Document:

EXHIBIT
10.2

     

    REGISTRATION
RIGHTS AGREEMENT

     

    This
Registration Rights Agreement (this “Agreement”) is made and
entered into as of September 9, 2009, by and among ZIOPHARM Oncology, Inc., a
Delaware corporation (the “Company”), and the several
purchasers signatory hereto (each a “Purchaser” and collectively,
the “Purchasers”).

     

    This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof between the Company and each Purchaser (the “Purchase
Agreement”).

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Company and the Purchasers agree as
follows:

     

    1.   
        Definitions.  Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase
Agreement.  As used in this Agreement, the following terms shall have
the respective meanings set forth in this Section 1:

     

    “Advice” shall have the
meaning set forth in Section 6(d).

     

    “Affiliate” means, with
respect to any person, any other person which directly or indirectly controls,
is controlled by, or is under common control with, such person.

     

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

     

    “Closing” has the meaning set
forth in the Purchase Agreement.

     

    “Closing Date” has the meaning
set forth in the Purchase Agreement.

     

    “Commission” means the United
States Securities and Exchange Commission.

     

    “Common Stock” means the
common stock of the Company, par value $0.001 per share, and any securities into
which such common stock may hereinafter be reclassified.

     

    “Effective Date” means the
date that the Registration Statement filed pursuant to Section 2(a) is first
declared effective by the Commission.

     

    “Effectiveness Deadline”
means, with respect to the Registration Statement required to be filed to cover
the resale by the Holders of the Registrable Securities, the earlier of: (i) the
90th
calendar day following the Closing Date; provided, that, if the
Commission reviews and has written comments to the filed Registration Statement,
then the Effectiveness Deadline under this clause (i) shall be the 120th
calendar day following the Closing Date, and (ii) the fifth (5th)
Trading Day following the date on which the Company is notified by the
Commission that the Registration Statement will not be reviewed or is no longer
subject to further review and comments and the effectiveness of the Registration
Statement may be accelerated; provided, however, that in
either case if the Effective Deadline falls on a Saturday, Sunday or other day
that the Commission is closed for business, the Effectiveness Deadline shall be
extended to the next business day on which the Commission is open for
business.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Effectiveness Period” shall
have the meaning set forth in Section 2(b).

     

    “Event” shall have the meaning
set forth in Section 2(c).

     

    “Event Date” shall have the
meaning set forth in Section 2(c).

     

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

     

    “Filing Deadline” means, with
respect to the Registration Statement required to be filed pursuant to Section
2(a), the 60th
calendar day following the Closing Date; provided, however, that if
the Filing Deadline falls on a Saturday, Sunday or other day that the Commission
is closed for business, the Filing Deadline shall be extended to the next
business day on which the Commission is open for business.

     

    “Holder” or “Holders” means the holder or
holders, as the case may be, from time to time of Registrable
Securities.

     

    “Indemnified Party” shall have
the meaning set forth in Section 5(c).

     

    “Indemnifying Party” shall
have the meaning set forth in Section 5(c).

     

    “Knowledge” means with respect
to any statement made to the knowledge of a party, that the statement is based
upon the actual knowledge of the executive officers of such party having
responsibility for the matter or matters that are the subject of the
statement.

    

    “Losses” shall have the
meaning set forth in Section 5(a).

    

    “New York Courts” means the
state and federal courts sitting in the City of New York, Borough of
Manhattan.

     

    “Person” means an individual
or corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.

     

    “Placement Agents” means
Rodman & Renshaw, LLC, Riverbank Capital Securities, Inc. and Griffin
Securities, Inc., and any permitted assigns.

     

    “Principal Trading Market”
means the Trading Market on which the Common Stock is primarily listed on and
quoted for trading, which, as of the Closing Date, shall be The NASDAQ Capital
Market.

     

    “Proceeding” means an action,
claim, suit, investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether commenced or
threatened.

     

    “Prospectus” means the
prospectus included in a Registration Statement (including, without limitation,
a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

    
      
         

      

      
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    “Register,” “registered” and “registration” refer to a
registration made by preparing and filing a Registration Statement or similar
document in compliance with the Securities Act and pursuant to Rule 415, and the
declaration or ordering of effectiveness of such Registration Statement or
document.

     

    “Registrable Securities” means
all of (i) the Shares (ii) the Warrant Shares issued or issuable upon the
exercise of the Warrants, (iii) any additional shares issuable in connection
with any anti-dilution provisions in the Warrants (without giving effect to any
limitations on exercise set forth in the Warrant) and (iv) any securities issued
or issuable upon any stock split, dividend or other distribution,
recapitalization or similar event; provided, that the Holder has
completed and delivered to the Company a Selling Stockholder Questionnaire; and
provided, further, that a Holder’s security shall cease to be Registrable
Securities upon the earliest to occur of the following:  (A) sale
pursuant to a Registration Statement or Rule 144 under the Securities Act (in
which case, only such security sold shall cease to be a Registrable Security);
or (B) such security becoming eligible for sale by the Holder pursuant to Rule
144 in a transaction in which the requirements of paragraph (c)(1) thereof do
not apply.

     

    “Registration Statements”
means any one or more registration statements of the Company filed under the
Securities Act that covers the resale of any of the Registrable Securities
pursuant to the provisions of this Agreement (including without limitation the
Initial Registration Statement, the New Registration Statement and any Remainder
Registration Statements), amendments and supplements to such Registration
Statements, including post-effective amendments, all exhibits and all material
incorporated by reference or deemed to be incorporated by reference in such
Registration Statements.

     

    “Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “Rule 415” means Rule 415
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

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

     

    “Selling Stockholder
Questionnaire” means a questionnaire in the form attached as Annex B hereto, or
such other form of questionnaire as may reasonably be adopted by the Company
from time to time.

     

    “Shares” means the shares of
Common Stock issued or issuable to the Purchasers pursuant to the Purchase
Agreement.

    
      
         

      

      
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    “Trading Day” means (i) a day
on which the Common Stock is listed or quoted and may be traded on its primary
Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock
is not listed on a Trading Market (other than the OTC Bulletin Board), a day on
which the Common Stock may be traded in the over-the-counter market, as reported
by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business Day.

     

    “Trading Market” means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.

     

    “Transfer Agent” means
American Stock Transfer and Trust Company or any successor transfer agent for
the Company, or a Successor transfer agent to the Company.

     

    “Warrants” means the Warrants
issued pursuant to the Purchase Agreement.

     

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

     

    
      	
            	
              2.

            	
              Registration.

            

    

     

    (a)           On
or prior to the 30th
calendar day following the Closing Date, the Company shall prepare and file with
the Commission a Registration Statement covering the resale of all Registrable
Securities not already covered by an existing and effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415
(the “Initial Registration
Statement”); provided,
however, that if the 30th
calendar day following the Closing Date falls on a Saturday, Sunday or other day
that the Commission is closed for business, such deadline shall be extended to
the next business day on which the Commission is open for
business.  The Initial Registration Statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance with the Securities Act) and shall
contain (except if otherwise required pursuant to written comments received from
the Commission upon a review of such Registration Statement) the “Plan of
Distribution” attached hereto as Annex A.  Notwithstanding the
registration obligations set forth in this subsection (a) and subsections (b)
and (c) of this Section 2, in the event the Commission informs the Company that
all of the Registrable Securities cannot, as a result of the application of Rule
415, be registered for resale on a single registration statement, the Company
agrees to promptly (i) inform each of the holders thereof; (ii) permit counsel
of such holders (subject to Section 4, at such holders expense) to review and
participate in discussions regarding the Company’s response to the Commission
regarding the application of 415 to the Registration Statement, (iii) use its
reasonable best efforts to file amendments to the Initial Registration Statement
as required by the Commission and/or (iv) if required by the Commission,
withdraw the Initial Registration Statement and file a new registration
statement (a “New Registration
Statement”), in either case covering the maximum number of Registrable
Securities permitted to be registered by the Commission on Form S-3 or such
other form available to register for resale the Registrable
Securities.  In the event the Company amends the Initial Registration
Statement or files a New Registration Statement, as the case may be, under
clauses (i) or (ii) above, the Company will use its reasonable best efforts to
file with the Commission, as promptly as allowed by Commission or staff guidance
provided to the Company or to registrants of securities in general, one or more
Registration Statements on Form S-3 or such other form available to register for
resale those Registrable Securities that were not registered for resale on the
Initial Registration Statement, as amended, or the New Registration Statement
(the “Remainder Registration
Statements”).

    
      
         

      

      
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    (b)           The
Company shall use its reasonable commercial efforts to cause each Registration
Statement to be declared effective by the Commission as soon as practicable and,
with respect to the Initial Registration Statement or the New Registration
Statement, as applicable, no later than the Effectiveness Deadline and shall use
its reasonable commercial efforts to keep each Registration Statement
continuously effective under the Securities Act until the earlier of (i) such
time as all of the Registrable Securities covered by such Registration Statement
have been publicly sold by the Holders, (ii) the date that all Registrable
Securities covered by such Registration Statement may be sold pursuant to Rule
144 in transactions in which the requirements of paragraph (c)(1) thereof do not
apply, as determined by counsel to the Company pursuant to a written opinion
letter to such effect, addressed and acceptable to the Transfer Agent and the
affected Holders (the “Effectiveness
Period”).  The Company shall ensure that each Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein (in the case of prospectuses, in the light of the
circumstances in which they were made) not misleading.  Each
Registration Statement shall also cover, to the extent allowable under the
Securities Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities.  The Company shall promptly notify the Holders via
facsimile or e-mail of the effectiveness of a Registration Statement and shall,
by 9:30 am Eastern Time on the Trading Day after the Effective Date (as defined
in the Purchase Agreement), file a final Prospectus with the Commission pursuant
to Rule 424.

     

    (c)           If:
(i) the Initial Registration Statement is not filed on or prior to the Filing
Deadline, (ii) the Initial Registration Statement or the New Registration
Statement, as applicable, is not declared effective by the Commission (or
otherwise does not become effective) on or prior to its Effectiveness Deadline
or (iii) after its Effective Date, such Registration Statement ceases for any
reason (including without limitation by reason of a stop order, or the Company’s
failure to update the Registration Statement), but excluding the inability of
any Holder to sell the Registrable Securities covered thereby due to market
conditions, to remain continuously effective and available to the Holders as to
all Registrable Securities to which it is required to cover at any time prior to
the expiration of the Effectiveness Period for an aggregate of more than 20
consecutive Trading Days or for more than an aggregate of 40 Trading
Days  in any 12-month period (which need not be consecutive), (any
such failure or breach in clauses (i), (ii) or (iii) above being referred to as
an “Event,” and, for
purposes of clauses (i) or (ii), the date on which such Event occurs, or for
purposes of clause (iii), the date which such 20 consecutive or 40 Trading Day
period (as applicable) is exceeded, being referred to as the “Event Date”), then in
addition to any other rights available to the Holders: (x) on such Event Date
the Company shall pay to each Holder an amount in cash, as liquidated damages
and not as a penalty, equal to 1.0% of the aggregate purchase price paid by such
Holder pursuant to the Purchase Agreement for any Registrable Securities then
held by such Holder (which remedy shall not be exclusive of any other remedies
available under this Agreement); and (y) on each monthly anniversary of each
such Event Date thereof (if the applicable Event shall not have been cured by
such date) until the applicable Event is cured, the Company shall pay to each
Holder an amount in cash, as partial liquidated damages and not as a penalty,
equal to 1.0% of the aggregate purchase price paid by such Holder pursuant to
the Purchase Agreement for any Registrable Securities then held by such Holder
(which remedy shall not be exclusive of any other remedies available under this
Agreement).  The parties agree that the Company will not be liable for
liquidated damages under this Section 2(c) in respect of the Warrants or the
Warrant Shares. If the Company fails to pay any partial liquidated damages
pursuant to this Section in full within seven days after the date payable, the
Company will pay interest thereon at a rate of 10% per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such partial liquidated damages are due until such
amounts, plus all such interest thereon, are paid in full.  The
partial liquidated damages pursuant to the terms hereof shall apply on a daily
pro-rata basis for any portion of a month prior to the cure of an Event, except
in the case of the first Event Date. Notwithstanding the foregoing, the maximum
payment to a Holder associated with all Events in the aggregate shall not exceed
(i) in any 30-day period, an aggregate of 1.0% of the purchase price paid by
such Holder for its Registrable Securities (plus interest accrued thereon, if
applicable) and (ii) 10.0% of the purchase paid by such Holder for its
Registrable Securities

    
      
         

      

      
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    (d)           Each
Holder agrees to furnish to the Company a completed and executed Selling
Stockholder Questionnaire.  The Company shall not be required to
include the Registrable Securities of a Holder in a Registration Statement and
shall not be required to pay any liquidated or other damages under Section 2(c)
to any Holder who fails to furnish to the Company a fully completed and executed
Selling Stockholder Questionnaire at least two Trading Days prior to the Filing
Deadline, or if sooner, five Trading Days after the Company furnishes copies of
the sections of the Prospectus, as contemplated by Section 3(a).

    

    (e)           In
the event that Form S-3 is not  available for the registration of the
resale of Registrable Securities hereunder, the Company shall (i) register the
resale of the Registrable Securities on another appropriate form reasonably
acceptable to the Holders and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering the
Registrable Securities has been declared effective by the
Commission.  

