UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

     
Date of Report (Date of Earliest Event Reported):   September 21, 2011

Torvec, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

     
New York 000-24455 16-1509512
_____________________
(State or other jurisdiction
_____________
(Commission
______________
(I.R.S. Employer
of incorporation) File Number) Identification No.)
      
1999 Mt. Read Blvd, Bldg 3, Rochester, New York   14615
_________________________________
(Address of principal executive offices)
  ___________
(Zip Code)
     
Registrant’s telephone number, including area code:   585-254-1100

Not Applicable
______________________________________________
Former name or former address, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


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Item 1.01 Entry into a Material Definitive Agreement.

On September 23, 2011, Torvec, Inc. (the "Company") entered into a Securities Purchase Agreement (the "Purchase Agreement"), pursuant to which the Company sold and issued 15,562,500 shares of its Series C Voting Convertible Preferred Stock, par value $0.01 per share (the "Preferred Shares"), and warrants (the "Warrants") to purchase 1,556,250 shares of its common stock, par value $0.01 per share ("Common Stock"), in a private placement to B. Thomas Golisano and two other accredited investors for an aggregate purchase price of $6,225,000 (the "Transaction"). In connection with the Purchase Agreement, and as part of the same plan of financing, three of the Company’s directors and one executive officer entered into a separate Subscription Agreement ("Directors Subscription Agreement") to purchase (a) 687,500 Preferred Shares and (b) Warrants to purchase 68,750 shares of Common Stock which contain the same terms and conditions as the Warrants purchased under the Purchase Agreement, for an aggregate purchase price of $275,000 (collectively, the "Directors’ Investment Transaction"). The Preferred Shares and the Warrants are referred to herein, collectively, as the "Series C Securities."

Directors, Thomas F. Bonadio, Asher J. Flaum, and Gary A. Siconolfi, and Chief Financial Officer, Robert W. Fishback, participated in the Directors’ Investment Transaction purchasing $50,000, 100,000, $100,000, and $25,000 of Series C Securities, respectively.

The Company intends to use the financing proceeds for the continued development and marketing of its technology for commercialization.

The Purchase Agreement, the form of Warrant, and a copy of the Directors Subscription Agreement are attached hereto as Exhibits 10.1, 10.2, and 10.3, respectively. A description of the material terms of the Transaction is set forth below, and is qualified in its entirety by reference to the documents attached hereto as Exhibits 3.1, 10.1, 10.2, 10.3, and 10.4 which are incorporated herein by reference.

Series C Preferred Stock

The Preferred Shares are subject to and qualified by the terms and conditions of the Certificate of Amendment of the Certificate of Incorporation of the Company (the "Certificate of Amendment"), describing the rights, privileges and preferences of the Preferred Shares, a copy of which is attached hereto as Exhibit 3.1 and is incorporated herein by reference.

Each Preferred Share is convertible, at the holder’s election, into one share of the Common Stock. The conversion rate is subject to adjustment in the event of the issuance of Common Stock as a dividend or distribution, and the subdivision or combination of the outstanding Common Stock or a reorganization, recapitalization, reclassification, consolidation or merger of the Company, as described in the Certificate of Amendment.

The Preferred Shares have a liquidation preference at their stated value per share of $0.40 that is senior to the Company’s Common Stock, and the Company’s Class A Non-Voting Cumulative Convertible Preferred Shares and Class B Non-Voting Cumulative Convertible Preferred Shares. The liquidation preference is payable upon a liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, or upon a deemed liquidation of the Company. A deemed liquidation includes, unless decided by the holders of at least two-thirds of the Preferred Shares, any consolidation, merger, or reorganization of the Company in which the shareholders of the Company own less than fifty percent of the voting power of the resultant entity, or an acquisition to which the Company is a party in which at least fifty percent of the Company’s voting power is transferred, or the sale, lease, exclusive license or transfer of all or substantially all of the assets or intellectual property of the Company other than to a wholly owned subsidiary.

The Preferred Shares have no right to receive dividends and have no redemption right. The Preferred Shares vote with the Common Stock on an as-converted basis. The Company may not, without approval of the holders of at least two-thirds of the Preferred Shares, (i) create any class or series of stock that is pari passu or senior to the Preferred Shares; (ii) create any class or series of stock that would share in the liquidation preference of the Preferred Shares or that is entitled to dividends payable other than in Common Stock or preferred shares of its own series, (iii) acquire any equity security or pay any dividend, except dividends on a class or series of stock that is junior to the Preferred Stock, payable in such junior stock, (iv) reissue any Preferred Shares, (v) declare or pay any dividend that would impair the payment of the liquidation preference of the Preferred Shares, (vi) authorize or issue any additional Preferred Shares, (vii) change the Certificate of Incorporation to adversely affect the rights of the holders of the Preferred Shares, or (viii) authorize, commit to or consummate any liquidation, dissolution or winding up in which the liquidation preference of the Preferred Shares would not be paid in full.

Warrants

The Warrants are governed by the terms and conditions contained in the form of Warrant, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.

The Warrants have a ten (10) year term and are initially exercisable for 1,625,000 shares of Common Stock. The Warrants are exercisable, at the holder’s election, for shares of the Company’s Common Stock in either a cash or cashless exercise. The Warrants have an initial exercise price equal to the greater of (i) $0.01 or (ii) eighty percent (80%) of the volume weighted average sale price per share of the Company’s Common Stock during the ten (10) consecutive trading days immediately preceding the notice of exercise.

Other Purchase Agreement Terms

Pursuant to the Purchase Agreement, the Company must within 30 days deregister the remaining 4,011,717 unsold shares of Common Stock covered by the Registration Statement on Form S-8 for the Company’s Business Consultants Stock Plan which was terminated in connection with the Transaction.

Investors’ Rights Agreement

In connection with the financing described above, the Company entered into an Investors’ Rights Agreement on September 23, 2011 (the "Investors’ Rights Agreement"), with investors B. Thomas Golisano, Charles T. Graham, and David Still (the "Investors"). Pursuant to the Investors’ Rights Agreement, the Company granted registration rights to the investors covering Common Stock issued on the conversion of the Preferred Shares or exercise of the Warrants or other shares issued in connection with the Transaction (the "Underlying Shares"). The registration rights are triggered when the Company is eligible to utilize Form S-3, and until such time as (i) the Company is sold, (ii) the Company is dissolved, or (iii) the Underlying Shares are eligible for resale without restriction in a three month period under Rule 144. Investors holding shares for sale to receive at least $500,000 in gross proceeds have the right to make the demand up to one time in any such twelve month period. The Investors’ Rights Agreement also contains a right of first offer for the future issuance of any equity securities of the Company. The Investors are entitled to purchase the portion of such future equity securities to be issued which equals the proportion that the total Common Stock then attributable to such Investor based on the Common Stock, Warrants and Preferred Shares held of record by such Investor bears to the total Common Stock of the Company then outstanding (in each instance assuming full conversion and/or exercise, as applicable, of all Preferred Shares and any other derivative securities of the Company then outstanding). Participating Investors are also permitted to purchase their proportionate share (or a share that is otherwise agreed among such participating Investors) of the purchase right of any non-participating Investor. The right of first offer does not apply to (i) the issuance of dividends or distributions, (ii) issuances by reason of reorganization or recapitalization of the Company’s capital stock, (iii) issuances made to employees, directors, advisors, or consultants pursuant to a plan or arrangement approved by the Board of Directors, (iv) issuances of any equity securities awarded as compensation, as payment for lease expenses, or as payment of consideration under any license agreements, (v) issuances upon exercise or conversion of options or warrants, (vi) issuances in connection with the Directors’ Investment Transaction, and (vii) issuances of common stock or options, or warrants pursuant to the acquisition of another company.

Pursuant to the terms of the Investors’ Rights Agreement, the Company may not, without the consent of Mr. Golisano: (i) grant any equity based compensation; (ii) reduce the per-share exercise price or conversion price of any equity based compensation; (iii) create or incur indebtedness in excess of $1,000,000 in the aggregate at any time, or (iv) guarantee the indebtedness of any third party except for trade account payables arising in the ordinary course of business. In the event the Company grants any equity based compensation or reduces the per-share exercise price or conversion price of any equity based compensation in violation of the terms of the Investors’ Rights Agreement, and with the effect that additional equity interests are issuable as a result, then the Company shall be obligated to immediately issue to each Investor such aggregate number of additional shares of Common Stock so that immediately following such violation such Investor’s ownership percentage is unaffected by the violation.

The Investors also agreed to "Market Stand-off" provisions that may be requested by an underwriter in an underwritten public offering by the Company.

In addition, pursuant to the terms of the Investors’ Rights Agreement, as long as Mr. Golisano may acquire at least 3,000,000 shares of Common Stock by conversion or exercise of his Series C Securities, (i) he is entitled to inspect the properties, assets, business and operation of the Company and discuss its business and affairs with its officers, consultants, directors and key employees, (ii) the Company shall invite him or his representative to attend all meetings of the Board of Directors and provide him with all information provided to directors for such purpose, and (iii) at his request, the Company shall cause him to be appointed to serve as a director until the following annual meeting of shareholders and until a successor is elected.

A copy of the Investors’ Rights Agreement has been filed with this Current Report on Form 8-K as Exhibit 10.4 and is incorporated by reference herein.

Shareholder Approval

The content and filing of the Certificate of Amendment was approved at a Special Meeting of the holders of the Company’s Class A Non-Voting Cumulative Convertible Preferred Shares, and Class B Non-Voting Cumulative Convertible Preferred Shares, originally scheduled for September 7, 2011, and adjourned to September 19, 2011, by a majority of the holders of such shares entitled to vote thereon voting as a single class.





Item 3.02 Unregistered Sales of Equity Securities.

The information contained in Item 1.01 is hereby incorporated by reference. Neither the Series C Securities nor the Underlying Shares are currently registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

In connection with the Transaction, the Company relied upon the exemption from securities registration afforded by Rule 506 of Regulation D as promulgated by the United States Securities and Exchange Commission under the Securities Act of 1933, as amended (the Securities Act) and/or Section 4(2) of the Securities Act. No advertising or general solicitation was employed in offering the securities. The offering and sale was made directly to seven individuals, who are accredited investors, and transfer of the Series C Securities is restricted by the Company in accordance with the requirements of the Securities Act.





Item 3.03 Material Modifications to Rights of Security Holders.

On September 21, 2011, the Company filed the Certificate of Amendment, a copy of which has been filed with this Current Report on Form 8-K as Exhibit 3.1, and is incorporated herein by reference. The Certificate of Amendment, describing the rights, privileges and preferences of the Company’s Series C Preferred Stock, is described more fully in Item 1.01 above.





Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On September 21, 2011, the Company filed the Certificate of Amendment, a copy of which has been filed with this Current Report on Form 8-K as Exhibit 3.1, and is incorporated herein by reference. The Certificate of Amendment, describing the rights, privileges and preferences of the Company’s Series C Preferred Stock, is described more fully in Item 1.01 above.





Item 5.07 Submission of Matters to a Vote of Security Holders.

One September 19, 2011, the Company held a Special Meeting of the holders of the Company’s Class A Non-Voting Cumulative Convertible Preferred Shares, or Series A Shares, and Class B Non-Voting Cumulative Convertible Preferred Shares, or Series B Shares, originally scheduled for September 7, 2011, to consider and approve the content and filing of the Certificate of Amendment. Only holders of the Company's Series A or Series B Shares at the close of business on August 26 2011 (the "Record Date") were entitled to vote at the Special Meeting. As of the Record Date, there were 664,601 Series A and Series B Shares entitled to vote, the holders of which were entitled to one vote per share. Holders of shares representing a total of 605,762 votes ( 91.1% of the total voting power), constituting a quorum, were represented in person or by valid proxies at the Special Meeting. At the Special Meeting, a majority of the holders of the Series A and Series B Shares entitled to vote thereon, voting as a single class, approved the content and filing of the Certificate of Amendment, described more fully in Item 1.01 above, as follows:

Votes For - 605,762
Votes Against - 0
Abstentions - 0
Broker Non-Votes - 0





Item 8.01 Other Events.

On September 26, 2011, the Company issued a press release announcing the Transaction described in Item 1.01 above. A copy of this press release has been filed with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. This disclosure is being filed pursuant to Rule 135c promulgated under the Securities Act of 1933, as amended, and is neither an offer to sell, nor a solicitation of an offer to buy, any of the securities described in this disclosure, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.





Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number / Description

3.1 Certificate of Amendment to the Certificate of Incorporation of Torvec, Inc., dated September 21, 2011

10.1 Securities Purchase Agreement by and among Torvec, Inc., a New York corporation, B. Thomas Golisano, and each purchaser listed on the Schedule of Purchasers attached thereto, dated September 23, 2011

10.2 Form of Warrant to Purchase Common Stock of Torvec, Inc.

10.3 Form of Directors Subscription Agreement

10.4 Investors’ Rights Agreement by and between Torvec, Inc., a New York corporation, B. Thomas Golisano, Charles T. Graham, and David Still, dated September 23, 2011

99.1 Press Release dated September 26, 2011






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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    Torvec, Inc.
          
September 26, 2011   By:   Robert W. Fishback
       
        Name: Robert W. Fishback
        Title: Chief Financial Officer and Principal Accounting Officer


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Exhibit Index


     
Exhibit No.   Description

 
3.1
  Certificate of Amendment to the Certificate of Incorporation of Torvec, Inc., dated September 21, 2011
10.1
  Securities Purchase Agreement by and among Torvec, Inc., a New York corporation, B. Thomas Golisano, and each purchaser listed on the Schedule of Purchasers attached thereto, dated September 23, 2011
10.2
  Form of Warrant to Purchase Common Stock of Torvec, Inc.
10.3
  Form of Directors Subscription Agreement
10.4
  Investors’ Rights Agreement by and between Torvec, Inc., a New York corporation, B. Thomas Golisano, Charles T. Graham, and David Still, dated September 23, 2011
99.1
  Press Release dated September 26, 2011

CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF INCORPORATION OF
TORVEC, INC.

Under Section 805 of the Business Corporation Law

The undersigned being the Chief Executive Officer and Secretary of Torvec, Inc., do hereby certify and set forth:

1. The name of the Corporation is Torvec, Inc.

2. The Certificate of Incorporation of the Corporation was filed by the Department of State on September 25, 1996.

3. The Certificate of Incorporation is hereby amended to add a new Article to the Certificate of Incorporation to state the number, designation, relative rights, preferences, and limitations of a new series of preferred shares of the par value of $.01 each.

To effect these changes, a new Article is added to the Corporation’s Certificate of Incorporation to read as follows:

“11. The designation, relative rights, preferences, and limitations of all shares of the Series C Preferred Shares shall, as fixed by the Corporation’s Board of Directors (the “ Board ”) in the exercise of its authority conferred by the Certificate of Incorporation and as permitted by Section 502 of the New York Business Corporation Law (the “ NY BCL ”), be as follows:

A. Sixteen Million Two Hundred and Fifty Thousand (16,250,000) authorized preferred             shares of the par value of $.01 each, as heretofore fixed by the Board, none of which has been issued, shall be issued in and as a series, to be Series C Voting Convertible Preferred Stock, $.01 par value (the “ Series C Preferred Shares ”). The term preferred shares as used herein shall include all 100,000,000 of the preferred shares, $.01 par value authorized by the Certificate of Incorporation of the Corporation, comprising a single class of which Series C Preferred Shares is the third series. The Class A Non-Voting Cumulative Convertible Preferred Shares (the “ Class A Preferred Shares ”) and the Class B Non-Voting Cumulative Convertible Preferred Shares (the “ Class B Preferred Shares ”), although designated as “class” shares, are nonetheless the first and second series, respectively, of this single class of preferred shares. The Series C Preferred Shares shall have a stated value of $0.40 per share (subject to appropriate adjustment for any stock dividend, combination or split or other similar recapitalization with respect to the Series C Preferred Shares) (the “ Series C Stated Value ”). The Corporation’s $.01 par value common stock may be referred to herein as the “ Common Shares .”

