed money in excess of $500,000; and

    

    (8)           change
the number of directors which constitutes the Board of Directors.

    

    6.            Conversion.  The holders of
shares of Series E Preferred Stock shall have the following conversion
rights:

     

    (a)           Optional Conversion.
Subject to the terms and conditions of this Section 6, the holder of any share
or shares of Series E Preferred Stock shall have the right, at its option at any
time, to convert any such shares of Series E Preferred Stock into such number of
fully paid and nonassessable shares of Common Stock as is obtained by: (i)
multiplying the number of shares of Series E Preferred Stock to be converted by
the Series E Stated Value and adding to such product the amount of any accrued
but unpaid dividends with respect to such shares of Series E Preferred Stock to
be converted; and (ii) dividing the result obtained pursuant to clause (i) above
by the Series E Conversion Price then in effect.

     

    (b)           Mandatory Conversion.
Subject to the terms and conditions of this Section 6, if the Registration
Statement covering the resale of the shares of Common Stock underlying all of
the Series E Preferred Stock is declared effective by the SEC, and is then
effective and the daily VWAP of the Common Stock for twenty (20) consecutive
trading days exceeds $2.00 per share (subject to appropriate adjustment from
time to time in the event of any stock dividend, stock split, reverse stock
split, reclassification, stock combination or other recapitalization affecting
the Common Stock), then the outstanding Series E Preferred Stock shall
automatically convert, together with accrued dividends, into Common Stock at the
Conversion Price then in effect.

     

    
      
        
        

      

      
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    (c)           The
“Series E
Conversion Price” shall initially be $0.65, and shall be subject to
adjustment from time to time in accordance with the provisions of this Section
6.

     

    (d)           Conversion
Procedures:

     

    (1)           Optional. The rights
of conversion set forth in this Section 6 shall be exercised by any holder of
Series E Preferred Stock by giving written notice to the Corporation that such
holder elects to convert a stated number of shares of Series E Preferred Stock
into Common Stock (the “Optional
Conversion Notice”) and by surrender of a certificate or certificates for
the shares of Series E Preferred Stock so to be converted (or, in lieu thereof,
by delivery of an appropriate lost stock affidavit in the event such certificate
or certificates have been lost or destroyed) to the Corporation at its principal
office (or such other office or agency of the Corporation as the Corporation may
designate by notice in writing to the holders of Series E Preferred Stock) at
any time on the date set forth in such notice (which date shall not be earlier
than the Corporation’s receipt of such notice), together with a statement of the
name or names (with address) in which the certificate or certificates for shares
of Common Stock shall be issued.

     

    (2)           Mandatory.  Upon
the occurrence of the events described in Section 6(b), the Corporation shall
promptly, but not later than five (5) Business Days thereof notify the
Corporation’s transfer agent of such events (“Mandatory
Conversion Notice”) which notice shall identify the Conversion Price then
in effect and direct the Corporation’s transfer agent to send certificates
representing shares of Common Stock issued upon conversion to the holders of
Series E Preferred Stock upon surrender of the certificates for shares of Series
E Preferred Stock. The Corporation shall promptly provide a copy of such
Mandatory Conversion Notice to each holder of Series E Preferred Stock within
one Business Day of the occurrence of the events described in Section
6(b).  The Mandatory Conversion Notice shall state the Conversion
Price then in effect and the address for the Corporation’s transfer agent to
send the new Common Stock upon surrender of the Series E Preferred Stock
certificates to the Corporation’s transfer agent and the address of the
Company’s transfer agent for the holder to send its Series E Preferred Stock
certificate(s).  Immediately upon the issuance of the Mandatory
Conversion Notice to the Corporation’s transfer agent as described in this
Section 6(d)(2), all shares of Series E Preferred Stock shall no longer be
deemed to be outstanding and all rights with respect to such shares shall
immediately cease and terminate, except only the right of the holders thereof,
upon surrender of their certificate or certificates therefor, to receive
certificates representing the number of shares of Common Stock into which such
Series E Preferred Stock has been converted.