    

    
      	
            	
              3.

            	
              Registration
      Procedures

            

    

     

    In
connection with the Company's registration obligations hereunder, the Company
shall:

     

    (a)           Not
less than five Trading Days prior to the filing of a Registration Statement or
any related Prospectus that differs substantively from the Initial Registration
Statement or the Prospectus contained therein, or any amendment or supplement
thereto, (i) furnish to each Holder copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holder, and
(ii) cause its officers and directors, counsel and independent certified
public accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to each Holder, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file a Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of 67% of the Registrable Securities
shall reasonably object in good faith, provided that the
Company is notified of such objection in writing no later than three Trading
Days after the Holders have been so furnished copies of a Registration Statement
or any related Prospectus or amendments or supplements thereto. During any
periods that the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities because the Holders of
67% of the Registrable Securities exercise their rights under this section to
object to the filing of a Registration Statement, any liquidated damages that
are accruing, at such time shall be tolled and any Event that may otherwise
occur because of the exercise of such rights or such delay shall be suspended,
until the Holders of 67% of the Registrable Securities no longer object to the
filing of such Registration Statement (provided that such
tolling shall only occur if the Company uses commercially reasonable efforts to
resolve such objection).

    
      
         

      

      
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    (b)           (i)  Prepare
and file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for its Effectiveness
Period; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424; (iii) respond as promptly as reasonably practicable to any
comments received from the Commission with respect to each Registration
Statement or any amendment thereto and, as promptly as reasonably possible,
provide the Holders true and complete copies of all correspondence from and to
the Commission relating to such Registration Statement that pertains to the
Holders as Selling Stockholders but not any comments that would result in the
disclosure to the Holders of material and non-public information concerning the
Company; and (iv) comply with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable Securities
covered by each Registration Statement.

     

    (c)           Notify
the Holders as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than three Trading Days prior to such filing, in the case of
(iii) and (iv) below, not more than one Trading Day after such issuance or
receipt, in the case of (v) below, not less than three Trading Days prior to the
financial statements in any Registration Statement becoming ineligible for
inclusion therein and, in the case of (vi) below, not more than one Trading Day
after the Company obtains Knowledge of such proceeding) and (if requested by any
such Person) confirm such notice in writing no later than one Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a “review” of
such Registration Statement and whenever the Commission comments in writing on
any Registration Statement (in which case the Company shall provide true and
complete copies thereof and all written responses thereto to each of the Holders
that pertain to the Holders as a Selling Stockholder or to the Plan of
Distribution, but not information which the Company believes would constitute
material and non-public information); and (C) with respect to each Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) the receipt by the Company of any request by the Commission or any other
federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information that pertains
to the Holders as Selling Stockholders or the Plan of Distribution; (iii) of the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the initiation of any
Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in the case of
such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in the case of any Prospectus, form of prospectus or supplement thereto, in
light of the circumstances under which they were made), not misleading; and (vi)
of a pending proceeding against the Company under Section 8A of the Securities
Act in connection with the offering of Registrable Securities.

     

    (d)           Use
reasonable commercial efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of a Registration
Statement, or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, as soon as practicable.

     

    (e)           If
requested by a Holder, furnish to such Holder, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto and all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that the Company shall have no
obligation to provide any document pursuant to this clause that is available on
the Commission’s EDGAR system.

    
      
         

      

      
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    (f)           Upon
notification by the Commission that a Registration Statement will not be
reviewed or is no longer subject to further review and comments, the Company
shall request acceleration of such Registration Statement within five (5)
Business Days after receipt of such notice.

     

    (g)          Prior
to any public offering of Registrable Securities, use its reasonable commercial
efforts to register or qualify or cooperate with the selling Holders in
connection with the registration or qualification (or exemption therefrom) of
such Registrable Securities for offer and sale under the securities or Blue Sky
laws of such jurisdictions within the United States as any Holder reasonably
requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period and to do any and
all other acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statements; provided,
that the Company shall not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action that would subject the Company to general service of process in any
jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so
subject.

     

    (h)           If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement
and under law, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such
Holders may reasonably request.  In connection therewith, if required
by the Transfer Agent, the Company shall promptly after the effectiveness of the
Registration Statement cause an opinion of counsel as to the effectiveness of
the Registration Statement to be delivered to and maintained with its Transfer
Agent, together with any other authorizations, certificates and directions
required by the transfer agent, which authorize and direct the Transfer Agent to
issue such Registrable Securities without legend upon sale by the holder of such
shares of Registrable Securities under the Registration Statement.

     

    (i)           Following
the occurrence of any event contemplated by Section 3(c)(v), as promptly as
reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, no effective Registration Statement nor
Prospectus in use thereunder will contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus, form of prospectus
or supplement thereto, in light of the circumstances under which they were
made), not misleading.

     

    (j)           (i)
In the time and manner required by the Principal Trading Market, prepare and
file with such Trading Market an additional shares listing application covering
all of the Registrable Securities, (ii) take all steps necessary to cause such
Registrable Securities to be approved for listing on the Principal Trading
Market as soon as possible thereafter, (iii) if requested by any Holder, provide
such Holder evidence of such listing, and (iv) during the Effectiveness Period,
maintain the listing of such Registrable Securities on the Principal Trading
Market.

    
      
         

      

      
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    (k)           In
order to enable the Holders to sell Shares or Warrant Shares under Rule 144,
until such time as all of the Shares and Warrant Shares have either been sold or
are eligible for sale without restriction pursuant to Rule 144, the Company
shall use its commercially reasonable efforts to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
Section 13(a) or 15(d) of the Exchange Act. During such one year period, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Person to
sell Shares and Warrant Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, including compliance with the provisions of the Purchase
Agreement relating to the transfer of the  Shares and Warrant
Shares.

     

    (l)           The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and any Affiliate thereof and as to any Financial Industry Regulatory
Authority (“FINRA”)
affiliations and of any natural persons who have the power to vote or dispose of
the Common Stock, and the Company has the right to include such information in
any Registration Statement and to otherwise provide such information to the
Commission.

     

    (m)           If
requested by a Holder, the Company shall effect a filing with respect to the
public offering contemplated by the Registration Statement (an “Issuer Filing”) with the
FINRA Corporate Financing Department pursuant to FINRA
Rule 5510(b)(10)(A)(i) within five Trading Days of the date of such
request.  The Company shall pay the filing fee required by such Issuer
Filing and shall use its commercially reasonable efforts to pursue the Issuer
Filing until the FINRA issues a letter confirming that it does not object to the
terms of the offering contemplated by the Registration Statement.  A
copy of the Issuer Filing and all related correspondence with respect thereto
shall be provided to the Placement Agents and, upon request, to any
Holder.

     

    4. 
          Registration
Expenses.  All fees and expenses incident to the Company’s
performance of or compliance with its obligations under this Agreement
(excluding any underwriting discounts and selling commissions and all legal fees
and expenses of legal counsel, accountants and other advisors for any Holder
except as specifically provided below) shall be borne by the Company whether or
not any Registrable Securities are sold pursuant to a Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the securities exchanges on which the Common Stock is
then listed for trading, and (B) in compliance with applicable state securities
or Blue Sky laws), (ii) messenger, telephone and delivery expenses, (iii) fees
and disbursements of counsel for the Company, (iv) Securities Act liability
insurance, if the Company so desires such insurance, and (v) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement.  In addition, the
Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. Further, upon request, the Company shall pay the reasonable fees and
disbursements of one firm or counsel (which firm or counsel shall be experienced
in securities matters and designated by Holders owning a majority of the
Registrable Securities) to act as counsel for the Holders in connection with the
preparation and filing of the Registration Statement; provided, however, that the
amount of fees and disbursements reimbursable pursuant to this Section shall be
limited to $10,000 in the aggregate. In no event shall the Company be
responsible for any broker or similar commissions or any legal fees, accounting
fees, the fees of other advisors or other costs of the Holders.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	
            	
              5.

            	
              Indemnification.

            

    

     

    (a)           Indemnification by the
Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents, partners, members, managers, shareholders, Affiliates and
employees of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, partners, members, managers, shareholders, agents
and employees of each such controlling Person, to the fullest extent permitted
by applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable costs of
preparation and investigation and reasonable attorneys' fees) and expenses
(collectively, “Losses”), as incurred that
arise out of or are based upon: (i) any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, any Prospectus or any
form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has approved Annex A hereto for
this purpose) or in any preliminary prospectus if used prior to the effective
date of such Registration Statement or arising out of or relating to any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, or (ii) any violation
or alleged violation by the Company of the Securities Act, Exchange Act or any
state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Agreement, except to the extent,
but only to the extent, that (A) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and approved by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto (it being understood that each Holder has approved Annex A hereto for
this purpose) or (B) in the case of an occurrence of an event of the type
specified in Section 3(c)(ii)-(v), the use by a Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of Advice (as defined in Section 6(d) below), but only if and to the extent that
following the receipt of the Advice the misstatement or omission giving rise to
such Loss would have been corrected; provided, however, that the
indemnity agreement contained in this Section 5(a) shall not apply to amounts
paid in settlement of any Losses if such settlement is effected without the
prior written consent of the Company, which consent shall not be unreasonably
withheld.  Each Holder shall notify the Company promptly of the
institution, threat or assertion of any Proceeding of which the Holder is aware
in connection with the transactions contemplated by this
Agreement.  Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of an Indemnified Party (as
defined in Section 5(c)) and shall survive the transfer of the Registrable
Securities by the Holders.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    (b)           Indemnification by
Holders. Each Holder shall, notwithstanding any termination of this
Agreement, severally and not jointly, indemnify and hold harmless the Company,
its directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses, as incurred, arising out of or based upon any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or any form of Prospectus, or in any amendment or
supplement thereto, or arising solely out of or based solely upon any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus, or any
form of Prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading to the extent, but only to the extent that,
such untrue statements or omissions are based upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or  to the extent that such information relates to such
Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and approved by such Holder expressly for use in the
Registration Statement (it being understood that the Holder has approved Annex A hereto for
this purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto; provided,
however, that the indemnity agreement contained in this Section 5(b)
shall not apply to amounts paid in settlement of any Losses if such settlement
is effected without the prior written consent of the Holder, which consent shall
not be unreasonably withheld.  In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.

     

    (c)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have the right to
assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all reasonable fees and
expenses incurred in connection with defense thereof; provided, that the failure of
any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and
only) to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.

     

    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party); provided, that the Indemnifying Party shall not be
liable for the fees and expenses of more than one separate firm of attorneys at
any time for all Indemnified Parties.  The Indemnifying Party shall
not be liable for any settlement of any such Proceeding effected without its
written consent, which consent shall not be unreasonably withheld, delayed or
conditioned.  No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

     

    All fees
and expenses of the Indemnified Party (including reasonable fees and expenses to
the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within twenty Trading Days of written notice
thereof to the Indemnifying Party.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    (d)           Contribution.  If
a claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations.  The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in Section 5(c), any reasonable attorneys' or other reasonable fees or
expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

     

    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section 5(d), no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the net proceeds actually received by such Holder from
the sale of the Registrable Securities subject to the Proceeding exceeds the
amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.  No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.

     

    The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties and are not in diminution or limitation of the indemnification
provisions under the Purchase Agreement.

     

    
      	
            	
              6.

            	
              Miscellaneous

            

    

     

    (a)           Remedies.  In
the event of a breach by the Company or by a Holder of any of their obligations
under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.  The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

     

    (b)           Entire
Agreement.  This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein.  This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter, except for, and as provided in the Transaction
Documents.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (c)           Compliance.  Each
Holder covenants and agrees that it (i) will comply with the prospectus delivery
requirements of the Securities Act as applicable to it (unless an exemption
therefrom is available) in connection with sales of Registrable Securities
pursuant to the Registration Statement provided the Company delivers notice to
such Holder in writing that the conditions set forth in Rule 172 of the
Securities Act are not met and that, accordingly, such Holder is obligated to
deliver prospectus upon such sales, and (ii) shall sell the Registrable
Securities only in accordance with a method of distribution described in the
Registration Statement.

     

    (d)           Discontinued
Disposition.  Each Holder further agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Section 3(c)(ii)-(v), such
Holder will forthwith discontinue disposition of such Registrable Securities
under the Registration Statement until it is advised in writing (the “Advice”) by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus or Registration
Statement.  The Company may provide appropriate stop orders to enforce
the provisions of this paragraph.

     

    (e)           Amendments and
Waivers.  This Agreement may be amended only by a writing
signed by all of the parties hereto.  The Company may take any action
herein prohibited that pertains to or effects a Purchaser, or omit to perform
any act herein required to be performed by it that pertains to or effects a
Purchaser, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of such Purchaser. No consideration shall
be offered or paid to any Holder to amend or consent to a waiver or modification
of any provision of this Agreement unless the same consideration also is offered
to all of the Holders.  Failure of any party to exercise any right or
remedy under this Agreement or otherwise or delay by a party in exercising such
right or remedy shall not operate as a waiver thereof.

     

    (f)           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and 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 number specified in
this Section prior to 5:00 p.m. (New York City time) on a Trading Day, (ii) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile or e-mail to the facsimile number or e-mail addressed
specified in this Section on a day that is not a Trading Day or later than 5:00
p.m. (New York City time) on any Trading Day, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service
with next day delivery specified, or (iv) upon actual receipt by the party to
whom such notice is required to be given.  The address for such
notices and communications shall be as follows:

    

    
      
        
          	
                  If
      to the Company:

                	 
      	
                  ZIOPHARM
      Oncology, Inc.