B. For purposes hereof, the following terms shall be defined as follows:

(1) “ Deemed Liquidation ” means: (i) unless the holders of at least two thirds (2/3) of the Series C Preferred Shares otherwise elect by vote or written consent without a meeting, (A) any consolidation or merger of the Corporation with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Corporation immediately prior to such consolidation, merger or reorganization own less than fifty percent (50%) of the voting power of the surviving or successor corporation or other entity immediately after such consolidation, merger or reorganization, or (B) any transaction or series of related transactions to which the Corporation is a party in which in excess of fifty percent (50%) of the Corporation’s voting power is transferred, excluding any consolidation or merger effected exclusively to change the domicile of the Corporation (an “ Acquisition ”); or (ii) unless the holders of at least two thirds (2/3) of the Series C Preferred Shares otherwise elect by vote or written consent without a meeting, a sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Corporation, or of all or substantially all of the Corporation’s intellectual property, whether in a single transaction or series of related transactions (an “ Asset Transfer ”) other than to a wholly owned subsidiary of the Corporation.

(2) “ Junior Stock ” means the Common Shares, Class A Preferred Shares, Class B Preferred Shares and any other shares of the Corporation’s stock authorized (in conformity with Section 11.G below and otherwise in accordance with the Corporation’s Certificate of Incorporation) after the date of this Amendment to the Certificate of Incorporation which by their express terms are not made senior to or on parity with the Series C Preferred Shares in liquidation or as to dividends or other distributions or any other matter or right.

(3) “ Parity or Senior Stock ” means any stock other than Series C Preferred Shares and Junior Stock.

C. The Series C Preferred Shares shall, with respect to distribution rights to stockholders of the Corporation on a liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or upon a Deemed Liquidation (any of which may be referred to as a “ Liquidation Event ”), rank senior to the Common Shares and all other preferred shares of the Corporation other than, to the extent but only to the extent hereafter so provided in the Corporation’s Certificate of Incorporation, any Parity or Senior Stock.

D. (1) In furtherance of Section 11.C above, in the event of any Liquidation Event, before any distribution or payment shall be made to the holders of any Junior Stock, the holders of Series C Preferred Shares then outstanding are entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, whether such assets are capital, surplus or earnings, for each Series C Preferred Share an amount equal to the Series C Stated Value (the “ Liquidation Preference ”). For avoidance of doubt, the foregoing payment of the Series C Stated Value to the holders of Series C Preferred Shares shall rank in preference to the dividend rights, including accumulations, of the Class A Preferred Shares and Class B Preferred Shares, except that this provision shall not be construed to prohibit the declaration or payment of dividends on: (i) Class A Preferred Shares solely in Class A Preferred Shares in accordance with Section 9.C. (1) of the Corporation’s Certificate of Incorporation as in effect on the date of this Certificate of Amendment without giving effect to any subsequent amendment thereof except as approved by the affirmative vote or consent of the holders of two-thirds (2/3) of the Series C Preferred Shares or (ii)  Class B Preferred Shares solely in Class B Preferred Shares in accordance with Section 10.D. (1) of the Corporation’s Certificate of Incorporation as in effect on the date of this Certificate of Amendment without giving effect to any subsequent amendment thereof except as approved by the affirmative vote or consent of the holders of two-thirds (2/3) of the Series C Preferred Shares. If, upon any Liquidation Event, there are insufficient assets of the Corporation to pay holders of Series C Preferred Shares the full Liquidation Preference due them, and, if applicable, to the holders of any securities of the Corporation having a preference in such Liquidation Event that is of equal priority with the Series C Preferred Shares in respect thereto (“ Parity Securities ”), then the holders of Series C Preferred Shares and Parity Securities shall share ratably in the distribution of the remaining assets of the Corporation in proportion to the respective amounts which would otherwise be payable in respect of the Series C Preferred Shares and Parity Securities held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

(2) After the payment of the full Liquidation Preference of the Series C Preferred Shares, and after giving effect to any dividends to the holders of Class A Preferred Shares or Class B Preferred Shares as set forth in Section 11. D. (1) above, the remaining assets of the Corporation legally available for distribution, if any, shall be distributed among the holders of the Series C Preferred Shares and Common Shares, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to Common Shares pursuant to the terms of the Certificate of Incorporation immediately prior to such Liquidation Event.

(3) Without limitation to anything in this Section 11.D, a Deemed Liquidation shall be deemed a liquidation under this Section 11.D. The Corporation shall not have the power to effect a Deemed Liquidation unless the transaction documents in respect of such transaction actually, lawfully and effectively provide that the consideration payable to the stockholders of the Corporation shall be allocated among the stockholders in accordance with this Section 11.D.

(4) Whenever the distribution provided for in this Section 11.D shall be payable in property other than cash, the value of such distribution shall be the fair market value of such property as determined in good faith by the Board.

E. The holders of the Series C Preferred Shares have no right to seek or to compel redemption of the Series C Preferred Shares and the Corporation shall have no right to compel the redemption of any of the Series C Preferred Shares.

F. Except as otherwise required by law, the holders of Series C Preferred Shares shall be entitled to vote on all matters to be voted on by the stockholders of the Corporation and shall have such number of votes equal to the largest whole number of Common Shares into which such holders’ Series C Preferred Shares are convertible pursuant to the provisions hereof. Except as otherwise required by law, the shares of Series C Preferred Shares shall vote together and equally with the Common Shares as a single class, and not as a separate class at any annual or special meeting of stockholders of the Corporation and may act by written consent in the same manner as may be permitted of the Common Shares.

G. In addition to any other vote or consent required herein or by law, the Corporation will not, without the vote or written consent without a meeting of the holders of at least two-thirds (2/3) of the outstanding Series C Preferred Shares, whether by amendment, merger, consolidation or otherwise, and whether directly or otherwise:

(1) create (including by amendment or other alteration of the terms of any existing security) any class or series of equity security that is a Parity or Senior Stock;

(2) without limitation of the foregoing in clause (1), create (including by amendment or other alteration of the terms of any existing security) any other series of preferred shares of the same class as the Series C Preferred that could share in the distribution of assets on a Liquidation Event pursuant to Article 7 or any other provision of the Corporation’s Certificate of Incorporation or applicable law in any way that would conflict with, diminish or impair the priority of the Series C Preferred Shares as to Liquidation Preference as set forth herein or that is entitled to dividends payable other than in Common Shares or preferred shares of its own series;

(3) repurchase, redeem or otherwise acquire (or pay into or set aside for a sinking fund for such purpose) any Series C Preferred Shares or any other equity security (or right to receive any equity security of the Corporation by conversion, exchange, exercise or otherwise) or pay any dividend, except for a dividend payable in Junior Stock, on any Junior Stock;

(4) reissue any Series C Preferred Shares acquired by the Corporation by reason of redemption, purchase, conversion or otherwise, or fail to cancel, retire and eliminate from the shares which the Corporation shall be authorized to issue, any such Series C Preferred Share acquired by the Corporation;

(5) declare or pay any dividend or distribution that would conflict with, diminish or impair the payment of the full Liquidation Preference of the Series C Preferred Shares, provided however that a dividend payable in Junior Stock, on any Junior Stock, shall not be deemed to conflict with, diminish or impair such payment;

(6) authorize or issue more than 16,250,000 Series C Preferred Shares;

(7) amend, correct and/or restate the Certificate of Incorporation in any way that could adversely change or affect the rights, preference or privileges of the Series C Preferred Shares; or

(8) authorize, commit to or consummate any Liquidation Event in which the Liquidation Preference would not be paid in full to the holders of the Series C Preferred Shares.

H. (1) Each Series C Preferred Share shall be convertible, at the option of the holder thereof, at any time and from time to time, and without payment of any conversion price or other consideration into one fully paid and non-assessable Common Share, subject to adjustment as set forth in Section 11.H(6) (the “ Conversion Rate ”).

(2) The right to convert Series C Preferred Shares under this Section 11.H may be exercised as to all or a portion of a holder’s Series C Preferred Shares. Each holder of Series C Preferred Shares who desires to convert the same into Common Shares pursuant to this Section 11.H shall surrender the certificate or certificates therefor (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit reasonably acceptable to the Corporation), duly endorsed, together with written notice to the Corporation (a “ Conversion Notice ”) that states (i) that the holder elects to convert the same, and (ii) the number of Series C Preferred Shares being converted. Promptly thereafter, the Corporation shall issue and deliver to the holder a certificate or certificates for the number of Common Shares to which the holder is entitled (and pay in cash the value of any fractional Common Share otherwise issuable, as set forth in Section 11.H.(5) below). If the right to convert is exercised as to fewer than all of the holder’s Series C Preferred Shares, a certificate(s) will be issued to the same record holder of Series C Preferred Shares converted for the remaining Series C Preferred Shares.

(3) Each conversion will be deemed to have been effective immediately prior to the close of business on the date on which the holder shall surrender the certificate or certificates representing Series C Preferred Shares to be converted or an affidavit of lost certificate as the case may be, duly endorsed, at the office of the Corporation or any transfer agent and shall give the Conversion Notice to the Corporation (the “ Conversion Date ”). The person(s) in whose name(s) any certificate(s) for Common Shares will be issuable upon the conversion will be deemed to have become the holder(s) of record of the Common Shares on the Conversion Date.

(4) Common Shares delivered upon conversion of Series C Preferred Shares will be, upon delivery, validly issued, fully paid and non-assessable, free of all liens and charges and not subject to any preemptive rights.

(5) No fractional share shall be issued upon the conversion of any Series C Preferred Shares. All Common Shares (including fractions thereof) issuable upon conversion of more than one Series C Preferred Share by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of a fraction of a Common Share, the Corporation shall, in lieu of issuing any fractional share, pay the holder otherwise entitled to such fraction a sum in cash equal to the fair market value of such fraction on the date of conversion as determined in good faith by the Board.

(6) (a) In case the Corporation at any time or times:

(i) declares a dividend, or makes a distribution, on the Common Shares in Common Shares or rights to acquire Common Shares; or

(ii) subdivides its outstanding Common Shares into a greater number of Common Shares; or

(iii) combines its outstanding Common Shares into a smaller number of Common Shares,

the Conversion Rate shall be proportionately adjusted at the time of the record date for the dividend or distribution or the effective date of the subdivision or a combination to the number of Common Shares that a holder of a Series C Preferred Share would have owned immediately following such action had such Series C Preferred Share been converted immediately prior thereto.

(b) If at any time or times there shall occur any reorganization, recapitalization, reclassification, consolidation or merger (other than a subdivision or combination of shares provided for in Section 11. H.6(a) above or an Asset Transfer or Acquisition) involving the Corporation in which the Common Shares are converted into or exchanged for securities, cash or other property, then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each Series C Preferred Share shall thereafter remain outstanding with all of the rights and preferences set forth herein, except that it shall be convertible in lieu of the Common Shares into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of Common Shares of the Corporation issuable upon conversion of one Series C Preferred Share immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions in this Section 11.H with respect to the rights and interests thereafter of the holders of the Series C Preferred Shares, to the end that the provisions set forth in this Section 11.H shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series C Preferred Shares.

(c) Upon the occurrence of each adjustment or readjustment of the Conversion Rate pursuant to this Section H.6, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series C Preferred Shares a certificate executed by the Corporation’s President or Chief Financial Officer setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of Series C Preferred Shares, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Rate for the Series C Preferred Shares at the time in effect, and (iii) the number of Common Shares and the amount, if any, of other property which at the time would be received upon the conversion of the Series C Preferred Shares.

(7) Each Series C Preferred Share shall be automatically converted into Common Shares, based on the then-effective Conversion Rate on the close of the business day after the vote by or written consent without a meeting of the holders of two-thirds (2/3) of the then outstanding Series C Preferred Shares that all of the Series C Preferred Shares shall be converted to Common Shares, which vote or consent shall be effective as to all shares of Series C Preferred Shares then outstanding.

(8) Upon (i) any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any transaction which would, absent a contrary election by the Series C Preferred Shares, constitute an Acquisition or any transaction which would comprise any other capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation with or into any other corporation, or any transaction which would, absent a contrary election by the Series C Preferred Shares, constitute an Asset Transfer, or any voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the Corporation shall mail to each holder of Series C Preferred Shares at least twenty (20) days prior to the record date specified therein a notice specifying (A) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (B) the date on which any such potential Acquisition or such reorganization, reclassification, transfer, consolidation, merger, potential Asset Transfer, or dissolution, liquidation or winding up is expected to become effective, and (C) the date, if any, that is to be fixed as to when the holders of record of Common Shares (or other securities) shall be entitled to exchange their shares of Common Shares (or other securities) for securities or other property deliverable upon such potential Acquisition, or reorganization, reclassification, transfer, consolidation, merger, potential Asset Transfer, or dissolution, liquidation or winding up.

(9) The Corporation shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of Common Shares on conversion of Series C Preferred Shares pursuant hereto; provided, however, that the Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

(10) The Corporation shall at all times reserve and keep available out of its authorized but unissued Common Shares, solely for the purpose of effecting the conversion of the Series C Preferred Shares, such number of its Common Shares as shall from time to time be sufficient to effect the conversion of all outstanding Series C Preferred Shares; and if at any time the number of authorized but unissued Common Shares shall not be sufficient to effect the conversion of all then outstanding Series C Preferred Shares, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued Common Shares to such number of shares as shall be sufficient for such purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to this Certificate of Incorporation.

I. Subject to obtaining the requisite vote of the holders of Series C Preferred Shares, the Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed for the benefit of the holders of Series C Preferred Shares under this Certificate of Incorporation by the Company, but will at all times in good faith assist in the carrying out of all such provisions and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holders of Series C Preferred Shares against impairment.

J. Any of the rights, powers, preferences and other terms of the Series C Preferred Shares set forth herein may be waived on behalf of all holders of Series C Preferred Shares by the affirmative vote or written consent without a meeting of the holders of at least two-thirds (2/3rds) of the Series C Preferred Shares then outstanding”

4. This Certificate of Amendment was authorized by resolutions duly adopted by the Board of Directors pursuant to authority granted to the Board under the Certificate of Incorporation of the Corporation, and in accordance with Section 502(c) of the NY BCL, and by the affirmative vote of the holders of a majority of all issued and outstanding shares of Class A Preferred Shares and Class B Preferred Shares, voting as a single class, entitled to vote thereon pursuant to Section 804 of the NY BCL, at a duly called meeting of such stockholders held on September 19, 2011.

IN WITNESS WHEREOF , the undersigned have executed this Certificate this 21 st day of September, 2011 and affirm under penalties of perjury that the foregoing statements are true and complete.

/s/ Richard A. Kaplan       
Richard A. Kaplan, Chief Executive Officer

/s/ Robert W. Fishback       
Robert W. Fishback, Secretary

1

CERTIFICATE OF AMENDMENT OF THE

CERTIFICATE OF INCORPORATION OF

TORVEC, INC.

Under Section 805 of the Business Corporation Law

WOODS OVIATT GILMAN LLP
700 Crossroads Building
Rochester, New York 14614

2

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “ Agreement ”) is made and entered into as of September 23, 2011 by and among Torvec, Inc., a New York corporation (the “ Company ”), B. Thomas Golisano, a resident of the State of Florida (the “ Investor ”), and each other Purchaser listed on the Schedule of Purchasers attached hereto (each along with the Investor, a “ Purchaser ” and collectively the “ Purchasers ”).

