Document:

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: April 11, 2008

            

    

     

    NOVELOS
      THERAPEUTICS, INC.

    

    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 April 11, 2013 (the
“Expiration
      Date”),
      at an
      exercise price per share equal to $0.65
      (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 has been issued pursuant to a certain Securities Purchase
      Agreement, dated as of March 26, 2008, as amended on April 9, 2008, by and
      among
      the Corporation and the Investors signatory thereto (the “Purchase
      Agreement”).
      All
      capitalized terms used but not defined herein shall have the meanings ascribed
      thereto in the Purchase Agreement.

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
      3. Exercise
      of Warrant.
      

    

    (a) 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). 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 Day, after this
      Warrant shall have been so exercised. When the Corporation is required to
      deliver certificates upon exercise, if certificates are not delivered to the
      Warrantholder within such three (3) Business Days, the Corporation shall be
      liable to the Warrantholder for liquidated damages equal to 1.5% of the
      aggregate Warrant Price for each 30-day period (or portion thereof) beyond
      such
      three (3) Business Day-period that the certificates have not been so delivered.
      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. 

    

    (b) (I)
      Notwithstanding
      anything herein to the contrary, in no event shall a Warrantholder be entitled
      to exercise any portion of this Warrant 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 Affiliates (other
      than shares of Common Stock which may be deemed beneficially owned through
      ownership of the unexercised shares of Common Stock underlying the Warrant
      or
      the unexercised or unconverted portion of any other security of the holder
      subject to a limitation on conversion analogous to the limitations contained
      herein) and (2) the number of shares of Common Stock issuable upon the 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 Affiliates 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 Affiliates beneficially own more than
      4.99% of the then outstanding shares of Common Stock). The waiver by a
      Warrantholder of any limitation contained in a warrant or convertible security
      now or hereafter held by such holder that is similar or analogous to the
      limitations set forth in this Section 3(b)(I) shall not be deemed a waiver
      or
      otherwise effect the limitation set forth in this Section 3(b)(I), unless such
      waiver expressly states it is a waiver of the provisions of this Section
      3(b)(I). For purposes of this Section 3(b)(I), beneficial ownership shall be
      determined in accordance with Section 13(d) of the Securities Exchange Act
      of
      1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided
      in clause (1) of such proviso. Any Warrantholder may waive the limitations
      set
      forth herein by sixty-one (61) days written notice to the Corporation. The
      foregoing shall not affect the Company’s right to redeem the Warrant pursuant to
      Section 19.

     

    
      
         

      

      
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    (II)
      Notwithstanding
      anything herein to the contrary, in no event shall a Warrantholder be entitled
      to exercise any portion of this Warrant 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 Affiliates (other
      than shares of Common Stock which may be deemed beneficially owned through
      ownership of the unexercised shares of Common Stock or the unexercised or
      unconverted portion of any other security of the holder 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 Affiliates 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
      Affiliates beneficially own more than 9.99% of the then outstanding shares
      of
      Common Stock). The waiver by a Warrantholder of any limitation contained in
      a
      warrant or convertible security now or hereafter held by such holder that is
      similar or analogous to the limitations set forth in this Section 3(b)(II)
      shall
      not be deemed a waiver or otherwise effect the limitation set forth in this
      Section 3(b)(II), unless such waiver expressly states it is a waiver of the
      provisions of this Section 3(b)(II). For purposes of this Section 3(b)(II),
      beneficial ownership shall be determined in accordance with Section 13(d) of
      the
      Securities Exchange Act of 1934, as amended, and Regulations 13D-G thereunder,
      except as otherwise provided in clause (1) of such proviso. Any Warrantholder
      may waive the limitations set forth herein by sixty-one (61) days written notice
      to the Corporation. The foregoing shall not affect the Company’s right to redeem
      the Warrant pursuant to Section 19.

    

    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.

     

    
      
         

      

      
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    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.
      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.

    

    (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.

     

    
      
         

      

      
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    (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. 

    

    (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.

     

    
      
         

      

      
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    Section
      10. [Reserved].
      

    

    Section
      11. 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
      12. 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
      13. 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.

    

    Section
      14. 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

            

    

     

    
      
         

      

      
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              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
      15. Registration
      Rights.
      The
      initial holder of this Warrant 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 Registration Rights Agreement dated
      April 11, 2008, by and between the Warrantholders and the Corporation, and
      any
      subsequent holder hereof shall be entitled to such rights to the extent provided
      in the Registration Rights Agreement.

    

    Section
      16. 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. 

    

    Section
      17. 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
      18. 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.

     

    
      
         

      

      
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    Section
      19. 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 19 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 19;

    

    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);

    

    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 19 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. 

     

    
      
         

      

      
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    “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. 

    

    Section
      20. Redemption.
      If
      a
      registration statement covering the resale of all of the Warrant Shares
      underlying all of the Warrants is declared effective by the SEC, and is then
      effective, and
      the
      daily VWAP of the Common Stock for twenty (20) consecutive trading days exceeds
      $2.50 per share (subject to appropriate adjustment from time to time in the
      event of any stock dividend, stock split, reverse stock split, reclassification,
      stock combination or other recapitalization affecting the Common Stock), and
      the
      Company has provided the Warrantholder notice that this redemption provision
      of
      this Warrant has been triggered, then Warrantholders shall have up to thirty
      (30) days to exercise this Warrant in accordance with Section 3 at the Warrant
      Price then in effect. On and after the thirty-first day, this Warrant, to the
      extent unexercised, shall no longer be exercisable and shall be converted into
      a
      right to receive $.01 per share for the number of shares for which the Warrant
      had been exercisable at the end of the thirtieth day.

    

    Section
      21. Amendments.
      This
      Warrant shall not be amended without the prior written consent of the
      Corporation and the Requisite Holders; provided,
      that
      (x) any such amendment or waiver must apply to all Warrants; and (y) the number
      of Warrant Shares subject to this Warrant, the Warrant Price and the Expiration
      Date may not be amended, and the right to exercise this Warrant may not be
      altered or waived, without the prior written consent of the
      Warrantholder.

    

    Section
      22. 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.

    

    Section
      23.  Certain
      Definitions. 
      When used herein, the following terms shall have the respective meanings
      indicated: 

    

    “Principal
      Market”
means,
      as of the Original Issuance Date the OTCBB.

    

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

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

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

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF, the Corporation has caused this Warrant to be duly executed,
      as
      of the 11th
      day of
      April, 2008.

    

    
      	 	
              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:

                	 
	 	
                   

                	 
	 	 	 
	 	 	 

        

         

      

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    APPENDIX
      B

    NOVELOS
      THERAPEUTICS, INC.

    NET
      ISSUE
      ELECTION NOTICE

     

    To:
      NOVELOS THERAPEUTICS, INC.

    

    Date:_________________________

     

    The
      undersigned hereby elects under Section 19 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

     

    
      
         

      

      
        3SECURITIES
      PURCHASE AGREEMENT

    

    THIS
      SECURITIES PURCHASE AGREEMENT (“Agreement”)
      is
      made as of this 26th day of March, 2008 (the “Signing
      Date”)
      by and
      among Novelos Therapeutics, Inc., a Delaware corporation (the “Company”),
      the
      holders of Series B Preferred Stock (as defined below), and the investors set
      forth on Schedule
      I affixed
      hereto, as such Schedule may be amended from time to time in accordance with
      the
      terms of this Agreement (each an “Investor”
and
      collectively the “Investors”).
       

    

    Recitals:

    

    A. The
      Company desires, pursuant to this Agreement, to raise up to the Investment
      Amount (as defined below) through the issuance and sale of the following to
      the
      Investors (the “Private
      Placement”):
      (i)
      up to 100 shares of a newly created series of the Company’s Preferred Stock,
      designated “Series D Convertible Preferred Stock”, par value $0.00001 per share
      (the “Preferred
      Stock”),
      which
      Preferred Stock shall have the rights, preferences and privileges set forth
      in
      the Certificate of Designations, Preferences and Rights, in the form of
Exhibit
      A
      annexed
      hereto and made a part hereof (the “Certificate
      of Designations”),
      and
      each share of Preferred Stock shall have a stated value of $50,000 and shall
      initially be convertible into shares of the Company's Common Stock, par value
      $0.00001 per share (the “Common
      Stock”),
      at a
      price of $0.65 per share (the “Conversion
      Price”),
      for
      an aggregate of 7,692,300 shares of Common Stock; and (ii) warrants to acquire
      up to 3,846,151 shares of Common Stock, equal to 50% of the number of shares
      of
      Common Stock underlying the Preferred Stock on the date of issue, with an
      exercise price of $0.65 per share, in the form of Exhibit
      B
      annexed
      hereto and made a part hereof (the “Warrants”);
      

    

    B. The
      Investors desire to purchase from the Company, and the Company desires to issue
      and sell to the Investors, upon the terms and conditions stated in this
      Agreement, such number of shares of Preferred Stock and Warrants to purchase
      such number of shares of Common Stock as is set forth next to each such
      Investor’s name on Schedule
      I
      affixed
      hereto; 

    

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

    

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

     

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

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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.

    

    “10-KSB”
has
      the
      meaning set forth in Section
      5.6.
      

    

    “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.

    

    “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
      9.15.

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    “Company’s
      Knowledge”
means
      the actual knowledge of the officers of the Company, after due inquiry and
      investigation.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

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

    

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

    

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

    

    “Covenant
      Expiration Event”
has
      the
      meaning set forth in Section
      9.8.

    

    “Deadline
      Date”
has
      the
      meaning set forth in Section
      9.15.

    

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

    

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

    

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

    

    “Escrow
      Amount”
has
      the
      meaning set forth in Section
      3.1(a).

    

    “Escrow
      Termination Date”
means
      the 15th calendar day after the Signing Date; provided,
      however,
      the
      Investors and the Company may jointly agree to extend the Escrow Termination
      Date for up to two additional 15-day periods by giving written notice to the
      Lead Investor Counsel of their election to so extend the Escrow Termination
      Date, in each case for up to an additional 15 calendar days, and in each such
      case, the Escrow Termination Date shall be the date specified in such notice;
      provided,
      further,
      however,
      the
      Escrow Termination Date shall not be later than April 30, 2008, on which date,
      if the Closing has not occurred, Lead Investor Counsel shall return the Escrow
      Amount in accordance with Section
      3.1(b);
      provided,
      further,
      however,
      the
      Escrow Termination Date shall occur upon termination of this Agreement pursuant
      to Section
      9.13.

    

    “Indemnified
      Person”
has
      the
      meaning set forth in Section
      10.3.

    

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

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Investment
      Amount”
means
      an amount equal to $5,000,000.

       

    “Lead
      Investors”
shall
      mean the Xmark Entities and the Orbimed Entities, together. 

    

    “Lead
      Investor Counsel”
has
      the
      meaning set forth in Section
      3.1(a).

    

    “Lead
      Investor Counsel Duties”
has
      the
      meaning set forth in Section
      3.2(a).

    

    “Lead
      Investor Counsel Fees”
has
      the
      meaning set forth in Section
      11.5.

    

    “Lead
      Investor Director”
      has the
      meaning set forth in Section 9.7(a). 

    

    “Lead
      Investor Observer”
      has the
      meaning set forth in Section 9.7(b)

    

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

    

    “Losses”
has
      the
      meaning set forth in Section
      10.2.

