Document:

WRITTEN
CONSENT AND WAIVER

     

    OF
HOLDERS OF SERIES C CONVERTIBLE PREFERRED STOCK AND

    SERIES
E CONVERTIBLE PREFERRED STOCK

    OF
NOVELOS THERAPEUTICS, INC.

     

    WHEREAS,
the undersigned are (i) holders (the “Series E Holders”) of the outstanding
shares of Series E Convertible Preferred Stock, par value $.00001 per share (the
“Series E Preferred Stock”) of Novelos Therapeutics, Inc. (the “Corporation”),
including the Requisite Holders (as defined in the Certificate of Designations,
Preferences and Rights of the Series E Preferred Stock (the “Series E
Certificate of Designations”)) and (ii) holders (the “Series C Holders” and,
together with the Series E Holders, the “Holders”) of the outstanding shares of
Series C 8% Cumulative Convertible Preferred Stock, par value $.00001 per share
(the “Series C Preferred Stock”) of the Corporation;

     

    WHEREAS,
the Corporation is seeking to consummate a public offering and sale (the
“Transaction”) of certain shares of its common stock, par value $.00001 per
share (the “Common Stock”), and warrants to purchase shares of Common Stock (the
“Warrants”) at a price and on terms to be determined, and it is expected that
the issue price of the Common Stock and the exercise price of the Warrants will
be below $0.65 per share;

     

    WHEREAS,
Section 5(b)(2) of the Series E Certificate of Designations provides that the
consent of the Requisite Holders is required in order to issue shares of Common
Stock at an effective price per share below $0.65, and the Certificate of
Designations, Preferences and Rights of the Series C Preferred Stock (the
“Series C Certificate of Designations”) requires certain actions on the part of
the Corporation, and provides for certain adjustments to the conversion price of
the Series C Preferred Stock, in the event shares of Common Stock are offered or
sold at a price per share below $0.65; and

     

    WHEREAS,
the Series E Holders and Series C Holders are willing to consent to the
Transaction on the terms, and for the consideration, set forth
herein;

    

    NOW THEREFORE, the parties hereto agree
as follows:

    

    1.           Consent and Waiver of Series
C Holders.  Pursuant to Section 4(d)(ii) of the Series C
Certificate of Designations, the Series C Holders hereby WAIVE any rights to
receive additional shares of Common Stock or other securities of the Corporation
they would have had, and any adjustment to the conversion price of the Series C
Preferred Stock that would otherwise have resulted, and any adjustment to the
exercise price and number of shares issuable upon exercise of those certain
warrants to purchase Common Stock issued to the Series C Holders on or about
September 30, 2005 that would otherwise have resulted, from the offer and sale
of the shares of Common Stock and warrants to purchase shares of Common Stock in
connection with the Transaction, and the issuance of the Incentive Warrants (as
defined below) hereunder, including without limitation under Section 4(d) of the
Series C Certificate of Designations, and hereby consent in all respects to the
Transaction and the issuance of the Incentive Warrants
hereunder.  Except as expressly set forth herein, the rights,
privileges and designations of the Series C Preferred Stock shall continue in
full force and effect.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    2.           Consent of Series E
Holders.  In accordance with Section 5(b)(2) of the Series E
Certificate of Designation, the Series E Holders hereby CONSENT in all respects,
pursuant to Section 5(b)(2) of the Series E Certificate of Designation to the
issuance of shares of Common Stock at a price per share, and the issuance of
warrants to purchase shares of Common Stock with an exercise price per share,
less than $0.65 in connection with the Transaction, and the issuance of the
Incentive Warrants hereunder.  Except as expressly set forth herein,
the rights, privileges and designations of the Series E Preferred Stock shall
continue in full force and effect.

    

    3.           Incentive
Warrants.  In consideration for the consents, waivers and
covenants of the Holders contained herein, if the Transaction is consummated and
in consideration for the foregoing, the Corporation shall issue to each Holder,
not later than the later of (i) the 20th Trading Day following the consummation
of the Transaction, and (ii) August 10, 2010, a warrant, substantially in the
form attached as Exhibit A hereto
(collectively, the “Incentive Warrants”), to purchase a number of shares of
Common Stock equal to such Holder’s Warrant Share Factor (if greater than zero),
each such warrant to expire on the fifth anniversary of the date of issuance and
to have an exercise price of $0.01 per share of Common Stock issuable
thereunder.

    

    Each
Holder’s “Warrant Share Factor” shall be the number of shares of Common Stock
obtained based on the following formula:

    

    W = [(C *
Pc) / (Px * 2)] – C

    

    WHERE:

    

    
      
        
          
            
              
                	
                        W

                      	
                        =

                      	
                        Warrant
      Share Factor.

                      
	 	 	 
	
                        C

                      	
                        =

                      	
                        Number
      of shares of Common Stock issuable upon such Holder’s Series C Preferred
      Stock or Series E Preferred Stock, as applicable.