WHEREAS , the Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), and Rule 506 of Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ SEC ”) under the Securities Act;

WHEREAS , the Purchasers desire to purchase from the Company, and the Company desires to issue and sell to the Purchasers, (a) an aggregate of 15,562,500 shares of the Company’s Series C Voting Convertible Preferred Stock, par value $0.01 per share (the “ Series C Convertible Preferred Stock ”), initially convertible into an equivalent number of common shares of the Company, par value $0.01 per share (“ Common Stock ”), for an aggregate purchase price of at least $6,225,000 at a price of $0.40 per share, and (b) Warrants to Purchase up to an aggregate of 1,556,250 shares of Common Stock in the form of Warrant attached as Exhibit A hereto (the “ Warrants ” and collectively with the Series C Convertible Preferred Stock, the “ Securities ”), each in the respective amounts set forth next to each Purchaser’s name on the Schedule of Purchasers attached hereto;

WHEREAS , the Company has filed, or will file prior to the Closing, a Certificate of Amendment (“ Certificate of Amendment ”) to the Company’s Certificate of Incorporation, as amended through January 29, 2007 (collectively, the “ Certificate of Incorporation ”, and as amended by the Certificate of Amendment, the “ Amended Certificate of Incorporation ”) in the form attached hereto as Exhibit B ; and

WHEREAS , in connection herewith, certain of the Company’s directors and executive officers have entered into, or will be entering into, a separate Subscription Agreement (“ Directors Subscription Agreement ”) to purchase (a) up to 687,500 shares of the Company’s Series C Convertible Preferred Stock, which are initially convertible into an equivalent number of shares of Common Stock for an aggregate purchase price of up to $275,000 at a price of $0.40 per share, and (b) Warrants to Purchase up to 68,750 shares of Common Stock which contain the same terms and conditions as the Warrant being purchased by the Investor pursuant hereto (collectively, the “ Directors’ Investment Transaction ”);

NOW THEREFORE , in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, the Company and each Purchaser hereto, severally and not jointly, agree as follows:

Section 1. Purchase and Sale of Securities.

1.1 Sale and Purchase. Upon the terms and subject to the conditions herein, and in reliance on the representations and warranties made by the Company in this Agreement, each Purchaser hereby severally agrees to purchase from the Company, and the Company hereby agrees to issue and sell to each Purchaser at the Closing (defined in Section 1.4 below), free and clear of any and all Claims (as defined below) (a) that number of Convertible Preferred Shares and (b) an accompanying number of Warrants, each as set forth next to each Purchaser’s name on the Schedule of Purchasers attached hereto, for the aggregate purchase price set forth on the Schedule of Purchasers (the “ Purchase Price ”). The Convertible Preferred Shares shall have the rights, privileges and preferences contained in the Amended Certificate of Incorporation. Each Warrant shall be immediately exercisable in accordance with its terms.

1.2 Amended Certificate of Incorporation. Immediately prior to or contemporaneously with the Closing, the Company shall have filed with the Secretary of State of New York the Certificate of Amendment, and the same shall have become effective prior to the Closing in accordance with New York law.

1.3 Use of Proceeds. The Company may use the proceeds from the sale of the Securities for general corporate purposes.

1.4 Closing. The closing of the issuance, sale, transfer, assignment, conveyance and delivery of the Securities (the “ Closing ”) will take place at the offices of Woods Oviatt Gilman, LLP, Two State Street, Rochester New York 14614, at 10:00 a.m., on the date hereof (the “ Closing Date ”).

1.5 Closing Deliveries. At the Closing:

(a) Each Purchaser shall deliver to the Company:

(i) in United States dollars and in immediately available funds, the Purchase Price for the Securities purchased by the Purchaser by wire transfer to an account designated by the Company; and

(ii) Such other supporting documents and certificates as the Company may reasonably request or as may be required pursuant to this Agreement or another Transaction Document in order to effect the transactions contemplated hereunder and thereunder; and

(iii) The Investors’ Rights Agreement in the form attached hereto as Exhibit C , duly executed by the Purchaser.

(b) The Company shall deliver or cause to be delivered to each Purchaser the following:

(i) a stock certificate representing all of the Convertible Preferred Shares issued hereunder registered in the name of the Purchaser, which certificate(s) shall contain the restrictive legend required hereby and the Investors’ Rights Agreement;

(ii) a Warrant registered in the name of the Purchaser, duly executed by the Company representing the number of Warrant Shares for such Purchaser as reflected on the Schedule of Purchasers , which Warrant shall contain the restrictive legend required hereby; and

(iii) the Investors’ Rights Agreement, in the form attached hereto as Exhibit C , duly executed by the Company.

(c) The Company shall deliver or cause to be delivered to the Investor the following:

(i) certificate of the secretary or assistant secretary of the Company certifying, as of the Closing, as to (A) the Amended Certificate of Incorporation, (ii) the By-Laws of the Company as amended or amended and restated to date, (iii) the resolutions of the board of directors of the Company approving the Transaction Documents and the other documents to be delivered by the Company thereunder and the performance of the obligations of the Company thereunder and (iv) the resolutions of the holders of the Class A Non-Voting Cumulative Convertible Preferred Stock (as defined in Section 2.4(a)) and the Class B Non-Voting Cumulative Convertible Preferred Stock (as defined in Section 2.4(a)) approving the content and filing of the Certificate of Amendment, and (v) the names and true signatures of the officers of the Company authorized to sign the Transaction Documents to be delivered by the Company under this Agreement and the other Transaction Documents;

(ii) a certificate of the Secretary of State of the State of New York as of a recent date, as to the good standing of the Company and as to the Charter Documents of the Company on file in the office of the Secretary of State;

(iii) the legal opinion of Richard Sullivan, Esq., general counsel for the Company, substantially in the form of Exhibit D hereto;

(iv) a copy of the Directors Subscription Agreement representing proceeds of at least $125,000, and each other document or agreement required to be executed by the Company or any other party thereto, in each case duly executed by each party thereto; and

(v) such other supporting documents and certificates as the Investor may reasonably request or as may be required pursuant to this Agreement or another Transaction Document.

1.6 Reservation of Shares. The Company has authorized and has reserved and covenants to continue to reserve out of its authorized Common Stock, free of preemptive rights and other similar contractual rights of stockholders, the maximum number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all of the Convertible Preferred Shares and the exercise of the Warrants .

1.7 Transfer Taxes. All transfer taxes, fees and duties under applicable law incurred in connection with the sale and transfer of the Convertible Preferred Shares under this Agreement will be borne and paid by the Company and it shall promptly reimburse the Purchasers for any such tax, fee or duty which any of them is required to pay under applicable law.

1.8 Further Assurances. The Company, on the one hand, and a Purchaser, on the other hand, from time to time after the Closing at the request of the other and without further consideration shall execute and deliver further instruments of issuance, transfer and assignment and take such other action as the other may reasonably require to fully and more effectively transfer and assign to, and vest in, the Purchasers, the Securities and all rights thereto, and to fully implement the provisions of this Agreement and the other Transaction Documents.

1.9 Certain Definitions. For purposes of this Agreement, the following terms shall have the meanings given thereto :

(a) “ Affiliate ” of a Person shall mean with respect to such a Person or entity, any Person or entity which directly or indirectly Controls, is Controlled by, or is under common Control with such Person or entity.

(b) “ Business Consultants Stock Plan ” shall mean that certain Business Consultants Stock Plan of the Company adopted as of June 2, 1999, as amended.

(c) “ Claim ” shall mean any and all liens, claims, options, charges, pledges, security interests, voting agreements, voting trusts, encumbrances, rights or restrictions of any nature.

(d) “ Control ” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise.

(e) “ Convertible Preferred Shares ” means the shares of the Series C Convertible Preferred Stock purchased hereunder.

(f)  Conversion Shares ” means the shares of Common Stock issuable upon conversion of the Convertible Preferred Shares.

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

(h) “ Existing Preferred Stock ” means collectively the Company’s outstanding Class A Non-Voting Cumulative Convertible Preferred Stock (as defined in Section 2.4(a)) and Class B Non-Voting Cumulative Convertible Preferred Stock (as defined in Section 2.4(a)).

(i) “ GAAP ” means generally accepted accounting principles as applied in the United States.

(j) “ Knowledge ” means the actual knowledge after reasonable investigation of Richard A. Kaplan, Robert Fishback, Richard Sullivan and Keith Gleasman.

(k) “ Legal Requirements ” means all foreign, federal, state, municipal and local statutes, laws, ordinances, judgments, decrees, orders, rules, regulations, policies and guidelines;

(l) “ Material Adverse Effect ” means any event, change or effect that is or would reasonably be expected to be materially adverse to the assets, liabilities, condition (financial or other), prospects, business or results of operations of the Company or any of its Subsidiaries, other than any event, change or effect relating to or resulting from: (i) the announcement or other disclosure of this Agreement or the transactions contemplated herein; (ii) conditions or changes in the general economic, business or financial environment which do not affect the Company or its Subsidiaries or the industries in which the Company or its Subsidiaries operate in a disproportionate manner; (iii) an act of terrorism or an outbreak or escalation of hostilities or war (whether declared or not declared) or any natural disasters or any national or international calamity or crisis affecting the United States; (iv) changes in Legal Requirements which do not affect the Company or its Subsidiaries or the industries in which the Company or its Subsidiaries operate in a disproportionate manner; or (v) changes in United States generally accepted accounting principles (“ GAAP ”) which do not affect the Company disproportionately. “ Permitted Encumbrances ” means (i) real estate taxes, assessments and other governmental levies, fees, or charges imposed that are (x) not due and payable as of the Closing Date or (y) being contested by appropriate proceedings; (ii) mechanics’ liens and similar liens for labor, materials, or supplies provided for amounts that are (x) not delinquent or (y) being contested by appropriate proceedings (and, in either event, are not material); (iii) zoning, building codes, and other land use laws regulating the use or occupancy of real property or the activities conducted thereon that are imposed by any governmental authority having jurisdiction over real property; (iv) liens, security interest or other encumbrances for any publicly disclosed indebtedness of the Company or its Subsidiaries; and (v) easements, covenants, conditions, restrictions and other similar matters affecting title to real property and other encroachments and title and survey defects that do not or would not materially impair the use or occupancy of such real property in the operation of the business of the Company and its Subsidiaries taken as a whole.

(m) “ Person ” means an individual, corporation, partnership, association, trust, any unincorporated organization or any other entity.

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

(o) “ SEC Reports ” means all reports, schedules, forms, statements and other documents required to be filed with the SEC by the Company for the two year period prior to the Closing through and including through the date hereof, with the SEC pursuant to the reporting requirements of the Exchange Act, including all exhibits included or incorporated by reference therein and financial statements and schedules thereto and documents included or incorporated by reference therein.

(p) “ Subsidiary ” of a Person means any corporation more than fifty (50%) percent of whose outstanding voting securities, or any partnership, limited liability company joint venture or other entity more than fifty percent (50%) of whose total equity interest, is directly or indirectly owned by such Person.

(q) “ Transaction Documents ” means this Agreement, the Warrants, the Certificate of Amendment, and the Investors’ Rights Agreement and each other agreement, document and instrument executed in connection with the transactions contemplated hereby or thereby.

(r) “ Warrant Shares ” means the shares of Common Stock issuable upon exercise of a Warrant.

(s) “ Underlying Shares ” means the Conversion Shares and the Warrants Shares.

Section 2. Representations and Warranties of the Company.

In order to induce the Purchasers to enter into this Agreement and consummate the transactions contemplated hereby, the Company hereby represents and warrants to each Purchaser that the following representations and warranties are true and complete as of the Closing; provided , that such representations and warranties are subject to the qualifications and exceptions set forth in the disclosure schedule delivered to each Purchaser pursuant to this Agreement (the “ Disclosure Schedule ”). The qualifications and exceptions on the Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections and subsections in this Section 2, and the qualifications and exceptions in any section or subsection shall qualify other sections and subsections in this Section 2 only to the extent expressly included in the Disclosure Schedule as a qualification or exception to such other section or subsection.

2.1 Organization and Corporate Power .

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of New York, and is duly qualified or registered to do business as a foreign corporation (i) in each jurisdiction listed in Schedule 2.1 and (ii) in each jurisdiction in which the failure to be so duly qualified or registered has had, or could have, a Material Adverse Effect. Each Subsidiary is duly organized, validly existing and in good standing under the laws of its State of organization and each jurisdiction in which the failure of that Subsidiary to be so qualified or registered has had, or could have, a Material Adverse Effect.

(b) The Company has all required corporate power and authority to carry on its business as presently conducted, to enter into and perform this Agreement and the other Transaction Documents to which it is a party and to carry out the transactions contemplated hereby and thereby, including the issuance and delivery of the Securities.

(c) True, complete and correct copies of the Certificate of Incorporation and the Company’s By-Laws, in each case as amended and in effect as of immediately prior to the filing of the Certificate of Amendment (the “ Charter Documents ”), have been furnished to the Investor by the Company.

2.2 Authorization and Non-Contravention .

(a) This Agreement and the other Transaction Documents are valid and binding obligations of the Company, enforceable in accordance with their respective terms.

(b) The execution, delivery and performance of this Agreement and the other Transaction Documents, the issuance and delivery of the Convertible Preferred Shares, and, upon conversion of the Convertible Preferred Shares and the exercise of the Warrant, the issuance and delivery of the Underlying Shares, respectively, have been duly authorized by all necessary corporate or other action of the Company’s Board of Directors and the Company’s stockholders.

(c) The execution and delivery of this Agreement and the other Transaction Documents, the issuance and delivery of the Convertible Preferred Shares, and, upon conversion of the Convertible Preferred Shares and the exercise of the Warrants, the issuance and delivery of the Underlying Shares, and the performance of the transactions contemplated by this Agreement and the other Transaction Documents, do not and will not: (i) violate or result in a violation of, conflict with or constitute or result in a violation of (whether after the giving of notice, lapse of time or both) any provision of the Charter Documents, as amended through the Closing Date; (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt, order, writ, decree or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company or any Subsidiary is a party, including, without limitation, any registration rights of any Person, or by which any property or asset of the Company or any Subsidiary is bound; or (iii) violate, conflict with or result in a violation of, or constitute a default (whether after the giving of notice, lapse of time or both) under, any provision of any Legal Requirement; or (iv) result in the creation of any Claim upon any assets of the Company or any Subsidiary; except in the case of each of clauses, (ii), (iii) and (iv), such as would not have a Material Adverse Effect;

(d) The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents and the consummation of the transactions herein and in the other Transaction Documents, other than the filing of the Certificate of Amendment (which will have been filed with the New York State Secretary of State prior to the Closing), the filing of any Form D required to be filed with the SEC and such other filings as are required to be made under applicable federal and state securities laws.

2.3 The Securities .

(a) The Convertible Preferred Shares purchased by each Purchaser hereunder will have the rights, preferences, privileges, terms and provisions set forth in the Amended Certificate of Incorporation.