    

    “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 and
      its Subsidiaries taken as a whole, 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 or any Subsidiary (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-B of the 1933 Act or (ii) the loss of which could reasonably
      be
      expected to have a Material Adverse Effect.

    

    “Orbimed
      Entities
      means,
      collectively, Caduceus Master Fund Limited, a Bermuda corporation (“Caduceus
      Master”),
      Caduceus Capital II, L.P., a Delaware limited partnership (“Caduceus
      Capital”),
      and
Summer
      Street Life Sciences Hedge Fund Investors LLC, a Delaware limited liability
      company (“Summer
      Street”)
      .

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “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.

    

    “Placement
      Agent”
shall
      mean Rodman and Renshaw.

     

    “Placement
      Agent Agreement”
means
      that certain letter from the Company to the Placement Agent, dated February
      12,
      2007, as amended by a letter agreement on March 25, 2008.

    

    “Placement
      Agent Fee”
has
      the
      meaning set forth in Section
      5.19.

    

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

    

    “Press
      Release”
has
      the
      meaning set forth in Section
      9.13.

    

    “Prior
      Registration Agreement”
shall
      mean the registration rights agreements dated May 2, 2007 between the Company
      and the holders of Series B Preferred Stock. 

    

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

    

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

    

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

     

    “Requisite
      Holders”
shall
      mean the holders of at least a majority of the then outstanding shares of
      Preferred Stock which majority must include (i) the Xmark Entities, provided
      such Xmark Entities have purchased an aggregate of $1,300,000 of Preferred
      Stock
      pursuant to this Agreement and hold at least one-third of the Preferred Stock
      issued to the Xmark Entities at Closing as of the date of determination and
      (ii)
      the OrbiMed Entities, provided such OrbiMed Entities have purchased an aggregate
      of $1,600,000 of Preferred Stock pursuant to this Agreement and hold at least
      one-third of the Preferred Stock issued to the OrbiMed Entities at Closing
      as of
      the date of determination (appropriately adjusted for any stock dividend, stock
      split, reverse stock split, reclassification, stock combination or other
      recapitalization occurring after the date hereof).

    

    “Rule
      144”
has
      the
      meaning set forth in Section
      9.14.

    

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

     

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

    

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

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Series
      B Preferred Stock”
shall
      mean the 300 shares of Series B Convertible Preferred Stock, par value $.00001,
      issued pursuant to that certain Securities Purchase Agreement dated as of April
      12, 2007, as amended on May 2, 2007. 

    

    “Series
      B Warrants”
shall
      have the meaning set forth in Section 7.3. 

    

    “Signing
      Date”
has
      the
      meaning set forth in the Recitals.

    

    “Subsidiary”
has
      the
      meaning set forth in Section
      5.1.

    

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

    

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

    

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

    

    “Xmark
      Entities”
means,
      collectively, Xmark Opportunity Fund, L.P., a Delaware limited partnership
      (“Xmark
      LP”)
      and
      Xmark Opportunity Fund, Ltd., a Cayman Islands exempted company (“Xmark
      Ltd”).
      

     

    2. Purchase
      and Sale of Securities.
      

     

    Subject
      to the terms and conditions of this Agreement, including without limitation,
      the
      conditions set forth in Section
      8,
      there
      shall be a closing at which the Company shall issue and sell, and each Investor
      listed on Schedule
      I
      attached
      hereto, which Schedule
      I
      may be
      amended from time to time, with the prior written consent of the Investors,
      to
      add additional Investors who agree to purchase Preferred Stock in the Private
      Placement by executing a counterpart to this Agreement following the date
      hereof, shall severally, and not jointly, purchase, the number of shares of
      Preferred Stock and the number of Warrants, in each case, in the respective
      amounts set forth opposite their names on Schedule
      I
      affixed
      hereto, in exchange for the cash consideration set forth as the “Closing
      Purchase Price” opposite their respective names on Schedule
      I
      affixed
      hereto.

    

    3. Escrow.
      

     

    3.1. (a)
      Simultaneously with the execution and delivery of this Agreement by an Investor,
      such Investor shall promptly cause a wire transfer of immediately available
      funds (U.S. dollars) in an amount representing the “Closing Purchase Price” on
      such Investor’s signature page affixed hereto and opposite such Investor’s name
      thereon, to be paid to a non-interest bearing escrow account of Lowenstein
      Sandler PC, the Lead Investors’ counsel (“Lead Investor
      Counsel”),
      set
      forth on Schedule
      II
      affixed
      hereto (the aggregate amounts received being held in escrow by Lead Investor
      Counsel are referred to herein as the “Escrow
      Amount”).
      Lead
      Investor Counsel shall hold the Escrow Amount in escrow in accordance with
      Section
      3.1(b).
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) The
      Lead
      Lead Investor Counsel shall continue to hold the Escrow Amount in escrow in
      accordance with and subject to this Agreement, from the date of its receipt
      of
      the funds constituting the Escrow Amount until the soonest of: 

    

    (i)
      the
      Escrow Termination Date,
      in
      which case, if Lead Investor Counsel then holds any portion of the Escrow
      Amount, then: (A) Lead Investor Counsel shall return the portion of the Escrow
      Amount received from each Investor which it then holds, to each such Investor,
      in accordance with written wire transfer instructions received from such
      Investor; and (B) if Lead Investor Counsel has not received written wire
      transfer instructions from any Investor before the 30th
      day
      after the Escrow Termination Date, then Lead Investor Counsel may, in its sole
      and absolute discretion, either (x) deposit that portion of the Escrow Amount
      to
      be returned to such Investor in a court of competent jurisdiction on written
      notice to such Investor, and Lead Investor Counsel shall thereafter have no
      further liability with respect to such deposited funds, or (y) continue to
      hold
      such portion of the Escrow Amount pending receipt of written wire transfer
      instructions from such Investor or an order from a court of competent
      jurisdiction; OR

    

    (ii)
      in
      the
      case of the Closing,
      receipt
      of written instructions from the Lead Investors that the Closing shall have
      been
      consummated, in which case, Lead Investor Counsel shall release the Escrow
      Amount constituting the aggregate of all the “Closing Purchase Price” for each
      of the Investors (the “Aggregate Purchase Price”) as follows: (A) the Placement
      Agent Fee to the Placement Agent, (B) the Lead Investor Counsel Fees to the
      Lead
      Investor Counsel and (B) the balance of the aggregate “Closing Purchase Price”
to the Company.

    

    3.2. The
      Company and the Investors acknowledge and agree for the benefit of Lead Investor
      Counsel (which shall be deemed to be a third party beneficiary of this
Section
      3 and
      of
Section
      11)
      as
      follows: 

    

    (a) Investor
      Counsel: (i) is not responsible for the performance by the Company, the
      Investors or Placement Agent of this Agreement or any of the Transaction
      Documents or for determining or compelling compliance therewith; (ii) is only
      responsible for (A) holding the Escrow Amount in escrow pending receipt of
      written instructions from the Investors directing the release of the Escrow
      Amount, and (B) disbursing the Escrow Amount in accordance with the written
      instructions from the Investors, each of the responsibilities of Lead Investor
      Counsel in clause (A) and (B) is ministerial in nature, and no implied duties
      or
      obligations of any kind shall be read into this Agreement against or on the
      part
      of Lead Investor Counsel (collectively, the “Lead
      Investor Counsel Duties”);
      (iii)
      shall not be obligated to take any legal or other action hereunder which might
      in its judgment involve or cause it to incur any expense or liability unless
      it
      shall have been furnished with indemnification acceptable to it, in its sole
      discretion; (iv) may rely on and shall be protected in acting or refraining
      from
      acting upon any written notice, instruction (including, without limitation,
      wire
      transfer instructions, whether incorporated herein or provided in a separate
      written instruction), instrument, statement, certificate, request or other
      document furnished to it hereunder and believed by it to be genuine and to
      have
      been signed or presented by the proper Person, and shall have no responsibility
      for making inquiry as to, or for determining, the genuineness, accuracy or
      validity thereof, or of the authority of the Person signing or presenting the
      same; (v) may consult counsel satisfactory to it, and the opinion or advice
      of
      such counsel in any instance shall be full and complete authorization and
      protection in respect of any action taken, suffered or omitted by it hereunder
      in good faith and in accordance with the opinion or advice of such counsel;
      and
      (vi) shall be authorized to receive from the Escrow Amount, on the applicable
      Closing Date, the Lead Investor Counsel Fees. Documents and written materials
      referred to in this Section
      3.2(a)
      include,
      without limitation, e-mail and other electronic transmissions capable of being
      printed, whether or not they are in fact printed; and any such e-mail or other
      electronic transmission may be deemed and treated by Lead Investor Counsel
      as
      having been signed or presented by a Person if it bears, as sender, the Person’s
      e-mail address. 

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) Lead
      Investor Counsel shall not be liable to anyone for any action taken or omitted
      to be taken by it hereunder, except in the case of Investor Counsel’s gross
      negligence or willful misconduct in breach of the Lead Investor Counsel Duties.
      IN NO EVENT SHALL LEAD INVESTOR COUNSEL BE LIABLE FOR INDIRECT, PUNITIVE,
      SPECIAL OR CONSEQUENTIAL DAMAGE OR LOSS (INCLUDING BUT NOT LIMITED TO LOST
      PROFITS) WHATSOEVER, EVEN IF LEAD INVESTOR COUNSEL HAS BEEN INFORMED OF THE
      LIKELIHOOD OF SUCH LOSS OR DAMAGE AND REGARDLESS OF THE FORM OF
      ACTION.

    

    (c) The
      Company and the Investors hereby indemnify and hold harmless Lead Investor
      Counsel from and against any and all loss, liability, cost, damage and expense,
      including, without limitation, reasonable counsel fees and expenses, which
      Lead
      Investor Counsel may suffer or incur by reason of any action, claim or
      proceeding brought against Lead Investor Counsel arising out of or relating
      to
      the performance of the Lead Investor Counsel Duties, unless such action, claim
      or proceeding is exclusively the result of the willful misconduct, bad faith
      or
      gross negligence of Investor Counsel. 

    

    (d) Lead
      Investor Counsel has acted as legal counsel to one or more of the Investors
      in
      connection with this Agreement and the other Transaction Documents, is merely
      acting as a stakeholder under this Agreement and is, therefore, hereby
      authorized to continue acting as legal counsel to such Lead Investors including,
      without limitation, with regard to any dispute arising out of this Agreement,
      the other Transaction Documents, the Escrow Amount or any other matter. Each
      of
      the Company and the Investors hereby expressly consents to permit Lead Investor
      Counsel to represent such Investors in connection with all matters relating
      to
      this Agreement, including, without limitation, with regard to any dispute
      arising out of this Agreement, the other Transaction Documents, the Escrow
      Amount or any other matter, and hereby waives any conflict of interest or
      appearance of conflict or impropriety with respect to such representation.
      Each
      of the Company and the Investors has consulted with its own counsel specifically
      about this Section
      3
      to the
      extent they deemed necessary, and has entered into this Agreement after being
      satisfied with such advice.