     

    
      
        
        

      

      
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    (e)           Promptly
after receipt of the written notices referred to in Section 6(d)(I) above or the
issuance of the Mandatory Conversion Notice, as applicable, and surrender of the
certificate or certificates for the share or shares of Series E Preferred Stock
to be converted (or, in lieu thereof, by delivery of an appropriate lost stock
affidavit in the event such certificate or certificates have been lost or
destroyed), but in no event more than three (3) Business Days thereafter, the
Corporation shall issue and deliver, or cause to be issued and delivered, to the
holder of Series E Preferred Stock, registered in such name or names as such
holder may direct in writing, a certificate or certificates for the number of
whole shares of Common Stock issuable upon the conversion of such share or
shares of Series E Preferred Stock. To the extent permitted by law, such
optional conversion shall be deemed to have been effected, and the Series E
Conversion Price shall be determined, as of the close of business on the date on
which such Optional Conversion Notice shall have been received by the
Corporation and the certificate or certificates for such share or shares of
Series E Preferred Stock shall have been surrendered as aforesaid (or, in lieu
thereof, an appropriate lost stock affidavit has been delivered to the
Corporation). Upon a mandatory conversion, such conversion shall be deemed to
have been effected, and the Series E Conversion Price shall be determined, as of
the close of business on the date on which the conditions in Section 6(b) have
been satisfied. At such time of conversions, the rights of the holder of such
share or shares of Series E Preferred Stock shall cease with respect to the
shares of Series E Preferred Stock being converted, and the Person or Persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the holder
or holders of record of the shares represented thereby.

     

    (f)        
   If the Company shall fail for any reason or for no reason to
issue to a holder the applicable certificate or certificates within three (3)
Business Days of receipt of documents necessary for the conversions set forth
above (the “Deadline
Date”), then, in addition to all other remedies available to such holder,
if on or after the Business Day immediately following such three (3) Business
Day period, such holder or holder’s broker, acting on behalf of such holder,
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the holder of shares of Common Stock that
such holder anticipated receiving from the Company upon a
conversion  of holder’s Series E Preferred tock (a “Buy-In”),
then the Company shall, within three (3) Business Days after such holder’s
request and in such holder’s sole discretion, either (i) pay cash to the holder
in an amount equal to such holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such shares of Common Stock) shall terminate, or (ii)
promptly honor its obligation to deliver to such holder a certificate or
certificates representing such shares of Common Stock and pay cash to the holder
in an amount equal to the excess (if any) of the Buy-In Price over the product
of (a) such number of shares of Common Stock, times (b) the closing bid price on
the Deadline Date.

     

    (g)           No
fractional shares shall be issued upon any conversion of shares of Series E
Preferred Stock into Common Stock.  If any fractional share of Common
Stock would, except for the provisions of the first sentence of this Section
6(g), be delivered upon such conversion, the Corporation, in lieu of delivering
such fractional share, shall pay to the holder surrendering the shares of Series
E Preferred Stock for conversion an amount in cash equal to the Market Price of
such fractional share of Common Stock.  In case the number of shares
of Series E Preferred Stock represented by the certificate or certificates
surrendered pursuant to Section 6(d) above exceeds the number of shares
converted, the Corporation shall, upon such conversion, execute and deliver to
the holder, at the expense of the Corporation, a new certificate or certificates
for the number of shares of Series E Preferred Stock represented by the
certificate or certificates surrendered which are not to be
converted.

     

    
      
        
        

      

      
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    (h)           If,
at any time after the Initial Issue Date, the number of shares of Common Stock
outstanding is increased by a stock dividend payable in shares of Common Stock
or by a subdivision or split-up of shares of Common Stock, then, following the
record date for the determination of holders of Common Stock entitled to receive
such stock dividend, or to be affected by such subdivision or split-up, the
Series E Conversion Price shall be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of Series E Preferred Stock shall
be increased in proportion to such increase in outstanding shares.

    

    (i)           If,
at any time after the Initial Issue Date, the number of shares of Common Stock
outstanding is decreased by a combination of the outstanding shares of Common
Stock into a smaller number of shares of Common Stock, then, following the
record date to determine shares affected by such combination, the Series E
Conversion Price shall be appropriately increased so that the number of shares
of Common Stock issuable on conversion of each share of Series E Preferred Stock
shall be decreased in proportion to such decrease in outstanding
shares.

    

    (j)           If
the Common Stock issuable upon the conversion of the Series E Preferred Stock
shall be changed into the same or different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination or shares of stock dividend
provided for elsewhere in this Section 6, or the sale of all or substantially
all of the Corporation’s properties and assets to any other Person), then and in
each such event the holder of each share of Series E Preferred Stock shall have
the right thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which such shares of Series E Preferred Stock might have been
converted, as the case may be, immediately prior to such reorganization,
reclassification or change, all subject to further adjustment as provided
herein.