(b) Upon delivery to each Purchaser at the Closing of the stock certificate provided for in Section 1.5(b)(i) above and the Warrant as provided for in Section 1.5(b)(ii) above with respect to the Securities for issuance, sale, transfer, assignment, conveyance and delivery to such Purchaser, and upon the Company’s receipt of the Purchase Price payable by such Purchaser in accordance with Section 1.5(a)(i) above, (i) such Purchaser will become the sole record, legal and beneficial owner of (A) such Convertible Preferred Shares, (B) such Warrant and (C) upon conversion of the Convertible Preferred Shares, and the exercise of the Warrant and payment of the exercise price therefor, the Underlying Shares, as applicable, and the Purchaser will have good and marketable title to the Securities and the Underlying Shares and each shall pass to such Purchaser, free and clear of any Claims, except for the restrictions on transfer created by the Investor Rights Agreement and applicable securities laws; and (ii) the Convertible Preferred Shares and the Warrants to be issued at the Closing have been duly authorized by all necessary corporate action (including, without limitation, any required shareholder or director meeting and consent) and shall be validly issued and outstanding, fully paid and non-assessable, and will be issued in compliance with all applicable federal and state securities laws. When the Warrant Shares are issued and paid for in accordance with the terms of this Agreement and as set forth in the Warrants, and when the Conversion Shares are issued upon conversion of the Convertible Preferred Shares, the Warrant Shares and Conversion Shares will be duly authorized by all necessary corporate action and validly issued and outstanding, fully paid and non-assessable, free and clear of all Claims of any kind and the holders (other than restrictions on transfer created by this Agreement, the Investor Rights Agreement and applicable securities laws) shall be entitled to all rights accorded to a holder of Common Stock.

(c) The Underlying Shares have been duly reserved for issuance by the Company.

(d) Upon conversion of the Convertible Preferred Shares and the exercise of the Warrant and payment of the exercise price therefor, the Underlying Shares will be issued in compliance with all applicable federal and state securities laws, assuming the accuracy of each Purchaser’s representations and warranties set forth in Section 3 now and at the time of such exercise or conversion.

2.4 Capitalization .

(a) As of immediately prior to the Closing and prior to the filing of the Certificate of Amendment, the authorized capital stock of the Company consists of (i) 400,000,000 shares of Common Stock, par value $0.01 per share, of which (A) 45,700,399 shares are currently outstanding, (B) 664,601 shares are reserved for issuance upon conversion of the outstanding Existing Preferred Stock, (C) 1,841,750 shares are reserved for issuance upon the exercise of Common Stock purchase warrants, (D) 541,848 shares are reserved for issuance upon the exercise of options under the 1998 Stock Option Plan, (E) 276,000 shares are reserved for issuance upon the exercise of options outstanding under the 2011 Stock Option Plan, (F) 2,724,000 additional shares are reserved for issuance pursuant to the 2011 Stock Option Plan in respect of future awards under such plan, (G) 7,260,000 shares are reserved for issuance upon the exercise of outstanding non-plan options, and (H) no other shares are reserved for issuance for any purpose, and (ii) 100,000,000 shares of preferred stock, par value $0.01 per share, including (A) 3,300,000 shares designated as “ Class A Non-Voting Cumulative Convertible Preferred Stock ”, of which 587,101 shares are issued and outstanding and which shares are convertible into 587,101 shares of Common Stock, and (B) 300,000 shares designated as “ Class B Non-Voting Cumulative Convertible Preferred Stock ”, of which 77,500 shares are issued and outstanding and which shares are convertible into 77,500 shares of Common Stock.  The Company is not a party to a “rights plan”, or “poison pill” agreement. 

(b) Except as disclosed in Schedule 2.4(b) , there are no outstanding subscriptions, options, warrants, commitments, preemptive rights, agreements, arrangements or commitments of any kind relating to the issuance or sale of, or outstanding securities convertible into or exercisable or exchangeable for, any shares of capital stock of any class or other equity interests of the Company.

(c) As of the Closing, and after giving effect to the transactions contemplated hereby, all of the outstanding shares of capital stock of the Company (including the Convertible Preferred Shares) will have been duly and validly authorized and issued, fully paid and non-assessable, and will have been offered, issued, sold and delivered in compliance with applicable federal and state securities laws without giving rise to preemptive rights of any kind.

(d) As of the Closing, and after giving effect to the transactions contemplated hereby, other than rights set forth in the Transaction Documents, except as disclosed in Schedule 2.4(d) , there are (i) no preemptive rights, rights of first refusal, put or call rights or obligations or anti-dilution rights with respect to the issuance, sale or redemption of the Company’s capital stock or any interests therein, or (ii) no rights to have the Company’s capital stock (whether currently outstanding securities or any securities issuable upon exercise or conversion of its currently outstanding securities) registered for sale to the public in connection with the laws of any jurisdiction. To the Company’s Knowledge, no stockholder of the Company has entered into any agreements with respect to the voting of capital stock of the Company.

(e) The 2007 Commercializing Event Plan and the Trust Agreement, dated September 22, 2005, each of which is referenced in the Company’s 10-Q filing have been terminated and are of no further force or effect.

(f)  Schedule 2.4(f) sets forth the capitalization of the Company (on a fully-diluted basis) immediately following the Closing and the consummation of the Directors’ Investment Transaction.

2.5 Subsidiaries; Investments. Except as set forth in Schedule 2.5 , the Company does not have any Subsidiaries and does not own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association or other business entity. Except as set forth in Schedule 2.5 , the Company is not a participant in any joint venture, partnership or similar arrangement. Except as set forth in Schedule 2.5 each of the Subsidiaries listed on Schedule 2.5 is wholly owned, directly or indirectly, by the Company and there are no outstanding subscriptions, options, warrants, commitments, preemptive rights, agreements, arrangements or commitments of any kind relating to the issuance or sale of, or outstanding securities convertible into or exercisable or exchangeable for, any shares of capital stock of any class or other equity interests of any such Subsidiary.

2.6 SEC Reports; Financial Statements .

(a) The Company has filed all forms, reports and exhibits required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchange Act, for the two years preceding the date hereof on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.

(b) As of their respective dates, the SEC Reports or any amendments thereof, complied in all material respects with the requirements of the Exchange Act applicable to the SEC Reports, and none of the SEC Reports or to the extent such reports were amended, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(c) As of their respective dates, except as set forth therein or in the notes thereto, the financial statements contained in the SEC Reports and the related notes (the “ Financial Statements ”) complied as to form in all material respects with all applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. The Financial Statements: (i) were prepared in accordance with GAAP, consistently applied during the periods involved (except (A) as may be otherwise indicated in the notes thereto or (B) in the case of unaudited interim statements, to the extent that they may not include footnotes, may be condensed or summary statements or may conform to the SEC’s rules and instructions for Reports on Form 10-Q), (ii) fairly present in all material respects the consolidated financial condition, position and operating results of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal and recurring year-end audit adjustments) and (iii) are in all material respects in accordance with the books of account and records of the Company and its consolidated Subsidiaries (except as may be otherwise noted therein). Neither the Company nor any Subsidiary has any material liabilities or obligations, contingent or otherwise, other than (x) liabilities under contracts and commitments incurred in the ordinary course of Company’s or Subsidiaries’ business, (y) liabilities incurred in the ordinary course of Company’s or Subsidiaries’ business subsequent to June 30, 2011, and (z) liabilities and obligations of a type or nature not required under GAAP to be reflected in the Financial Statements which, in all such cases, individually and in the aggregate would not have a Material Adverse Effect.

2.7 No Material Adverse Changes . Except as otherwise set forth in one of the Company’s reports on Form 10-K or Form 10-Q, since the date of the latest audited Financial Statements, (a) there has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse Effect, (b) the Company has not incurred any liabilities (contingent or otherwise) other than trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice, (c) the Company has not altered its method of accounting, (d) except for the declaration of dividends with respect to Existing Preferred Stock which dividends are accumulated but not paid, the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (e) the Company has not issued any equity securities to any Person (including without limitation as a result of the exercise of a warrant or option), (f) the Company has not settled or canceled any material debt, claim, suit, arbitration or governmental investigation, (g) the Company has not sold, assigned or transferred any material assets including without limitation any of its intellectual property, (h) the Company has not suffered any substantial losses, and (i) the Company has not made any agreement (written or oral) to effect any of the foregoing. The Company does not have pending before the SEC any request for confidential treatment of information.

2.8 Transactions with Affiliates. Except as set forth on Schedule 2.8 , there are no loans, leases or other agreements or transactions or proposed agreements or transactions between the Company or a Subsidiary, on the one hand, and any present or former stockholder, director, officer or employee of the Company or a Subsidiary, or to the Knowledge of the Company any member of such officer’s, director’s, employee’s or stockholder’s immediate family, or any Person controlled by such officer, director, employee or stockholder or his or her immediate family, on the other hand. No present (or to the Knowledge of the Company, former) stockholder, director, officer or employee of the Company or a Subsidiary, or to the Knowledge of the Company any of their respective spouses or family members, owns directly or indirectly, on an individual or joint basis, any interest in, or serves as an officer or director or in another similar capacity of, any competitor, customer or supplier of the Company, or any organization which has a material contract or arrangement with the Company.

2.9 Material Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such certificates, authorizations or permits would not have or reasonably be expected to result in a Material Adverse Effect (“ Material Permits ”), and neither the Company nor any Subsidiary has received any notice of investigation or proceedings relating to the revocation or modification of any Material Permit.

2.10 Title to Assets. The Company and the Subsidiaries have good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, taken as a whole, in each case free and clear of all Claims, except for Permitted Encumbrances. Neither the Company nor any Subsidiary owns any real property. Any personal property or real property and facilities held under lease by the Company and/or a Subsidiary are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in material compliance.

2.11 Tax Matters. The Company and its Subsidiaries have duly and timely filed all required tax returns and reports required to be filed by them in connection with any federal, state and local tax, duty or charge levied, assessed or imposed upon the Company, its Subsidiaries or their respective assets, including unemployment and social security. The Company and its Subsidiaries have duly and timely paid all taxes due and payable, or, with respect to those taxes which are being contested in good faith, the Company and its Subsidiaries have made an appropriate reserve on their respective financial statements for the same. No taxing authority has asserted or assessed any additional tax liabilities against the Company and its Subsidiaries which are outstanding on this date, there are no pending audits of any tax return or report of the Company or any Subsidiary, and neither the Company nor its Subsidiaries have filed for any extension of time for the payment of any tax or the filing of any tax return or report.

2.12 Intellectual Property.

(a) To the knowledge of the Company and each Subsidiary, the Company and the Subsidiaries have valid and exclusive ownership of, or have sufficient legal rights to use, all patents, patent applications, trademarks, trademark applications, service marks, service mark applications, trade names, copyrights, trade secrets, domain names, proprietary rights and processes, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and as presently proposed to be conducted and which the failure to so have could have or reasonably be expected to result in a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”). To the Knowledge of the Company, all such Intellectual Property Rights are enforceable and, other than with respect to commercially available software products under standard end-user license agreements and as set forth on Schedule 2.12(a), there are no outstanding options, licenses, agreements, Claims or shared ownership interests relating to any Intellectual Property Rights. To the Company’s Knowledge, neither the Company nor any Subsidiary is infringing on the intellectual property rights of any other Person nor is any Person infringing on the intellectual property rights of the Company or any Subsidiary. Neither the Company nor any Subsidiary has received any communications alleging that the Company or a Subsidiary has violated or, by conducting its business, would violate any of the patents, trademarks, service marks, tradenames, copyrights, trade secrets, mask works or other proprietary rights or processes of any other Person.

(b) No third party has claimed that any Person employed by or affiliated with the Company has (i) violated any of the terms or conditions of such Person’s employment, non-competition, non-disclosure or similar agreement with such third party; (ii) disclosed or utilized any trade secret or proprietary information or documentation of such third party or (iii) interfered in the employment relationship between such third party and any of its employees. To the Company’s knowledge, no Person employed by or affiliated with the Company has used any trade secret or any information or documentation proprietary to any other Person in connection with the Company’s business. Each Person employed by or that has served as a consultant has assigned to the Company all intellectual property rights he or she owns that are related to the Company’s business including all Intellectual Property Rights, other than such failure to obtain as would not be reasonably expected to have a Material Adverse Effect.

2.13 Litigation, Investigations etc.. There is no claim, action, suit, governmental or administrative proceeding or investigation, arbitration or charge pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries or any of their directors or officers or which questions the validity of this Agreement or any other Transaction Document. Without limitation to the foregoing, the Company is not subject to any investigation or proceeding by the SEC or any state securities commissions. There is no claim, action or suit which the Company intends to initiate.

2.14 Employees; Employee Matters.

(a) Neither the Company nor its Subsidiaries have any collective bargaining arrangements or agreements covering any of their employees, and there is no strike or other labor dispute involving the Company or, to the Company’s knowledge, threatened, which could have a Material Adverse Effect. Except as disclosed in the SEC Documents, neither the Company nor its Subsidiaries have any employment contract, or any other similar contract relating to the right of any officer, employee or consultant to be employed or engaged by the Company or such Subsidiary. Since December 31, 2010, no officer, consultant or employee of the Company or its Subsidiary whose termination, either individually or in the aggregate, could have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company or any Subsidiary. The Company is not delinquent in payments to any of its employees or independent contractors for any wages, salaries, commissions, bonuses or any other compensation for any service performed for it to the date hereof. Except as set forth on Schedule 2.14 , upon termination of employment of any Company employee no severance or other payments will become due.

(b)  Schedule 2.14(b) sets forth each employee benefit plan maintained, established or sponsored by the Company or which the Company participates in or contributes to, which is subject to the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”). The Company has made all required contributions and has no liability to any such employee benefit plan, other than liability for health plan continuation coverage described in Part 6 of Title I(B) of ERISA, and has complied in all material respects with all applicable laws for any such employee benefit plan.

2.15 Compliance with Legal Requirements. Except as set forth on Schedule 2.15, the Company complies and has at all times prior to the date hereof complied in all material respects with all applicable Legal Requirements (including, without limitation, with respect to wages, hours, worker classification and collective bargaining, and all environmental and safety matters), and the Company has not received notice from any governmental authority or any other Person of any alleged violation or noncompliance.

2.16 Insurance Coverage. The Company and the Subsidiaries are insured by insurers            of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged.

2.17 Investment Banking; Brokerage. There are no claims for, and the Company is not obligated to pay any, investment banking fees, brokerage commissions, broker’s or finder’s fees or similar compensation in connection with the transactions contemplated by this Agreement payable by the Company or based on any arrangement or agreement made by or on behalf of the Company.

2.18 Private Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section 3 now and at the time of any subsequent exercise or conversion thereof, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby or the issuance to a Purchaser of any Underlying Securities. Neither the Company nor any Person acting on its behalf has made any offer or sales of any securities or solicited any offers to purchase any security under circumstances that would eliminate the availability of the exemption from registration under Section 4(2) of the Securities Act.

2.19 Investment Company. The Company is not, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

2.20 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2 , OR AS EXPRESSLY SET FORTH IN ANY OTHER TRANSACTION DOCUMENT, THE COMPANY MAKES NO OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF ITS ASSETS, LIABILITIES OR OPERATIONS.

Section 3. Representations and Warranties of the Purchaser .

In order to induce the Company to enter into this Agreement, each Purchaser represents and warrants to the Company, severally and not jointly, as to itself, the following:

3.1 Investment Status .

(a) The Purchaser is purchasing the Securities for its own account, for investment only and not with a view to, or any present intention of, effecting a distribution of such securities or any part thereof except pursuant to a registration or an available exemption under applicable Legal Requirements.

(b) The Purchaser acknowledges that neither the Securities nor the Underlying Shares have been registered under the Securities Act or the securities laws of any state or other jurisdiction and cannot be disposed of unless they are subsequently registered under the Securities Act and any applicable state laws or an exemption from such registration is available.

3.2 Accredited Investor. The Purchaser is an “accredited investor” as defined in Regulation D and has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment in the Securities.

3.3 Opportunities for Additional Information . The Purchaser acknowledges that he has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company, and to the extent deemed necessary in light of the Purchaser’s personal knowledge of the Company’s affairs, the Purchaser has asked such questions and received in writing answers to the full satisfaction of the Purchaser, and the Purchaser desires to invest in the Company.

3.4 No General Solicitation . The Purchaser acknowledges that the Securities were not offered to him by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (a) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio, or (b) any seminar or meeting to which such Purchaser was invited by any of the foregoing means of communications.