    

    (e) Lead
      Investor Counsel shall have the right at any time to resign for any reason
      and
      be discharged of its duties as escrow agent hereunder (including without
      limitation the Lead Investor Counsel Duties) by giving written notice of its
      resignation to the Company and the Lead Investors at least ten (10) calendar
      days prior to the specified effective date of such resignation. All obligations
      of the Lead Investor Counsel hereunder shall cease and terminate on the
      effective date of its resignation and its sole responsibility thereafter shall
      be to hold the Escrow Amount, for a period of ten (10) calendar days following
      the effective date of resignation, at which time,

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i) Lead
      Investor Counsel shall be entitled to receive from the Escrow Amount the Lead
      Investor Counsel Fees through and including the effective date of resignation;
      and

    

    (ii) if
      a
      successor escrow agent shall have been appointed and have accepted such
      appointment in a writing to both the Company and the Lead Investors, then upon
      written notice thereof given to each of the Investors, the Lead Investor Counsel
      shall deliver the Escrow Amount to the successor escrow agent, and upon such
      delivery, Lead Investor Counsel shall have no further liability or obligation;
      or

    

    (iii) if
      a
      successor escrow agent shall not have been appointed, for any reason whatsoever,
      Lead Investor Counsel shall at its option in its sole discretion, either (A)
      deliver the Escrow Amount to a court of competent jurisdiction selected by
      Lead
      Investor Counsel and give written notice thereof to the Company and the
      Investors, or (B) continue to hold Escrow Amount in escrow pending written
      direction from the Company and the Lead Investors in form and formality
      satisfactory to Investor Counsel.

     

    (f) In
      the
      event that the Lead Investor Counsel shall be uncertain as to its duties or
      rights hereunder or shall receive instructions with respect to the Escrow Amount
      or any portion thereunder which, in its sole discretion, are in conflict either
      with other instructions received by it or with any provision of this Agreement,
      Lead Investor Counsel shall have the absolute right to suspend all further
      performance under this Agreement (except for the safekeeping of such Escrow
      Amount) until such uncertainty or conflicting instructions have been resolved
      to
      the Investor Counsel’s sole satisfaction by final judgment of a court of
      competent jurisdiction, joint written instructions from the Company and all
      of
      the Investors, or otherwise. In the event that any controversy arises between
      the Company and one or more of the Investors or any other party with respect
      to
      this Agreement or the Escrow Amount, the Lead Investor Counsel shall not be
      required to determine the proper resolution of such controversy or the proper
      disposition of the Escrow Amount, and shall have the absolute right, in its
      sole
      discretion, to deposit the Escrow Amount with the clerk of a court selected
      by
      the Lead Investor Counsel and file a suit in interpleader in that court and
      obtain an order from that court requiring all parties involved to litigate
      in
      that court their respective claims arising out of or in connection with the
      Escrow Amount. Upon the deposit by the Lead Investor Counsel of the Escrow
      Amount with the clerk of such court in accordance with this provision, the
      Lead
      Investor Counsel shall thereupon be relieved of all further obligations and
      released from all liability hereunder.

    

    (g) The
      provisions of this Section
      3
      shall
      survive any termination of this Agreement.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4. Closing.
      

     

    4.1
       Place.
      The
      closings of the transactions contemplated by this Agreement (the “Closing”)
      shall
      take place at the offices of Investor Counsel, 1251 Avenue of the Americas,
      New
      York, New York, or at such other location and on such other date as the Company
      and the Investors shall mutually agree (or remotely via the exchange of
      documents and signatures), on the Closing Date.

    

    4.2 Closing.
      Upon
      satisfaction of the conditions to Closing set forth in Section
      8
      hereof,
      the Lead Investors shall instruct Lead Investor Counsel to immediately release,
      and upon receipt of such instructions, Lead Investor Counsel shall release,
      that
      portion of the Escrow Amount constituting the Aggregate Purchase Price as
      follows: (A) the Lead Investor Counsel Fees to the Lead Investor Counsel and
      (B)
      the balance of the Aggregate Purchase Price to the Company (the date of receipt
      of such balance by the Company is hereinafter referred to as the “Closing
      Date”).
      On
      the Closing Date, the Company shall issue or cause to be issued to each Investor
      a certificate or certificates, registered in such name or names as each such
      Investor may designate, representing the number of shares of Preferred
      Stock as
      is set
      forth opposite such Investor’s name on Schedule
      I
      affixed
      hereto and shall also issue to each such Investor, or such Investor’s respective
      designees, the number of Warrants as is set forth opposite such Investor’s name
      on Schedule I
      affixed
      hereto. 

    

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

     

    5.1. Organization,
      Good Standing and Qualification.
      Each of
      the Company and its Subsidiaries, a complete list of which is set forth in
      Schedule
      5.1
      hereto
      (“Subsidiaries”),
      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. Each of the Company and its Subsidiaries 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. 

     

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

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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. All of the issued and outstanding shares
      of
      capital stock of each Subsidiary have been duly authorized and validly issued
      and are fully paid, nonassessable and free of pre-emptive rights, were issued
      in
      full compliance with applicable law and any rights of third parties and are
      owned by the Company, beneficially and of record, and, except as described
      on
Schedule
      5.3,
      are
      subject to no lien, encumbrance or other adverse claim. 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 or any
      of
      its Subsidiaries is or may be obligated to issue any equity securities of any
      kind and, except as contemplated by this Agreement, neither the Company nor
      any
      of its Subsidiaries is currently in negotiations for the issuance of any equity
      securities of any kind. Except as described on Schedule
      5.3
      and
      except for the Registration Rights Agreement, there are no voting agreements,
      buy-sell agreements, option or right of first purchase agreements or other
      agreements of any kind among the Company and any of its security holders
      relating to the securities of the Company. Except as described on Schedule
      5.3,
      the
      Company has not granted any Person the right to require the Company to register
      any of its securities under the 1933 Act, whether on a demand basis or in
      connection with the registration of securities of the Company for its own
      account or for the account of any other Person.

     

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

     

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

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.5. Consents.
      The
      execution, delivery and performance by the Company of the Transaction Documents
      and the Certificate of Designations and the offer, issuance and sale of the
      Securities require no consent of, action by or in respect of, or filing with,
      any Person, governmental body, agency, or official other than those consents
      set
      forth on Schedule
      5.5
      and
      filings that have been made pursuant to applicable state securities laws and
      post-sale filings pursuant to applicable state and federal securities laws
      which
      the Company undertakes to file within the applicable time periods. The Company
      has taken all action necessary to exempt (i) the issuance and sale of the
      Securities, (ii) the issuance of the Conversion Shares upon due conversion
      of
      the Preferred Stock, (iii) the issuance of the Warrant Shares upon due exercise
      of the Warrants, and (iv) the other transactions contemplated by the Transaction
      Documents from the provisions of any anti-takeover, business combination or
      control share law or statute binding on the Company or to which the Company
      or
      any of its assets and properties may be subject or any provision of the
      Company’s Certificate of Incorporation, Bylaws or any stockholder rights
      agreement that is or could become applicable to the Investors 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
      the
      Investors or the exercise of any right granted to the Investors pursuant to
      this
      Agreement, the Certificate of Designations or the other Transaction
      Documents.

     

    5.6. Delivery
      of SEC Filings; Business.
      Copies
      of the Company’s most recent Annual Report on Form 10-KSB for the fiscal year
      ended December 31, 2007 (the “10-KSB”),
      and
      all other reports filed by the Company pursuant to the 1934 Act since the filing
      of the 10-KSB and prior to the date hereof (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 and its Subsidiaries
      are
      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 and its Subsidiaries, taken as a whole.

     

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

     

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

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

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

    

    (iv) any
      waiver, not in the ordinary course of business, by the Company or any Subsidiary
      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 or a Subsidiary, 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 and its
      Subsidiaries taken as a whole;

    

    (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
      or
      any Subsidiary is bound or to which any of their respective assets or properties
      is subject;

    

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

    

    (viii) any
      transaction entered into by the Company or a Subsidiary 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 or any Subsidiary;

    

    (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 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. Neither the Company
      nor
      any Subsidiary has received any notice of the intention of any party to
      terminate any Material Contract.

    

    5.9. No
      Conflict, Breach, Violation or Default.
      The
      execution, delivery and performance of the Transaction Documents and the
      Certificate of Designations by the Company and the issuance and sale of the
      Securities will not conflict with or result in a breach or violation of any
      of
      the terms and provisions of, or constitute a default under (i) the Company’s
      Certificate of Incorporation or Bylaws, both as in effect on the date hereof
      (true and accurate copies of which have been provided to the Investors 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, any Subsidiary or any of their respective assets
      or properties, or (b) except as set forth on Schedule
      5.9,
      any
      agreement or instrument to which the Company or any Subsidiary is a party or
      by
      which the Company or a Subsidiary is bound or to which any of their respective
      assets or properties is subject.  

     

    5.10. Tax
      Matters.
      Each of
      the Company and each Subsidiary has timely prepared and filed all tax returns
      required to have been filed by the Company or such Subsidiary 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
      or
      any Subsidiary 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 and its Subsidiaries, taken as a whole. All taxes
      and other assessments and levies that the Company or any Subsidiary 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 Subsidiary or any of their respective 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 Subsidiary or other corporation or entity. Neither the Company
      nor any Subsidiary is presently undergoing any audit by a taxing authority,
      or
      has 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 and each Subsidiary 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 them; and except as disclosed in the SEC Filings, the Company and each
      Subsidiary 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 them.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.12. Certificates,
      Authorities and Permits.
      The
      Company and each Subsidiary possess adequate certificates, authorities or
      permits issued by appropriate governmental agencies or bodies necessary to
      conduct the business now operated by it, and neither the Company nor any
      Subsidiary has 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 or such Subsidiary, 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 or any Subsidiary
      exists or, to the Company’s Knowledge, is imminent.

     

    5.14. Intellectual
      Property.

     

    (a) All
      Intellectual Property of the Company and its Subsidiaries 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 or its Subsidiaries which is necessary
      for
      the conduct of Company’s and each of its Subsidiaries’ respective 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 or its Subsidiaries has been or is now involved in any
      interference, reissue, re-examination or opposition proceeding.

     

    (b) All
      of
      the licenses and sublicenses and consent, royalty or other agreements concerning
      Intellectual Property which are necessary for the conduct of the Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted or as
      currently proposed to be conducted to which the Company or any Subsidiary is
      a
      party or by which any of their 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 or its Subsidiaries that are
      parties thereto 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
      or any of its Subsidiaries under any such License Agreement.

     

    (c) The
      Company and its Subsidiaries own or have the valid right to use all of the
      Intellectual Property that is necessary for the conduct of the Company’s and
      each of its Subsidiaries’ respective businesses 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 and its Subsidiaries’ businesses. The Company and its
      Subsidiaries have a valid and enforceable right to use all third party
      Intellectual Property and Confidential Information used or held for use in
      the
      respective businesses of the Company and its Subsidiaries as currently conducted
      or as currently proposed to be conducted.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) To
      the
      Company’s Knowledge, the conduct of the Company’s and its Subsidiaries’
businesses 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
      and its Subsidiaries which are necessary for the conduct of Company’s and each
      of its Subsidiaries’ respective businesses 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 its Subsidiaries and the Company’s
      and its Subsidiaries’ 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 or any of its
      Subsidiaries’ ownership or right to use any of the Intellectual Property or
      Confidential Information which is necessary for the conduct of the Company’s and
      each of its Subsidiaries’ respective businesses as currently conducted or as
      currently proposed to be conducted.

     

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

     

    (g) The
      Company and its Subsidiaries have taken reasonable steps to protect the
      Company’s and its Subsidiaries’ rights in their 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 and each of its Subsidiaries’ respective businesses 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 or its Subsidiaries’ Confidential Information
      to any third party without the Company’s consent.