                
	 
      	 
      	
                  1180
      Avenue of the Americas

                  19th
      Floor

                
	 
      	 
      	
                  New
      York, New York 10036

                
	 
      	 
      	
                  Facsimile:
      (646) 214-0711

                
	 
      	 
      	
                  Attn:
      Jonathan Lewis, M.D., Ph.D.

                
	 
      	 
      	 
      
	
                  With
      a copy to:

                	 
      	
                  Maslon
      Edelman Borman & Brand, LLP

                
	 
      	 
      	
                  3300
      Wells Fargo Center

                  90
      South Seventh Street

                
	 
      	 
      	
                  Minneapolis,
      MN 55402

                
	 
      	 
      	
                  Facsimile:
      (612) 672-8397

                
	 
      	 
      	
                  Attn:
      Alan M. Gilbert,
Esq.

                

        

      

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  If
      to a Purchaser:

                	 
      	
                  To
      the address set forth under such Purchaser's name on the signature pages
      hereof.

                
	 
      	 
      	 
      
	
                  If
      to any other Person who is then the registered Holder:

                	 
      	
                  To
      the address of such Holder as it appears in the stock transfer books of
      the Company or such other address as may be designated in writing
      hereafter, in the same manner, by such
Person.

                

        

      

    

    

    provided,
that any party may change its address for notices by providing written notice to
the other parties in the manner prescribed by this Section.

    

    (g)           Successors and
Assigns.  This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder.  The Company may not assign
its rights or obligations hereunder without the prior written consent of each
Holder.  The rights of the Holders hereunder, including the right to
have the Company register Registrable Securities pursuant to this Agreement, may
be assigned by each Holder to transferees or assignees of all or any portion of
the Registrable Securities, but only if (i) the Holder agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being transferred or assigned, (iii) at or before the time the Company received
the written notice contemplated by clause (ii) of this sentence, the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions contained herein and (iv) the transferee is an “accredited investor,”
as that term is defined in Rule 501 of Regulation D.

     

    (h)           Execution and
Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same
Agreement.  In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format file, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

     

    (i)           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement 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 Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective
Affiliates, employees or agents) will be commenced in 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, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
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 Agreement 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 PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.  If either party shall
commence a Proceeding to endorse any provisions of this Agreement, then the
prevailing party in such Proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation preparation and prosecution of such Proceeding.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    (j) 
          Cumulative
Remedies.  The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

     

    (k)           Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction.  It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

     

    (l)           Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

     

    (m)          Independent Nature of
Purchasers' Obligations and Rights.  The obligations of each
Purchaser under this Agreement are several and not joint with the obligations of
any other Purchaser hereunder, and no Purchaser shall be responsible in any way
for the performance of the obligations of any other Purchaser
hereunder.  The decision of each Purchaser to purchase Securities
pursuant to the Transaction Documents has been made independently of any other
Purchaser.  Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this
Agreement.  Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents.  Each Purchaser shall be
entitled to protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any Proceeding for such
purpose.  The Company acknowledges that each of the Purchasers has
been provided with the same Registration Rights Agreement for the purpose of
closing a transaction with multiple Purchasers and not because it was required
or requested to do so by any Purchaser.

     

    (n)           Currency.        Unless
otherwise indicated, all dollar amounts referred to in this Agreement are in
United States Dollars.  All amounts owing under this Agreement are in
United States Dollars.  All amounts denominated in other currencies
shall be converted in the United States dollar equivalent amount in accordance
with the applicable exchange rate in effect on the date of
calculation.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

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

     

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        16

        
          

        

      

      
         

      

    

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

     

    
      
        
          	 
      	
                  ZIOPHARM
      ONCOLOGY, INC.

                
	 
      	 
      
	 
      	
                  By:

                	 
      	 
      
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title:

                

        

      

    

     

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OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
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    IN WITNESS WHEREOF, the parties have
executed this Registration Rights Agreement as of the date first written
above.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            

                            
                              
                                
                                  
                                    	 
      	
                                            NAME
      OF INVESTING ENTITY

                                          
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                                            AUTHORIZED
      SIGNATORY

                                          
	 
      	 
      
	 
      	
                                            By:

                                          	 
      
	 
      	 
      	
                                            Name:

                                          
	 
      	 
      	
                                            Title:

                                          

                                  

                                

                              

                            

                            

                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                	 
      	
                                                        ADDRESS
      FOR NOTICE

                                                      
	 
      	 
      
	 
      	
                                                        c/o:

                                                      	 	 
      
	 
      	 
      	 	 
      
	 
      	
                                                        Street:

                                                      	 	 
      
	 
      	 
      	 	 
      
	 
      	
                                                        City/State/Zip:

                                                      	 	 
      
	 
      	 
      	 	 
      
	 
      	
                                                        Attention:

                                                      	 	 
      
	 
      	 
      	 	 
      
	 
      	
                                                        Tel:

                                                      	 	 
      
	 
      	 
      	 	 
      
	 
      	
                                                        Fax:

                                                      	 	 
      
	 
      	 
      	 	 
      
	 
      	
                                                        Email:

                                                      	 	 
      

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Annex
A

     

    PLAN
OF DISTRIBUTION

    

    We are
registering the shares of Common Stock issued to the selling shareholders and
issuable upon exercise of the warrants to permit the resale of these shares of
Common Stock by the holders of the shares of Common Stock and warrants from time
to time after the date of this prospectus.  We will not receive any of
the proceeds from the sale by the selling shareholders of the shares of Common
Stock.  We will bear all fees and expenses incident to our obligation
to register the shares of Common Stock.

     

    The
selling shareholders may sell all or a portion of the shares of Common Stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents.  If the
shares of Common Stock are sold through underwriters or broker-dealers, the
selling shareholders will be responsible for underwriting discounts or
commissions or agent's commissions.  The shares of Common Stock may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of the sale, at varying prices determined at the time of sale, or at
negotiated prices.  These sales may be effected in transactions, which
may involve crosses or block transactions.  The selling shareholders
may use any one or more of the following methods when selling
shares:

     

    
      	
              ·

            	
              on
      any national securities exchange or quotation service on which the
      securities may be listed or quoted at the time of
  sale;

            

    

     

    
      	
              ·

            	
              in
      the over-the-counter market;

            

    

     

    
      	
              ·

            	
              in
      transactions otherwise than on these exchanges or systems or in the
      over-the-counter market;

            

    

     

    
      	
              ·

            	
              through
      the writing of options, whether such options are listed on an options
      exchange or otherwise;

            

    

     

    
      	
              ·

            	
              ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

            

    

     

    
      	
              ·

            	
              block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            

    

     

    
      	
              ·

            	
              purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

            

    

     

    
      	
              ·

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

     

    
      	
              ·

            	
              privately
      negotiated transactions;

            

    

     

    
      	
              ·

            	
              settlement
      of short sales entered into after the effective date of the registration
      statement of which this prospectus is a
part;

            

    

     

    
      	
              ·

            	
              broker-dealers
      may agree with the selling securityholders to sell a specified number of
      such shares at a stipulated price per
share;

            

    

     

    
      	
              ·

            	
              a
      combination of any such methods of sale;
and

            

    

     

    
      	
              ·

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

     

    The
selling shareholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

     

    Broker-dealers
engaged by the selling shareholders may arrange for other brokers-dealers to
participate in sales. If the selling shareholders effect such transactions by
selling shares of Common Stock to or through underwriters, broker-dealers or
agents, such underwriters, broker-dealers or agents may receive commissions in
the form of discounts, concessions or commissions from the selling shareholders
or commissions from purchasers of the shares of Common Stock for whom they may
act as agent or to whom they may sell as principal. Such commissions will be in
amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction will not be in excess of a
customary brokerage commission in compliance with FINRA Rule 2440; and in the
case of a principal transaction a markup or markdown in compliance with FINRA
IM-2440 or the successor to such FINRA rules.

     

    In
connection with sales of the shares of Common Stock or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the shares of
Common Stock in the course of hedging in positions they assume.  The
selling shareholders may also sell shares of Common Stock short and if such
short sale shall take place after the date that this Registration Statement is
declared effective by the Commission, the selling stockholders may deliver
shares of Common Stock covered by this prospectus to close out short positions
and to return borrowed shares in connection with such short
sales.  The selling shareholders may also loan or pledge shares of
Common Stock to broker-dealers that in turn may sell such shares. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).

     

    The
selling shareholders may pledge or grant a security interest in some or all of
the warrants or shares of Common Stock owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of Common Stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act of 1933, as amended, amending, if
necessary, the list of selling shareholders to include the pledgee, transferee
or other successors in interest as selling shareholders under this
prospectus.  The selling shareholders also may transfer and donate the
shares of Common Stock in other circumstances in which case the transferees,
donees, pledgees or other successors in interest will be the selling beneficial
owners for purposes of this prospectus.

     

    The
selling shareholders and any broker-dealer participating in the distribution of
the shares of Common Stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act.  At the time a particular
offering of the shares of Common Stock is made, a prospectus supplement, if
required, will be distributed which will set forth (i) the name of each such
selling stockholder and of the participating broker-dealer(s), (ii) the number
of shares involved, (iii) the price at which such the shares of Common Stock
were sold, (iv) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this prospectus, and (vi) other facts material to the
transaction.  In no event shall any broker-dealer receive fees,
commission and markups which, in the aggregate, would exceed eight percent (8%).
In addition, upon the Company being notified in writing by a Selling Stockholder
that a donee or pledgee intends to sell more than 500 shares of Common Stock, a
supplement to this prospectus will be filed if then required in accordance with
applicable securities law.

     

    Under the
securities laws of some states, the shares of Common Stock may be sold in such
states only through registered or licensed brokers or dealers.  In
addition, in some states the shares of Common Stock may not be sold unless such
shares have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied
with.

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

     

    There can
be no assurance that any selling shareholder will sell any or all of the shares
of Common Stock registered pursuant to the shelf registration statement, of
which this prospectus forms a part.

     

    We have
advised each selling stockholder that it may not use shares registered on the
registration statement of which this prospectus is a part to cover short sales
of common stock made prior to the date on which the registration statement shall
have been declared effective by the Securities and Exchange
Commission.  If a selling stockholder uses this prospectus for any
sale of shares of our common stock, it will be subject to the prospectus
delivery requirements of the Securities Act. The selling shareholders and any
other person participating in such distribution will be subject to applicable
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, including, without limitation, Regulation M of the
Exchange Act, which may limit the timing of purchases and sales of any of the
shares of Common Stock by the selling shareholders and any other participating
person.  Regulation M may also restrict the ability of any person
engaged in the distribution of the shares of Common Stock to engage in
market-making activities with respect to the shares of Common
Stock.  All of the foregoing may affect the marketability of the
shares of Common Stock and the ability of any person or entity to engage in
market-making activities with respect to the shares of Common
Stock.

     

    We will
pay all expenses of the registration of the shares of Common Stock pursuant to
the registration rights agreement, including, without limitation, Securities and
Exchange Commission filing fees and expenses of compliance with state securities
or “blue sky” laws; provided, however, that a selling
shareholder will pay all underwriting discounts and selling commissions, if any
and any related legal expenses incurred by it.  We will indemnify the
selling shareholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling shareholders will be entitled to contribution.  We may be
indemnified by the selling shareholders against civil liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling shareholder specifically for use in
this prospectus, in accordance with the related registration rights agreements,
or we may be entitled to contribution.

    
      
         

      

      
        A-3Execution
Copy

    

    SECURITIES PURCHASE
AGREEMENT

    

    THIS SECURITIES PURCHASE AGREEMENT
(“Agreement”)
is made as of this 25th day of August, 2009 by and among Novelos Therapeutics,
Inc., a Delaware corporation (the “Company”)
and Purdue Pharma L.P., a Delaware limited partnership (“Purdue”).

    

    Recitals:

    

    A.           The
Company desires, pursuant to this Agreement, to raise the Investment Amount (as
defined below) through the issuance and sale, in the aggregate, of the following
to Purdue (the “Private
Placement”): (i) 13,636,364 shares (the “Common
Shares”) of Common Stock, par value $0.00001 per share (the “Common
Stock”); and (ii)
warrants to acquire shares of Common Stock equal to 35% of the aggregate number
of shares of Common Stock to be issued and sold to Purdue pursuant to the
Closings (as defined below) rounded up to the next even number at each Closing
(as defined below), approximately 4,772,728 shares of Common Stock, with an
exercise price of $0.66 per share, each to be in the form of Exhibit
B annexed hereto and made a part hereof (the “Warrants”);

    

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

    

    C.           Subject
to the conditions hereinafter set forth, on each Closing Date, Purdue will
purchase Common Shares and Warrants in the Private Placement for an aggregate
purchase price equal to the portion of the Investment Amount to be delivered at
the applicable Closing;

    

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

    

    E.          
Contemporaneous with closing of the initial sale of the Common Shares and the
Warrants hereunder (the “Initial
Closing”), the Company and Purdue will enter into a Registration Rights
Agreement, in the form attached hereto as Exhibit
E (the “Registration
Rights Agreement”);

    

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

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

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

     

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

    

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

    

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

    

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

    

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

    

    “Business
Combination” means (i) the acquisition by a third party of a majority of
the outstanding shares of capital stock of the Company by tender or exchange
offer or otherwise where such third party shall have become, directly or
indirectly, the beneficial owner (within the meaning of Rule 13d-3 under the
1934 Act) of the securities of the Company representing fifty percent (50%) or
more of the Company’s capital stock, (ii) the effectiveness of any merger of the
Company with or into a third party, in which the capital stock of the Company
immediately prior to such merger represents less than fifty percent (50%) of the
voting power (without regard to the effect of any so-called “blocker provisions”
of any convertible securities) of the surviving entity (or, if the surviving
entity is a wholly owned subsidiary, its parent) immediately after such merger
and (iii) the closing of any sale of all or substantially all of the assets of
the Company.