                      
	 	 	 
	
                        Pc

                      	
                        =

                      	
                        Pre-Transaction
      conversion price per share of Common Stock for Series C Preferred Stock or
      Series E Preferred Stock, as applicable.

                      
	 	 	 
	
                        Px

                      	
                        =

                      	
                        the
      volume weighted average price of the Common Stock as reported on Bloomberg
      LP for the 20 Trading Day period immediately following the consummation of
      the
Transaction.

                      

              

            

          

        

      

    

    

    “Trading
Day” shall mean a day on which quotations are published on the OTC Bulletin
Board.

     

    
      
         

      

      
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    4.           Authorized
Shares.  The parties acknowledge and understand that the
Corporation will not have sufficient authorized and unissued shares of Common
Stock available for issuance upon exercise of the Incentive
Warrants.  The Corporation agrees to use its reasonable best efforts
to obtain, prior to January 1, 2011, the requisite consent of its stockholders
to amend its Certificate of Incorporation to increase the number of shares of
Common Stock authorized thereunder to at least the minimum amount that would
result in their being sufficient authorized, unissued and unreserved shares of
Common Stock available for issuance upon exercise of all of the Incentive
Warrants (the “Amendment”).  In the event the Amendment is not
effective on or before January 1, 2011, the Corporation shall pay to each
Holder, as liquidated damages and not as a penalty, an amount in cash equal to
12% of the aggregate liquidation preference applicable to the shares of Series E
Preferred Stock or Series C Preferred Stock, as applicable, held by such Holder,
and an additional amount equal to 2% of such liquidation preference on the first
day of each calendar month thereafter until the Amendment is
effective.  In furtherance of the foregoing, each Holder agrees to
vote or cause to be voted all shares of the Corporation’s capital stock owned by
such Holder, or over which such Holder has voting control, from time to time and
at all times, in whatever manner as shall be necessary to approve the aforesaid
increase to the number of authorized shares of Common Stock.

    

    5.           “No-Short.”  Each
Holder covenants that neither it nor any affiliate acting on its behalf or
pursuant to any understanding with it will execute any Short Sales (as defined
in Regulation SHO promulgated under the Securities Exchange Act of 1934, as
amended) during the period commencing upon the consummation of the Transaction
and ending on the 180th day following
such consummation.

    

    6.           Registration
Rights.  If after one year after the issuance of the Incentive
Warrants, a Holder is unable to immediately sell all of its common stock
underlying the Warrants pursuant to Rule 144 promulgated under the Securities
Act of 1933, as amended (“Rule 144”) without time, volume or other limitations
under Rule 144, then the Company will use reasonable best efforts to register
such shares with the Securities and Exchange Commission (the “Commission”) and
use its reasonable best efforts to have the Commission declare such registration
statement effective.  Except as otherwise provided under this Section
6, the terms, conditions and procedures set forth in Sections 3 through 7 of
that certain Registration Rights Agreement (including without limitation the
provisions governing expenses, maintenance of registration, obligations of
holders and indemnification) by and among the Company and certain of the Holders
dated February 11, 2009 shall govern the aforesaid registration as fully as if
such terms were set forth herein and applicable to such registration, provided
that under no circumstances shall the Company be obligated to pay liquidated
damages in respect of such registration.

    

    7.           Entire
Agreement.  This Agreement is intended by the parties as a
final expression of their agreement and intended, together with the Warrants, to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein.

     

    
      
         

      

      
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    8.           Choice of
Law.  This Consent and Waiver shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
conflicts of laws principles that would result in the application of the
substantive laws of another jurisdiction. Any action brought by any party
against any other party concerning this Consent and Waiver shall be brought only
in the civil or state courts of New York or in the federal courts located in New
York County. THE PARTIES AND THE INDIVIDUALS EXECUTING THIS CONSENT AND WAIVER
AND OTHER AGREEMENTS REFERRED TO HEREIN OR DELIVERED IN CONNECTION HEREWITH ON
BEHALF OF THE CORPORATION AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS AND
WAIVE TRIAL BY JURY. The prevailing party shall be entitled to recover from the
other party(ies) its reasonable attorney’s fees and costs. In the event that any
provision of this Consent and Waiver or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.

    

    9.           Counterparts.  This
Consent and Waiver may be executed in one or more counterparts, each of which
shall be deemed an original and all of which taken together shall constitute one
and the same instrument. Counterpart signature pages to this Consent and Waiver
transmitted by facsimile transmission, by electronic mail in “portable document
format” (“pdf”) form, or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, will have the same
effect as physical delivery of the paper document bearing an original
signature.

    

    

    [Remainder
of Page Intentionally Left Blank]

     

     

    
      
         

      

      
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    IN
WITNESS WHEREOF the undersigned have executed this Consent and Waiver as of the
date first above written.