     

    5.15. Environmental
      Matters.
      Neither
      the Company nor any Subsidiary (i) is 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)
      owns or operates any real property contaminated with any substance that is
      subject to any Environmental Laws, (iii) is liable for any off-site disposal
      or
      contamination pursuant to any Environmental Laws, and (iv) is 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 disclosed in the SEC Filings, there are no pending actions, suits or
      proceedings against or affecting the Company, its Subsidiaries or any of its
      or
      their properties; and to the Company’s Knowledge, no such actions, suits or
      proceedings are threatened or contemplated.

     

    5.17. Financial
      Statements.
      The
      financial statements included in each SEC Filing 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, neither the Company nor any of its Subsidiaries
      has 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 and each Subsidiary maintains in full force and effect insurance
      coverage and the Company reasonably believes such insurance coverage is
      adequate.

     

    5.19. Brokers
      and Finders.
      Except
      for the cash commission to be paid (the “Placement
      Agent Fee”)
      to the
      Placement Agent pursuant to the terms of the Placement Agent Agreement, as
      disclosed in Schedule
      5.19
      or as
      otherwise 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,
      any
      Subsidiary or any Investor 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 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 the Investors contained
      in Section
      6
      hereof,
      the offer and sale of the Securities to the Investors as contemplated hereby
      is
      exempt from the registration requirements of the 1933 Act.

     

    5.23. Questionable
      Payments.
      Neither
      the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of
      their respective current or former stockholders, directors, officers, employees,
      agents or other Persons acting on behalf of the Company or any Subsidiary,
      has
      on behalf of the Company or any Subsidiary or in connection with their
      respective businesses: (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 or any Subsidiary;
      or
      (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or
      other unlawful payment of any nature.

     

    5.24. Transactions
      with Affiliates.
      Except
      as disclosed in SEC Filings made on or prior to the date hereof, none of the
      officers or directors of the Company or a Subsidiary and, to the Company’s
      Knowledge, none of the employees of the Company is presently a party to any
      transaction with the Company or a Subsidiary or to a presently contemplated
      transaction (other than for services as employees, officers and directors)
      that
      would be required to be disclosed pursuant to Item 404 of Regulation S-B
      promulgated under the 1933 Act.

     

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

    

    6. Representations
      and Warranties of the Investors.
      Each of
      the Investors hereby severally, and not jointly, represents and warrants to
      the
      Company on and as of the Signing Date and on the applicable Closing Date,
      knowing and intending that the Company rely thereon, that:

     

    6.1. Authorization.
      The
      execution, delivery and performance by the Investor of the Transaction Documents
      to which such Investor is a party have been duly authorized and will each
      constitute the valid and legally binding obligation of the Investor, enforceable
      against the Investor 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 the Investor hereunder will be acquired for the
      Investor’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
      the
      Investor has no present intention of selling, granting any participation in,
      or
      otherwise distributing the same in violation of the 1933 Act. The Investor
      is
      not a registered broker dealer or an entity engaged in the business of being
      a
      broker dealer.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.3. Investment
      Experience.
      The
      Investor 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. The Investor has significant
      experience in making private investments, similar to the purchase of the
      Securities hereunder.

     

    6.4. Disclosure
      of Information.
      The
      Investor 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. The Investor acknowledges receipt of copies of
      and
      its satisfactory review of the SEC Filings. Neither such inquiries nor any
      other
      due diligence investigation conducted by the Investor shall modify, amend or
      affect the Investor’s right to rely on the Company’s representations and
      warranties contained in this Agreement.

     

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

     

    6.6. Legends.
      

     

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

     

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

     

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

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) From
      and
      after the first anniversary of the Closing Date in the case of the Conversion
      Shares and the first anniversary of the date of exercise of a Warrant (or,
      in
      the case of a “cashless” exercise, the first anniversary of the Closing Date) in
      the case of the Warrant Shares, provided, in each case, that the Investor is
      not
      an affiliate of the Company and has not been an affiliate for a period of ninety
      days, the Company shall, upon an Investor'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 that Investor of legended certificate(s) to
      the
      Company’s transfer agent together with a representation letter in customary
      form, the Company shall be liable to the Investor 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) Each
      Investor, severally and not jointly with the other Investors, 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 the Investors
      to sell any Securities pursuant to either the registration requirements of
      the
      Securities Act, including any applicable prospectus delivery requirements,
      or an
      exemption therefrom.

    

    6.7. Accredited
      Investor.
      The
      Investor is an “accredited investor” as defined in Rule 501(a) of Regulation D,
      as amended, under the 1933 Act.

     

    6.8. No
      General Solicitation.
      The
      Investor 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, as amended, under the 1933 Act.

     

    6.9. Brokers
      and Finders.
      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,
      any
      Subsidiary or any other Investor for any commission, fee or other compensation
      pursuant to any agreement, arrangement or understanding entered into by or
      on
      behalf of the Investor.

     

    6.10
       Cooperation.
      The
      Company agrees to use commercially reasonable efforts to cooperate with any
      Investor selling its Securities pursuant to Rule 144. 

    

    7. Exchange
      of Series B Preferred Stock and Related Matters.

     

    7.1 Consent
      of Series B Investors.
      By
      executing this Agreement each of the holders (the “Series B Investors”) of the
      Company’s Series B Preferred Stock, hereby consents to the offer and issuance of
      the Preferred Stock and Warrants and the filing of the Certificate of
      Designations.

     

    7.2 Exchange
      of Series B Stock for Preferred Stock.
      Each of
      the Series B Investors hereby agrees to exchange all of the shares of Series
      B
      Preferred Stock owned by such Series B Investor for the number of shares of
      Preferred Stock set forth opposite such Series B Investor’s name on Schedule III
      hereto (the “Exchange”). The Exchange shall be effective upon the Closing (with
      no further action required by the Company or the Series B Investors) and each
      share of Series B Preferred Stock will automatically convert into 1 share of
      Preferred Stock. Following the Closing, at the request of any Series B Investor,
      the Company will issue new stock certificates for shares of Preferred Stock
      in
      replacement of the existing Series B Preferred Stock certificates. For the
      avoidance of doubt, each Series B Investor will be entitled to receive its
      accrued but unpaid dividends with respect to such Series B Preferred Stock
      through the day immediately preceding the date of the Exchange.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.3 Waiver
      of Liquidated Damages.
      Each of
      the Series B Investors is a party to a Registration Rights Agreement dated
      as of
      May 2, 2007 (the “Prior Registration Agreement”) which provided for registration
      rights with respect to the 22,500,000 shares of Common Stock issuable upon
      conversion of the Series B Preferred Stock and 7,500,000 shares of Common Stock
      issuable upon exercise of warrants dated May 2, 2007 (the “Series
      B Warrants”).
      Pursuant to Section 7(a) of the Prior Registration Agreement, each of the Series
      B Investors hereby waive any and all liquidated damages arising under Section
      2
      of the Prior Registration Agreement during the period from September 7, 2007
      through the date of this Agreement as a result of the Company’s failure to
      register 7,500,000 shares of common stock issuable upon exercise of the Series
      B
      Warrants and 3,000,000 shares of common stock issuable upon conversion of the
      Series B Preferred Stock.

    

    8. Conditions
      to Closing.

     

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

     

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

     

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

     

    (c) The
      Company shall have executed and delivered a counterpart to the Registration
      Rights Agreement to the Investors.

     

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

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e) The
      Company shall have delivered a Certificate, executed on behalf of the Company
      by
      its Chief Executive Officer or its Chief Financial Officer, dated as of the
      Closing Date, certifying to the fulfillment of the conditions specified in
      subsections (a), (b), (d) and (h) of this Section
      8.1;

     

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

     

    (g) [Reserved].
      

    

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

     

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

     

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

     

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

    

    (l) The
      Escrow Amount shall, as of the Closing, equal or exceed the Investment
      Amount.

    

    (m)
      The
      Company shall have delivered to the Series B Investors a duly executed amendment
      to the Series B Warrants, dated on or before the Closing Date, substantially
      in
      the form attached hereto as Exhibit C. 

     

    (n)
       The
      Company shall have delivered to the Series B Investors a duly executed amendment
      to the Prior Registration Agreement, dated on or before the Closing Date,
      substantially in the form attached hereto as Exhibit F. 

    

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

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a) [Reserved].

     

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

     

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

     

    (d) Each
      of
      the Investors shall have delivered to Lead Investor Counsel the “Closing
      Purchase Price” set forth opposite such Investor’s name on Schedule
      I
      affixed
      hereto; 

     

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

     

    (f) The
      Series B Investors shall have delivered to the Company a duly executed amendment
      to the Series B Warrants, dated on or before the Closing Date, substantially
      in
      the form attached hereto as Exhibit C.

    

    (g)
       The
      Series B Investors shall have delivered to the Company a duly executed amendment
      to the Prior Registration Agreement, dated on or before the Closing Date,
      substantially in the form attached hereto as Exhibit F. 

    

    9. Covenants
      and Agreements of the Company.

     

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

     

    9.2. [Reserved]

     

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

     

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

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    9.6. Termination
      of Certain Covenants.
      The
      provisions of Sections
      9.2
      through
      9.5
      shall
      terminate and be of no further force and effect upon the date on which the
      Company’s obligations under the Registration Rights Agreement to register and
      maintain the effectiveness of any registration statement covering the
      Registrable Securities (as such term is defined in the Registration Rights
      Agreement) shall terminate. The provisions of Sections
      9.7
      through
      9.16
      shall
      survive indefinitely. 

     

    9.7 Board/Observer
      Rights.

    

    (a) From
      and
      after the Closing until such time as the Xmark Entities are no longer Requisite
      Holders, the Xmark Entities shall have the right to designate one (1) member
      to
      the Company’s Board of Directors (the “Lead
      Investor Director”). The
      Company shall use its best efforts to cause the Lead Investor Director to be
      elected to the Company’s Board of Directors. The Xmark Entities shall have the
      right to remove or replace the Lead Investor Director by giving notice to such
      Lead Investor Director and the Company, and the Company shall use its best
      efforts to effect the removal or replacement of any such Lead Investor Director.
      Subject to any limitations imposed by applicable law, the Lead Investor Director
      shall be entitled to the same perquisites, including stock options,
      reimbursement of expenses and other similar rights in connection with such
      person's membership on the Board of Directors of the Company, as every other
      non-employee member of the Board of Directors of the Company. 

    

    (b) From
      and
      after the Closing until such time as the Lead Investors are no longer Requisite
      Holders the Lead Investors shall have the right to designate one (1) observer
      to
      attend all meetings of the Company’s Board of Directors, committees thereof and
      access to all information made available to members of the Board (the
“Lead
      Investor Observer”). The
      Lead
      Investor Observer shall have the same rights as those who customarily attend
      such position. Notwithstanding the foregoing, the Company reserves the right
      to
      exclude the Lead Investor Observer from access to any material, meeting or
      portion thereof if the Company believes, based on an opinion from its counsel,
      that such exclusion is necessary to preserve attorney-client, work product
      or
      similar privilege. The Lead Investor 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 Lead Investor 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 Lead
      Investor Observer shall execute a standard confidentiality agreement prior
      to
      attending any meetings.