    

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

    

    “Buy-In
Price” has the meaning set forth in Section
8.14.

    

    “Closing”
and “Closings”
have the meaning set forth in Section
4.1.

    

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

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    “Collaboration
Agreement” refers to that agreement between the Company and Mundipharma
International Corporation Limited dated as of February 11, 2009.

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    “Deadline
Date” has the meaning set forth in Section
8.14.

    

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

    

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

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

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

    

    “Final
Subsequent Closing” shall mean a Subsequent Closing upon the occurrence
of which the Company will have achieved the issuance and sale to Purdue, in the
aggregate, of all Common Shares and Warrants issuable to Purdue pursuant to this
Agreement.

    

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

    

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

    

    “Initial
Closing” has the meaning set forth in the Recitals.

    

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

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    “Investment
Amount” means an amount equal to $9,000,000.24.

    

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

    

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

    

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

    

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

    

    “OTCBB”  shall
mean the OTC Bulletin Board.

    

    “Preferred
Stock” means the Company’s preferred stock, par value $0.00001 per
share.

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

    

    “Press
Release” has the meaning set forth in Section
8.12.

    

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

    

    “Pro Rata
Share” means with respect to each capital raising transaction to which
Section 10.1 applies an amount equal to the product obtained by multiplying (a)
an amount equal to the securities being issued in such capital raising
transaction times (b) a fraction
of which the numerator is the number of shares of all Common Stock beneficially
owned by Purdue and its Associated Companies at the time the Pro Rata Share is
being determined (including shares of Common Stock issuable upon conversion of
shares of Preferred Stock), and the denominator is all of the outstanding shares
of Common Stock and shares of Common Stock issuable upon conversion of
outstanding Preferred Stock.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Purdue
Observer” has the meaning set forth in Section
8.9.

    

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

    

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

    

    “Rule
144” has the meaning set forth in Section
8.13.

    

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

    

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

    

    “Securities”
means the Common Shares, the Warrant and the Warrant Shares.

    

    “Series E
SPA” means that certain Securities Purchase Agreement, dated as of
February 11, 2009, by and among the Company and certain investors, including
Purdue.

    

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

    

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

    

    “United
States” shall mean the United States of America, its territories and
possessions.

    

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

    

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

    

    2.           Purchase and Sale of
Securities.

     

    Subject to the terms and conditions of
this Agreement, including without limitation, the conditions set forth in Section 7, there
shall be Closings at which the Company shall issue and sell, and Purdue agrees
to purchase Common Shares in the Private Placement by executing a counterpart to
this Agreement, shall purchase, the Common Shares and the Warrants in exchange
for the cash consideration consisting of such portion of the “Investment Amount”
as shall be payable for the Common Shares and Warrants so issued and sold at
each such Closing.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    3.           [Reserved.]

     

    4.           Closings.

     

    4.1         Place.  All
closings of the transactions contemplated by this Agreement (individually, the
“Closing”
and collectively, the “Closings”;
the date of each Closing referred to as the “Closing
Date” of such Closing) shall take place at the offices of Company
Counsel, Seaport World Trade Center West, 155 Seaport Boulevard, Boston, MA
02210 (or remotely via the electronic exchange of documents and signatures) or
at such other location as the parties shall agree. The Initial Closing shall
take place simultaneously with the execution and delivery of this Agreement and
any additional Closings (each, a “Subsequent
Closing”) shall take place as set forth in Section 4.3.

    

    4.2         Initial
Closing.  Simultaneously with the execution hereof, the Company
shall hold the Initial Closing. At the Initial Closing, the Company will deliver
to Purdue via e-mail an electronic copy of the signed stock certificate(s)
representing 5,303,030 Common Shares (the “Initial
Shares”), which shall be an even number, registered in Purdue’s name and
an electronic copy of a signed Warrant exercisable for 1,856,062 Warrant Shares
(the “Initial
Warrant”), which number of Warrant Shares shall be rounded up to the next
even number.  Following such delivery, Purdue shall promptly initiate
a wire transfer of immediately available funds (U.S. dollars) equal to
$3,499,999.80 to be delivered to the account of the Company, account details of
which are as set forth on Schedule
4.2 affixed hereto.

     

    4.3         Subsequent
Closings.  A Subsequent Closing shall occur as soon as
practicable, and in any event within 5 business days of the delivery by the
Company to Purdue of a written notice calling for such Subsequent Closing and
specifying the amount of Common Shares to be issued at such Subsequent Closing
(each a “Subsequent
Closing Notice”), which in each case shall be an even number of Common
Shares.  At each Subsequent Closing, the Company will deliver to
Purdue via e-mail an electronic copy of the signed stock certificate(s)
representing the number of Common Shares specified in the applicable Subsequent
Closing Notice, registered in Purdue’s name, and an electronic copy of a signed
Warrant exercisable for a number of Warrant Shares equal to 35% of the number of
the Common Shares issued in each such Subsequent Closing, which number of
Warrant Shares shall be rounded up to the next even number.  The
Company will use its best efforts to achieve the authorization, and take all
requisite action on the part of the Company, its officers, directors and
stockholders necessary for said authorization, of sufficient shares of Common
Stock to issue to Purdue all Common Shares and Warrants issuable pursuant to
this Agreement as soon as practicable after the Initial Closing.  Each
of the Company and Purdue shall use its best efforts to complete the Final
Subsequent Closing on or prior to Exclusive Negotiation
Period.  Following delivery of each Subsequent Closing Notice, Purdue
shall promptly initiate a wire transfer of immediately available funds (U.S.
dollars) equal to the stated value of such Common Shares to be delivered to the
account of the Company, account details of which are as set forth on Schedule
4.2 affixed hereto.  Notwithstanding the foregoing (i) at each
Subsequent Closing, the Company shall issue and sell not less than $1,000,000
other than the final Subsequent Closing which can be for less than $1,000,000;
(ii) the aggregate purchase price of the Common Shares and Warrants sold in all
Closings shall not exceed the Investment Amount; and (iii) no Subsequent Closing
shall take place after the end of the Exclusive Negotiation Period without the
prior written consent of Purdue.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    4.4         Delivery of Original Common
Shares and Warrants.  As soon as possible after each Closing,
but no later than 5 Business Days following such Closing, the Company will
deliver by overnight mail, original certificate(s) representing the Common
Shares and the original Warrant issued and sold at such Closing.

     

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

     

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

     

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

     

    5.3.         Capitalization.

     

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

    
      
         

      

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

     

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

     

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

    

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

    
      
         

      

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

     

    5.6.         Delivery of SEC Filings;
Business.  Copies of the Company’s most recent Annual Report on
Form 10-K for the fiscal year ended December 31, 2008, the Company’s quarterly
reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009,
and reports on Form 8-K filed by the Company from January 1, 2009 through the
Initial Closing (collectively, the “SEC
Filings”) are available on EDGAR.  The SEC Filings are the only
filings required of the Company pursuant to the 1934 Act for such
period.  The Company is engaged only in the business described in the
SEC Filings and the SEC Filings contain a complete and accurate description in
all material respects of the business of the Company.

     

    5.7.         No Material Adverse
Change.  Except as contemplated herein or identified and
described on Schedule
5.7(a), since June 30, 2009, there has not been:

     

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

    

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

    

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

    

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

    

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

    
      
         

      

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

    

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

    

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

    

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

    

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

    

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

    

    5.8.         SEC
Filings.  At the time of filing thereof, the SEC Filings
complied as to form in all material respects with the requirements of the 1934
Act and did not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.  The Company has not registered any of its securities with
the SEC under Sections 12(b) or 12(g) of the 1934 Act and is not required to do
so by any OTCBB regulations, 1934 Act or otherwise by SEC
regulations.  The Company is required to file reports pursuant to
Section 15(d) of the 1934 Act.  The Company is not (with or without
the lapse of time or the giving of notice, or both) in breach or default of any
Material Contract and, to the Company’s Knowledge, no other party to any
Material Contract is (with or without the lapse of time or the giving of notice,
or both) in breach or default of any Material Contract.  The Company
has not received any notice of the intention of any party to terminate any
Material Contract.

     

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

    
      
         

      

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

     

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

     

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

     

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

     

    5.14.       Intellectual
Property.

     

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

    
      
         

      

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

     

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

     

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

     

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

     

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

     

    
      
         

      

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

     

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

     

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

     

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

     

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

    
      
         

      

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

    

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

     

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

     

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

     

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

     

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

    
      
         

      

      
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    5.25.       Trading
Compliance.  The Common Stock is traded on the OTCBB and the
Company has taken no action designed to, or which to the Company’s Knowledge is
likely to have the effect of, causing the Common Stock not to continue to be
traded on the OTCBB.  No order ceasing or suspending trading in any
securities of the Company or prohibiting the issuance and/or sale of the
Securities is in effect and no proceedings for such purpose are pending or
threatened.  The Company is in compliance with all OTCBB rules and
regulations in effect as of the Initial Closing necessary to ensure that the
Common Stock is authorized to be traded on the OTCBB.  To the extent
such OTCBB rules and regulations have been materially amended or revised since
the Initial Closing, the Company has used its best efforts to comply with such
amendments and revisions in order to ensure that the Common Stock is authorized
to be traded on the OTCBB.

    

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

    

    5.27.       Sarbanes-Oxley; Internal
Accounting Controls.  The Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it
as of the Initial Closing.  The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with United States general
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.  The
Company has established disclosure controls and procedures (as defined in 1934
Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure
controls and procedures to ensure that material information relating to the
Company, is made known to the certifying officers by others within those
entities, particularly during the period in which the Company’s most recently
filed periodic report under the 1934 Act, as the case may be, is being
prepared.  The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of the date prior to
the filing date of the most recently filed periodic report under the 1934 Act
(such date, the “Evaluation
Date”).  The Company presented in its most recently filed
periodic report under the 1934 Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.  Since the Evaluation Date,
there have been no significant changes in the Company’s internal controls (as
such term is defined in Item 307(b) of Regulation S-K under the 1934 Act) or, to
the Knowledge of the Company, in other factors that could significantly affect
the Company’s internal controls.

    
      
         

      

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

    

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

    

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

     

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

     

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

     

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

     

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

    
      
         

      

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

     

    6.6.         Legends.

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
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    (e)          Notwithstanding
any restrictions on transfer set forth in this Section 6.6, Purdue may sell,
transfer, assign, pledge or otherwise dispose of the Securities, in whole or in
part, to any of its Associated Companies or any third party subject to (i)
compliance with all applicable securities laws and the conditions set forth in
this Section 6.6 and (ii) the delivery to the Company of such documentation as
may be reasonably requested by the Company and reasonably necessary for the
Company to obtain a legal opinion that such disposition may lawfully be made
without registration under the Securities Act.