    

    
      
        
          
            
              
                	
                        SERIES
      E HOLDERS:

                      	 
      
	 	 
	
                        XMARK
      OPPORTUNITY FUND, LTD.

                      	
                        CADUCEUS
      CAPITAL MASTER FUND

                      
	
                        XMARK
      OPPORTUNITY FUND, L.P.

                      	
                        LIMITED

                      
	
                        XMARK
      JV INVESTMENT

                      	
                        CADUCEUS
      CAPITAL II, L.P.

                      
	
                        PARTNERS,
      LLC

                      	
                        UBS
      EUCALYPTUS FUND, L.L.C.

                      
	
                         

                      	      
                        PW
      EUCALYPTUS FUND, LTD.

                      
	 	      
                        SUMMER
      STREET LIFE SCIENCES 

                      
	 	HEDGE
      FUND INVESTORS LLC
	 	 
	
                        By:
      /s/ Mitchell D.
      Kaye

                      	
                        By:
      _______________________

                      
	
                        Name:
      Mitchell D. Kaye

                      	
                        Name:
      Samuel D. Isaly

                      
	
                        Title:
      Authorized Signatory

                      	
                        Title:
      Managing Partner, Orbimed Advisors

                      
	
                        Address:
      90 Grove Street

                      	
                        Address:
      c/o OrbiMed Advisors LLC

                      
	
                        Ridgefield,
      CT 06877

                      	
                        767
      Third Avenue, 30th Floor

                      
	
                        Attn:
      Mitchell D. Kaye

                      	
                        New
      York, NY
10017

                      

              

            

          

        

      

    

     

     

    KNOLL
SPECIAL OPPORTUNITIES

    FUND
II MASTER FUND LTD.

    EUROPA
INTERNATIONAL, INC.

     

     

    By:
_________________________

    Name:
Fred Knoll

    Title:
Portfolio Manager

    Address:
c/o Knoll Capital Management

    666 Fifth
Avenue, Suite 3702

    New York,
NY 10103

     

    
      
        
          
            
              
                	 
      	 
      
	
                        BEACON
      COMPANY

                      	
                        ROSEBAY
      MEDICAL COMPANY, L.P.

                      
	
                        By:
      Stanhope Gate Corp., its managing

                      	
                        By:
      Rosebay Medical Company, Inc., its

                      
	
                        general
      partner

                      	
                        general
      partner

                      
	 	 
	 	 
	
                        By:
      /s/ Steven
      Meiklejohn

                      	
                        By:
      /s/ Stephen A.
      Ives

                      
	
                        Name:
      Steven Meiklejohn

                      	
                        Name:
      Stephen A. Ives

                      
	
                        Title:
      Director

                      	
                        Title:
      Vice
President

                      

              

            

          

        

      

    

     

    
 

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    SERIES
C HOLDERS:

    
      	
               

            	 
      
	
              LONGVIEW
      FUND, LP

            	
              LONGVIEW
      EQUITY FUND, LP

            
	 
      	 
      
	
              By:
      /s/ Peter T.
      Benz

            	
              By:
      /s/ Peter T.
      Benz

            
	
              Name:
      Peter T. Benz

            	
              Name:
      Peter T. Benz

            
	
              Title:
      Manager

            	
              Title:
      Manager

            
	
              Address:

            	
              Address:

            

    

    

    

    LONGVIEW
INTERNATIONAL

    EQUITY
FUND, LP

    

    By: /s/ Peter T.
Benz

    Name: Peter
T. Benz

    Title:
Manager                                

    Address:

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    Agreed
and accepted:

    

    
      
        
          	 
      	 
      
	 
      	
                  NOVELOS
      THERAPEUTICS, INC.

                
	 	 
	 
      	
                  Dated:
      July 6, 2010

                
	 	 
	 
      	
                  By:
      /s/ Harry S.
      Palmin

                
	 
      	
                  Name:
      Harry S. Palmin

                
	 
      	
                  Title:
      President and CEO

                

        

      

    

     

     

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
 

    EXHIBIT
A

    

    FORM OF
WARRANT

    (included as Exhibit 10.53
to this filing)NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
“COMMISSION”) OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) AND APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR (II) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY
LAWS.

    

     

    
      	 
      	 
      	 
      
	
              Warrant
      No. [_]

            	
                

            	
              Original
      Issue Date: [  ], 2010

            

    

     

    NOVELOS
THERAPEUTICS, INC.