    

    (k)           If
at any time or from time to time there shall be a merger or consolidation of the
Corporation with or into another corporation, or the sale of all or
substantially all of the Corporation’s properties and assets to any other
Person, then, as a part of such merger, or consolidation or sale, provision
shall be made so that holders of Series E Preferred Stock, as the case may be,
shall thereafter be entitled to receive upon conversion of the Series E
Preferred Stock, the number of shares of stock or other securities or property
of the Corporation, or of the successor corporation resulting from such merger,
consolidation or sale, to which such holder would have been entitled if such
holder had converted its shares of Series E Preferred Stock immediately prior to
such merger, consolidation or sale, without regard to any conversion limitation
specified in Section 6(j).  In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 6 with
respect to the rights of the holders of the Series E Preferred Stock after the
merger, consolidation or sale to the end that the provisions of this Section 6,
including adjustment of the Series E Conversion Price then in effect for the
Series E Preferred Stock and the number of shares issuable upon conversion of
the Series E Preferred Stock) shall be applicable after that event in as nearly
equivalent a manner as may be practicable.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (l)        (I)  
Except as to a mandatory conversion contemplated by Section 6(b) above,
notwithstanding anything herein to the contrary, in no event shall a holder of
Series E Preferred Stock be entitled to convert any portion of the Series E
Preferred Stock so held by such holder in excess of that portion upon conversion
of which the sum of (1) the number of shares of Common Stock beneficially owned
by such holder and its Affiliates or Associated Companies (other than shares of
Common Stock which may be deemed beneficially owned through ownership of the
unconverted shares of Series E Preferred Stock or the unexercised or unconverted
portion of any other security of the holder subject to a limitation on
conversion analogous to the limitations contained herein) and (2) the number of
shares of Common Stock issuable upon the conversion of that portion of the
Series E Preferred Stock with respect to which the determination of this proviso
is being made, would result in beneficial ownership by such holder and its
Affiliates or Associated Companies of any amount greater than 4.99% of the then
outstanding shares of Common Stock (whether or not, at the time of such
conversion, the Holder and its Affiliates or Associated Companies beneficially
own more than 4.99% of the then outstanding shares of Common
Stock).  The waiver by a holder of Series E Preferred Stock of any
limitation contained in an option or convertible security now or hereafter held
by such holder that is similar or analogous to the limitations set forth in this
Section 6(l) shall not be deemed a waiver or otherwise effect the limitation set
forth in this Section 6(l), unless such waiver expressly states it is a waiver
of the provisions of this Section 6(l).  For purposes of this Section
6(l), beneficial ownership shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such
proviso.  Any holder of Series E Preferred Stock may waive the
limitations set forth herein by sixty-one (61) days written notice to the
Corporation or immediately preceding a Change of Control of the
Corporation.  For purposes of this Sections 6(l)(I) and (II), the term
“Change of Control” means (1) any sale, lease or other transfer of substantially
all of the Corporation’s assets, in one or a series of transactions; (2) any
merger, consolidation or similar business combination transaction, in which the
Corporation is not the survivor or, if the Corporation is the survivor, then
only if the holders of a majority of the Common Stock outstanding immediately
before such transaction cease to own a majority of the Common Stock immediately
after the transaction; (3) in or a series of events, any change in the majority
of the members of the Board, unless the replacement directors were nominated by
the majority of the Board immediately preceding such change; and (4) if any
person or entity (other than the holders of the Series E Preferred Stock) shall
acquire or become the “beneficial owner” (as that term is defined in Rule 13d-3
of the Exchange Act) of more than 50% of the Corporation’s outstanding
stock.

     

    
      
        
        

      

      
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    (II)  Except as to a
mandatory conversion contemplated by Section 6(b) above, notwithstanding
anything herein to the contrary, in no event shall a holder of Series E
Preferred Stock be entitled to convert any portion of the Series E Preferred
Stock so held by such holder in excess of that portion upon conversion of which
the sum of (1) the number of shares of Common Stock beneficially owned by such
holder and its Affiliates or Associated Companies (other than shares of Common
Stock which may be deemed beneficially owned through ownership of the
unconverted shares of Series E Preferred Stock or the unexercised or unconverted
portion of any other security of the holder subject to a limitation on
conversion analogous to the limitations contained herein) and (2) the number of
shares of Common Stock issuable upon the conversion of that portion of the
Series E Preferred Stock with respect to which the determination of this proviso
is being made, would result in beneficial ownership by such holder and its
Affiliates or Associated Companies of any amount greater than 9.99% of the then
outstanding shares of Common Stock (whether or not, at the time of such
conversion, the Holder and its Affiliates or Associated Companies beneficially
own more than 9.99% of the then outstanding shares of Common
Stock).  The waiver by a holder of Series E Preferred Stock of any
limitation contained in an option or convertible security now or hereafter held
by such holder that is similar or analogous to the limitations set forth in this
Section 6(l) shall not be deemed a waiver or otherwise effect the limitation set
forth in this Section 6(l), unless such waiver expressly states it is a waiver
of the provisions of this Section 6(l).  For purposes of this Section
6(l), beneficial ownership shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such
proviso.  Any holder of Series E Preferred Stock may waive the
limitations set forth herein by sixty-one (61) days written notice to the
Corporation or immediately preceding a Change of Control of the
Corporation.