    

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

     

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

     

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

     

    7.           Conditions
to Closing.

     

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

     

    (a)          (i)
The representations and warranties made by the Company, in Article 5 as of the
Initial Closing that are qualified as to materiality shall be true and correct
in all respects, and those not so qualified shall be true and correct in all
material respects as of the Initial Closing; and (ii) the representations and
warranties of the Company contained in Sections 5.1, 5.2, 5.4, 5.5, 5.9, 5.25
and 5.28 that are qualified as to materiality shall be true and correct in all
respects, and those not so qualified shall be true and correct in all material
respects as of the time of each Subsequent Closing as though made at and as of
such Subsequent Closing;

     

    (b)          The
Company shall have performed in all material respects all obligations herein
required to be performed or observed by it on or prior to each
Closing;

     

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

     

    (d)          The
Common Shares to be issued at each Closing shall have been duly and validly
authorized and, when issued to Purdue in accordance with the terms of this
Agreement, shall be validly issued, fully paid and nonassessable, and shall be
free and clear of all liens, claims, encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by
applicable securities laws;

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    (e)          Solely
with respect to the Initial Closing, the Company shall have executed, obtained
and delivered an otherwise fully executed counterpart to the Registration Rights
Agreement to Purdue;

     

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

     

    (g)          The
Company shall have delivered a Certificate, executed on behalf of the Company by
its Chief Executive Officer or its Chief Financial Officer (i) at the Initial
Closing, dated as of the Initial Closing, certifying to the fulfillment of the
conditions specified in subsections (a), (b), (c), (d), (f) and (k) of this
Section 7.1,
and (ii) at each Subsequent Closing, dated as of such Subsequent Closing,
certifying to the fulfillment of the conditions specified in subsections (a),
(b), (c), (d), (f), (k), (l), (m) and (n) of this Section
7.1,

     

    (h)          The
Company shall have delivered a Certificate, executed on behalf of the Company by
its Secretary, dated as of the Initial Closing, certifying the resolutions
adopted by the Board of Directors of the Company approving the transactions
contemplated by this Agreement and the other Transaction Documents and the
issuance and sale of the Securities, certifying the current versions of the
Certificate of Incorporation and Bylaws of the Company and certifying as to the
signatures and authority of persons signing the Transaction Documents and all
related documents on behalf of the Company;  The Company shall further
delivered a Certificate, executed on behalf of the Company by its Secretary,
dated as of each Subsequent Closing certifying that the aforementioned
resolutions of the Board of Directors of the Company have not been repealed and
further certifying that the Certificate of Incorporation and Bylaws of the
Company have not been amended from the versions that the Secretary of the
Company certified as current at the time of the Initial Closing;

     

    (i)           [Reserved.];

     

    (j)           Purdue
shall have received a Company Counsel Opinion with respect to the Securities to
be issued at each Closing;

     

    (k)          As
of each Closing, no stop order or suspension of trading shall have been imposed
by any Person with respect to public trading in the Common
Stock;

    
      
         

      

      
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    (l)           As
of each Subsequent Closing, the Company shall not have (i) applied for or consented
to the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property,
(ii) made a general assignment for the benefit of its creditors, (iii) commenced
a voluntary case under the U.S. Bankruptcy Code, (iv) filed a petition seeking
to take advantage of any laws relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts (v) taken
any corporate action for the purpose of effecting any of the foregoing, (vi) a
proceeding or case commenced against it, or itself have initiated, in any court
of competent jurisdiction, seeking (A) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts, (B)
the appointment of a trustee, receiver, custodian, liquidator or the like of all
or any substantial part of its assets, or (C) similar relief under the U.S.
Bankruptcy Code, or an order, judgment or decree approving any of the foregoing
is entered and continues unstayed for a period of sixty (60) days, or (vii) had
an order for relief against it entered in an involuntary case under the U.S.
Bankruptcy Code;

    

    (m)         As
of each Subsequent Closing, the Company shall be in compliance with its
obligations set forth in Sections 8.4, 8.5, 8.9, 8.10 and 8.11; and

    

    (n)          As
of each Subsequent Closing, the Company shall be in compliance with its
obligations set forth in Section 8.16 with respect to all quarterly reports on
Form 10-Q and annual reports on Form 10-K.

    

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

    

    (a)          The
representations and warranties made by Purdue in Section 6 hereof that
are qualified as to materiality shall be true and correct in all respects, and
those not so qualified shall be true and correct in all material respects, at
all times prior to and as of each Closing;

     

    (b)          Purdue
shall have performed in all material respects all obligations herein required to
be performed or observed by it on or prior to each Closing;

     

    (c)          [Reserved.];

    

    (d)          Solely
with respect to the Initial Closing, Purdue shall have executed and delivered
the Registration Rights Agreement to the Company;

    

    (e)          Purdue
shall have delivered the portion of the Investment Amount deliverable to the
Company at each Closing as described in Section 4;

     

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

    
      
         

      

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

    

    8.           Covenants and Agreements of
the Company.

     

    8.1.         Authorization of Common
Stock.  The Company will use its best efforts to achieve the
authorization, and take all requisite action on the part of the Company, its
officers, directors and stockholders necessary for said authorization, of
sufficient shares of Common Stock to issue to Purdue all Common Shares and
Warrants issuable pursuant to this Agreement as soon as practicable after the
Initial Closing. Purdue will cooperate with the Company and hereby consents to
any amendment of the Company’s Certificate of Incorporation which seeks to
increase the number of authorized shares of Common Stock up to 225,000,000
shares and agrees to execute all necessary written consents, proxies, and or
powers of attorney in connection with any action to be taken at the meeting of
Company Stockholders or by written consent of Company stockholders to effect
such amendment.

     

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

     

    8.3          Final Subsequent
Closing.  The Company shall use its best efforts to complete
the Final Subsequent Closing on or prior to Exclusive Negotiation
Period.

     

    8.4.         Exclusivity and Right of
First Refusal.

     

    (a)          Exclusivity

     

    (i)           From
the date of the Initial Closing until the receipt by Purdue from the Company of
the Data and Analysis (as defined in subsection 8.4(c)(ii) below) of the Phase 3
clinical trial portion of the Novelos Trials (as defined in the Collaboration
Agreement) in the United States (“Exclusive Negotiation
Period”), the Company shall not negotiate with any third party other than Purdue
for (A) the license or other acquisition of NOV-002 Rights (defined below) in
the United States (the “Proposed Transaction”) or (B) any transaction which
would terminate the Rights of First Refusal Period set forth in subsection
8.4(c)(iii) below.

     

    (ii)          The
Company and Purdue agree that during the Exclusive Negotiation Period, neither
the Company nor any of its affiliates, or any of its or their respective
directors, officers, employees, financial advisors or counsel, agents or
representatives or any other party retained or engaged by the Company or any
affiliate of the Company to assist in the analysis, the arranging, brokering,
financing, negotiation or consummation of the Proposed Transaction at any time
will (either directly or through any intermediary) solicit, entertain offers or
bids from, respond to, negotiate with or consider any offer, bid or proposal of
any other person for a transaction that would conflict with or impede the
Proposed Transaction in any respect, or provide any non-public information to
any third party in connection with such an offer, bid or proposal except to the
extent to respond to unsolicited offers, bids or proposals as required by law,
including the fiduciary duties of the Board of Directors of the
Company.

    
      
         

      

      
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    (iii)         Until
the first to occur of (A) such time as the Company is permitted to proceed with
the transaction proposed by the Offeror (as defined below) pursuant to Section
8.4(b)(i)(3), or (B) the end of the Right of First Refusal Period, the Company
will (a) reasonably cooperate with Purdue to provide access to Purdue of the
Company’s books and records, and all other relevant documents and data, in each
case, to the extent related to the Proposed Transaction, (b) prepare, file,
prosecute and maintain all of its patents related to NOV-002 in the United
States, and (c) keep Purdue informed, in a timely manner, of material
communications, notifications or other information which it receives or provides
(directly or indirectly) with respect to NOV-002 or related patents and
intellectual property with any regulatory authority in the United States,
including, without limitation, the United States Patent and Trademark Office and
the United States Food and Drug Administration.

     

    (iv)         In
the event any negotiations between the Company and Purdue during such Exclusive
Negotiation Period results in a bona fide agreement in principle on terms to be
set forth in a definitive agreement, the Company will grant Purdue an option, at
no cost other than as specified in such agreement, to enter into such definitive
agreement, such option to terminate upon the 30th day, or such longer period as
agreed to between the Company and Purdue, following the end of the Exclusive
Negotiation Period.

     

    

    (b)          Right of First
Refusal

     

    (i)           In
the event that a definitive agreement for the license or acquisition by Purdue
of NOV-002 Rights is not entered into during the Exclusive Negotiation Period,
the Company will not enter into a definitive agreement to license, sell or
otherwise grant the NOV-002 Rights, in whole or in part, to a party other than
Purdue during the Right of First Refusal Period (defined below) except in
accordance with the following procedure:

     

    (1)           Within
10 business days of approval by the Company’s Board of Directors of a bona fide
offer of a third party to license or otherwise acquire NOV-002 Rights (a “Bona
Fide Offer”) during the Right of First Refusal Period, the Company shall
communicate all material terms of the Bona Fide Offer (but not the identity of
the third party making the Bona Fide Offer (the “Offeror”)) to
Purdue.

     

    (2)           Purdue
shall have 30 days, or such longer period as agreed to between the Company and
Purdue, to enter into a definitive agreement with the Company to acquire the
NOV-002 Rights on substantially the same terms, which provide no lesser economic
benefit to the Company, as set forth in the Bona Fide Offer.  For the
avoidance of doubt, neither Purdue nor the Company shall have the right to
negotiate a more favorable provision for itself than the provision as set forth
in the Bona Fide Offer.  If any usual or customary license provisions
are not set forth in the Bona Fide Offer, such provisions shall be negotiated in
good faith.

    
      
         

      

      
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    (3)           If
the definitive agreement is not entered into by Purdue and the Company within 30
days, or such longer period as agreed to between the Company and Purdue, of
Purdue’s receipt from the Company of the terms of the Bona Fide Offer, then the
Company may proceed with the transaction proposed by the Offeror on terms no
less favorable to the Company than the terms set forth in the Bona Fide
Offer.  If a definitive agreement for such transaction with the
Offeror is not entered into between the Company and the Offeror within 60 days
then the Company must re-offer the Bona Fide Offer to Purdue pursuant to the
procedures set forth in this Section 8.4(b)

     

    (c)          Section 8.4
Definitions

     

    (i)           The
term “NOV-002 Rights” means the rights to research, register, develop, make,
have made, use, warehouse, promote, market, sell, have sold, import, distribute,
and offer for sale NOV-002 in the United States.

     

    (ii)          The
term “Data and Analysis” means the final tables, listings and figures, set forth
in a letter to Purdue of even date herewith, from the Phase 3 clinical trial
portion of the Novelos Trials (as defined in the Collaboration Agreement) in the
United States.  The Data and Analysis will be provided to Purdue by
the Company as soon as practically possible after the Company's verification of
such Data and Analysis, and in accordance with the endpoints in the
pre-specified Statistical Analysis Plan in the Special Protocol Assessment
agreed with the United States Food and Drug Administration.

     

    (iii)         The
term “Right of First Refusal Period” means that period of time commencing as of
the date of the Initial Closing and terminating upon the later of (1) the
closing or effectiveness of a Business Combination transaction and (2) the end
of the Exclusive Negotiation Period.  For the avoidance of doubt, the
Company may enter into a definitive agreement for a Business Combination
transaction subject to Section 8.4(a) but the Right of First Refusal Period will
not terminate until the later of (1) the closing or effectiveness of such
Business Combination transaction and (2) the end of the Exclusive Negotiation
Period.

     

    (d)          Disclosure

     

    Except as and to the extent required by
law, without the prior written consent of the other party, neither Purdue nor
the Company will, and each will direct and cause its officers, directors,
employees, attorneys, accountants and other agents and representatives not to,
directly or indirectly, make any public comment, statement or communication with
respect to, or otherwise publicly disclose or permit the public disclosure of
any of the terms, conditions or other aspects of the Proposed Transaction which
may be under negotiation between the parties during the Exclusive Negotiation
Period or Right of First Refusal Period.  If a party is required by
law to make any such disclosure, it shall first provide to the other party the
content of the proposed disclosure, the reasons such disclosure is required by
law and the time and place the disclosure will be made and the opportunity to
consult with respect thereto.  Disclosure shall be made only of that
part of information that counsel advises that the party is legally required to
disclose.

    
      
         

      

      
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    (e)          Termination of
Rights

     

    In the event Purdue fails to pay for
any Common Shares and Warrants at a Subsequent Closing in compliance with
Section 4.3, for which the Company has satisfied all conditions to Purdue’s
obligation to close, as set forth in Section 7.1, and such failure to pay
continues for ten (10) business days after the Company gives Purdue a written
notice, as provided in Section 10.5, of such failure, the Rights of Exclusivity
and the Right of First Refusal provided in this Section 8.4 shall be immediately
null and void and of no further effect.

     

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

     

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

     

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

     

    8.8.         Termination of Certain
Covenants.  The provisions of Sections 8.5 through
8.7 shall
terminate and be of no further force and effect upon the date on which the
Company’s obligations under the Registration Rights Agreement to register and
maintain the effectiveness of any registration statement covering the
Registrable Securities (as such term is defined in the Registration Rights
Agreement) shall terminate.  The provisions of Sections 8.1 through
8.4 and Sections 8.9 through
8.21 shall
survive indefinitely.

     

    8.9.         Board Seat and Board
Observer Rights.  From and after the Initial Closing until the
later of such time as Purdue or its Associated Companies are no longer (i) a
Requisite Holder (as defined in the Certificate of Designations, Preferences and
Rights of Series E Convertible Preferred Stock executed by the Company as of
February 11, 2009) and (ii) holders of at least fifty percent (50%) of the
Common Shares issued and sold to Purdue pursuant to this Agreement, Purdue shall
have the continuing right to designate one (1) member to the Company’s Board of
Directors (the “Purdue
Director”).  The Company shall use its best efforts to cause
the Purdue Director to be elected to the Company’s Board of
Directors.  During any period of time that Purdue has a right to
designate a member to the Company’s Board of Directors and such person is not a
member of the Company’s Board of Directors, Purdue shall have the continuing
right to designate one (1) observer to attend all meetings of the Company’s
Board of Directors, committees thereof and access to all information made
available to members of the Board (the “Purdue
Observer”).  The Purdue Observer shall have the same rights as
those who customarily attend such position.  Notwithstanding the
foregoing, the Company reserves the right to exclude the Purdue Observer from
access to any material, meeting or portion thereof if the Company reasonably
believes, that such access could result in a conflict of interest due to the
actions of Purdue or its Associated Companies that trigger the right of the
Company to terminate the Collaboration Agreement pursuant to Section 13.2.1
thereof, or believe, on advice of its counsel, that such exclusion is necessary
to preserve attorney-client, work product or similar privilege.  The
Purdue Observer shall hold in confidence and trust and not use or disclose any
confidential information provided to or learned by him or her in connection with
the Purdue Observer’s rights hereunder for any purpose other than the monitoring
and administration of the transactions contemplated hereby, unless otherwise
required by law, so long as such information is not in the public
domain.  If requested by the Company, the Purdue Observer shall
execute a standard confidentiality agreement prior to attending any
meetings.  The Purdue Observer as of the Initial Closing is Jim
Dolan.  The Company shall indemnify the Purdue Director to the same
extent the Company indemnifies all other members of the Company's Board of
Directors, in addition to any and all indemnification of the members of the
Company's Board of Directors required pursuant the Company's Certificate of
Incorporation, as amended, and its By-laws, as amended.  The Company
shall reimburse the Purdue Director or Purdue Observer expenses incurred by the
Purdue Director or Purdue Observer in connection with its activities relating to
the Company's Board of Directors.  This Section 8.9 supersedes in its
entirety Section 8.7 of the Series E SPA.