    

       9.8 Affirmative
      Covenants.
      From
      and after the Signing Date until the Escrow Termination Date (after taking
      into
      account any extensions of the Escrow Termination Date)(the “Covenant
      Expiration Event”),
      the
      Company shall (and shall cause its Subsidiaries to):

    

    (a) use
      its
      best efforts to consummate the Closing on or before the Escrow Termination
      Date;

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) use
      its
      best efforts to keep in full force and effect its corporate existence and all
      material rights, franchises, intellectual property rights and goodwill relating
      or pertaining to its businesses;

     

    (c) conduct
      its operations only in the ordinary course of business consistent with past
      practice;

     

    (d) maintain
      its books, accounts and records in accordance with past practice or as required
      by generally accepted accounting principles;

     

    (e) duly
      pay
      and discharge, or cause to be paid and discharged, before the same shall become
      overdue, all taxes, assessments and other governmental charges imposed upon
      it
      and its properties (real and personal), sales and activities, or any part
      thereof, or upon the income or profits therefrom, as well as all claims for
      labor, materials, or supplies that if unpaid could reasonably be expected to
      by
      law become a lien on any of its property; provided that any such tax,
      assessment, charge, levy or claim need not be paid if the validity or amount
      thereof shall currently be contested in good faith by appropriate proceedings
      and if the Company or any Subsidiary shall have set aside on its books adequate
      reserves with respect thereto in accordance with generally accepted accounting
      principals, consistently applied; and provided, further that it pay all such
      taxes, assessments, charges, levies or claims forthwith upon the commencement
      of
      proceedings to foreclose any lien or other encumbrance that may have attached
      as
      security therefore;

     

    (f) use
      its
      best efforts to obtain all authorizations, consents, waivers, approvals or
      other
      actions and to make all filings and applications necessary or desirable to
      consummate the transactions contemplated hereby and to cause the conditions
      to
      the obligation to close to be satisfied; 

     

    (g) promptly
      notify the Investors in writing if, to the Company’s Knowledge, (i) any of the
      representations and warranties (together with the Disclosure Schedules) made
      by
      it herein or in any of the other Transaction Document cease to be accurate
      and
      complete in all material respects, or (ii) it fails to comply with or satisfy
      any material covenant, condition or agreement to be complied with or satisfied
      by it hereunder or under any other Transaction Document; 

     

    (h)
       give
      notice to the Investors in writing within three (3) days of becoming aware
      of
      any litigation or proceedings threatened in writing against the Company or
      any
      of its Subsidiaries or any of its directors or officers or any pending
      litigation and proceedings affecting the Company or any of its Subsidiaries
      or
      any of its directors or officers or to which any of them is or becomes a party
      involving a claim against any of them, stating the nature and status of such
      litigation or proceedings, provided,
      however,
      that
      the Investors shall not be provided with material non-public information without
      their express prior written consent; 

     

    (i) promptly
      notify the Investors in writing of the occurrence of any breach of any term
      of
      this Agreement; and

     

    (j) comply
      in
      all material respects with (i) the applicable laws and regulations wherever
      its
      business is conducted, (ii) the provisions of its Certificate of Incorporation
      and Bylaws, (iii) all material agreements by which the Company, its Subsidiaries
      or any of their respective properties may be bound, and (iv) all applicable
      decrees, orders, and judgments. 

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.9 Negative
      Covenants.
      From
      and after the Signing Date until the occurrence of the Covenant Expiration
      Event, without the prior written consent of the Investors, the Company shall
      not
      (and shall cause its respective Subsidiaries not to):

    

    (a)
      take
      any
      action that would likely result in the representations and warranties set forth
      herein (other than representations made as of a particular date) becoming false
      or inaccurate in any material respect (or, as to representations and warranties,
      which, by their terms, are qualified as to materiality, becoming false or
      inaccurate in any respect);

    

    (b)
      take
      or
      omit to be taken any action, or permit any of its Affiliates to take or to
      omit
      to take any action, which would reasonably be expected to result in a Material
      Adverse Effect; 

    

    (c) directly
      or indirectly, merge or consolidate with any Person, or sell, transfer, lease
      or
      otherwise dispose of all or any substantial portion of its assets in one
      transaction or a series of related transactions, 

    

    (d) except
      for the filing of the Certificate of Designations, amend, alter or modify,
      its
      Certificate of Incorporation or Bylaws, or change its jurisdiction of
      organization, structure, status or existence, or liquidate or dissolve
      itself;

    

    (e) (i)
      increase the compensation or benefits payable or to become payable to its
      directors, officers or employees other than pursuant to the terms of any
      agreement as in effect on the Signing Date, (ii) pay any compensation or
      benefits not required by any existing plan or arrangement (including the
      granting of stock options, stock appreciation rights, shares of restricted
      stock
      or performance units) or grant any severance or termination pay to (except
      pursuant to existing agreements, plans or policies), or enter into any
      employment or severance agreement with, any director, officer or other employee,
      or (iii) establish, adopt, enter into, amend or take any action to
      accelerate rights under any collective bargaining, bonus, profit sharing,
      thrift, compensation, stock option, restricted stock, pension, retirement,
      savings, welfare, deferred compensation, employment, termination, severance
      or
      other employee benefit plan, agreement, trust, fund, policy or arrangement
      for
      the benefit or welfare of any directors, officers or current or former
      employees, except in each case to the extent required by applicable
      law;

    

    (f) make
      any
      loans to its directors, officers or stockholders;

     

    (g) waive,
      release, assign, settle or compromise any material rights, claims or litigation;
      

    

    (h) create,
      incur, assume or suffer to exist, or increase the amount of, any liability
      for
      borrowed money, directly or indirectly other than: (i) indebtedness existing
      on
      the date hereof; and (ii) purchase money indebtedness of the Company (including,
      without limitation, capital leases to the extent secured by purchase money
      security interests in equipment acquired pursuant thereto);

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i) assume,
      endorse, be or become liable for or guaranty the obligations of any other Person
      except in the ordinary course of business;

    

    (j) directly
      or indirectly, pay any dividends (other than quarterly and semi-annual dividend
      payments in accordance with Series B and Series C Certificates of Designations)
      or distributions on, or purchase, redeem or retire, any shares of any class
      of
      its capital stock or other equity interests or any securities convertible into
      capital stock, whether now or hereafter outstanding, or make any payment on
      account of or set apart assets for a sinking or other analogous fund for, the
      purchase, redemption, defeasance, retirement or other acquisition of its capital
      stock or other equity interests, or make any other distribution in respect
      thereof, either directly or indirectly, whether in cash or property or in
      obligations of the Company or any of its Subsidiaries;

    

    (k) enter
      into any transaction with any Affiliates or its or any of its Affiliate’s equity
      holders, directors, officers, employees (including upstreaming and downstreaming
      of cash and intercompany advances and payments) in an amount in excess of
      $25,000 in the aggregate or amend any material provision of any agreement with
      any Affiliate, or waive any material right of the Company or any Subsidiary
      under any such agreement;

    

    (l) at
      any
      time create any direct or indirect Subsidiary, enter into any joint venture
      or
      similar arrangement or become a partner in any general or limited partnership
      or
      enter into any management contract permitting third party management rights
      with
      respect to the business of the Company or any of its Subsidiaries;

    

    (m)
       cancel
      any liability or debt owed to it, except for consideration equal to or exceeding
      the outstanding balance of such liability or debt, and in any event, in the
      ordinary course of business; 

    

    (n) create,
      incur, assume or suffer to exist, any lien, charge or other encumbrance on
      any
      of their or its respective properties or assets now owned or hereafter
      acquired;

    

    (o)
       make
      any
      changes in any of its business objectives, purposes, or operations or engage
      in
      any business other than that presently engaged in or presently proposed to
      be
      engaged in by the Company;

    

    (p) issue
      any
      capital stock or any security or instrument which, pursuant to its terms, may
      be
      converted, exercised or exchanged for capital stock, other than upon the
      conversion or exercise of any presently outstanding options, warrants or
      convertible securities; or

    

    (q) enter
      into an agreement to do any of the foregoing.

    

    9.10. [Reserved]

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.11. Trading.
      The
      Company shall promptly following the date hereof secure and maintain the listing
      of the Conversion Shares and the Warrant Shares upon each securities exchange
      or
      quotation system upon which the Common Stock is then traded, so that as of
      the
      relevant Closing Date such Conversion Shares and Warrant Shares shall have
      been
      authorized for trading on the relevant securities exchange or quotation
      system.

    

    9.12. Use
      of
      Proceeds.
      The
      Company will use the proceeds from the sale of the Securities for general
      corporate purposes, and not for (i) the repayment of any outstanding
      indebtedness for borrowed money of the Company or any of its Subsidiaries or
      (ii) redemption or repurchase of any of its or its Subsidiaries’ equity
      securities. 

    

    9.13. Press
      Release.
      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 the Investors, announcing the transactions
      contemplated by the Transaction Documents (the “Press
      Release”).
      In
      addition, the Company will file a Current Report on Form 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, the form of Registration Rights Agreement
      and the form of Warrant)). Without any such Investor’s prior consent, the
      Company agrees not to disclose in the Press Release the names, addresses or
      any
      other information about an Investor, except as required by law and to satisfy
      its obligations under the Registration Rights Agreement. 

    

    9.14. Furnishing
      of Information.
      As long
      as any Investor owns 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 any Investor owns Preferred Shares, Warrants or the
      Warrant Shares, if the Company is not required to file reports pursuant to
      such
      laws, it will prepare and furnish to the Investors and make publicly available
      in accordance with Rule 144(c) promulgated by the SEC pursuant to the 1933
      Act,
      as such Rule may be amended from time to time, such information as is required
      for the Investors to sell the Preferred Shares and Warrant Shares under Rule
      144
      promulgated by the SEC pursuant to the 1933 Act, as such Rule may be amended
      from time to time (“Rule
      144”).
      The
      Company further covenants that it will take such further action as any holder
      of
      Preferred Shares, Warrants or the Warrant Shares may reasonably request, all
      to
      the extent required from time to time to enable such Person to sell the
      Preferred Shares and Warrant Shares without registration under the 1933 Act
      within the limitation of the exemptions provided by Rule 144. 

    

    9.15. Buy-In.
      If the
      Company shall fail for any reason or for no reason to issue to an Investor
      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 such Investor, if on or after
      the
      Business Day immediately following such three (3) Business Day period, such
      Investor or Investor’s broker, acting on behalf of such Investor, purchases (in
      an open market transaction or otherwise) shares of Common Stock to deliver
      in
      satisfaction of a sale by the holder of shares of Common Stock that such
      Investor anticipated receiving from the Company without any restrictive legend,
      then the Company shall, within three (3) Business Days after such Investor’s
      request and in such Investor’s sole discretion, either (i) pay cash to the
      Investor in an amount equal to such Investor’s total purchase price (including
      brokerage commissions, if any) for the shares of Common Stock so purchased
      (the
“Buy-In
      Price”),
      at
      which point the Company’s obligation to deliver such certificate (and to issue
      such shares of Common Stock) shall terminate, or (ii) promptly honor its
      obligation to deliver to such Investor a certificate or certificates
      representing such shares of Common Stock and pay cash to the Investor 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.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.16 Limited
      Participation Right.
      In the
      event the Requisite Holders approve an amendment to the Certificate of
      Designations which materially adversely affects all of the Investors, and if,
      during the twelve (12) month period following such amendment, the Company agrees
      to sell, offers for sale or solicits offers to buy its securities in a
      transaction in which one or more Lead Investors participates, the Company shall
      provide notice of such transaction to each Investor who held shares of Preferred
      Stock on the date of such amendment and on the date of such transaction (each,
      an "Eligible Investor") and shall give each Eligible Investor the right to
      participate in such transaction on a pro rata basis among the participating
      Lead
      Investors and the Eligible Investors (based upon the number of shares of
      Preferred Stock held by the Investors participating in the transaction at the
      time of such transaction).