3.5 Rule 144 . The Purchaser understands that the Securities and the Underlying Shares must be held indefinitely unless they are registered under the Securities Act or an exemption from registration is available. The Purchaser acknowledges that he is familiar with Rule 144 of the rules and regulations of the SEC, as amended, promulgated pursuant to the Securities Act, and that he has been advised that Rule 144 permits resales only under certain circumstances. The Purchaser understands that to the extent that Rule 144 is not available, the Purchaser will be unable to sell any Securities or Underlying Shares without either registration under the Securities Act or the existence of another exemption from such registration requirement.

3.6 No Shorting . The Purchaser has not engaged in any short sales of the Common Stock or instructed any third parties to engage in any short sales of the Common Stock on his behalf prior to the Closing Date. The Purchaser covenants and agrees that it will not be in a net short position with respect to the shares of Common Stock. For purposes of this Section 3.6, a “net short position” means a sale of Common Stock by a Purchaser that is marked as a short sale and that is made at a time when there is no equivalent offsetting long position in Common Stock held by the Purchaser.

3.7 General . The Purchaser understands that the Securities are being offered and sold in reliance on a transactional exemption from the registration requirement of Federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Securities.

3.8 Investment Banking; Brokerage Fees. The Purchaser has not incurred or become liable for any investment banking fees, brokerage commissions, broker’s or finder’s fees or similar compensation (exclusive of professional fees to lawyers and accountants) in connection with the transactions contemplated by this Agreement.

3.9 Exculpation Among Purchasers . The Purchaser acknowledges that it is not relying upon any Person, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. The Purchaser agrees that neither any Purchaser nor the respective controlling Persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore taken or omitted to be taken by any of them in connection with the purchase of the Securities.

Section 4. Closing Conditions And Deliveries .

The obligations of each Purchaser to purchase and pay for the Securities shall be subject to the fulfillment by the Company, to the Purchaser’s reasonable satisfaction, before the Closing of the following conditions, unless otherwise waived by the Purchaser:

4.1 Representations and Warranties . The representations and warranties of the Company contained in Section 2 shall be true and correct in all respects as of the Closing.

4.2 Performance. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Company on or before the Closing.

4.3 Authorizations . All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or any state that are required in connection with the lawful issuance of the Securities pursuant to this Agreement shall be obtained and effective as of the Closing.

4.4 Deliveries by the Company.

(a) At the Closing, the Company shall have delivered, or shall have caused to be delivered, those deliveries contemplated by Section 1.5(b) above.

(b) With respect to the Investor, the Company shall have delivered, or shall have caused to be delivered, those deliveries contemplated by Section 1.5(c) above.

4.5 Business Consultants Stock Plan . The Company shall have terminated the Business Consultants Stock Plan.

4.6 Directors’ Investment Transaction. The Company shall have received a minimum of $125,000 in connection with the Directors’ Investment Transaction in accordance with the terms and conditions of the Directors Subscription Agreement.

4.7 No Material Adverse Effect. No event shall have occurred since June 30, 2011 and no facts or conditions shall exist that, individually or in the aggregate, have had, or would reasonably be expected to have, a Material Adverse Effect.

4.8 No Litigation or Injunction. There shall be no action, suit, claim or proceeding of any nature pending, or overtly threatened against (a) the Purchasers or the Company, their respective properties or any of their respective officers, directors or Affiliates arising out of, or in any way connected with, the transactions contemplated by this Agreement or any other Transaction Document or (b) the Company, its properties or any of its officers, directors or Affiliates that has had or could reasonably be expected to have a Material Adverse Effect, and the consummation of the transactions contemplated by this Agreement and the other Transaction Documents shall not violate any order, decree or judgment of any court or governmental body having competent jurisdiction.

4.9 Certificate of Amendment . The Company shall have filed the Certificate of Amendment with the Secretary of State of New York State prior to the Closing, a copy of the filing receipt of which shall be provided to each Purchaser.

4.10 Minimum Amount. The Company shall have received the deliveries under Section 5.1 from the Purchasers representing an aggregate Purchase Price of at least $6,000,000.

4.11 Reservation of Shares . The Company shall have reserved for issuance a sufficient number of shares of Common Stock for the purpose of enabling the Company to satisfy any obligations to issue Underlying Shares on the conversion of the Convertible Preferred Shares and the exercise of the Warrants.

Section 5. Closing Conditions And Deliveries .

The obligations of the Company to issue and sell the Securities and to consummate the other transactions contemplated by this Agreement and the other Transaction Documents shall be subject to the fulfillment by each Purchaser to the Company’s reasonable satisfaction or waiver on or before the Closing Date of the following conditions:

5.1 Closing Deliveries by the Purchaser to the Company. At the Closing, the Purchaser shall deliver, or shall cause to be delivered, to the Company, the deliveries contemplated by Section 1.5(a).

5.2 Representations and Warranties. The representations and warranties of each Purchaser contained in Section 3 shall be true and correct, in all respects as of the Closing.

5.3 Performance. Each Purchaser shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Investor on or before the Closing.

5.4 Minimum Amount. The Company shall have received the deliveries under Section 5.1 from the Purchasers representing an aggregate Purchase Price of at least $6,000,000.

5.5 Authorizations . All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or any state that are required in connection with the lawful issuance of the Securities pursuant to this Agreement shall be obtained and effective as of the Closing.

Section 6. Covenants .

The Company covenants with each of the Purchaser and the Investor, as applicable as follows, which covenants are for the benefit of the Purchasers and the Investor, as applicable:

6.1 Securities Compliance .

(a) The Company shall timely notify the Commission in accordance with their rules and regulations, of the transactions contemplated by any of the Transaction Documents, including filing a report on Form 8-K and filing a Form D with respect to the Convertible Preferred Shares, Warrants, Conversion Shares and Warrant Shares, if required by the Commission’s rules, and shall take all other necessary action and proceedings as may be required and permitted by applicable federal or state law, rule and regulation, for the legal and valid issuance of the Convertible Preferred Shares, the Warrant, the Conversion Shares and the Warrant Shares to the Purchasers or subsequent holders

(b) The Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the

Purchasers set forth herein in order to determine the applicability of Federal and state securities laws exemptions and the suitability of such Purchasers to acquire the Securities.

6.2 Business Consultants Stock Plan . Within thirty (30) days after the Closing Date, the Company shall take such actions as are necessary to deregister all unsold shares of Common Stock covered by the Registration Statements on Form S-8 listed on Schedule 6.2 for the Business Consultants Stock Plan.

6.3 Noncircumvention . The Company shall not, by amendment of its Certificate of Incorporation or By-Laws or through any reorganization, transfer of assets, consolidation, merger, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement, the Transaction Documents or the Securities.

6.4 Net Operating Loss Carryforwards . The Company will give diligent consideration to the status of its net operating loss carryforwards and possible techniques to preserve its net operating loss carryforwards.

         
Section 7. General .
 
  7.1    
Waivers and Consents; Amendments .

(a) For the purposes of this Agreement and the other Transaction Documents, no course of dealing between or among any of the parties hereto and no delay on the part of any party hereto in exercising any rights hereunder or thereunder shall operate as a waiver of the rights hereof and thereof. No covenant or provision hereof may be waived otherwise than by a written instrument signed by the party or parties so waiving such covenant or other provision as contemplated herein.

(b) No amendment to this Agreement may be made without the written consent of the Company and Purchasers holding at least a majority of the outstanding Convertible Preferred Shares.

7.2 Legend on Securities . The Company and the Purchasers acknowledge and agree that:

(a) the following legend shall be typed on each certificate evidencing any of the Convertible Preferred Shares or Underlying Shares issued at any time by the Investor:

“THE SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE SECURITIES PURCHASE AGREEMENT PURSUANT TO WHICH THESE SECURITIES WERE PURCHASED FROM THE COMPANY. COPIES OF SUCH RESTRICTIONS ARE ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. NO TRANSFER OF SUCH SECURITIES OR OF THIS CERTIFICATE (OR OF ANY SHARES OR OTHER SECURITIES (OR CERTIFICATES THEREFOR) ISSUED IN EXCHANGE FOR OR IN RESPECT OF SUCH SECURITIES) SHALL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS SET FORTH IN THE SECURITIES PURCHASE AGREEMENT HAVE BEEN COMPLIED WITH.”

“NO SALE, OFFER TO SELL, OR TRANSFER OF THE SERIES C PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE , OR THE SECURITIES ISSUABLE UPON THE CONVERSION THEREOF, SHALL BE MADE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND IS IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.”

(b) a legend shall be placed on the Warrant, or the Underlying Shares, in the form contained on the form of Warrant attached as Exhibit A hereto.

(c) the aforementioned legends shall be placed on or omitted (or removed) from certificates representing the Convertible Preferred Shares, Warrant and Underlying Shares as set forth in the Investors’ Rights Agreement.

7.3 Survival and Expiration . The respective representations, warranties, covenants and agreements of the Company and each Purchaser set forth in this Agreement (except covenants and agreements which are expressly required to be performed and are performed in full on or prior to the Closing Date) shall survive the Closing and the consummation of the transactions contemplated hereby.

7.4 Indemnification

(a) The Company agrees to indemnify and hold harmless the Purchasers, their beneficiaries, heirs, successors and assigns for loss or damage including, without limitation, reasonable attorneys’ fees and other expenses, arising as a result of or related to any breach by the Company of any of its representations and warranties contained in this Agreement. For purposes of this Agreement, such loss or damage shall specifically exclude any lost profits (but shall not exclude loss of value), consequential damages or punitive damages.

(b) Each Purchaser, severally and not jointly on its own behalf agrees to indemnify and hold harmless the Company, and its Affiliates, and each Person who controls any of them within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (a “ Company Indemnified Party ”), for loss and damage including, without limitation, reasonable attorneys’ fees and other expenses arising as a result of or related to any breach by the Purchaser of any of his, her or its representations and warranties contained in this Agreement. For purposes of this Agreement, such loss or damage shall specifically exclude any lost profits, consequential damages or punitive damages.

(c) The maximum amount payable by the Company to a Purchaser, or a Purchaser to the Company or any Company Indemnified Party, for losses or damages in respect of claims made by the Purchaser for indemnification under this Section 7.4, shall not exceed an amount equal to the Purchase Price paid by such Purchaser.

(d) After the Closing, the rights and remedies expressly provided pursuant to the terms of this Agreement will constitute the sole and exclusive basis for, and means of, recourse between the parties with respect to the subject matter hereof, and the Company and the Purchaser each expressly waives any and all other rights or causes of action with respect to the subject matter hereof that it may have against the other party now or in the future under any applicable Legal Requirement. Without limiting the generality of the foregoing, each party agrees that, after the Closing, this Section 7.4 provides its sole remedy with respect to any loss or damages arising from the breach by another party of any of the breaching party’s representations and warranties contained in this Agreement; provided, however, that (i) this Section 7.4(d) shall not apply with respect to any claim based on fraud or intentional misrepresentation, and (ii) nothing contained in this Agreement shall impair or limit in any way the rights or remedies available to the Purchaser under or in respect of the other Transaction Documents.

7.5 Governing Law; Waiver of Jury Trial. This Agreement shall be deemed to be a contract made under, and shall be construed in accordance with, the laws of the State of New York, without giving effect to conflict of laws principles thereof. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

7.6 Section Headings; Construction . The descriptive headings in this Agreement have been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provision thereof or hereof. The use in this Agreement of the masculine pronoun in reference to a party hereto shall be deemed to include the feminine or neuter, and vice versa, as the context may require. The parties have participated jointly in the negotiation and drafting of this Agreement and the other Transaction Documents with counsel sophisticated in investment transactions. In the event an ambiguity or question of intent or interpretation arises, this Agreement and the other Transaction Documents shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement and the other Transaction Documents. Where the word “including” or the word “includes” is used in this Agreement, it means “including (or includes) without limitation”.

7.7 Counterparts . This Agreement may be executed simultaneously in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute but one and the same document.

7.8 Notices and Demands . Any notice or demand which is required or provided to be given under this Agreement shall be deemed to have been sufficiently given and received for all purposes when delivered in writing by hand, facsimile, email or other method of electronic delivery, or five (5) days after being sent by certified or registered mail, postage and charges prepaid, return receipt requested, or two (2) days after being sent by overnight delivery providing receipt of delivery, to the following addresses:

(a) if to the Company, to: Torvec Inc., 1999 Mt. Read Boulevard, Building 3, Rochester, NY 14615, Attention: Chief Executive Officer, Fax: 585-254-1105, Email: dickk@torvec.com, with copies (which shall not constitute notice) to Torvec Inc., 1999 Mt. Read Boulevard, Building 3, Rochester, NY 14615, Attention: General Counsel, Fax: 585-254-1105, Email: dsullivan@torvec.com; and

(b) if to the Investor, to: B. Thomas Golisano, 3175 Green Dolphin Lane, Naples, Florida 34102, Fax: 585-383-3428, Email: tgolisano@bluetie.com, with a copy (which shall not constitute notice) to Fisher Asset Management,        ,        , Attention: David Still, Fax: 585-340-1202, Email:       

(c) if to a Purchaser other than the Investor, to the address set forth on the Schedule of Purchasers.

7.9 Remedies; Severability . Notwithstanding anything herein to the contrary, it is specifically understood and agreed that any breach of the provisions of the Transaction Documents by any Person subject hereto or thereto will result in irreparable injury to the other parties hereto or thereto, that the remedy at law alone will be an inadequate remedy for such breach, and that, in addition to any other remedies which they may have at law or in equity, including recovery of damages, such other parties may enforce their respective rights by actions for specific performance (to the extent permitted by law). Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be deemed prohibited or invalid under such applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, and such prohibition or invalidity shall not invalidate the remainder of such provision or the other provisions of this Agreement.

7.10 Integration . This Agreement, including the exhibits, schedules, documents and instruments referred to herein or therein constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof.

7.11 Assignability; Binding Agreement. This Agreement may not be assigned by any party hereto without the prior written consent of each other party hereto. This Agreement shall be binding upon and enforceable by, and shall inure to the benefit of, the parties hereto and their respective successors, heirs, executors, administrators and permitted assigns, and no others. Notwithstanding the foregoing, nothing in this Agreement is intended to give any Person not named herein the benefit of any legal or equitable right, remedy or claim under this Agreement, except as expressly provided herein.

7.12 Press Releases and Public Announcements. No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the Company and the Investor, except as may otherwise be required by applicable Legal Requirement, or rule of any trading market where the Company’s securities are quoted in order to maintain current reporting status.

7.13 Fees and Expenses. Except as otherwise specified in this Section 7.13 or agreed in writing by the parties, all costs and expenses incurred in connection with this Agreement, the Transaction Documents and the transactions contemplated by this Agreement shall be paid by the party incurring such cost or expense. At the Closing, the Company shall promptly reimburse the Investor upon presentation of appropriate invoices and documentation therefor for all Reimbursable Expenses incurred, by or on behalf of the Investor. For purposes of this Agreement, “ Reimbursable Expenses ” shall mean all reasonable out-of-pocket fees and expenses incurred by the Investor in connection with his due diligence investigation of the Company, the preparation of this Agreement and the other Transaction Documents and consummation of the transactions contemplated by this Agreement, including all reasonable fees and expenses of counsel to the Investor.

7.14 Waiver of Conflicts . Each party to this Agreement acknowledges that Woods Oviatt Gilman, LLP, counsel for the Company, has in the past performed and may continue to perform legal services for the Investor in matters unrelated to the transactions described in this Agreement, including the representation of such Investor in venture capital financings and other matters. Accordingly, each party to this Agreement hereby (a) acknowledges that they have had an opportunity to ask for information relevant to this disclosure; and (b) gives its informed consent to Woods Oviatt Gilman LLP’s representation of certain of the Investor in such unrelated matters and to Woods Oviatt Gilman LLP’s representation of the Company in connection with this Agreement and the transactions contemplated hereby.