    
      
         

      

      
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    8.10.       Trading.  The
Company shall promptly, following each Closing, take all actions necessary and
continue to take all actions necessary as contemplated in this Agreement or
otherwise to ensure that the Common Shares and the Warrant Shares are authorized
to be traded on the OTCBB, including the timely filing of all SEC Filings as
required under Section 8.17.

     

    8.11.       Use of
Proceeds.  The Company will use the proceeds from the sale of
the Securities to fund its operating activities pursuant to the budget set forth
in Schedule
8.11.  The Company shall not use the proceeds from the sale of
the Securities for (i) the repayment of any outstanding indebtedness for
borrowed money of the Company, (ii) redemption or repurchase of any of the
Company’s equity securities.  Furthermore, until the Company submits
the New Drug Application concerning the use of NOV-002 for non-small cell lung
cancer to the U.S. Food and Drug Administration, the Company shall not use its
current assets or the proceeds from the sale of the Securities for (A) clinical
activities other than those (x) relating to the Novelos Trials (as defined in
the Collaboration Agreement, (y) approved by the JCC (as defined in the
Collaboration Agreement) and (z) relating to the New Drug Application concerning
the use of NOV-002 for non-small cell lung cancer or (B) the payment of
salaries, bonuses or other compensation other than those amounts set forth in
Schedule
8.11.  This Section 8.11 supersedes in its entirety Section 8.9
of the Series E SPA.

    

    8.12        Press Release; Form 8-K
Filing.  On or before 9:00 a.m., New York City time, on the
first Business Day following the date of this Agreement, the Company shall issue
a press release, which shall have been reviewed and approved by Purdue,
announcing the transactions contemplated by the Transaction Documents (the
“Press
Release”). The Company will file a Current Report on Form 8-K (the “8-K”)
with the SEC describing the terms of the Transaction Documents (and including as
exhibits to such Current Report on Form 8-K the material Transaction Documents
(including, without limitation, this Agreement and the form of
Warrant)).  The 8-K will be filed within four (4) Business Days of
signing of this Agreement.

    
      
         

      

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

    

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

    

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

    

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

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

     

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

    

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

    

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

    

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

    

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

    

    9.           Survival and
Indemnification.

     

    9.1.           Survival.  Subject
to Section 8.8,
all representations, warranties, covenants and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants and
agreements as of the date hereof and shall survive the Closing Dates until the
third anniversary thereof; provided, however, that the
provisions contained in: (a) Sections 5.4, 9.1, 9.2, 9.3, and Article 10 hereof shall
survive indefinitely; and (b) Sections 5.10 and
5.15 shall
survive until 90 days after the applicable statute of limitations.

     

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

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

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

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    10.         Miscellaneous.

     

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

     

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

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

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

     

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

     

    10.5.         Notices.  Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given as hereinafter
described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal,
(iii) if given by mail, then such notice shall be deemed given upon the earlier
of (A) receipt of such notice by the recipient or (B) three (3) Business Days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by a nationally recognized overnight air courier, then such notice shall
be deemed given one (1) Business Day after delivery to such
carrier.  All notices shall be addressed to the party to be notified
at the address as follows, or at such other address as such party may designate
by ten (10) days’ advance written notice to the other party:

     

    

    If to the Company:

    

    Novelos
Therapeutics, Inc.

    One
Gateway Center, Suite 504

    Newton,
MA 02458

    USA

    Attention:  Chief
Executive Officer

    Fax:  (617)
964-6331

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    With a copy to:

    

    Foley
Hoag LLP

    Seaport
World Trade Center West

    155
Seaport Boulevard

    Boston,
MA 02210

    USA

    Attn:  Paul
Bork

    Fax:  (617)
832-7000

    

    If to Purdue:

    

    Purdue
Pharma L.P.

    One
Stamford Forum

    201
Tresser Blvd.

    Stamford,
CT 06901-3431

    USA

    Attention:  Edward
B. Mahony, Chief Financial Officer

    

    With a copy to:

    

    Chadbourne
& Parke LLP

    30
Rockefeller Plaza

    New York,
New York 10112

    USA

    Telefacsimile:
(212) 541-5369

    Attention:  Stuart
D. Baker

    

    10.6.         [Reserved.]

     

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

     

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

     

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

    [Signature
Page Follows]

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    Signature
Page

    

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

    

    
      
        	 
      	
                NOVELOS
      THERAPEUTICS, INC.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Harry S. Palmin

              
	 
      	
                Name:   Harry
      S. Palmin

              
	 
      	
                Title:  President
      and CEO

              
	 
      	 
      
	 
      	
                PURDUE
      PHARMA L.P.

              
	 
      	 
      
	 
      	
                By:  Purdue
      Pharma Inc.,

              
	 
      	
                its
      general partner

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ John H. Stewart

              
	 
      	
                Name:  John
      H. Stewart

              
	 
      	
                Title:    President,

              
	 
      	
                            
      Chief Executive Officer

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibits

    

    
      
        	
                Exhibit
      A

              	
                [Reserved.]

              
	
                Exhibit
      B

              	
                Form
      of Warrant

              
	
                Exhibit
      C

              	
                Form
      of Company Counsel Opinion

              
	
                Exhibit
      D

              	
                Form
      of Purchaser Questionnaire

              
	
                Exhibit
      E

              	
                Form
      of Registration Rights
Agreement

              

      

    

    

    Schedules

    

    
      
        
          	
                  Schedule
      4.2

                	
                  Company
      Wire Instructions

                
	
                  Schedule
      5.3

                	
                  Capitalization

                
	
                  Schedule
      5.5

                	
                  Consents

                
	
                  Schedule
      5.7(a)

                	
                  Material
      Adverse Changes

                
	
                  Schedule
      5.8(b)

                	
                  SEC
      Filings

                
	
                  Schedule
      5.9

                	
                  Conflicts

                
	
                  Schedule
      5.10

                	
                  Taxes

                
	
                  Schedule
      5.11

                	
                  Title
      to Properties

                
	
                  Schedule
      5.14(a)

                	
                  Intellectual
      Property

                
	
                  Schedule
      5.14(d)

                	
                  IP
      Litigation

                
	
                  Schedule
      5.16

                	
                  Litigation

                
	
                  Schedule
      5.19

                	
                  Brokers
      and Finders

                
	
                  Schedule
      5.24

                	
                  Affiliate
      Transactions

                
	
                  Schedule
      5.28

                	
                  Indebtedness

                
	
                  Schedule
      8.11

                	
                  Novelos
      Budget

                

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
B

    

    Form
of Warrant

     

    (Included as Exhibit
10.43 to this filing)

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
C

    

    Form
of Company Counsel Opinion

    

    
      
        	
                August
      25, 2009

                 

              	 
      	
                Seaport
      World Trade Center West

                155
      Seaport Boulevard

                Boston,
      MA 02210-2600

                 

                617
      832 1000 main

                617
      832 7000 fax

              

      

    

    

    Purdue
Pharma L.P.

    One
Stamford Forum

    201
Tresser Blvd.

    Stamford,
CT  06901-3431

    

    
      	
            	
              Re:

            	
              Securities
      Purchase Agreement

            

    

    

    Ladies
and Gentlemen:

     

    We have
acted as counsel for Novelos Therapeutics, Inc., a Delaware corporation (the
“Company”), in connection with the execution and delivery of (i) the Securities
Purchase Agreement by and between Purdue Pharma L.P. (the “Purchaser”) and the
Company dated as of the date hereof (the “Purchase Agreement”) and (ii) the
Registration Rights Agreement between the Purchaser and the Company dated as of
the date hereof (the “Registration Rights Agreement” and, together with the
Purchase Agreement, the “Transaction Documents”). The Purchase Agreement
provides for the issuance and sale by the Company at one or more closings of an
aggregate of (i) up to 13,636,364 shares of Common Stock, par value $0.00001 per
share (the “Common Stock”); and (ii) warrants to acquire approximately 4,772,728
shares of Common Stock, with an exercise price of $0.66 per
share.  The shares of Common Stock issuable upon exercise of a warrant
are referred to herein as the “Warrant Shares”.  All terms used herein
have the meanings defined for them in the Purchase Agreement unless otherwise
defined herein.

    

    This
opinion is furnished to you in connection with the Closing of the issuance and
sale of 5,303,030 shares of Common Stock (“the Shares”) and a warrant to
purchase 1,856,062 shares of Common Stock (the “Warrant”) on the date hereof
pursuant to the Purchase Agreement.  In rendering the opinions
expressed below, we have examined originals or copies of: (i) the Transaction
Documents, (ii) the Warrant, (iii) the Company’s Certificate of Incorporation,
as amended through the date hereof (“Certificate of Incorporation”), (iv) the
Company’s By-laws, as in effect on the date hereof (the “By-laws”), (v) a
Secretary’s Certificate from the Company, dated as of the date hereof, issued
pursuant to Section 7.1(h) of the Purchase Agreement and (vi) a Certificate
executed by the Company’s Chief Executive Officer or its Chief Financial
Officer, dated as of the date hereof, and issued pursuant to Section 7.1(g) of
the Purchase Agreement, and we have examined and considered such corporate
records, certificates and matters of law as we have deemed appropriate as a
basis for our opinions set forth below.  In rendering the opinions
expressed below, we have relied, as to factual matters, upon the representations
and warranties of the Company contained in the Transaction
Documents.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

    In
connection with the preparation of this opinion, we have not made any
independent review or investigation of any court or agency docket or other
litigation papers or of any judgment, order, decree, ruling or decision of any
governmental commission, bureau or other regulatory authority or agency applying
primarily to the Company, nor have we made any independent investigation as to
the existence of any actions, suits, investigations or proceedings, if any,
pending or threatened against the Company, the Purchaser or any other person or
entity.

     

    As used
in the opinions expressed throughout, the phrase “to our knowledge,” means the
actual knowledge of any of the lawyers within our firm who have worked on the
transactions contemplated by the Transaction Documents, without any special
investigation with respect to the matter as to which any such opinion is so
qualified.

     

    As you
are aware, the Company’s ability to issue and sell shares of Common Stock and
execute and deliver warrants to purchase shares of Common Stock at any
Subsequent Closing is subject to and conditioned on the availability at the time
of a Subsequent Closing of sufficient additional authorized, unissued and
unreserved shares of Common Stock.  Accordingly, at this time we
express no opinion as to the Company’s performance under the Purchase Agreement
with regard to the issuance and sale of shares of Common Stock, or the execution
and delivery of any warrant to purchase shares of Common Stock, at any
Subsequent Closing.

     

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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.           The
Company is a corporation validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority to
carry on its business as described in the SEC Filings, and to enter into and
perform its obligations under the Transaction Documents and the
Warrant.  The Company is qualified as a foreign corporation to do
business and is in good standing in The Commonwealth of
Massachusetts.

     

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

     

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

     

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

     

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

     

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

     

    7.           Upon
payment as provided in the Purchase Agreement, the Shares will be validly
issued, fully paid and nonassessable.  Upon issuance and delivery
following due exercise in accordance with the Warrant, the Warrant Shares will
be validly issued, fully paid and nonassessable.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

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

     

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

     

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

     

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

    

    
      
        
          
            
              
                
                  	
                          Very
      truly yours,

                        	 
	 
      	 
      	 
	
                          FOLEY
      HOAG LLP

                        	 
	 
      	 
      	 
	
                          By:

                        	 
      	 
	 
      	
                          A
      Partner

                        	 

                

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
D

    

    Novelos
Therapeutics, Inc.
Confidential
Purchaser Questionnaire

     

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

     

    
      	
              1.

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

            

    

     

    A.           INDIVIDUAL
IDENTIFICATION QUESTIONS

     

    Name

    (Exact
name as it should appear on stock certificate)

    

    Residence
Address

    

    Home
Telephone Number

    

    Fax
Number

    

    Date of Birth

     

    Social Security Number

     

    B.           IDENTIFICATION
QUESTIONS FOR ENTITIES

     

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

    

    Address
of Principal Place of Business

    

    State (or
Country) of Formation or Incorporation

    

    Contact
Person

    

    Telephone
Number (  )

    

    Type of
Entity

      (corporation,
partnership, trust, etc.)