    

    10. Survival
      and Indemnification.

     

    10.1. Survival.
      Subject
      to Section
      9.6,
      all
      representations, warranties, covenants and agreements contained in this
      Agreement shall be deemed to be representations, warranties, covenants and
      agreements as of the date hereof and shall survive the Closing Date until the
      third anniversary thereof; provided,
      however,
      that
      the provisions contained in: (a) Sections
      3.2,
      5.4,
      10.1,
      10.2
      and
      10.3
      hereof
      shall survive indefinitely; and (b) Sections
      5.10
      and
5.15
      shall
      survive until 90 days after the applicable statute of limitations. 

     

    10.2. Indemnification.
      The
      Company agrees to indemnify and hold harmless, each Investor and its Affiliates
      and the directors, officers, employees and agents of each Investor and its
      Affiliates, 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.

     

    10.3. 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
      10.2,
      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.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11. Miscellaneous.

     

    11.1. Successors
      and Assigns.
      This
      Agreement may not be assigned by a party hereto without the prior written
      consent of the Company and the Investors; provided,
      however,
      that an
      Investor may assign its rights and delegate its duties hereunder in whole or
      in
      part to an Affiliate or to a third party acquiring some or all of its Securities
      in a private transaction without the prior written consent of the Company or
      the
      other Investors, after notice duly given by such Investor to the Company;
provided,
      that no
      such assignment or obligation shall affect the obligations of such Investor
      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 the Investor Counsel, which is an express intended third party
      beneficiary of this Agreement, and 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.

     

    11.2. 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.

     

    11.3. 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.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    If
      to the
      Company:

    

    Novelos
      Therapeutics, Inc.

    One
      Gateway Center, Suite 504

    Newton,
      MA 02458

    Attention:
      Chief Executive Officer

    Fax:
      (617) 964-6331

    

    With
      a
      copy to:

    

    Foley
      Hoag LLP

    Seaport
      World Trade Center West

    155
      Seaport Boulevard

    Boston,
      MA 02210 

    Attn:
      Paul Bork

    Fax:
      (617) 832-7000

    

    If
      to any
      of the Investors:

    

    to
      the
      addresses set forth on Schedule
      I
      affixed
      hereto.

    

    With
      a
      copy to:

    

    Lowenstein
      Sandler PC

    1251
      Avenue of the Americas

    New
      York,
      NY 10020

    Attn:
      Steven E. Siesser, Esq.

    Fax:
      (973) 597-2507

    

    11.5. Expenses.
      The
      Company shall pay the Lead Investors for their reasonable out-of-pocket
      expenses, including the reasonable fees and expenses of Lead Investor Counsel
      in
      connection with the Private Placement (which Lead Investor Counsel Fees shall
      include, without limitation, the fees and expenses associated with the
      negotiation, preparation and execution and delivery of this Agreement and the
      other Transaction Documents and any amendments, modifications or waivers
      thereto)(the “Lead
      Investor Counsel Fees”),
      in an
      amount not to exceed $25,000 through the Closing Date. The Lead Investor Counsel
      Fees shall be paid to Lead Investor Counsel on the Closing Date by release
      to
      Lead Investor Counsel of the portion of the Escrow Amount equal to the Lead
      Investor Counsel Fees applicable to such Closing Date. Except as set forth
      above, the Company and the Investors shall each bear their own expenses in
      connection with the negotiation, preparation, execution and delivery of this
      Agreement. In the event that legal proceedings are commenced by any party to
      this Agreement against another party to this Agreement in connection with this
      Agreement or the other Transaction Documents, the party or parties which do
      not
      prevail in such proceedings shall severally, but not jointly, pay their pro
      rata
      share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs
      and expenses incurred by the prevailing party in such
      proceedings.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11.6. 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 the Requisite Holders; provided,
      however,
      that
      any provision affecting the rights or obligations of Investor Counsel, shall
      not
      be waived or amended without the prior written consent of the Investor
      Counsel. 
      Any
      amendment or waiver effected in accordance with this Section
      11.6
      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.

     

    11.7. Publicity.
      Except
      as provided in Section
      9.13,
      No
      public release or announcement concerning the transactions contemplated hereby
      shall be issued by the Company or the Investors without the prior consent of
      the
      Company (in the case of a release or announcement by the Investors) or the
      Lead
      Investors, as representative of the Investors (in the case of a release or
      announcement by the Company) (which consents shall not be unreasonably
      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 the Lead Investors, as the case may be, shall allow the Investors or the
      Company, as applicable, to the extent reasonably practicable in the
      circumstances, reasonable time to comment on such release or announcement in
      advance of such issuance.

     

    11.8. 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.

     

    11.9. 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.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11.10. 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.

     

    11.11. 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 EACH OF THE INVESTORS 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]

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Company
      Signature Page

    

    IN
      WITNESS WHEREOF, 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

            

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Investor
      Signature Page

    

    IN
      WITNESS WHEREOF, 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.

    

    
      	
              Date:
                March 26, 2008

            	 
	 	 
	
              Xmark
                Opportunity Fund, Ltd.

            	 
	
              Name
                of entity

            	 
	 	 
	
              By:
                

            	
              Xmark
                Opportunity Manager, LLC,

            	 
	
              its
                Investment Manager

            	 
	 	 
	
              By:
                

            	
              Xmark
                Opportunity Partners, LLC,

            	 
	
              its
                Sole Member

            	 
	 	 
	
              By:
                

            	
              Xmark
                Capital Partners, LLC,

            	 
	
              its
                Managing Member

            	 
	 	 
	
              By:
                

            	
              /s/
                Mitchell D. Kaye

            	 
	 	 
	
              Name:
                Mitchell D. Kaye

            	 
	
              Title:
                Chief Executive Officer

            	 
	 	 
	
              Cayman
                Islands

            	 
	
              Jurisdiction
                of organization of entity

            	 
	 	 
	
              Address:

            	 
	 	 
	
              90
                Grove Street

            	 
	
              Ridgefield,
                CT 06877

            	 

    

    

    Aggregate
      dollar amount of Securities committed to be purchased pursuant to the terms
      of
      the Agreement: 

    

    
      	
              Closing
                Price:

            	 	
              $

            	
              850,000

            	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Investor
      Signature Page

    

    IN
      WITNESS WHEREOF, 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.

    

    
      	
              March
                26, 2008

            	 
	 	 
	
              Xmark
                Opportunity Fund, L.P.

            	 
	
              Name
                of entity

            	 
	 	 
	
              By:
                

            	
              Xmark
                Opportunity GP, LLC

            	 
	
              its
                General Partner

            	 
	 	 
	
              By:
                

            	
              Xmark
                Opportunity Partners, LLC,

            	 
	
              its
                Sole Member

            	 
	 	 
	
              By:
                

            	
              Xmark
                Capital Partners, LLC,

            	 
	
              its
                Managing Member

            	 
	 	 
	
              By:
                

            	
              /s/
                Mitchell D. Kaye

            	 
	 	 
	
              Name:
                Mitchell D. Kaye

            	 
	
              Title:
                Chief Executive Officer

            	 
	 	 
	
              Delaware

            	 
	
              Jurisdiction
                of organization of entity

            	 
	 	 
	
              Address:

            	 
	 	 
	
              90
                Grove Street

            	 
	
              Ridgefield,
                CT 06877

            	 

    

    

    Aggregate
      dollar amount of Securities committed to be purchased pursuant to the terms
      of
      the Agreement: 

    

    
      	
              Closing
                Price:

            	 	
              $

            	
              450,000

            	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    The
      undersigned is signatory to this Securities Purchase Agreement for purposes
      of
      Section 7
      only.

    

    
      	
              Date:
                March 26, 2008

            	 
	 	 
	
              Xmark
                JV Investment Partners, LLC

            	 
	
              Name
                of entity

            	 
	 	 
	
              By:
                

            	
              Xmark
                Opportunity Partners, LLC

            	 
	
              its
                Investment Manager

            	 
	 	 
	
              By:
                

            	
              Xmark
                Capital Partners, LLC,

            	 
	
              its
                Managing Member

            	 
	 	 
	
              By:
                

            	
              /s/
                Mitchell D. Kaye

            	 
	 	 
	
              Name:
                Mitchell D. Kaye

            	 
	
              Title:
                Chief Executive Officer

            	 
	 	 
	
              Address:

            	 
	 	 
	
              90
                Grove Street

            	 
	
              Ridgefield,
                CT 06877

            	 
	 	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Investor
      Signature Page

    

    IN
      WITNESS WHEREOF, 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.

    

    
      	
              Date:
                March 26, 2008

            	 
	 	 
	
              Caduceus
                Capital Master Fund Limited

            	 
	
              Name
                of entity

            	 
	 	 
	
              By:
                

            	
              /s/
                Samuel D. Isaly

            	 
	 	 
	
              Name:
                Samuel D. Isaly

            	 
	
              Title:
                Managing Partner, OrbiMed Advisors LLC

            	 
	 	 
	
              Print
                jurisdiction of organization of entity:

            	 
	 	 
	
              Address:

            	 
	
              c/o
                OrbiMed Advisors LLC

            	 
	
              767
                Third Avenue, 30th Floor

            	 
	
              New
                York, NY 10017

            	 

    

    

    Aggregate
      dollar amount of Securities committed to be purchased pursuant to the terms
      of
      the Agreement: 

    

    
      	
              Closing
                Price:

            	 	
              $

            	
              500,000.00

            	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Investor
      Signature Page

    

    IN
      WITNESS WHEREOF, 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.

    

    
      	
              Date:
                March 26, 2008 

            
	 
	
              IF
                A CORPORATION, PARTNERSHIP,

            
	
              TRUST,
                ESTATE OR OTHER ENTITY:

            
	 
	
              Caduceus
                Capital II, L.P.

            
	
              Name
                of entity

            
	 
	
              By:
                

            	
              /s/
                Samuel D. Isaly

            	 
	
              Name:
                Samuel D. Isaly

            
	
              Title:
                Managing Partner, OrbiMed Advisors LLC 

            
	 
	
              Print
                jurisdiction of organization of entity: 

            
	
               

              Address:

              c/o
                OrbiMed Advisors LLC

              767
                Third Avenue, 30th
                Floor

              New
                York, NY 10017

            

    

    

    Aggregate
      dollar amount of Securities committed to be purchased pursuant to the terms
      of
      the Agreement: 

    

    
      	
              Closing
                Price:

            	 	
              $

            	
              600,000.00

            	 

    

    

      
        
           

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    Investor
      Signature Page

    

    IN
      WITNESS WHEREOF, 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.

    

    
      	
              Date:
                March 26, 2008

            
	 
	
              Summer
                Street Life Sciences Hedge Fund Investors LLC 

            
	
              Name
                of entity 

            
	 
	
              By:
                

            	
              /s/
                Samuel D. Isaly

            	 
	
              Name:
                Samuel D. Isaly

            
	
              Title:
                Managing Partner, OrbiMed Advisors LLC 

            
	 
	
              Print
                jurisdiction of organization of entity:

            
	
               

              Address:

              c/o
                OrbiMed Advisors LLC

              767
                Third Avenue, 30th
                Floor

              New
                York, NY 10017

            

    

    

    Aggregate
      dollar amount of Securities committed to be purchased pursuant to the terms
      of
      the Agreement: 

    

    
      	
              Closing
                Price:

            	 	
              $

            	
              500,000.00

            	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
      undersigned are signatories to this Securities Purchase Agreement for purposes
      of
      Section 7
      only.