    

    FORM
OF WARRANT TO PURCHASE [    ] SHARES OF

    COMMON
STOCK, PAR VALUE $0.00001 PER SHARE

    

    FOR VALUE RECEIVED,
_______________________ (“Warrantholder”),
is entitled to purchase, subject to the provisions of this Warrant, from NOVELOS
THERAPEUTICS, INC. a Delaware corporation (“Corporation”),
at any time not later than 5:00 P.M., Eastern time, on ________________, 2015
(the “Expiration
Date”), at an exercise price per share equal to $0.01 (the exercise price
in effect being herein called the “Warrant
Price”), [    ] shares (“Warrant
Shares”) of the Corporation’s Common Stock, par value $0.00001 per share (“Common
Stock”).  The number of Warrant Shares purchasable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time as described herein.  This Warrant is one of several
Warrants of like tenor issued pursuant to that certain Consent and Waiver of
Holders of Series C Convertible Preferred Stock and Series E Convertible
Preferred Stock of the Corporation dated June [___], 2010 (the “Consent
and Waiver”).

    

    Section
1.          Registration.  The
Corporation shall maintain books for the transfer and registration of the
Warrant.  Upon the initial issuance of this Warrant, the Corporation
shall issue and register the Warrant in the name of the
Warrantholder.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    Section
2.          Transfers.  As
provided herein, this Warrant may be transferred only pursuant to a registration
statement filed under the Securities Act, or an exemption from such
registration.  Subject to such restrictions, the Corporation shall
transfer this Warrant from time to time upon the books to be maintained by the
Corporation for that purpose, upon surrender thereof for transfer properly
endorsed or accompanied by appropriate instructions for transfer and such other
documents as may be reasonably required by the Corporation, including, if
required by the Corporation, an opinion of its counsel to the effect that such
transfer is exempt from the
registration requirements of the Securities Act, to establish that such transfer
is being made in accordance with the terms hereof, and a new Warrant shall be
issued to the transferee and the surrendered Warrant shall be canceled by the
Corporation.  Notwithstanding the foregoing, the Warrantholder may
sell, transfer, assign, pledge or otherwise dispose of the Warrant, 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 (ii) the delivery to
the Corporation of such documentation to establish that such transfer is being
made in accordance with the terms hereof, and as may be reasonably requested by
the Corporation and necessary for the Corporation to obtain a legal opinion that
such disposition may lawfully be made without registration under the Securities
Act.  “Associated
Company” means, as to Warrantholder, 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 Warrantholder.  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.

    

    Section
3.          Exercise of
Warrant.  Subject to the provisions hereof, the Warrantholder
may exercise this Warrant in whole or in part at any time prior to its
expiration upon surrender of the Warrant, together with delivery of the duly
executed Warrant exercise form attached hereto as Appendix A (the
“Exercise
Agreement”) and payment by cash, certified check or wire transfer of
funds for the aggregate Warrant Price for that number of Warrant Shares then
being purchased, to the Corporation during normal business hours on any Business
Day at the Corporation’s principal executive offices (or such other office or
agency of the Corporation as it may designate by notice to the holder hereof);
provided that this Warrant shall not be exercisable at any time prior to the
effectiveness of the Amendment (as defined in the Consent and
Waiver).  The Warrant Shares so purchased shall be deemed to be issued
to the holder hereof or such holder’s designee, as the record owner of such
shares, as of the close of business on the date on which this Warrant shall have
been surrendered (or evidence of loss, theft or destruction thereof and security
or indemnity satisfactory to the Corporation), the Warrant Price shall have been
paid and the completed Exercise Agreement shall have been
delivered.  Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the holder hereof within a reasonable time, not exceeding
three (3) Business Days, after this Warrant shall have been so
exercised.  The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of such holder or such other name as shall be designated by such
holder.  If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Corporation shall, at its expense, at the
time of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.  If (1) a certificate representing the
Warrant Shares is not delivered to the Warrantholder within three (3) Business
Days of the due exercise of this Warrant by the Warrantholder and (2) prior to
the time such certificate is received by the Warrantholder, the Warrantholder,
or any third party on behalf of the Warrantholder or for the Warrantholder’s
account, purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Warrantholder of shares
represented by such certificate (a “Buy-In”),
then the Corporation shall pay in cash to the Warrantholder (for costs incurred
either directly by such Warrantholder or on behalf of a third party) the amount
by which the total purchase price paid for Common Stock as a result of the
Buy-In (including brokerage commissions, if any) exceeds the proceeds received
by such Warrantholder as a result of the sale to which such Buy-In
relates.  The Warrantholder shall provide the Corporation written
notice indicating the amounts payable to the Warrantholder in respect of the
Buy-In.

     

    
      
         

      

      
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    Section
4.          Compliance with the
Securities Act of 1933. The Corporation may cause the legend set forth on
the first page of this Warrant to be set forth on each Warrant or similar legend
on any security issued or issuable upon exercise of this Warrant, unless counsel
for the Corporation is of the opinion as to any such security that such legend
is unnecessary.