    

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

    

    2.           DESCRIPTION
OF INVESTOR

     

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

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    
      	
               
      

            	
               ̈

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

            

    

     

    3.           BUSINESS,
INVESTMENT AND EDUCATIONAL EXPERIENCE

     

    Occupation

    

    Number of Years

    

    Present Employer

    

    Position/Title

    

    Educational
Background

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    
      
        
          
            
              
                	 
      	
                        Stocks & Bonds

                      	 	
                        Venture Capital Investments

                      
	
                        Frequently

                      	 
      	 	 
      
	
                        Occasionally

                      	 
      	 	 
      
	
                        Never

                      	 
      	 	 
      

              

            

          

        

      

    

     

    4.           SIGNATURE

     

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

     

    Executed at ___________________, on ____________,
2009

     

    _________________________________________

    (Signature)

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
E

    

    Form
of Registration Rights Agreement

     

    
      (Included as Exhibit
10.42 to this filing)

       

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.2

    

    Wiring
Instructions

     

    
      	
              Bank:

            	
              Citizens
      Bank RI

            
	
              Bank
      Address:

            	
              1
      Citizens Drive, Riverside, RI 02915, USA

            
	 
      	
              617-527-8059

            
	
              Account
      Name:

            	
              Novelos
      Therapeutics, Inc.

            
	
              Account
      Address:

            	
              One
      Gateway Center, Suite 504

            
	 
      	
              Newton,
      MA 02458, USA

            
	
              ABA
      (Routing) #:

            	
              011500120

            
	
              Swift
      Code:

            	
              CTZIUS33

            
	
              Account
      #:

            	
              1132895348

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Schedule
5.3

    

    Capitalization

    

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

    

    5.3(a)(ii)
At the date hereof there are 49,282,145 shares of common stock outstanding and
852.692875 shares of preferred stock outstanding.

    

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

    

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

    

    
      
        
          
            	
                    Stock
      Options

                  	 	 	7,279,825	 
	
                    Warrants

                  	 	 	31,214,109	 
	
                    Preferred
      stock  (including accumulated dividends as described in schedule
      5.3(b) below)

                  	 	 	54,444,092	 
	 
      	 	 	 	 
	
                    Total
      shares reserved for future issuance

                  	 	 	92,938,026	 

          

        

      

    

    

    5.3(a)

    

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

    

    
      
        
          
            
              
                	
                        Offering

                      	 	
                        Outstanding

                        (as adjusted)

                      	 	 	
                        Exercise

                        Price

                        (as adjusted)

                      	 	
                        Expiration Date

                      
	  	 	 	 	 	 	 	 
      
	
                        2005
      Bridge Loans

                      	 	 	720,000	 	 	$	0.625	 	
                        April
      1, 2010

                      
	
                        2005
      PIPE - Placement agents and finders

                      	 	 	762,810	 	 	$	0.65	 	
                        August
      9, 2010

                      
	
                        Series
      A Preferred:

                      	 	 	 	 	 	 	 	 	 
      
	
                             Investors
      – September 30, 2005 closing

                      	 	 	909,090	 	 	$	0.65	 	
                        September 30, 2010

                      
	
                             Investors
      – October 3, 2005 closing

                      	 	 	60,606	 	 	$	0.65	 	
                        October
      3, 2010

                      
	
                        2006
      PIPE – Investors and placement agents

                      	 	 	5,432,120	 	 	$	1.82	 	
                        March
      7, 2011

                      
	
                        Series
      B Preferred:

                      	 	 	 	 	 	 	 	 	 
      
	
                             Investors

                      	 	 	7,500,000	 	 	$	0.65	 	
                        December 31, 2015

                      
	
                             Placement
      agents

                      	 	 	900,000	 	 	$	1.25	 	
                        May
      2, 2012

                      
	
                        Series
      C Exchange

                      	 	 	1,333,333	 	 	$	1.25	 	
                        May
      2, 2012

                      
	
                        Series
      D Preferred

                      	 	 	4,365,381	 	 	$	0.65	 	
                        December
      31, 2015

                      
	
                        Series
      E Preferred

                      	 	 	9,230,769	 	 	$	0.65	 	
                        December
      31, 2015

                      
	 
      	 	 	 	 	 	 	 	 	 
      
	
                        Total

                      	 	 	31,214,109	 	 	 	 	 	 
      

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

    

    
      
        
          
            	
                    Issued
      pursuant to the 2000 Option Plan

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

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

                  	 	 	4,770,000	 
	
                    Total
      outstanding options

                  	 	 	7,279,825	 

          

        

      

    

    

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

    

    237 shares of Series C Preferred
Stock -  The shares of Series C preferred stock are convertible
into a total of 4,375,384 shares of common stock.  The Series C
preferred stock has an annual dividend rate of 20%.  The dividends are
payable quarterly after all outstanding dividends on the Series E Preferred
Stock have been paid.  Accumulated unpaid dividends through June 30,
2009 total $540,360.  An additional $142,200 of dividends will
accumulate through September 30, 2009 if there are no conversions of Series C
preferred stock before that date. The total dividends of $682,560 would be
convertible into an additional 1,050,092 shares of common stock. Additional
details regarding the Series C preferred stock may be found in the Certificate
of Designations of Series C Cumulative Convertible Preferred Stock and the
Agreement to Exchange and Consent dated May 1, 2007.

    

    615.692875
shares of Series E Preferred Stock
-
The shares of Series E Preferred Stock are convertible any time after
issuance at the option of the holder at $0.65 per share of common stock into a
total of 47,360,983 shares of common stock. If there is an effective
registration statement covering the shares of common stock underlying the Series
E Preferred Stock and the VWAP, as defined in the Series E Certificate of
Designations, of the Company’s common stock exceeds $2.00 for 20 consecutive
trading days, then the outstanding Series E Preferred Stock will automatically
convert into common stock at the conversion price then in effect. The conversion
price will be subject to adjustment for stock dividends, stock splits or similar
capital reorganizations. The holders of Series E Preferred Stock are entitled to
vote on all matters on which the holders of common stock are entitled to vote,
subject to certain limitations that may be waived by the Company with 61 days
notice . The Series E Preferred Stock has an annual dividend rate of 9%, payable
semi-annually on June 30 and December 31. Accumulated unpaid dividends through
June 30, 2009 total $1,077,463 and are convertible into an additional
1,657,634
shares of common stock. Such dividends may be paid in cash or in
registered shares of the Company’s common stock at the Company’s option, subject
to certain conditions. The Series E Preferred Stock ranks senior to all other
outstanding series of preferred stock and common stock as to the payment of
dividends and the distribution of assets upon voluntary or involuntary
liquidation, dissolution or winding up of the Company’s affairs. The holders of
the Series E Preferred Stock have certain registration rights that are described
in the Registration Rights Agreement dated February 11, 2009, the Registration
Rights Agreement dated May 2, 2007 and the Amendments to Registration Rights
Agreement dated April 11, 2008 and Feburary 11, 2009. Additional details
regarding the Series E Preferred Stock and the rights of the Series E
stockholders may be found in Certificate of Designations of Series E Convertible
Preferred Stock, the Securities Purchase Agreement dated March 26, 2008, the
Securities Purchase Agreement dated February 11, 2009.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

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

     

    On August
15, 2008, the Company sold 4,615,384 shares of its common stock to two related
accredited investors for gross proceeds of approximately $3 million, pursuant to
a securities purchase agreement (the “Common Stock Purchase Agreement”) dated
August 14, 2008. The Common Stock Purchase Agreement provides that if, prior to
the public announcement of the conclusion of the Company’s NOV-002 Phase III
clinical trial in non-small cell lung cancer (the “Announcement Date”), the
Company completes a Subsequent Equity Financing (as defined therein) and the
prior holders of shares of our previously outstanding Series D Preferred Stock
(the “Series D Shares”) receive a reduction in the effective conversion price or
exercise price, as applicable, of the Series D Shares or common stock purchase
warrants issued in connection with the issuance of the Series D Shares or
receive additional shares of common stock, as consideration in connection with
any consent given by the holders of the Series D Shares, then the purchasers
shall be entitled to receive substantially equivalent consideration, on a
proportional basis, in the form of additional shares of common stock based on
the formula detailed in the Common Stock Purchase Agreement.

     

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

    

    
      
        
          
            
              
                	
                         

                      	
                        EDGAR
      Reference

                      
	 
      	 
      
	
                        Description

                      	
                        Form

                      	
                        Filing Date

                      	
                        Exhibit

                        No.

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

                      	
                        8-K

                      	
                        June
      2, 2005

                      	
                        8-K

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

                      	
                        10-QSB

                      	
                        August
      15, 2005

                      	
                        10-QSB

                      
	 
      	 
      	 
      	 
      
	
                        Certificate
      of Incorporation

                      	
                        8-K

                      	
                        June
      17, 2005

                      	
                        8-K

                      
	 
      	 
      	 
      	 
      
	
                        Certificate
      of Designations of Series E  convertible preferred
      stock

                      	
                        8-K

                      	
                        February 18, 2009

                      	
                        8-K

                      
	 
      	 
      	 
      	 
      
	
                        Certificate
      of Designations of Series C  cumulative convertible preferred
      stock

                      	
                        10-QSB

                      	
                        May
      8, 2007

                      	
                        10-QSB

                      
	 
      	 
      	 
      	 
      
	
                        By-laws

                      	
                        8-K

                      	
                        June
      17, 2005

                      	
                        8-K

                      
	 
      	 
      	 
      	 
      
	
                        2000
      Stock Option and Incentive Plan

                      	
                        SB-2

                      	
                        November 16, 2005

                      	
                        10.2

                      

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                	
                         

                      	
                        EDGAR
      Reference

                      
	 
      	 
      
	
                        Description

                      	
                        Form

                      	
                        Filing
      Date

                      	
                        Exhibit

                        No.

                      
	 
      	 
      	 
      	 
      
	
                        Form
      of 2004 non-plan non-qualified stock option

                      	
                        SB-2

                      	
                        November
      16, 2005

                      	
                        10.3

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

                      	
                        SB-2

                      	
                        November
      16, 2005

                      	
                        10.4

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

                      	
                        SB-2

                      	
                        November
      16, 2005

                      	
                        10.5

                      
	 
      	 
      	 
      	 
      
	
                        Form
      of common stock purchase warrant issued in March 2005

                      	
                        SB-2

                      	
                        November
      16, 2005

                      	
                        10.6

                      
	 
      	 
      	 
      	 
      
	
                        Form
      of securities purchase agreement dated May 2005

                      	
                        8-K

                      	
                        June
      2, 2005

                      	
                        99.1

                      
	 
      	 
      	 
      	 
      
	
                        Form
      of subscription agreement dated September 30, 2005

                      	
                        8-K

                      	
                        October
      3, 2005

                      	
                        99.1

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

                      	
                        8-K

                      	
                        October
      3, 2005

                      	
                        99.3

                      
	 
      	 
      	 
      	 
      
	
                        Form
      of securities purchase agreement dated March 2, 2006

                      	
                        8-K

                      	
                        March
      3, 2006

                      	
                        99.2

                      
	 
      	 
      	 
      	 
      
	
                        Form
      of common stock purchase warrant dated March 2006

                      	
                        8-K

                      	
                        March
      3, 2006

                      	
                        99.3

                      
	 
      	 
      	 
      	 
      
	
                        2006
      Stock Incentive Plan

                      	
                        10-QSB

                      	
                        November
      6, 2006

                      	
                        10.1

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

                      	
                        8-K

                      	
                        December 15, 2006

                      	
                        10.1

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

                      	
                        8-K

                      	
                        December
      15, 2006

                      	
                        10.2

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

                      	
                        8-K

                      	
                        December
      15, 2006

                      	
                        10.3

                      
	 
      	 
      	 
      	 
      
	
                        Securities
      Purchase Agreement dated April 12, 2007

                      	
                        10-QSB

                      	
                        May
      8, 2007

                      	
                        10.1

                      

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                	
                         

                      	
                        EDGAR
      Reference

                      
	 
      	 
      
	
                        Description 
      

                      	
                        Form

                      	
                        Filing
      Date

                      	
                        Exhibit

                        No.

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

                      	
                        10-QSB

                      	
                        May
      8, 2007

                      	
                        10.2

                      
	 
      	 
      	 
      	 
      
	
                        Registration
      Rights Agreement dated May 2, 2007

                      	
                        10-QSB

                      	
                        May
      8, 2007

                      	
                        10.3

                      
	 
      	 
      	 
      	 
      
	
                        Agreement
      to Exchange and Consent dated May 1, 2007

                      	
                        10-QSB

                      	
                        May
      8, 2007

                      	
                        10.5

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

                      	
                        10-QSB

                      	
                        May
      8, 2007

                      	
                        4.1

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

                      	
                        10-QSB

                      	
                        May
      8, 2007

                      	
                        4.2

                      
	 
      	 
      	 
      	 
      
	
                        Securities
      Purchase Agreement dated March 26, 2008

                      	
                        8-K

                      	
                        April
      14, 2008

                      	
                        10.1

                      
	 
      	 
      	 
      	 
      
	
                        Amendment
      to Securities Purchase Agreement dated April 9, 2008

                      	
                        8-K

                      	
                        April
      14, 2008

                      	
                        10.2

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

                      	
                        8-K

                      	
                        April
      14, 2008

                      	
                        4.3

                      
	 
      	 
      	 
      	 
      
	
                        Warrant
      Amendment Agreement dated April 11, 2008

                      	
                        8-K

                      	
                        April
      14, 2008

                      	
                        10.5

                      
	 
      	 
      	 
      	 
      
	
                        Amendment
      to Registration Rights Agreement dated April 11, 2008

                      	
                        8-K

                      	
                        April
      14, 2008

                      	
                        10.4

                      
	 
      	 
      	 
      	 
      
	
                        Securities
      Purchase Agreement dated August 14, 2008

                      	
                        8-K

                      	
                        August
      18, 2008

                      	
                        10.1

                      
	 
      	 
      	 
      	 
      
	
                        Securities
      Purchase Agreement dated February 11, 2009

                      	
                        8-K

                      	
                        February 18, 2009

                      	
                        10.1

                      
	 
      	 
      	 
      	 
      
	
                        Registration
      Rights Agreement dated February 11, 2009

                      	
                        8-K

                      	
                        February
      18, 2009

                      	
                        10.2

                      

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              
                	
                         

                      	
                        EDGAR
      Reference

                      
	 
      	 
      
	
                        Description

                      	
                        Form

                      	
                        Filing
      Date

                      	
                        Exhibit

                        No.