7.15 Finders Fee. Each party represents that it neither is nor will be obligated for any finder’s fee or commission in connection with this transaction. Each Purchaser agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which each Purchaser or any of its officers, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless each Purchaser from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

[ REMAINDER OF PAGE INTENTIONALLY LEFT BLANK ]

1

IN WITNESS WHEREOF , the parties have executed this Agreement or have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

     
COMPANY :
 
 
TORVEC, INC.
 
By: /s/ Richard A. Kaplan—
 
Name:
Title:
  Richard A. Kaplan
Chief Executive Officer

    PURCHASERS :

     
/s/ B. Thomas Golisano—
 
Name:
  B. Thomas Golisano

    /s/ Charles T. Graham       

    Name: Charles T. Graham

/s/ David Still       

    Name: David Still

SCHEDULE OF PURCHASERS

 

                                                                 
Purchaser
     
Address and
      Number of
      Aggregate
      Purchase
               
Facsimile Number
          Convertible           Number of           Price
               
 
          Preferred Shares           Warrant                
               
 
          Being Purchased           Shares                  
               
 
                                               
B. Thomas Golisano          
3175 Green Dolphin
            15,212,500               1,521,250             $ 6,085,000  
               
Ln Naples, FL 34102 Fax: 585-340-1202
                                               
               
 
                                               
Charles T. Graham          
10 Turtle Creek
            250,000               25,000             $ 100,000  
               
Pittsford, NY 14534 Fax: None
                                               
               
 
                                               
David Still          
18 Wrenfield Lane
            100,000               10,000             $ 40,000  
               
Pittsford, NY 14534 Fax: 585-340-1202
                                               
               
 
                                               
TOTAL          
 
            15,562,500               1,556,250             $ 6,225,000  
               
 
                                               

DISCLOSURE SCHEDULES

Reference is made to the Securities Purchase Agreement dated as of September 23, 2011 (the “ Purchase Agreement ”), by and between Torvec, Inc., a New York corporation (the “ Company ”), and B. Thomas Golisano, a resident of the State of Florida (the “ Investor ”) and each other Purchaser listed on the Schedule of Purchasers attached thereto (each along with the Investor, a “ Purchaser ” and collectively the “ Purchasers ”). This document constitutes the Disclosure Schedules defined in the Purchase Agreement and referred to in Section 2 of the Purchase Agreement.

The fact that any item of information is contained herein shall not be construed to mean that such information is required to be disclosed by the Purchase Agreement. Such information shall not be used as a basis for interpreting the term “material,” “materially,” “materiality,” or “material adverse effect” in the Purchase Agreement.

Terms defined in the Purchase Agreement and not otherwise defined in the Disclosure Schedules are used herein as defined in the Purchase Agreement. The section headings in the Disclosure Schedules are for convenience of reference only and shall not be deemed to alter or affect the express description of the sections of the Disclosure Schedules as set forth in the Purchase Agreement. The Disclosure Schedules are arranged in sections corresponding to the lettered and numbered Sections contained in the Purchase Agreement.

Unless otherwise stated, all statements made herein are made as of the date of the execution of the Purchase Agreement or such date as may be referenced to in that Section of the Purchase Agreement to which the statement relates.

The signature of the Purchasers below is only for purposes of the Purchasers acknowledging receipt of the Disclosures Schedules as provided by the Company and is not, in any way, an acknowledgement, agreement, representation or warranty by any of the Purchasers that the information contained on the Disclosure Schedules is true, accurate or complete.

         
TORVEC, INC.   PURCHASERS:
   
 
   
By:  
/s/ Richard A. Kaplan—
  /s/ B. Thomas Golisano—
   
 
   
   
Richard A. Kaplan, Chief Executive Officer
  B. Thomas Golisano

    /s/ David Still       

David Still

/s/ Charles T. Graham       

    Charles T. Graham

Schedule 2.1

Jurisdictions of Qualification

New York

Schedule 2.4(b)

Outstanding Subscriptions, etc.

At June 30, 2011, there were 587,101 Class A Non-Voting Cumulative Convertible Preferred Stock (“Class A Preferred Shares”) outstanding. Cumulative dividends payable upon conversion of these outstanding shares of Class A Preferred Shares amounted to approximately $1,443,000 as of June 30, 2011.  In the event the dividends with respect to all accumulated and unsettled dividends were paid in Class A Preferred Shares, pursuant to their terms at June 30, 2011, the Company would issue 360,750 Class A Preferred Shares. 

At June 30, 2011, there were 77,500 Class B Non-Voting Cumulative Convertible Preferred Stock (“Class B Preferred Shares”) outstanding. Cumulative dividends payable upon conversion of these outstanding shares of Class B Preferred Shares amounted to approximately $223,000 as of June 30, 2011.  In the event the dividends with respect to all accumulated and unsettled dividends were paid in Class A Preferred Shares, pursuant to their terms at June 30, 2011, the Company would issue 44,600 Class B Preferred Shares. 

The Company has the following additional outstanding subscriptions, options, warrants, commitments, preemptive rights, agreements, arrangements or commitments of any kind relating to the issuance or sale of, or outstanding securities convertible into or exercisable or exchangeable for, any shares of capital stock of any class or other equity interests of the Company:

  Warrants to purchase 1,841,750 shares of Common Stock;

  Stock options to purchase 541,848 shares of Common Stock under the 1998 Stock Option Plan;

  Stock options to purchase 276,000 shares of Common Stock under the 2011 Stock Option Plan; and

  Non-plan stock options to purchase 7,260,000 shares of Common Stock.

Concurrently with the execution of the Purchase Agreement, the Company is obtaining additional financing through the sale of up to 687,500 Investment Units, for an aggregate of $275,000 to three directors and one executive officer of the Company in reliance upon the provisions of Rule 506 of Regulation D, under the Securities Act of 1933, as amended. Each “Investment Unit” consists of one (1) share of the Company’s Series C Voting Convertible Preferred Stock, par value $0.01 per share, initially convertible into an equivalent number of shares of Common Stock, par value $0.01 per share, and a warrant to purchase one-tenth (1/10 th ) of a share of Common Stock.

Schedule 2.4(d)

Outstanding Registration Rights

The Company issued warrants to purchase 500,000 shares of Common Stock with registration rights to two individual members of L.T. Lawrence in 1998. Warrants covering 375,000 of the shares were cancelled. The remaining warrants covering 125,000 shares are exercisable and have registration rights if and when the Company has an initial public offering. The members have demand and piggyback registration rights with respect to the foregoing.

In 2002 the Company issued a warrant to purchase 1.0 million shares of Common Stock with registration rights to Eric Steenburgh in connection with his appointment as CEO, pursuant to a certain Series B Warrant dated April 16, 2002.  The warrant is exercisable in 3 tranches:

1 — 250,000 shares  at $.25 per share – already exercised and sold

2 — 250,000 shares at $.50 per share – already exercised and sold

3 – Warrant to purchase 500,000 shares at $.75 per share, vests upon a sale of the Company or the sale or licensing of one or more of the Company’s technology.  No triggering event has occurred yet.  No termination date.  Mr. Steenburgh has piggyback registration rights only with respect to the foregoing.

Schedule 2.4(f)

Post-Closing Capitalization

(See attached)

                                                 
            Torvec, Inc.                                
            Post Closing Capital Structure                        
            As of September 23, 2011                        
    As of 9/7/11   Financing Transaction   As of 9/23/11
             
Convertible Preferred Shares:
                                               
 
                                               
Preferred A Shares
  587,101                           587,101        
Preferred A Accum. Dividends*
  360,754                           360,754        
Preferred B Shares
  77,500                           77,500        
Preferred B Accum. Dividends*
  44,683                           44,683        
Preferred C Shares:
                                               
Golisano Investor Group
                  15,562,500           15,562,500        
Directors / Officer
      1,070,038   687,500   16,250,000   687,500   17,320,038
 
                                               
Stock Options:
                                               
 
                                               
1998 Stock Option Plan @ 6/30/11
  641,848                           641,848        
Less: Expired Since 6/30/11
  (100,000 )                           (100,000 )        
Non-Plan Options:
                                               
R. Kaplan
  5,150,000                           5,150,000        
R. Fishback
  250,000                           250,000        
Board / Advisor
  1,350,000                           1,350,000        
Retired Board
  150,000                           150,000        
Engineers
  360,000                           360,000        
2011 Stock Option Plan:
                                               
Board
  275,000                           275,000        
Employees
  1,000   8,077,848         1,000   8,077,848
 
                                               
Warrants:
                                               
 
                                               
Warrants Outstanding as of 9/7/11
  1,841,750                           1,841,750        
Financing Transaction - 9/23/11:
                                               
Golisano Investor Group
                  1,556,250           1,556,250        
Directors / Officer
      1,841,750   68,750   1,625,000   68,750   3,466,750
 
                                               
 
                                   
 
                                               
TOTAL Potentially Dilutive Shares
          10,989,636           17,875,000           28,864,636
Outstanding Common Shares
          45,700,399                     45,700,399
Total Common Shares including Dilutive Securities
          56,690,035           17,875,000           74,565,035
 
                                               
* Note: Impact from Acccumulated Dividends on Preferred Stock excludes accrual subsequent to 6/30/11....not material.
                       

Schedule 2.5

Subsidiaries and Joint Ventures

Wholly owned subsidiaries :

Iso-Torque Corporation, a New York corporation

As set forth in the Certificate of Amendment to the Certificate of Incorporation of the Company filed with the New York State Secretary of State on October 21, 2004, holders of Class B Non-Voting Cumulative Convertible Preferred Stock of the Company have the right to convert each such share into one (1) fully paid and nonassessable share of the $0.01 par value common stock of Iso-Torque Corporation.

Variable Gear LLC, a New York limited liability company

Majority owned subsidiary :

Ice Surface Development, Inc., a New York corporation (56% owned at Closing)

Majority owned joint venture :

Torvec China, LLC, a New York limited liability company (60% ownership interest at Closing).

Schedule 2.8

Transaction with Affiliates

(1) During the ten plus years prior to the incorporation of the Company, Vernon E., Keith E. and James Y. Gleasman invented and patented numerous technologies as disclosed in domestically and internationally filed patents. Upon the Company’s incorporation, the Gleasmans assigned all of their right, title and interest to and in such inventions and patents to the Company in exchange for the issuance of 16,464,400 shares of the Company’s Common Stock and the agreement of the Company to pay the Gleasmans the sum of $365,000 for expenditures in the development of these inventions and products, the Gleasmans having agreed to waive and release the Company from payment of any other expenses that they had incurred in the development of these inventions and products. The board of directors of the Company concluded that the value of the inventions, patents and patent applications assigned to the Company, as well as the value of the services rendered, had a value in excess of the par value of the number of shares transferred to the assignors and service providers, respectively. Shares issued are fully paid and nonassessable.

(2) On December 1, 1997, the Company entered into three-year consulting agreements with Vernon, Keith and James Gleasman (major stockholders, directors and officers) whereby each was obligated to provide services to the Company in exchange for compensation of $12,500 each per month. In 1997 the Company granted each Vernon, Keith and James Gleasman 25,000 nonqualified Common Stock options, exercisable immediately at $5.00 per common share for ten years. These options expired in 2007 and were not extended or replaced.

During 2001, the Company issued 126,667 common shares under these agreements for approximately $665,000 of accrued consulting fees.

On September 30, 2002, the Company granted 727,047 nonqualified Common Stock options, all exercisable immediately at $5.00 per common share, in settlement of approximately $653,000 of accrued consulting fees under these agreements. These options expired September 30, 2007 and were not extended or replaced.

On December 23, 2003, the Company granted 166,848 nonqualified Common Stock options exercisable immediately at $5.00 per common share, in settlement under the agreements for accrued consulting fees of approximately $265,000. These options are exercisable for ten years.

The Company’s consulting agreements with Vernon, Keith and James Gleasman expired on December 1, 2003 and were not renewed.

(3) During the years ended December 31, 2010 and 2009, the Company paid in business consultant common shares or cash $94,494 and $94,700 respectively, to a member of the Gleasman family for administrative, technological and engineering consulting services.

(4) During the years ended December 31, 2010 and 2009, the Company paid in business consultant common shares or cash $76,002 and $87,700 to a family member of its general counsel for engineering services rendered to the Company.

(5) On September 14, 2007, the Company moved its executive offices from Pittsford, New York to Rochester, New York, which includes both a manufacturing and executive office facility. The Rochester facility is owned by a partnership, with which Asher J. Flaum, a Company director, is associated. On April 28, 2008, the Company’s board of directors approved the terms of a lease and such lease was executed on April 29, 2008.

(6) On August 18, 2006, the Company granted 400,000 nonqualified Common Stock warrants valued at approximately $1,237,000 to a company one member of which is a director. The warrants are immediately exercisable at $3.27 per common share for a period of ten years. These warrants were modified and reissued upon mutual agreement of the parties effective October 15, 2010. These modified warrants are immediately exercisable at $.44 per common share for a period of ten years from the modification date. This modification was valued at $68,000 and the Company recognized this expense in the fourth quarter of 2010.

(7) On June 19, 2006, the Company awarded an aggregate 360,000 nonqualified Common Stock warrants valued at approximately $629,000 to a director for additional services rendered by such director as chairman of the board’s executive committee during 2006.

(8) On August 17, 2005, the Company repaid $28,000 indebtedness to a stockholder by issuing 11,667 restricted common shares, such number of shares based upon the closing price of the Company’s Common Stock on August 16, 2005.

(9) On April 28, 2008, the board of directors approved a one-time payment to its chairman of the governance and compensation committee of $46,000 for special services rendered in connection with required compliance under the Sarbanes-Oxley Act. This amount was paid by the issuance of 19,167 common shares valued as of the closing price on April 28, 2008. The Company charged $46,000 to operations in connection with such services.

(10) On October 26, 2010, the Company issued 164,187 common shares valued at approximately $62,400 to each of its chairman of the board and general counsel for services rendered in connection with the engagement of the Company’s new chief executive officer.

(11) On December 13, 2010, the Company executed a consultant agreement with a company owned by director John Hienricy, Hienrocket, Inc., to provide consulting services to the Company at a rate of $200 per hour. Pursuant to the agreement, the Company agreed to pay the consultant an incentive fee equal to $10,000 or proportionate part thereof for each $1,000,000 of revenue or proportionate part thereof actually paid and received by the Company for a period of five years provided the definitive agreement with the third party payer results from the material efforts of the consultant.

(12) Stock Option Agreement dated September 30, 2010 between the Company and Richard A. Kaplan.

(13) Employment Agreement dated October 4, 2010 between the Company and Richard A. Kaplan.

(14) Letter Agreement dated October 18, 2010 between the Company and Robert W. Fishback.

(15) Stock Option Agreement dated October 18, 2010 between the Company and Robert W. Fishback.

(16) The Company has outstanding options reflecting awards to its executive officers and directors in connection with their compensation.

(17) Three of the Company’s directors and one executive officer are participating in the Directors’ Investment Transaction.

Other than as described herein, there are no loans, leases or other agreements or transactions or proposed agreements or transactions between the Company or any present or former stockholder, director, officer or employee of the Company, or to the knowledge of the Company any member of such officer’s, director’s, employee’s or stockholder’s immediate family, or any Person controlled by such officer, director, employee or stockholder or his or her immediate family that are presently effective.

Schedule 2.12(a)

Intellectual Property Agreements

License granted by Torvec on December 12, 2007 in perpetuity to HDP, Inc., 4670 Hatchery Road, Waterford, Michigan 48329-3633 as Licensee permitting HDP, Inc. to incorporate Torvec’s Sphere-Gear Constant Velocity Joint into HDP’s Multifuel Engine for commercialization. By its terms, the license does not grant HDP, Inc. any other rights so that Torvec is free to develop, build and market the Constant Velocity Joint as it sees fit in all other markets.