     

    (m)          Notices of Record
Date.  In case at any time:

     

    (1)           the
Corporation shall declare any dividend upon its Common Stock or any other class
or series of capital stock of the Corporation payable in cash or stock or make
any other distribution to the holders of its Common Stock or any such other
class or series of capital stock;

     

    (2)           the
Corporation shall offer for subscription pro rata to the holders
of its Common Stock or any other class or series of capital stock of the
Corporation any additional shares of stock of any class or other rights;
or

     

    (3)           there
shall be any capital reorganization or reclassification of the capital stock of
the Corporation, any Acquisition or a liquidation, dissolution or winding up of
the Corporation;

     

    
      
        
        

      

      
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    then, in
any one or more of said cases, the Corporation shall give, by delivery in person
or by certified or registered mail, return receipt requested, addressed to each
holder of any shares of Series E Preferred Stock at the address of such holder
as shown on the books of the Corporation, (a) at least 20 Business Days’ prior
written notice of the date on which the books of the Corporation shall close or
a record shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any event set forth in clause
(3) of this Section 6(m) and (b) in the case of any event set forth in clause
(3) of this Section 6(m), at least 20 Business Days’ prior written notice of the
date when the same shall take place.  Such notice in accordance with
the foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock or such other class or series of capital stock shall be entitled thereto
and such notice in accordance with the foregoing clause (b) shall also specify
the date on which the holders of Common Stock and such other series or class of
capital stock shall be entitled to exchange their Common Stock and other stock
for securities or other property deliverable upon consummation of the applicable
event set forth in clause (3) of this Section 6(m).

     

    (n)           Upon
any adjustment of the Series E Conversion Price, then and in each such case the
Corporation shall give prompt written notice thereof, by delivery in person or
by certified or registered mail, return receipt requested, addressed to each
holder of shares of Series E Preferred Stock at the address of such holder as
shown on the books of the Corporation, which notice shall state the Series E
Conversion Price resulting from such adjustment and setting forth in reasonable
detail the method upon which such calculation is based.

     

    (o)           The
Corporation will at all times reserve and keep available out of its authorized
Common Stock, solely for the purpose of issuance upon conversion of the Series E
Preferred Stock as herein provided, 100% of such number of shares of Common
Stock as shall then be issuable upon the conversion of all outstanding shares of
Series E Preferred Stock without regard to the limitation set forth in Section
6(l).  The Corporation covenants that all shares of Common Stock which
shall be so issued shall be duly and validly issued and fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the Series E Conversion Price in effect at the
time. The Corporation will take all such action as may be necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirement of any national securities
exchange upon which the Common Stock may be listed and are subject to an
effective Registration Statement (as defined in the Registration Rights
Agreement).  The Corporation will not take any action which results in
any adjustment of the Series E Conversion Price if the total number of shares of
Common Stock issued and issuable after such action upon conversion of the Series
E Preferred Stock would exceed the total number of shares of Common Stock then
authorized by the Corporation’s Amended and Restated Certificate of
Incorporation.

     

    (p)           The
issuance of certificates for shares of Common Stock upon conversion of Series E
Preferred Stock shall be made without charge to the holders thereof for any
issuance tax in respect thereof, provided that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any certificate in a name other than that of the
holder of the Series E Preferred Stock which is being converted.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (q)           The
Corporation will at no time close its transfer books against the transfer of any
Series E Preferred Stock or of any shares of Common Stock issued or issuable
upon the conversion of any shares of Series E Preferred Stock in any manner
which interferes with the timely conversion of such Series E Preferred Stock,
except as may otherwise be required to comply with applicable securities
laws.

    

    7.           
Amendment.  This
Certificate of Designations may only be amended with the prior written consent
of the Requisite Holders and, in the event that any such amendment materially
adversely affects a holder of Series E Preferred Stock in a manner
disproportionate to the other holders of Series E Preferred Stock, without the
prior written consent of such holder.  The Corporation may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Corporation shall have obtained the written consent
to such action or omission to act, of the Requisite Holders and, in the event
that any such action or omission to act materially adversely affects a holder of
Series E Preferred Stock in a manner disproportionate to the other holders of
Series E Preferred Stock, without the prior written consent of such
holder.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the Corporation has
caused this Certificate of Designations to be duly executed as of the 11th day
of February, 2009.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 	 	NOVELOS THERAPEUTICS,
      INC. 	 
	 	 	 	 
	
                                       

                                    	
                                       

                                    	/s/ Harry
      S. Palmin	 
      
	 	 	 	 
	 	 	
                                      Name:  Harry
      S. Palmin

                                      Title:  President
      and CEO

                                    	 

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        16

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