    

    Section
5.          Payment of
Taxes.  The Corporation will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the
Corporation shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issuance or delivery of any
certificates for Warrant Shares in a name other than that of the registered
holder of this Warrant in respect of which such shares are issued, and in such
case, the Corporation shall not be required to issue or deliver any certificate
for Warrant Shares or any Warrant until the person requesting the same has paid
to the Corporation the amount of such tax or has established to the
Corporation’s reasonable satisfaction that such tax has been
paid.  The holder shall be responsible for income taxes due under
federal, state or other law, if any such tax is due.

    

    Section
6.          Mutilated or Missing
Warrants.  In case this Warrant shall be mutilated, lost,
stolen, or destroyed, the Corporation shall issue in exchange and substitution
of and upon cancellation of the mutilated Warrant, or in lieu of and
substitution for the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and for the purchase of a like number of Warrant Shares, but only upon
receipt of evidence reasonably satisfactory to the Corporation of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Corporation.

    

    Section
7.          Reservation of Common
Stock.  Subject to Section 4 of the Consent and Waiver, the
Corporation hereby represents and warrants that there have been reserved, and
the Corporation shall at all applicable times keep reserved until issued (if
necessary) as contemplated by this Section 7, out of the authorized and unissued
shares of Common Stock, 100% of the number of shares issuable upon exercise of
the rights of purchase represented by this Warrant.  The Corporation
agrees that all Warrant Shares issued upon due exercise of the Warrant shall be,
at the time of delivery of the certificates for such Warrant Shares, duly
authorized, validly issued, fully paid and non-assessable shares of Common Stock
of the Corporation.

    

    Section
8.          Adjustments.  Subject
and pursuant to the provisions of this Section 8, the Warrant Price and number
of Warrant Shares subject to this Warrant shall be subject to adjustment from
time to time as set forth hereinafter.

     

    
      
         

      

      
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    (a)      
If the Corporation shall, at any time or from time to time while this Warrant is
outstanding, pay a dividend or make a distribution on its Common Stock in shares
of Common Stock, subdivide its outstanding shares of Common Stock into a greater
number of shares or combine its outstanding shares of Common Stock into a
smaller number of shares or issue by reclassification of its outstanding shares
of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Corporation so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been fully exercised immediately prior to such event upon
payment of a Warrant Price that has been adjusted to reflect a fair allocation
of the economics of such event to the Warrantholder.  Such adjustments
shall be made successively whenever any event listed above shall
occur.

    

    (b)      If any
capital reorganization, reclassification of the capital stock of the
Corporation, consolidation or merger of the Corporation with another corporation
in which the Corporation is not the survivor, or sale, transfer or other
disposition of all or substantially all of the Corporation’s assets to another
corporation shall be effected, then, the Corporation shall use its best efforts
to ensure that lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise
thereof.  The Corporation shall not effect any such consolidation,
merger, sale, transfer or other disposition unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Corporation) resulting from such consolidation or merger, or the corporation
purchasing or otherwise acquiring such assets or other appropriate corporation
or entity shall assume the obligation to deliver to the holder of the Warrant,
at the last address of such holder appearing on the books of the Corporation,
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase, and the other obligations
under this Warrant.  The provisions of this Section 8(b) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers or other dispositions.

    

    (c)       In
case the Corporation shall fix a payment date for the making of a distribution
to all holders of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Corporation is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 8(a)), or
subscription rights or warrants, the Company shall provide notice to the
Warrantholder at least 10 days in advance of the fixing of such payment date and
the Warrantholder may elect to exercise this Warrant in whole or in part prior
to such payment date in accordance with Section 3 hereof.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
 

    (d)       For
the term of this Warrant, in addition to the provisions contained above, the
Warrant Price shall be subject to adjustment as provided below. An adjustment to
the Warrant Price shall become effective immediately after the payment date in
the case of each dividend or distribution and immediately after the effective
date of each other event which requires an adjustment.

    

    (e)       In
the event that, as a result of an adjustment made pursuant to this Section 8,
the holder of this Warrant shall become entitled to receive any shares of
capital stock of the Corporation other than shares of Common Stock, the number
of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.

    

    Section
9.         Fractional
Interest.  The Corporation shall not be required to issue
fractions of Warrant Shares upon the exercise of this Warrant.  If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 9, be deliverable upon such exercise, the Corporation,
in lieu of delivering such fractional share, shall pay to the exercising holder
of this Warrant an amount in cash equal to the Market Price of such fractional
share of Common Stock on the date of exercise.

    

    Section
10.       Benefits.  Nothing
in this Warrant shall be construed to give any person, firm or corporation
(other than the Corporation and the Warrantholder) any legal or equitable right,
remedy or claim, it being agreed that this Warrant shall be for the sole and
exclusive benefit of the Corporation and the Warrantholder.

    

    Section
11.       Notices to
Warrantholder.  Upon the happening of any event requiring an
adjustment of the Warrant Price, the Corporation shall promptly give written
notice thereof to the Warrantholder at the address appearing in the records of
the Corporation, stating the adjusted Warrant Price and the adjusted number of
Warrant Shares resulting from such event and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is
based.  Failure to give such notice to the Warrantholder or any defect
therein shall not affect the legality or validity of the subject
adjustment.