Schedule 2.14

Employee Termination Obligations

Pursuant to the terms of the Employment Agreement dated October 4, 2010 between the Company and Richard A. Kaplan, if the company terminates him, removes him as CEO, or a change in control of the Company occurs, he is entitled to three years’ severance pay, consisting of base pay and any incentive compensation.

Pursuant to the terms of the Letter Agreement dated October 18, 2010 between the Company and Robert W. Fishback, if the Company terminates him, removes him as CFO, or a change in control of the Company occurs, he is entitled to 12 months’ severance pay.

Schedule 2.14(b)

ERISA Plans

None
Schedule 2.15

Compliance with Legal Requirements

As of June 30, 2011, the Company has accrued $406,000 for potential accrued payroll tax
payables. Schedule 6.2

Registration Statements

1.  Form S-8 (file no. 333-165843 – filed and declared effective on April 1, 2010) . This registration statement registered an additional 5,000,000 shares of Common Stock issuable to executive business consultants and advisors of the Company in exchange for bona fide services rendered by such consultants and advisors as authorized by the Board of Directors under the Company’s Business Consultants Stock Plan.

2

TORVEC, INC.

Warrant No. H-       

WARRANT TO PURCHASE COMMON STOCK
VOID AFTER 5:00 P.M., EASTERN TIME,
ON THE EXPIRATION DATE

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR WITHOUT DELIVERING AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

FOR VALUE RECEIVED, TORVEC, INC ., a New York corporation (the “ Company ”), hereby agrees to sell upon the terms and on the conditions hereinafter set forth, at any time commencing on the date hereof but no later than 5:00 p.m., Eastern Time, on September 23, 2021 (the “ Expiration Date ”), to        or his registered assigns (the “ Holder ”), under the terms as hereinafter set forth,        (        ) fully paid and non-assessable shares of the Company’s Common Stock, par value $.01 per share ( the “ Common Stock ”), at a purchase price per share equal to the Exercise Price (as defined below), pursuant to the terms and conditions set forth in this warrant (this “ Warrant ”). The number of shares of Common Stock issued upon exercise of this Warrant (“ Warrant Shares ”) and the Exercise Price are subject to adjustment in certain events as hereinafter set forth.

This Warrant is issued pursuant to that certain Securities Purchase Agreement among the Holder, certain other persons and the Company, dated as of September 23, 2011.

1. Exercise of Warrant.

(a) The Holder may exercise this Warrant according to the terms and conditions set forth herein by delivering to the Company, at the address set forth in Section 9 prior to 5:00 p.m., Eastern Time, on the Expiration Date (i) this Warrant, (ii) the Subscription Form attached hereto as Exhibit A (the “ Subscription Form ”) (having then been duly executed by the Holder), (iii) cash, a certified check or a bank draft in payment of the purchase price, in lawful money of the United States of America, for the number of Warrant Shares specified in the Subscription Form.

(b) This Warrant may be exercised in whole or in part so long as any exercise in part hereof would not involve the issuance of fractional Warrant Shares. If exercised in part, the Company shall deliver to the Holder a new Warrant, identical in form to this Warrant, in the name of the Holder, evidencing the right to purchase the number of Warrant Shares as to which this Warrant has not been exercised, which new Warrant shall be signed by the Chairman, Chief Executive Officer or President of the Company. The term Warrant as used herein shall include any subsequent Warrant issued as provided herein.

(c) No fractional Warrant Shares or scrip representing fractional Warrant Shares shall be issued upon the exercise of this Warrant. The Company shall pay cash in lieu of such fractional Warrant Shares. The price of a fractional Warrant Share shall equal the product of (i) the VWAP (as defined below) per share of the Common Stock on the exchange or market on which the Common Stock is then traded (if the Common Stock is not then publicly traded, then the fair market value per share of the Common Stock (as determined by the Company’s Board of Directors)), and (ii) the applicable fraction.

(d) In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for Warrant Shares so purchased, registered in the name of the Holder on the stock transfer books of the Company, shall be delivered to the Holder within a reasonable time after such rights shall have been so exercised. The person or entity in whose name any certificate for Warrant Shares is issued upon exercise of the rights represented by this Warrant shall for all purposes be deemed to have become the holder of record of such Warrant Shares immediately prior to the close of business on the date on which the Warrant was surrendered and payment of the Exercise Price and any applicable taxes was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the opening of business on the next succeeding date on which the Company’s stock transfer books are open. Except as provided in Section 4 hereof, the Company shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of Warrant Shares on exercise of this Warrant.

(e) The “ Exercise Price ” shall mean the greater of (i) $0.01 or (ii) eighty percent (80%) of the Volume Weighted Average Price (“ VWAP ”) per share of the Company’s Common Stock during the ten (10) consecutive trading days immediately preceding the date that notice of exercise is given to the Company, subject to such adjustments as are provided in Section 5 of the Warrant. As used herein, the “ Volume Weighted Average Price ” or “ VWAP ” for any security as of any date means the volume weighted average sale price per share on the Over the Counter Electronic Bulletin Board (the “ OTC-BB ”) as reported by, or based upon data reported by, Bloomberg Financial Markets or an equivalent, reliable reporting service designated reasonably and in good faith by the Company (“ Bloomberg ”) or, if the OTC-BB is not the principal trading market for such security, the volume weighted average sale price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or, if no volume weighted average sale price is reported for such security, then the last closing trade price of such security as reported by Bloomberg, or, if no last closing trade price is reported for such security by Bloomberg, the average of the bid prices of any market makers for such security that are listed with the OTC Markets Group, Inc. If the Volume Weighted Average Price cannot be calculated for such security on such date in the manner provided above, the volume weighted average price shall be the fair market value of a share of Common Stock as determined by the Company’s Board of Directors reasonably and in good faith upon the request of the Holder. “ Trading Day ” shall mean any day on which the Common Stock is traded for any period on the OTC-BB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

(f)  Net Exercise Election . In lieu of exercising this Warrant by payment of cash, the Holder may elect to receive, without the payment by the Holder of any additional consideration, a number of shares of Common Stock (rounded down to the nearest whole share) equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company (the “ Net Exercise ”), with the net issue election duly selected and initialed in the Subscription Form delivered to the Company as provided above. Thereupon the Company will issue to the Holder such number of shares of Common Stock as is computed using the following formula:

X = Y (A-B)
A

     
where X =  
the number of shares of Common Stock to be issued to the Holder
upon the Net Exercise pursuant to this Section;
Y =  
the number of shares of Common Stock exercised under this Warrant
for which the net issue election is made pursuant to this Section
(upon such Net Exercise, the number of shares of Common Stock
subject to further exercise under this Warrant shall be reduced by
this number);
A =  
the Volume Weighted Average Price of one share of the Company’s
Common Stock on the date the Net Exercise election is made pursuant
to this Section; and
B =  
the per share Exercise Price in effect under this Warrant

(g)  Exercise Prior to Expiration . To the extent this Warrant is not previously exercised as to all shares of Common Stock subject hereto, this Warrant shall be deemed automatically exercised by Net Exercise pursuant to Section 1(f) above (even if this Warrant is not surrendered) immediately before its expiration. To the extent this Warrant is deemed automatically exercised pursuant to this Section 1(g), the Company agrees to promptly notify the Holder of the number of shares of Common Stock the Holder is to receive by reason of such automatic exercise.

2. Disposition of Warrant Shares and Warrant.

(a) The Holder hereby acknowledges that: (i) this Warrant and any Warrant Shares purchased pursuant hereto are not being registered (A) under the Securities Act of 1933 (the “ Securities Act ”) on the ground that the issuance of this Warrant is exempt from registration under Section 4(2) of the Securities Act as not involving any public offering, or (B) under any applicable state securities law because the issuance of this Warrant does not involve any public offering; and (ii) that the Company’s reliance on the registration exemption under Section 4(2) of the Securities Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Holder. The Holder represents and warrants that he, she, or it is acquiring this Warrant and will acquire Warrant Shares for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing this Warrant or Warrant Shares.

(b) The Holder hereby agrees that it will not sell, transfer, pledge or otherwise dispose of (collectively, “ Transfer ”) all or any part of this Warrant and/or Warrant Shares unless and until (A) the securities to be transferred are eligible for transfer under Rule 144 under the Securities Act, (B) there is in effect a registration statement under the Securities Act covering the proposed transaction, or (C) he shall have first have given notice to the Company describing such Transfer and furnished to the Company (i) a statement from the transferee, whereby the transferee represents and warrants that he, she, or it is acquiring this Warrant and will acquire Warrant Shares, as applicable, for investment for his own account, with no present intention of dividing his participation with others or reselling or otherwise distributing this Warrant or Warrant Shares, as applicable, and either (ii) an opinion, reasonably satisfactory to counsel for the Company, of counsel (skilled in securities matters, selected by the Holder and reasonably satisfactory to the Company) to the effect that the proposed Transfer may be made without registration under the Securities Act and without registration or qualification under any state law, or (iii) an interpretative letter from the U.S. Securities and Exchange Commission to the effect that no enforcement action will be recommended if the proposed sale or transfer is made without registration under the Act. It is agreed that, provided an opinion of counsel is not required by the Company’s transfer agent, (i) the Company shall not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances, and (ii) no registration statement or opinion of counsel shall be necessary for a transfer without consideration by a Holder to an Affiliate of such Holder or without consideration by a Holder which is (A) a partnership to its partners or retired partners in accordance with partnership interests, (B) a corporation to its shareholders in accordance with their interest in the corporation, (C) a limited liability company to its members or former members in accordance with their interests in the limited liability company, (D) an individual Holder to such Holder’s Immediate Family Member or a trust for the benefit of the individual Holder or an Immediate Family Member thereof. As used in this Section 2(b), “ Affiliate , ” as used in this Section, means, with respect to any specified person, any other person who, directly or indirectly, controls, is controlled by, or is under common control with such person, including without limitation any general partner, managing member, officer or director of such person, and “ Immediate Family Member ” means, with respect to a specified person, such person’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships.

(c) If, at the time of issuance of Warrant Shares, no registration statement is in effect with respect thereto under applicable provisions of the Securities Act and Rule 144 or another similar exemption under the Securities Act is not available for the sale of all of such Warrant Shares without limitation during a three-month period without registration, the Company may, at its election, require that (i) the Holder provide written reconfirmation of the Holder’s investment intent to the Company, and (ii) any stock certificate evidencing Warrant Shares shall bear legends reading substantially as follows:

“THE SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE WARRANT PURSUANT TO WHICH THESE SHARES WERE PURCHASED FROM THE COMPANY. COPIES OF SUCH RESTRICTIONS ARE ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. NO TRANSFER OF SUCH SHARES OR OF THIS CERTIFICATE (OR OF ANY SHARES OR OTHER SECURITIES (OR CERTIFICATES THEREFOR) ISSUED IN EXCHANGE FOR OR IN RESPECT OF SUCH SHARES) SHALL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS SET FORTH IN THE WARRANT HAVE BEEN COMPLIED WITH.”

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT.”

In addition, so long as the foregoing legend may remain on any stock certificate evidencing Warrant Shares, the Company may maintain appropriate “stop transfer” orders with respect to such certificates and the shares represented thereby on its books and records and with those to whom it may delegate registrar and transfer functions.

3.  Reservation of Shares . The Company hereby agrees that at all times there shall be reserved for issuance upon the exercise of this Warrant such number of shares of the Common Stock as shall be required for issuance upon exercise of this Warrant. The Company further agrees that all Warrant Shares will be duly authorized and will, upon issuance and payment of the exercise price therefor, be validly issued, fully paid and non-assessable, free from all taxes, liens, charges and encumbrances with respect to the issuance thereof, other than taxes, if any, in respect of any transfer occurring contemporaneously with such issuance and other than transfer restrictions imposed by federal and state securities laws.

4.  Exchange, Transfer or Assignment of Warrant . Subject to Section 2, this Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of the Company (“ Warrants ”) of different denominations, entitling the Holder or Holders thereof to purchase in the aggregate the same number of Warrant Shares purchasable hereunder. Subject to Section 2, upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form attached hereto as Exhibit B (the “ Assignment Form ”) duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in the Assignment Form and this Warrant shall promptly be canceled. Subject to Section 2, this Warrant may be divided or combined with other Warrants that carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof.

5.  Capital Adjustments . This Warrant is subject to the following further provisions:

(a)  Recapitalization, Reclassification and Succession . If any recapitalization of the Company or reclassification of its Common Stock or any merger or consolidation of the Company into or with a corporation or other business entity, or the sale or transfer of all or substantially all of the Company’s assets or of any successor corporation’s assets to any other corporation or business entity (any such corporation or other business entity being included within the meaning of the term “successor corporation”) shall be effected, at any time while this Warrant remains outstanding and unexpired, then, as a condition of such recapitalization, reclassification, merger, consolidation, sale or transfer, lawful and adequate provision shall be made whereby the Holder of this Warrant thereafter shall have the right to receive upon the exercise hereof as provided in Section 1 and in lieu of the Warrant Shares immediately theretofore issuable upon the exercise of this Warrant, such shares of capital stock, securities or other property as may be issued or payable with respect to or in exchange for the number of outstanding shares of Common Stock equal to the number of Warrant Shares immediately theretofore issuable upon the exercise of this Warrant had such recapitalization, reclassification, merger, consolidation, sale or transfer not taken place, and in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.

(b)  Subdivision or Combination of Shares . If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the number of Warrant Shares purchasable upon exercise of this Warrant shall be proportionately adjusted.

(c)  Stock Dividends and Distributions . If the Company at any time while this Warrant is outstanding and unexpired shall issue or pay the holders of its Common Stock, or take a record of the holders of its Common Stock for the purpose of entitling them to receive, a dividend payable in, or other distribution of, Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant shall be adjusted to the number of shares of Common Stock that Holder would have owned immediately following such action had this Warrant been exercised immediately prior thereto.

(d)  Price Adjustments . Whenever the number of Warrant Shares purchasable upon exercise of this Warrant is adjusted pursuant to Sections 5(a), 5(b) or 5(c), the Exercise Price shall be proportionately adjusted.

(e)  Certain Shares Excluded . The number of shares of Common Stock outstanding at any given time for purposes of the adjustments set forth in this Section 5 shall exclude any shares then directly or indirectly held in the treasury of the Company.

6.  Notice to Holders .

(a) Notice of Record Date. In case:

(i) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend payable out of earned surplus of the Company) or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right;

(ii) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation with or merger of the Company into another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation; or

(iii) of any voluntary dissolution, liquidation or winding-up of the Company;

then, and in each such case, the Company will mail or cause to be mailed to the Holder hereof at the time outstanding a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any, is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution or winding-up. Such notice shall be mailed at least twenty (20) calendar days prior to the record date therein specified, or if no record date shall have been specified therein, at least twenty (20) days prior to such specified date.

(b)  Certificate of Adjustment . Whenever any adjustment shall be made pursuant to Section 5 hereof, the Company shall promptly make available and have on file for inspection a certificate signed by its Chairman, Chief Executive Officer, President or a Vice President, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Exercise Price and number of Warrant Shares purchasable upon exercise of this Warrant after giving effect to such adjustment.

7.  Loss, Theft, Destruction or Mutilation . Upon receipt by the Company of evidence satisfactory to it, in the exercise of its reasonable discretion, of the ownership and the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of indemnity reasonably satisfactory to the Company and, in the case of mutilation, upon surrender and cancellation thereof, the Company will execute and deliver in lieu thereof, without expense to the Holder, a new Warrant of like tenor dated the date hereof.