    

    
      	
              Date:
                March 26, 2008 

            
	 
	
              PW
                Eucalyptus Fund, Ltd. 

            
	
              UBS
                Eucalyptus Fund, L.L.C. 

            
	 
	
              By:
                

            	
              /s/
                Samuel D. Isaly

            	 
	
              Name:
                Samuel D. Isaly

            
	
              Title:
                Managing Partner, OrbiMed Advisors LLC 

            
	 
	
              Address:

              c/o
                OrbiMed Advisors LLC

              767
                Third Avenue, 30th
                Floor

              New
                York, NY 10017

            

    

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Investor
      Signature Page

    

    IN
      WITNESS WHEREOF, 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.

    

    
      	
              Date:
                March 26, 2008

            
	 
	
              Knoll
                Capital Fund II Master Fund Ltd. 

            
	
              Name
                of entity

            
	 
	
              By:
                

            	
              /s/
                Fred Knoll

            	 

    

    
      	
              Name: Fred
                Knoll 

            
	
              Title:   KOM
                Capital Management

            
	        Investment
              Manager
	 

    

    
      	
              Print
                jurisdiction of organization of entity:

            
	
               

              Address:

              c/o
                KOM Capital Management

              666
                Fifth Avenue, Suite 3702, 

              New
                York, NY 10103

            

    

    

    Aggregate
      dollar amount of Securities committed to be purchased pursuant to the terms
      of
      the Agreement: 

    

    
      	
              Closing
                Price:

            	 	
              $

            	
              400,000.00

            	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Investor
      Signature Page

    

    IN
      WITNESS WHEREOF, 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.

    

    
      	
              Date:
                March 26, 2008

            
	 
	
              Europa
                International, Inc.

            
	
              Name
                of entity

            
	 
	
              By:
                

            	
              /s/
                Fred Knoll

            	 
	
              Name: Fred
                Knoll 

            
	
              Title:   Knoll
                Capital Management 

            
	        Investment
              Manager for
	        Europa
              International, Inc.
	 
	
              Print
                jurisdiction of organization of entity

            
	
               

              Address:

              c/o
                Knoll Capital Management

              666
                Fifth Avenue, Suite 3702, 

              New
                York, NY 10103

            

    

    

    Aggregate
      dollar amount of Securities committed to be purchased pursuant to the terms
      of
      the Agreement: 

    

    
      	
              Closing
                Price:

            	 	
              $

            	
              1,000,000.00

            	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    Investor
      Signature Page

    

    IN
      WITNESS WHEREOF, 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.

    

    
      	
              Date:
                March 26, 2008

            
	 
	
              Hunt
                BioVenures, L.P. 

            
	
              Name
                of entity

            
	 
	
              By:
                HBV GP, L.L.C., its General Partner 

            
	 
	
              By:

            	
              /s/
                J. Fulton Murray, III

            	 
	
              Name:
                J. Fulton Murray, III, Manager

            
	 
	
              Jurisdiction
                of organization of entity: Delaware 

            
	
               

              Address:

              Hunt
                Investments 

              1900
                N. Akard 

              Dallas,
                TX 75201

              Attn:
                Michael T. Bierman, J. Fulton Murray, III and Benjamin D. Nelson
                

            

    

    

    Aggregate
      dollar amount of Securities committed to be purchased pursuant to the terms
      of
      the Agreement: 

    

    

    
      	
              Closing
                Price:

            	 	
              $

            	
              700,000.00

            	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      I

    INVESTORS
      - CLOSING

    

    
      	
              Name of Investor

            	 	
               

              Closing Purchase

              Price

            	 	
              Number of

              Shares of

              Preferred Stock

            	 	
               

              Number of

              Warrants

            	 
	
              Xmark
                Opportunity Fund, Ltd. 

              90
                Grove Street 

              Ridgefield,
                CT 06877

              Attn:
                Mitchell D. Kaye 

            	 	 	
              850,000.00

            	 	 	
              17

            	 	 	
              653,846

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Xmark
                Opportunity Fund, L.P. 

              90
                Grove Street 

              Ridgefield,
                CT 06877

              Attn:
                Mitchell D Kaye

            	 	 	
              450,000.00

            	 	 	
              9

            	 	 	
              346,154

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Caduceus
                Capital Master Fund Limited 

              c/o
                OrbiMed Advisors LLC

              767
                Third Avenue, 30th
                Floor

              New
                York, NY 10017

              Attn:
                Jeff Comisarow 

            	 	 	
              500,000.00

            	 	 	
              10

            	 	 	
              384,615

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Caduceus
                Capital II, L.P. 

              c/o
                OrbiMed Advisors LLC

              767
                Third Avenue, 30th
                Floor

              New
                York, NY 10017

              Attn:
                Jeff Comisarow 

            	 	 	
              600,000.00

            	 	 	
              12

            	 	 	
              461,538

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Summer
                Street Life Sciences Hedge Fund Investors, LLC

              c/o
                OrbiMed Advisors LLC

              767
                Third Avenue, 30th
                Floor

              New
                York, NY 10017

              Attn:
                Jeff Comisarow 

            	 	 	
              
              

              500,000.00

            	 	 	
              
              

              10

            	 	 	
              
              

              384,615

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Knoll
                Capital Fund II Master Fund, Ltd. 

              c/o
                KOM Capital Management

              666
                Fifth Avenue, Suite 3702, 

              New
                York, NY 10103

              Attn:
                Fred Knoll 

            	 	 	
              400,000.00

            	 	 	
              8

            	 	 	
              307,692

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Europa
                International, Inc. 

              c/o
                KOM Capital Management

              666
                Fifth Avenue, Suite 3702, 

              New
                York, NY 10103

              Attn:
                Fred Knoll 

            	 	 	
              1,000,000.00

            	 	 	
              20

            	 	 	
              769,230

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              Hunt-BioVentures,
                L.P. 

              1900
                N. Akard

              Dallas,
                TX 75201 

              Attn:
                Michael T. Bierman, J. Fulton Murray III, and Benjamin D. Nelson
                

            	 	 	
              700,000.00

            	 	 	
              14

            	 	 	
              538,461

            	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      II

    

    Lead
      Investor Counsel Wire Instructions

    For
      Escrow Amount

    

    
      	
              Bank:  

            	
              PNC
                Bank New Jersey

            
	 	
              Caldwell,
                NJ

            
	
              ABA
                No.:  

            	
              031207607

            
	
              Account
                No.:  

            	
              8025720174

            
	
              For
                credit to:  

            	
              Lowenstein
                Sandler PC

            
	 	
              Special
                Trust Account I

            

    

    

    For
      International wires please use SWIFT Code: PNCCUS33

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      III

    Exchange
      of Series B Preferred Stock for Series D Preferred Stock

    

    
      	
              Name of Investor

            	 	
              Number of

              Shares of Series

              B Preferred

              Stock

            	 	
              Number of Shares

              of Series D

              Preferred Stock

            	 
	
              Xmark
                Opportunity Fund, Ltd. 

            	 	 	
              40
                

            	 	 	
              40
                

            	 
	
              Xmark
                Opportunity Fund, L.P. 

            	 	 	
              20

            	 	 	
              20

            	 
	
              Xmark
                JV Investment Partners, LLC

            	 	 	
              20

            	 	 	
              20

            	 
	
              Caduceus
                Capital Master Fund Limited 

            	 	 	
              40

            	 	 	
              40

            	 
	
              Caduceus
                Capital II, L.P. 

            	 	 	
              26

            	 	 	
              26

            	 
	
              UBS
                Eucalyptus Fund, L.L.C. 

            	 	 	
              26

            	 	 	
              26

            	 
	
              PW
                Eucalyptus Fund, Ltd. 

            	 	 	
              3

            	 	 	
              3

            	 
	
              Knoll
                Capital Fund II Master Fund, Ltd. 

            	 	 	
              40

            	 	 	
              40

            	 
	
              Europa
                International, Inc. 

            	 	 	
              40

            	 	 	
              40

            	 
	
              Hunt-BioVentures,
                L.P. 

            	 	 	
              45

            	 	 	
              45

            	 
	 	 	 	 	 	 	 	 

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibits

    

    
      	
              Exhibit
                A

            	
              Certificate
                of Designations

            
	
              Exhibit
                B

            	
              Form
                of Warrant

            
	
              Exhibit
                C 

            	
              Form
                of Amendment to Series B Warrant 

            
	
              Exhibit
                D 

            	
              Registration
                Rights Agreement 

            
	
              Exhibit
                E

            	
              Company
                Counsel Opinion 

            
	
              Exhibit
                F 

            	
              Amendment
                to Registration Rights Agreement

            

    

    

    Schedules

    

    
      	
              Schedule
                5.1

            	
              Subsidiaries

            
	
              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
                5.19

            	
              Brokers
                and Finders

            

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    

    Certificate
      of Designations

     

    (See
      Exhibit 4.1 to this filing)

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      B

    

    Form
      of Warrant

     

    
      (See
        Exhibit 4.3 to this filing)

       

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      C

    

    Form
      of Amendment to Series B Warrant

     

    
      (See
        Exhibit 10.5 to this filing)

       

    

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Exhibit
      D

    

    Registration
      Rights Agreement

     

    
      
        (See
          Exhibit 10.3 to this filing)

         

      

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      E

    

    Form
      of Company Counsel Opinion

     

    1. The
      Company is a corporation validly existing and in good standing under the laws
      of
      the State of Delaware and has the requisite corporate power to own its property
      and assets, to conduct its business as it is currently being conducted and
      to
      enter into and perform its obligations under the Transaction Documents and
      the
      Certificate of Designations. The Company
      is
      qualified as a foreign corporation to do business and is in good standing in
      the
      Commonwealth of Massachusetts.

     

    2. The
      execution, delivery and performance by the Company of the Transaction Documents,
      the issuance of the Preferred Stock and the Warrants, the issuance of the
      Preferred Shares upon due conversion of the Preferred Stock and the issuance
      of
      the Warrant Shares upon due exercise of the Warrants 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. 

     

    3. Each
      of
      the Transaction Documents 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.

     

    4. The
      Certificate of Designations has been filed with the Secretary of State of the
      State of Delaware and has become effective. The Preferred Stock has the relative
      rights, preferences and limitations set forth in the Certificate of
      Designations.

     

    5. The
      execution and delivery by the Company of each of the Transaction Documents,
      the
      issuance of the Preferred Stock and Warrants, the issuance of the Preferred
      Shares upon due conversion of the Preferred Stock and the issuance of the
      Warrant Shares upon due exercise of the Warrants and the performance by the
      Company of the Transaction Documents will not violate or contravene or be in
      conflict with (a) any
      provision of the [Organizational Documents]; (b) any
      provision of the General Corporation Law of the State of Delaware and any
      provision of any federal or Massachusetts law, rule or regulation applicable
      to
      the Company in transactions of the nature contemplated by the Transaction
      Documents; (c) any order, judgment or decree of any court or other
      governmental agency which is known to us and which is binding on the Company
      or
      any of its property; (d) any agreement, indenture or other written agreement
      or
      understanding to which the Company or a Subsidiary is a party which has been
      identified as a material agreement in the officer’s certificate attached hereto
      (collectively, “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
      federal or Massachusetts governmental authority or pursuant to the General
      Corporation Law of the State of Delaware or from any other Person under any
      Material Agreement in order for it to execute and deliver each of the
      Transaction Documents, to issue the Preferred Stock and Warrants, to issue
      the
      Preferred Shares upon due conversion of the Preferred Stock, to issue the
      Warrant Shares upon due exercise of the Warrants and to perform its obligations
      under the Transaction Documents, other than those consents, approvals,
      authorizations, registrations, declarations or filings that have already been
      obtained and remain in full force and effect and except
      for (a)  the filing of a Form D (the “Form D”) with the
      Securities and Exchange Commission pursuant to Regulation D promulgated
      under the Securities Act of 1933, as amended (the “Securities Act”) and (b) the
      filing of the Form D with requisite state jurisdictions.