    

    Section
12.        Identity of Transfer
Agent.  The Transfer Agent for the Common Stock is American
Stock Transfer & Trust Company.  Upon the appointment of any
subsequent transfer agent for the Common Stock or other shares of the
Corporation’s capital stock issuable upon the exercise of the rights of purchase
represented by the Warrant, the Corporation will mail to the Warrantholder a
statement setting forth the name and address of such transfer
agent.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
 

    Section
13.        Notices.  Unless
otherwise provided, any notice required or permitted under this Warrant 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 facsimile, 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 days after such notice is
deposited in first class mail, postage prepaid, and (iv) if given by an
internationally recognized overnight air courier, then such notice shall be
deemed given one day after delivery to such carrier.  All notices
shall be addressed as follows: if to the Warrantholder, at its address as set
forth in the Corporation’s books and records and, if to the Corporation, at the
address as follows, or at such other address as the Warrantholder or the
Corporation may designate by ten days’ advance written notice to the
other:

    

    If to the Corporation:

    

    Novelos Therapeutics,
Inc.

    One Gateway Center, Suite
504

    Newton, MA 02458

    Attention:  Chief Executive
Officer

    Fax:  (617)
964-6331

    

    With a copy to:

    

    Foley Hoag LLP

    Seaport World Trade Center
West

    155 Seaport Boulevard

    Boston, MA 02210

    Attn:  Paul
Bork

    Fax:  (617)
832-7000

    

    Section
14.        Registration
Rights.  The Warrantholder is entitled to the benefit of
certain registration rights with respect to the shares of Common Stock issuable
upon the exercise of this Warrant as provided in the Consent and Waiver, and any
subsequent holder hereof shall be entitled to such rights.

    

    Section
15.        Successors.  All
the covenants and provisions hereof by or for the benefit of the Warrantholder
shall bind and inure to the benefit of its respective successors and assigns
hereunder.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
 

    Section
16.        Governing
Law.  This Warrant shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without reference
to the choice of law provisions thereof.  The Corporation and, by
accepting this Warrant, the Warrantholder, each 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 Warrant 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
Warrant.  The Corporation and, by accepting this Warrant, the
Warrantholder, each 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.  The Corporation and, by accepting this Warrant, the
Warrantholder, each 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 CORPORATION AND THE
WARRANTHOLDER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING RELATING TO OR ARISING OUT OF THIS WARRANT AND THE
TRANSACTIONS CONTEMPLATED HEREBY.

    

    Section
17.        No Rights as
Shareholder.  Prior to the exercise of this Warrant, the
Warrantholder shall not have or exercise any rights as a shareholder of the
Corporation by virtue of its ownership of this Warrant.

    

    Section
18.        Cashless
Exercise.  If, at any time after
the six-month anniversary of the Original Issue Date, there is no effective registration statement covering all or
any part of the Warrant Shares filed under the Securities Act, the Warrantholder
may elect to receive, without the payment by the Warrantholder of the aggregate
Warrant Price in respect of the shares of Common
Stock to be acquired upon exercise hereof, shares of Common Stock equal to the
value of this Warrant or any portion hereof being exercised pursuant to this
Section 18 by the surrender of this Warrant (or such portion of this Warrant
being so exercised) together with the Net Issue Election Notice
annexed hereto as Appendix B duly executed, at the office of the
Corporation.  Thereupon, and in no event later than three (3) Business
Days after the Corporation’s receipt of the Net Issue Election Notice, the Corporation
shall issue to the Warrantholder certificate(s) for such number of fully paid,
validly issued and nonassessable shares of Common Stock as is computed using the
formula immediately below.  The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and
shall be registered in the name of such holder or such other name as shall be
designated by such holder.  If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Corporation
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.  

    

    X = Y (A - B)

         A

    where                      

    

    X
=          the number of shares of Common Stock to be issued to the
Warrantholder upon exercise of this Warrant pursuant to this Section
18;

    

    Y
=          the total number of shares of Common Stock covered by
this Warrant which the Warrantholder has surrendered at such time for cashless exercise (including both shares to
be issued to the Warrantholder and shares to be canceled as payment
therefor);

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    
 

    A
=          the Market Price of one share of Common Stock as at the
time the net issue election is made; and

    

    B
=           the Warrant Price
in effect under this Warrant at the time the net issue election is
made.

    

    The Warrant Shares issued pursuant to this Section 18
shall be deemed to be issued to the exercising holder or such holder’s designee, as the
record owner of such shares, as of the
close of business on the date on which the Net Issue Election Notice shall have
been surrendered (or evidence of loss, theft or destruction thereof and security
or indemnity satisfactory to the Corporation) to the
Corporation.  Notwithstanding the foregoing, this
Warrant shall not be exercisable at any time prior to the effectiveness of the
Amendment (as defined in the Consent and Waiver).