                      
	 
      	 
      	 
      	 
      
	
                        Series
      D Preferred Stock Consent and Agreement to Exchange dated February 10,
      2009

                      	
                        8-K

                      	
                        February
      18, 2009

                      	
                        10.3

                      
	 
      	 
      	 
      	 
      
	
                        Warrant
      Amendment Agreements dated February 11, 2009

                      	
                        8-K

                      	
                        February 18, 2009

                      	
                        10.4

                      
	 
      	 
      	 
      	 
      
	
                        Amendment
      No. 2 to Registration Rights Agreement dated February 11,
    2009

                      	
                        8-K

                      	
                        February
      18, 2009

                      	
                        10.5

                      

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    Schedule 5.3
(continued)

    

    5.3(b)
Adjustments

    

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

     

    NVLT
- Capital Structure - Pro forma for First Closing of Purdue
Financing

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 
      	 	
                                        Common Stock Equivalents

                                      	 	 	 	 	 	 	 	  
	  	 	
                                        Prior to Transaction

                                      	 	 	
                                        Pro Forma First

                                      	 	 	
                                        Exer./Conv.

                                      	 	 	 	 	
                                        Warrant

                                      
	  	 	 	 	 	
                                        Closing

                                      	 	 	
                                        Price

                                      	 	 	
                                        Total cash

                                      	 	
                                        Expiration

                                      
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                        Cash, cash
      equivalents1

                                      	 	 	 	 	 	 	 	 	 	 	$	4,493,124	 	 
      
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                        Common
      stock outstanding2

                                      	 	 	49,282,145	 	 	 	54,585,175	 	 	 	 	 	$	3,500,000	 	 
      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        Preferred
      stock

                                      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        Series
      C3

                                      	 	 	5,425,475	 	 	 	5,425,475	 	 	$	0.65	 	 	 	 	 	 
      
	
                                        Series
      E4

                                      	 	 	49,018,617	 	 	 	49,018,617	 	 	$	0.65	 	 	 	 	 	 
      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        Warrants

                                      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        2005
      Bridge Financing (Pre-IPO)

                                      	 	 	720,000	 	 	 	720,000	 	 	$	0.625	 	 	
                                        cashless

                                      	 	
                                        April
      2010

                                      
	
                                        2005
      PIPE Placement Agent

                                      	 	 	762,810	 	 	 	762,810	 	 	$	0.65	 	 	$	495,827	 	
                                        August
      2010

                                      
	
                                        Series
      C

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

                                      
	
                                        2006
      PIPE5

                                      	 	 	5,432,120	 	 	 	5,559,689	 	 	$	1.78	 	 	$	9,896,246	 	
                                        March
      2011

                                      
	
                                        Series
      C

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

                                      	 	
                                        May
      2012

                                      
	
                                        Series
      E

                                      	 	 	21,996,150	 	 	 	21,996,150	 	 	$	0.65	 	 	$	14,297,498	 	
                                        12/31/2015

                                      
	
                                        Purdue
      transaction6

                                      	 	 	 	 	 	 	1,856,062	 	 	$	0.66	 	 	$	1,225,001	 	
                                        12/31/2015

                                      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        Stock
      options outstanding

                                      	 	 	7,279,825	 	 	 	7,279,825	 	 	$	0.5987	 	 	$	4,358,720	 	 
      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	$	38,896,718	 	 
      
	
                                        Fully
      diluted shares

                                      	 	 	142,220,171	 	 	 	149,506,832	 	 	 	 	 	 	 	 	 	 
      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    1
Represents cash at 6/30/09.

    2 Pro
forma common stock outstanding includes shares to be issued to Purdue in the
First Closing.

    3 Common
stock equivalents include sharees that may be issued in payment or conversion of
dividends that have accrued through 9/30/09 (dividends payable
quarterly)

    4 Common
stock equivalents include sharees that may be issued in payment or conversion of
dividends that have accrued through 6/30/09 (dividends payable 6/30
&12/31)

    5 Pro
forma includes additional warrants to be issued pursuant to anti-dilution
provisions; decrease in warrant strike price from $1.82 to $1.78.

    6 Pro
forma warrant number consists of warrants to purchase common stock to be issued
to Purdue in the First Closing.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5.3(b)
Adjustments

    

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

    

    NVLT
- Capital Structure - Pro forma for Final Closing of Purdue
Financing

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 
      	 	
                                        Common Stock Equivalents

                                      	 	 	 	 	 	 	 	  
	  	 	
                                        Pro Forma

                                      	 	 	
                                        Pro Forma

                                      	 	 	
                                        Exer./Conv.

                                      	 	 	 	 	
                                        Warrant

                                      
	  	 	
                                        First Closing

                                      	 	 	
                                        Final Closing

                                      	 	 	
                                        Price

                                      	 	 	
                                        Total cash

                                      	 	
                                        Expiration

                                      
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                        Cash, cash equivalents1

                                      	 	 	 	 	 	 	 	 	 	 	$	7,993,124	 	 
      
	
                                        Common
      stock outstanding2

                                      	 	 	54,585,175	 	 	 	62,918,509	 	 	 	 	 	$	5,500,000	 	 
      
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        Preferred
      stock

                                      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        Series
      C3

                                      	 	 	5,425,475	 	 	 	5,425,475	 	 	$	0.65	 	 	 	 	 	 
      
	
                                        Series
      E4

                                      	 	 	49,018,617	 	 	 	49,018,617	 	 	$	0.65	 	 	 	 	 	 
      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        Warrants

                                      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        2005
      Bridge Financing (Pre-IPO)

                                      	 	 	720,000	 	 	 	720,000	 	 	$	0.625	 	 	
                                        cashless

                                      	 	
                                        April
      2010

                                      
	
                                        2005
      PIPE Placement Agent

                                      	 	 	762,810	 	 	 	762,810	 	 	$	0.65	 	 	$	495,827	 	
                                        August
      2010

                                      
	
                                        Series
      C

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

                                      
	
                                        2006
      PIPE5

                                      	 	 	5,559,689	 	 	 	5,750,728	 	 	$	1.72	 	 	$	9,891,252	 	
                                        March
      2011

                                      
	
                                        Series
      C

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

                                      	 	
                                        May
      2012

                                      
	
                                        Series
      E

                                      	 	 	21,996,150	 	 	 	21,996,150	 	 	$	0.65	 	 	$	14,297,498	 	
                                        12/31/2015

                                      
	
                                        Purdue
      transaction6

                                      	 	 	1,856,062	 	 	 	4,772,730	 	 	$	0.66	 	 	$	3,150,002	 	
                                        12/31/2015

                                      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
      
	
                                        Stock
      options outstanding

                                      	 	 	7,279,825	 	 	 	7,279,825	 	 	$	0.5987	 	 	$	4,358,720	 	 
      
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	$	46,316,724	 	 
      
	
                                        Fully
      diluted shares

                                      	 	 	149,506,832	 	 	 	160,947,873	 	 	 	 	 	 	 	 	 	 
      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    1
Represents cash at 6/30/09 plus proceeds from the First
Closing

    2 Pro
forma common stock outstanding includes shares to be issued to Purdue in the
Final Closing.

    3 Common
stock equivalents include sharees that may be issued in payment or conversion of
dividends that have accrued through 9/30/09 (dividends payable
quarterly)

    4 Common
stock equivalents include sharees that may be issued in payment or conversion of
dividends that have accrued through 6/30/09 (dividends payable 6/30
&12/31)

    5 Pro
forma includes additional warrants to be issued pursuant to anti-dilution
provisions; decrease in warrant strike price from $1.78 to $1.72.

    6 Pro
forma warrant number consists of warrants to purchase common stock to be issued
to Purdue in the Final Closing.

    

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

    

    5.3(d)
None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
5.5

    

    Consents

    

    In order
to complete any Subsequent Closings (as described in Section 4 to this
Agreement), the Company will be required to obtain shareholder approval to amend
its Certification of Incorporation to increase the number of authorized shares
of common stock. A special meeting of shareholders has been scheduled for
November 3, 2009 at which time this matter will be voted upon.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
5.7(a)

    

    Material
Adverse Changes

    

    5.7(ii)
On August 21, 2009, the Company accepted a tender of an aggregate of 6,947,728
warrants to purchase its common stock in exchange for the issuance of an
aggregate of 2,084,308 shares of its common stock.  This tender was in
accordance with the Invitation to Tender dated July 13, 2009 and sent to holders
of a total of 12,379,848 warrants dated March 7, 2006.

    

    5.7(vi)
On August 20, 2009, the Company’s by-laws were amended in order to implement
required notice periods and a protocol for calling shareholder meetings and
addressing. shareholder proposals.  A copy of such the amended by-laws
has been provided to Purdue.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     Schedule
5.9

    

    Conflicts

    

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
5.10

    

    Taxes

    

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
5.11

    

    Title
to Properties

    

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 5.14
(a)

    

    Intellectual
Property

     

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule 5.14
(d)

    

    IP
Litigation

    

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
5.16

    

    Litigation

    

    None.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
5.19

    

    Brokers
and Finders

    

    None.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
5.24

    

    Affiliate
Transactions

    

    None.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
5.28

    

    Indebtedness

    

    None.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
8.11

    

    Novelos
Budget

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              	 
      	 	
                                                                                                      2009

                                                                                                    	 	 	
                                                                                                      2010

                                                                                                    	 	 	
                                                                                                      11

                                                                                                    	 
	
                                                                                                      Compound
      / Indication

                                                                                                    	 	
                                                                                                      Q3

                                                                                                    	 	 	
                                                                                                      Q4

                                                                                                    	 	 	
                                                                                                      Q1

                                                                                                    	 	 	
                                                                                                      Q2

                                                                                                    	 	 	
                                                                                                      Q3

                                                                                                    	 	 	
                                                                                                      Q4

                                                                                                    	 	 	
                                                                                                      Q1

                                                                                                    	 
	
                                                                                                      NOV-002
      / Lung Cancer

                                                                                                    	 	
                                                                                                      Ph3:
      SPA

                                                                                                    	 	 	 	 	 	 	
                                                                                                      NDA

                                                                                                    	 	 	
                                                                                                      FDA
      App

                                                                                                    	 
	
                                                                                                      NOV-002
      / Breast Cancer

                                                                                                    	 	      
                                                                                                      Phase
      2

                                                                                                    	 	
                                                                                                       

                                                                                                    	 	 	 	 	 	 	 	 	 
	
                                                                                                      NOV-002
      / Cancers

                                                                                                    	 	
                                                                                                      Additional
      Phase 2s

                                                                                                    	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                      Burn
      estimate1

                                                                                                    	 	 	4.3	 	 	 	4.2	 	 	 	3.5	 	 	 	1.6	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                      cumulative

                                                                                                    	 	 	 	 	 	 	8.5	 	 	 	11.9	 	 	 	13.5	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                      cash
      projection/(funding requirement)

                                                                                                    	 	 	0.2	 	 	 	-4.0	 	 	 	-7.4	 	 	 	-9.0	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                                                                                      Cash
      -
      6/30/09

                                                                                                    	 	 	4.5	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      1Estimated cash burn assumes that vendor
obligations outstanding at 6/30/09 are paid in full by 12/31/09 and
that   estimated costs in the period 7/1/09- 6/30/10 are paid in
the quarter in which they are estimated to be incurred. Actual  timing
of cash payments will depend on a number of factors including when the work is
performed and invoiced and when  vendor payments are made.
 

       

      The above burn estimate
of  $13.5 million includes the following:

       

      
        
          
            	
                    Phase 3 NSCLC clinical costs

                  	 	
                    5.6

                  	 	
                    (includes
      the payment of 2.7 in accrued, unpaid costs at 6/30/09)

                  
	
                    CMC/regulatory
      costs

                  	 	
                    2.2

                  	 	
                    (CMC/regulatory
      costs shall follow detailed budget as set forth in letter to Purdue dated
      8/25/09)

                  
	
                    Non-clinical
      research

                  	 	
                    1.9

                  	 	
                    (Non-clinical
      costs shall follow detailed budget as set forth in letter to Purdue dated
      8/25/09)

                  
	
                    Corporate
      general & administrative costs

                  	 	
                    1.7

                  	 	
                    (includes
      $738,000 in salaries, bonuses and benefits)

                  
	
                    R&D general & administrative costs

                  	 	
                    1.9

                  	 	
                    (includes
      $1.5 million in salaries, bonuses and benefits)

                  
	
                    Phase
      2 clinical

                  	 	
                    0.2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}]]