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7. The
      shares of Common Stock issuable upon conversion of the Preferred Stock and
      exercise of the Warrants have been duly authorized and, upon issuance and
      delivery upon conversion of such Preferred Stock in accordance with the terms
      of
      the Purchase Agreement and exercise of such Warrants in accordance with the
      terms of the Warrants, will be validly issued, outstanding, fully paid and
      nonassessable. Other than as disclosed in the Purchase Agreement, and the
      Disclosure Schedules delivered in connection with the Purchase Agreement, there
      are no preemptive rights or, to the best of our knowledge, any options,
      warrants, conversion privileges or other rights presently outstanding to
      purchase any of the authorized but unissued capital stock of the
      Company.

     

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

    

      
        
           

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    Exhibit
      F 

    

    Form
      of Amendment to Prior Registration Agreement

     

    
      
        (See
          Exhibit 10.4 to this filing)

         

      

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      5.1

    

    Subsidiaries
      

    

    

    None.
      

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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 39,360,272 shares of common stock outstanding
      and
      572 shares of preferred stock outstanding. 

    

    5.3(a)(iii)
      At the date hereof there are 5,082,651 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:

    

    
      	
              2000
                Stock Option Plan 

            	 	 	
              73,873

            	 
	
              2006
                Stock Incentive Plan 

            	 	 	
              2,555,000

            	 
	
              Options
                issued outside of formalized plans

            	 	 	
              2,453,778

            	 
	
              Warrants
                

            	 	 	
              28,973,047

            	 
	
              Preferred
                stock 

            	 	 	
              22,014,000

            	 
	 	 	 	 	 
	
              Total
                shares reserved for future issuance 

            	 	 	
              56,069,698

            	 

    

    

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      5.3 (continued)

    

    5.3(a)
      Other 

    

    The
      following is a listing of documents available on EDGAR that contain the rights
      of Novelos security holders at the date hereof:

    

    
      	
              Document
                Description 

            	 	
              Filed
with
Form

            	 	
              Filing
                Date

            	 	
              Exhibit
                No.

            	 
	
              Certificate
                of Incorporation

               

            	 	 	
              8-K

              
              

            	 	 	
              June 17, 2005

              
              

            	 	 	
              1

              
              

            	 
	
              Certificate
                of Designations of Series B convertible preferred stock

               

            	 	 	
              10-QSB

              
              

            	 	 	
              May 8, 2007

              
              

            	 	 	
              3.2

              
              

            	 
	
              Certificate
                of Designations of Series C cumulative convertible preferred
                stock

               

            	 	 	
              10-QSB

              
              

            	 	 	
              May
                8, 2007

              
              

            	 	 	
              3.2

              
              

            	 
	
              By-laws

               

            	 	 	
              8-K

              
              

            	 	 	
              June
                17, 2005

              
              

            	 	 	
              2

              
              

            	 
	
              2000
                Stock Option and Incentive Plan

               

            	 	 	
              SB-2

              
              

            	 	 	
              November 16, 2005

              
              

            	 	 	
              10.2

              
              

            	 
	
              Form
                of 2004 non-plan non-qualified stock option

               

            	 	 	
              SB-2

              
              

            	 	 	
              November 16, 2005

              
              

            	 	 	
              10.3

              
              

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

               

            	 	 	
              SB-2

              
              

            	 	 	
              November 16, 2005

              
              

            	 	 	
              10.4

              
              

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

               

            	 	 	
              SB-2

              
              

            	 	 	
              November 16, 2005

              
              

            	 	 	
              10.5

              
              

            	 
	
              Form
                of common stock purchase warrant issued in March 2005

               

            	 	 	
              SB-2

              
              

            	 	 	
              November 16, 2005

              
              

            	 	 	
              10.6

              
              

            	 
	
              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 share escrow agreement

               

            	 	 	
              8-K

              
              

            	 	 	
              November 3, 2005

              
              

            	 	 	
              10.3

              
              

            	 
	
              Consideration
                and new technology agreement dated April 1, 2005 with ZAO BAM

               

            	 	 	
              10-QSB

              
              

            	 	 	
              August 15, 2005

              
              

            	 	 	
              10.2

              
              

            	 
	
              Letter
                agreement dated March 31, 2005 with The Oxford Group, Ltd. 

               

            	 	 	
              10-QSB

              
              

            	 	 	
              August 15, 2005

              
              

            	 	 	
              10.3

              
              

            	 
	
              Form
                of securities purchase agreement dated March 2, 2006

               

            	 	 	
              8-K

              
              

            	 	 	
              March 3, 2006

              
              

            	 	 	
              99.2

              
              

            	 
	
              Form
                of common stock purchase warrant dated March 2006

               

            	 	 	
              8-K

              
              

            	 	 	
              March 3, 2006

              
              

            	 	 	
              99.3

              
              

            	 
	
              2006
                Stock Incentive Plan 

               

            	 	 	
              10-QSB

              
              

            	 	 	
              November 6, 2006

              
              

            	 	 	
              10.1

              
              

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

               

            	 	 	
              8-K

              
              

            	 	 	
              December 15, 2006

              
              

            	 	 	
              10.1

              
              

            	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

               

            	 	 	
              8-K

              
              

            	 	 	
              December 15, 2006

              
              

            	 	 	
              10.2

              
              

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

               

            	 	 	
              8-K

              
              

            	 	 	
              December 15, 2006

              
              

            	 	 	
              10.3

              
              

            	 
	
              Securities
                Purchase Agreement dated April 12, 2007

               

            	 	 	
              10-QSB

              
              

            	 	 	
              May
                8, 2007

              
              

            	 	 	
              10.1

              
              

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

               

            	 	 	
              10-QSB

              
              

            	 	 	
              May
                8, 2007

              
              

            	 	 	
              10.2

              
              

            	 
	
              Registration
                Rights Agreement dated May 2, 2007

               

            	 	 	
              10-QSB

              
              

            	 	 	
              May
                8, 2007

              
              

            	 	 	
              10.3

              
              

            	 
	
              Agreement
                to Exchange and Consent dated May 1, 2007

               

            	 	 	
              10-QSB

              
              

            	 	 	
              May
                8, 2007

              
              

            	 	 	
              10.5

              
              

            	 
	
              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

              
              

            	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Schedule
      5.3 (continued)

    

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

     

    NVLT
      - Proforma Capital Structure

    
Upon
      Closing of Series D Financing

    

      
        	 	 	 	 	
                Number

              	 	
                Effective

                conv.

                rate

              	 	
                Common stock

                equival.

              	 	
                Exer.

                Price

              	 	
                Total cash

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Cash,
                  cash equivalents1

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                $

              	
                10,926,220

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Common
                  stock outstanding

              	 	 	
                39,360,272

              	 	 	
                39,360,272

              	 	 	 	 	 	
                39,360,272

              	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Preferred
                  stock

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Series
                  C 

              	 	 	
                3,264,000

              	 	 	
                272

              	 	 	
                0.65

              	 	 	
                5,021,538

              	 	 	 	 	 	 	 
	
                Series
                  B (to exchange for D) 

              	 	 	
                15,000,000

              	 	 	
                300

              	 	 	
                0.65

              	 	 	
                23,076,923

              	 	 	 	 	 	 	 
	
                Series
                  D (estimated net proceeds) 

              	 	 	 	 	 	
                100

              	 	 	
                0.65

              	 	 	
                7,692,300

              	 	 	 	 	
                $

              	
                4,800,000

              	 
	
                Warrants

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                2005
                  Bridge Financing 

              	 	 	
                720,000

              	 	 	
                720,000

              	 	 	 	 	 	
                720,000

              	 	
                $

              	
                0.625

              	 	 	
                cashless

              	 
	
                2005
                  PIPE and Series A Preferred4

              	 	 	
                6,149,696

              	 	 	
                8,938,925

              	 	 	 	 	 	
                8,938,925

              	 	
                $

              	
                0.65

              	 	
                $

              	
                5,810,301

              	 
	
                2006
                  PIPE5

              	 	 	
                10,270,018

              	 	 	
                10,875,979

              	 	 	 	 	 	
                10,875,979

              	 	
                $

              	
                2.08

              	 	
                $

              	
                22,622,036

              	 
	
                Series
                  B & Placement Agent 

              	 	 	
                8,400,000

              	 	 	
                8,400,000

              	 	 	 	 	 	
                8,400,000

              	 	
                $

              	
                0.65

              	 	
                $

              	
                5,460,000

              	 
	
                Series
                  A (subordination) 

              	 	 	
                1,333,333

              	 	 	
                1,333,333

              	 	 	 	 	 	
                1,333,333

              	 	
                $

              	
                1.25

              	 	 	
                cashless

              	 
	
                Series
                  D 

              	 	 	
                -

              	 	 	
                3,846,151

              	 	 	 	 	 	
                3,846,151

              	 	
                $

              	
                0.65

              	 	
                $

              	
                2,499,998

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Stock
                  options outstanding 

              	 	 	
                5,082,651

              	 	 	
                5,082,651

              	 	 	 	 	 	
                5,082,651

              	 	
                $

              	
                0.6786

              	 	
                $

              	
                3,449,087

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                $

              	
                55,567,643

              	 
	
                Stock
                  options reserved for issuance under 2006 plan

              	 	 	
                2,445,000

              	 	 	 	 	 	 	 	 	
                2,445,000

              	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Fully
                  diluted shares

              	 	 	
                92,024,970

              	 	 	 	 	 	 	 	 	
                116,793,072

              	 	 	 	 	 	 	 

      

    

     

    
      Notes:

      1
        As of Dec 31, 2007

      2
        Conversion price will be reduced from $1.00 to $0.65 in connection with the
        Series D financing

      4
        Includes 2,789,229 warrants to be issued pursuant to anti-dilution adjustments
        in connection with the Series D Financing; price adjustment from
        $1.00

      5
        Includes 606,961 warrants to be issued pursuant to anti-dilution adjustments
        in
        connection with the Series B Financing; price adjustment from
        $2.20

    

     

    
      
         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      5.5

    

    Consents
      

     

    In
      connection with the closing of the preferred stock and warrant financing, we
      anticipate receiving a consent from the holders of the Company’s Series C
      Convertible Preferred Stock. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      5.7(a)

    

    Material
      Adverse Changes 

     

    None.
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      5.8b

    

    SEC
      Filings 

     

    None.
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      5.9

    

    Conflicts

    

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

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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
      5.19

    

    Brokers
      and Finders

     

    On
      February 12, 2007 the Company entered into a letter agreement with the Placement
      Agent and on March 25, 2008, that letter agreement was amended to provide that
      the Company pay the Placement Agent a cash placement fee of 2% of the aggregate
      proceeds from the Private Placement.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}]]