    

    “Market
Price” as of a particular date (the “Valuation
Date”) shall mean the following: (a) if the Common Stock is then listed
on a national stock exchange, the Market Price shall be the closing sale price
of one share of Common Stock on such exchange on the last trading day prior to
the Valuation Date, provided that if such stock has not traded in the prior ten
(10) trading sessions, the Market Price shall be the average closing price of
one share of Common Stock in the most recent ten (10) trading sessions during
which the Common Stock has traded; (b) if the Common Stock is then included in
the OTC Bulletin Board (the “OTCBB”),
the Market Price shall be the closing sale price of one share of Common Stock on
the OTCBB on the last trading day prior to the Valuation Date or, if no such
closing sale price is available, the average of the high bid and the low ask
price quoted on the OTCBB as of the end of the last trading day prior to the
Valuation Date, provided that if such stock has not traded in the prior ten (10)
trading sessions, the Market Price shall be the average closing price of one
share of Common Stock in the most recent ten (10) trading sessions during which
the Common Stock has traded, (c) if the Common Stock is then included in the
“pink sheets,” the Market Price shall be the closing sale price of one share of
Common Stock on the “pink sheets” on the last trading day prior to the Valuation
Date or, if no such closing sale price is available, the average of the high bid
and the low ask price quoted on the “pink sheets” as of the end of the last
trading day prior to the Valuation Date, provided that if such stock has not
traded in the prior ten (10) trading sessions, the Market Price shall be the
average closing price of one share of Common Stock in the most recent ten (10)
trading sessions during which the Common Stock has traded.  The Board
of Directors of the Corporation shall respond promptly, in writing, to an
inquiry by the Warrantholder prior to the exercise hereunder as to the Market
Price of a share of Common Stock as determined by the Board of Directors of the
Corporation.  

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
 

    Section
19.        Restrictions on Exercise of
Warrant.

    

    (a) Notwithstanding anything herein to
the contrary, in no event shall the Warrantholder be entitled to exercise any
portion of the Warrant per Section 3 so held by such Warrantholder in excess of
that portion upon exercise of which the sum of (1) the number of shares of
Common Stock beneficially owned by such Warrantholder and its Associated
Companies (other than shares of Common Stock which may be deemed beneficially
owned through ownership of the unexercised Warrant or portion thereof or the
unexercised or unconverted portion of any other security of the Warrantholder
subject to a limitation on exercise analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the exercise
of that portion of the Warrant with respect to which the determination of this
proviso is being made, would result in beneficial ownership by such
Warrantholder and its Associated Companies of any amount greater than 4.99% of
the then outstanding shares of Common Stock (whether or not, at the time of such
conversion, the Warrantholder and its Associated Companies beneficially own more
than 4.99% of the then outstanding shares of Common Stock).  The
waiver by the Warrantholder of any limitation contained in an option or
convertible security now or hereafter held by such holder that is similar or
analogous to the limitations set forth in this Section 19(a) shall not be deemed
a waiver or otherwise effect the limitation set forth in this Section 19(a),
unless such waiver expressly states it is a waiver of the provisions of this
Section 19(a).  For purposes of this Section 19(a), beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such proviso.  The Warrantholder
may waive the limitations set forth herein by sixty-one (61) days written notice
to the Corporation or immediately preceding a Change of Control of the
Corporation.  For purposes of Sections 19(a) and 19(b), the term
“Change of Control” shall mean (1) any sale, lease or other transfer of
substantially all of the Corporation’s assets, in one or a series of
transactions; (2) any merger, consolidation or similar business combination
transaction, in which the Corporation is not the survivor or, if the Corporation
is the survivor, then only if the holders of a majority of the Common Stock
outstanding immediately before such transaction cease to own a majority of the
Common Stock immediately after the transaction; (3) if one or a series of
events, any change in the majority of the members of the Corporation’s Board of
Directors (the “Board”), unless the replacement
directors were nominated by the majority of the Board immediately preceding such
change; and (4) if any person or entity (other than Purdue) shall acquire or
become the “beneficial owner” (as that term is defined in Rule 13d-3 of the
Exchange Act) of more than 50% of the Corporation’s outstanding
stock.

    

    (b)  Notwithstanding anything
herein to the contrary, in no event shall the Warrantholder be entitled to
exercise any portion of the Warrant per Section 3 so held by such Warrantholder
in excess of that portion upon exercise of which the sum of (1) the number of
shares of Common Stock beneficially owned by such Warrantholder and its
Associated Companies (other than shares of Common Stock which may be deemed
beneficially owned through ownership of the unexercised Warrant or portion
thereof or the unexercised or unconverted portion of any other security of the
Warrantholder subject to a limitation on exercise analogous to the limitations
contained herein) and (2) the number of shares of Common Stock issuable upon the
exercise of that portion of the Warrant with respect to which the determination
of this proviso is being made, would result in beneficial ownership by such
Warrantholder and its Associated Companies of any amount greater than 9.99% of
the then outstanding shares of Common Stock (whether or not, at the time of such
conversion, the Warrantholder and its Associated Companies beneficially own more
than 9.99% of the then outstanding shares of Common Stock).  The
waiver by the Warrantholder of any limitation contained in an option or
convertible security now or hereafter held by such holder that is similar or
analogous to the limitations set forth in this Section 19(b) shall not be deemed
a waiver or otherwise effect the limitation set forth in this Section 19(b),
unless such waiver expressly states it is a waiver of the provisions of this
Section 19(b).  For purposes of this Section 19(b), beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as
otherwise provided in clause (1) of such proviso.  The Warrantholder
may waive the limitations set forth herein by sixty-one (61) days written notice
to the Corporation or immediately preceding a Change of Control of the
Corporation.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
 

    Section
20.        Amendments.  This
Warrant shall not be amended without the prior written consent of the
Corporation and the Warrantholder.

    

    Section
21.        Section
Headings.  The section headings in this Warrant are for the
convenience of the Corporation and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.

    

     

     

     

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    
 

    IN WITNESS WHEREOF, the Corporation has
caused this Warrant to be duly executed, as of the
[     ] day of [   ], 2010.

    

    
      
        
          
            	 
      	
                    NOVELOS
      THERAPEUTICS, INC.

                  	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
                    By:

                  	  
      	 
	 
      	
                    Name:

                  	
                    Harry
      S. Palmin

                  	 
	 
      	
                    Title:

                  	
                    President
      and CEO

                  	 

          

        

      

    

    
 

     

     

     

    
 

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    APPENDIX
A

    NOVELOS
THERAPEUTICS, INC.

    WARRANT
EXERCISE FORM

    

    To:
NOVELOS THERAPEUTICS, INC.

    

    The undersigned hereby irrevocably
elects to exercise the right of purchase represented by the within Warrant
(“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price
and surrender of the Warrant, _______________ shares of Common Stock (“Warrant
Shares”) provided for therein, and requests that certificates for the Warrant
Shares be issued as follows:

     

    
      
        
          	
                  _______________________________

                
	
                  Name

                
	
                  ________________________________

                
	
                  Address

                
	
                  ________________________________

                
	
                  ________________________________

                
	
                  Federal
      Tax ID or Social Security
No.

                

        

      

    

    

    and delivered by

    

    
      
        	
                o

              	
                certified
      mail to the above address, or

              
	
                o

              	
                electronically
      (provide DWAC Instructions:___________________), or

              
	
                o

              	
                other
      (specify:
  __________________________________________).

              

      

    

    

    

    and, if
the number of Warrant Shares shall not be all the Warrant Shares purchasable
upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
Shares purchasable upon exercise of this Warrant be registered in the name of
the undersigned Warrantholder or the undersigned’s Assignee as below indicated
and delivered to the address stated below.

    

    Dated:
___________________, ____

    

    
      
        	
                Note:
      The signature must correspond with

              	 
      
	
                the
      name of the registered holder as written

              	
                Signature:_______________________

              
	
                on
      the first page of the Warrant in every

              	
                      
                  _______________________________

                

              
	
                particular,
      without alteration or enlargement

              	
                Name
      (please print)

              
	
                or
      any change whatever, unless the Warrant

              	 
      
	
                has
      been assigned.

              	
                      
                  _______________________________

                

              
	 
      	
                      
                  _______________________________

                

              
	 
      	
                Address

              
	 
      	
                      
                  _______________________________

                

              
	 
      	
                Federal
      Identification or

              
	 
      	
                Social
      Security No.

              
	 
      	 
      
	 
      	
                Assignee:

              
	 
      	
                      
                  _______________________________

                

              
	 
      	
                      
                  _______________________________

                

              
	 
      	
                _______________________________

              

      

    

    

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    APPENDIX B

    NOVELOS THERAPEUTICS, INC.

    NET ISSUE ELECTION NOTICE

    

    

    To: NOVELOS THERAPEUTICS, INC.

    

    Date:_________________________

    

    

               The undersigned hereby elects under Section 18 of the
Warrant to surrender the right to purchase ____________ shares of Common Stock
pursuant to this Warrant and hereby
requests the issuance of _____________ shares of Common Stock.  The
certificate(s) for the shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated
below.

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	 
      	
                                       

                                  	 
	 
      	
                                    Signature

                                  	 
	 
      	 
      	 
	 
      	
                                       

                                  	 
	 
      	
                                    Name for Registration

                                  	 
	 
      	 
      	 
	 
      	
                                       

                                  	 
	 
      	
                                    Mailing Address

                                  	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    

    

    

    

    

    

    

    

    
      
         

      

      
        2

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