8.  Warrant Holder Not a Shareholder . The Holder of this Warrant, as such, shall not be entitled by reason of this Warrant to any rights whatsoever as a shareholder of the Company, including but not limited to voting rights.

9.  Notices . Any notice provided for in this Warrant must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and return receipt requested), or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated:

If to the Company:

Torvec, Inc.

1999 Mt. Read Boulevard, Building 3

Rochester, New York 14615

Attention: Chief Executive Officer

If to the Holder:

To the address of such Holder set forth on the books and records of the Company,

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Warrant will be deemed to have been given (a) if personally delivered, upon such delivery, (b) if mailed, five days after deposit in the U.S. mail, or (c) if sent by reputable overnight courier service, one business day after such services acknowledges receipt of the notice.

10.  Choice of Law . THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAW RULES.

IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its behalf, in its corporate name and by a duly authorized officer, as of this 23rd day of September 2011.

TORVEC, INC.

By:
Name:       
Title:       

1

EXHIBIT A
SUBSCRIPTION FORM

Torvec, Inc.

Torvec, Inc.

1999 Mt. Read Boulevard, Building 3

Rochester, New York 14615

Attention: Chief Executive Officer

The undersigned hereby (1) irrevocably elects to exercise his or its rights to purchase       shares of Company’s Common Stock, par value $.01 per share (“ Common Stock ”) covered by the attached Warrant, and (2) [check one]        (i) makes payment in full of the purchase price therefore by enclosure of cash, a certified check or bank draft, or        (ii) elects to purchase the Warrant Shares by Net Exercise (as defined in the Warrant), and (3) requests that certificates for such shares of Common Stock be issued in the name of:

(Please print the Warrant holder’s name, address and Social Security/Tax Identification Number)
     
     
     
and (4) if such number of shares of Common Stock shall not be all the shares receivable upon exercise of the attached Warrant, requests that a new Warrant for the balance of the shares covered by the attached Warrant be registered in the name of, and delivered to:

(Please print name, address and Social Security/Tax Identification Number)
     
     
     
In lieu of receipt of a fractional share of Common Stock, the undersigned will receive a check representing payment therefor.

Dated:              

PRINT WARRANT HOLDER NAME

Name:       

Title:       

Witness:

      

2

EXHIBIT B
ASSIGNMENT FORM

Torvec, Inc.
1999 Mt. Read Boulevard, Building 3
Rochester, New York 14615
Attention: Chief Executive Officer

FOR VALUE RECEIVED, hereby sells, assigns and transfers unto

(Please print assignee’s name, address and Social Security/Tax Identification Number)
     
     
     
the right to purchase the Common Stock, par value $.01 per share, of Torvec, Inc., a New York corporation, represented by this Warrant to the extent of shares as to which such right is exercisable and does hereby irrevocably constitute and appoint        , Attorney, to transfer the same on the books of the Company with full power of substitution in the premises.

Dated:              

PRINT WARRANT HOLDER NAME

Name:       

Title:       

Witness:

      

3

SUBSCRIPTION AGREEMENT
Torvec, Inc., a New York corporation

Torvec, Inc.,
1999 Mt. Read Blvd. Building 3,
Rochester, New York 14615

Gentlemen:

This Subscription Agreement (the “ Agreement ”) is made by and between Torvec, Inc. , a New York corporation (the “ Company ”), and the undersigned, a director or executive officer of the Company (the “ Subscriber ”) in connection with the private placement of up to 687,500 Investment Units, for an aggregate of $275,000 to three directors and one executive officer of the Company (the “ Purchasing Directors Financing ”). Each Investment Unit consists of one (1) share of the Company’s Series C Voting Convertible Preferred Stock, par value $0.01 per share (the “ Series C Preferred Stock ”) initially convertible into an equivalent number of shares of common stock of the Company, par value $0.01 per share (“ Common Stock ”), and a warrant to purchase one-tenth (1/10 th ) of a share of Common Stock (the “ Warrant ”, and together with the Series C Preferred Stock, and the Common Stock issuable upon exercise of the Warrant or conversion of the shares of Series C Preferred Stock, each a “ Company Security ” and collectively, the “ Company Securities ”). The Purchasing Directors Financing is part of a transaction whereby the Company is obtaining financing concurrently herewith, of approximately $6.23 million through the sale of 15,562,500 Investment Units to lead investor, B. Thomas Golisano, and other accredited investors(the “ Golisano Financing ”), for an aggregate of $6.5 million with the Investment Units to be purchased in the Purchasing Directors Transaction (collectively, the “ Financing ”).The offer and sale of the Investment Units in the Financing are being made in reliance upon the provisions of Rule 506 of Regulation D, under the Securities Act of 1933, as amended (the “ Securities Act ”).

In consideration of any agreement by the Company to accept the Subscriber’s subscription upon the terms and conditions set forth herein, the Subscriber agrees and represents as follows:

1.  Subscription .

(a) The Subscriber hereby irrevocably subscribes to purchase from the Company at a purchase price of $0.40 per Investment Unit, that number of Investment Units as shall have been subscribed for by the Subscriber as set forth on the signature page of this Agreement.

(b) Simultaneously with the execution of this Agreement, the Subscriber is paying and delivering to the Company a check made payable to “Torvec, Inc.,” in the amount of the aggregate purchase price due for the purchase of the Investment Units subscribed. Subscriber further understands the payments made hereunder may be used by the Company as working capital or for other purposes that the Company may determine in its sole discretion.

2.  Effectiveness . Subscriber agrees that this Agreement shall not be binding on the Company unless and until it is accepted by the Company. Until accepted, this Agreement constitutes an irrevocable offer to the Company. Subscriber also understands and agrees that the Company may refuse to accept this Agreement for any reason and this Agreement shall not be accepted until the funds paid by Subscriber herewith clear and are credited to the account of the Company.

3.  Investment Representations .

Subscriber hereby makes the representations and warranties set forth below with the express intention that they be relied upon by the Company in determining the suitability of the Subscriber to purchase Investment Units:

(a) Subscriber is aware that the Investment Units and the underlying Company Securities is a speculative investment involving a high degree of risk and the potential loss of his/her entire investment. Subscriber acknowledges that there is no minimum aggregate number of Investment Units that must be purchased pursuant to this Agreement. There is no arrangement to place funds in an escrow, trust, or similar account and all subscription deposits will be paid directly to the Company.

(b) Subscriber can bear the economic risk of this investment and can afford a complete loss of this investment; and Subscriber (A) has sufficient liquid assets to pay the full purchase price for the shares of the Investment Units; (B) has adequate means of providing for Subscriber’s current needs and possible personal contingencies, and has no present need for liquidity of Subscriber’s investment in the Investment Units; (C) does not have a commitment to investments which are not readily marketable or transferable which is disproportionate to Subscriber’s net worth; and (D) Subscriber’s investment in the Investment Units will not cause such commitment to become excessive.

(c) Subscriber has sought and received such accounting, legal and tax advice as the Subscriber has considered necessary to make an informed investment decision.

(d) Subscriber has had the opportunity to review publicly available materials filed by the Company with the Securities and Exchange Commission (“ SEC ”) pursuant to the Securities Exchange Act of 1934, as amended, including, but not limited to, the Risk Factors related to the Company’s business and an investment in its Common Stock. The Company has made available to Subscriber, a reasonable time prior to the date hereof, the opportunity to ask questions of, and to receive answers from, the Company and its representatives, concerning the terms and conditions of the Financing, including the Golisano Financing, and access to any information, documents, financial statements, records and books (i) relative to the Company, the business, the Financing, including the Golisano Financing, and an investment in the Company, and (ii) necessary to verify the accuracy of any information furnished to Subscriber.

(e) Subscriber understands that the Investment Units and the underlying Company Securities have not been registered under the Securities Act or pursuant to the provisions of the securities or other laws of any applicable jurisdictions, in reliance upon certain exemptions contained in the Securities Act and Regulation D promulgated thereunder and in the laws of such jurisdictions. Subscriber is fully aware that Subscriber’s purchase of the Investment Units, is to be accepted by the Company in reliance upon such exemptions based upon Subscriber’s representations, warranties and agreements contained herein. The Subscriber further understands and agrees that the Company will not honor any attempt by the Subscriber to sell, pledge, transfer or otherwise dispose of any of the Investment Units or the underlying Company Securities in the absence of an effective registration statement for such shares of the Company Securities, or an opinion of counsel satisfactory to the Company that an exemption from any applicable registration requirements is available. The Subscriber further understands that the Company is under no obligation to register the Investment Units and the underlying Company Securities or make an exemption from registration available and that the Company has not represented that it will make any attempt to so register the Investment Units and the underlying Company Securities to make such an exemption thereto available. Subscriber is fully aware of the restrictions on sale, transferability, and assignment of the Company’s securities for an indefinite period of time.

(f) Subscriber knows of no public solicitation or advertisement of any offer in connection with the proposed issuance and sale of the securities hereunder. Subscriber is not purchasing the Investment Units as a result of any advertisement, article, notice or other communication regarding the Company or the Investment Units published in any newspaper, magazine or similar media or broadcast over television or radio or the Internet or presented at any seminar or through any other general solicitation or general advertisement and acknowledges that the Subscriber had a preexisting business or personal relationship with an officer or director of the Company.

(g) Subscriber understands that the Investment Units are being offered only to accredited investors . Subscriber has delivered herewith a Representation of Accredited Investor (attached as Exhibit A hereto) and the Subscriber represents that the information contained in such Representation is true and accurate as of the date hereof. The Subscriber agrees to advise the Company if any of the information contained in the Representation materially changes prior to acceptance of this subscription.

(h) The Subscriber has delivered herewith a Form W-9 — Request for Taxpayer Identification Number and Certification (attached as Exhibit B hereto), and the Subscriber represents that the information contained in such Form W-9 is true and accurate as of the date hereof. The Subscriber agrees to supplement the information in such Form W-9 as may be necessary to ensure that the information contained in such Form W-9 remains correct in all material respects.

(i) Subscriber’s execution and delivery of this Agreement has been duly authorized by all necessary action. Subscriber agrees not to transfer or assign this Agreement or any of Subscriber’s interest herein. Subscriber is acquiring the Investment Units for Subscriber’s own account and not as a fiduciary or nominee for any other person and for investment purposes only and not with a view to or for the transfer, assignment, resale, or distribution thereof, in whole or in part. Subscriber has no present plans to enter into any such contract, undertaking, agreement, or arrangement. Subscriber understands the meaning and legal consequences of the foregoing representations and warranties. Subscriber is not an “underwriter” of any of the Company’s securities, as that term is defined in Section 2(11) of the Securities Act, and Subscriber will not take or cause to be taken any action that would cause Subscriber to be deemed an “underwriter” of the securities.

(j) Subscriber has the full power and authority to execute, deliver and perform this Agreement. This Agreement, when executed and delivered by Subscriber, will constitute a valid and legally binding obligation of Subscriber, enforceable in accordance with its terms.

(k) Subscriber is a resident of the State or other jurisdiction set forth on the Signature Page of this Agreement and has reviewed any legend applicable to such state or jurisdiction in Paragraph 4 hereof.

(l) Subscriber acknowledges that, except as expressly set forth in this Agreement, neither the Company, nor any other Person acting on the Company’s behalf has made any other representations and warranties of any kind or nature whatsoever to the Subscriber in connection with the sale of the Investment Units hereunder, including without limitation, any representation or warranty regarding the Company, its business, financial statements, results of operations, financial condition or future prospects.

(m) The foregoing representations and warranties are true and correct as of the date of Subscriber’s purchase of the Investment Units subscribed for herein, and each such representation and warranty shall survive such purchase. Subscriber agrees to notify the Company immediately as soon as any such representation or warranty is no longer true and correct.

4.  Legends . Each certificate representing shares of the Series C Voting Convertible Preferred Stock and the Common Stock issuable upon the conversion thereof, which may be issued by the Company hereunder shall bear the following legend:

“NO SALE, OFFER TO SELL, OR TRANSFER OF THE SERIES C PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE, OR THE SECURITIES ISSUABLE UPON THE CONVERSION THEREOF, SHALL BE MADE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND IS IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS.”

The Subscriber agrees that a legend shall be placed on the Warrant in the form presented to Subscriber, and a similar legend shall be placed on the Common Stock issuable upon the exercise thereof.

5.  Indemnification . Subscriber hereby agrees to indemnify and hold harmless the Company and its affiliated persons and entities (other than Subscriber) from any and all damages, losses, costs, and expenses (including reasonable attorneys’ fees) which it may incur by reason of Subscriber’s failure to fulfill any of the terms and conditions of this purchase or by reason of any misrepresentation or breach of any of the warranties contained herein. In this regard, Subscriber agrees to hold the Company and its controlling persons harmless from all expenses, liabilities, and damages deriving from an assignment or disposition of any shares of our Company Securities subscribed for and/or purchased hereby in a manner which violates the Securities Act, or of any applicable state securities law or which may be suffered by the indemnified person by reason of any misrepresentation or breach of any warranty or agreement by Subscriber set forth herein.

6 Securities Laws . Subscriber understands that this Financing has not been reviewed by the U.S. Securities and Exchange Commission or the securities commissioner or Attorney General of any state due to the exempted nature of this Financing. Subscriber understands that any Financing literature used in conjunction with this Financing has not been reviewed by the U.S. Securities and Exchange Commission or the Attorney General or securities commissioner of any state and therefore has not been approved by the U.S. Securities and Exchange Commission or any state securities commissioner.

7 Notices . All notices and other communications required or permitted hereunder shall be in writing, shall be effective when given, and shall in any event be deemed to be given upon receipt by the other party or, if earlier, (a) five (5) days after deposit with the United States Postal Service or other applicable postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if delivered by hand, (c) one (1) business day after the business day of deposit with Federal Express or similar overnight courier, freight prepaid or (d) one (1) business day after the business day of facsimile transmission, if delivered by facsimile transmission with copy by first class mail, postage prepaid, and shall be addressed to the parties at the following addresses and/or facsimile numbers (or at such other address or number for a party as shall be specified by like notice):

(a) If to the Company, to the address first set forth in the beginning of this Agreement;

(b) If to Subscriber, to the address set forth on the signature page of this Agreement for Subscriber.

8.  Governing Law . This Agreement shall be governed in all respects, including, without limitation, validity, interpretation and effect, by the internal laws of the State of New York as applied to contracts entered into and entirely performed within such state.

9.  Severability . If any provision of this Agreement, or the application thereof, will for any reason and to any extent be invalid or unenforceable, the remainder of this Agreement and application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision.

10.  Entire Agreement . This Agreement, and the exhibits attached hereto, constitute the entire agreement between the parties hereto with respect to the subject matter hereof, are intended to be limited to the expressly provided provisions hereof, and supersede any prior agreements, representations or understandings, both written and oral, between the parties hereto with respect to the subject matter hereof, including, but not limited to, any prior Subscription Agreement which may have been executed in favor of the Company by the Subscriber.

11.  Binding Effect . This Agreement is binding upon and will inure to the benefit of the parties hereto and their respective successors and permitted assigns.

12.  Amendment . This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.

13.  Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

1

SIGNATURE PAGE

The undersigned hereby subscribes for the number of Investment Units as indicated below.

      Number of Investment Units subscribed:

       Investment Units X $0.40 per Investment Unit = $       .00 payment.

IN WITNESS WHEREOF , the undersigned has executed this Subscription Agreement this        day of September, 2011.

Signature:
Name (Print):
Address:

SSN or EIN:

Title of Authorized Signatory if Subscriber is a corporation, partnership or other entity

Subscription for        shares of Investment Units accepted this        day of September, 2011.

Torvec, Inc.,

By:
Name:
Title:

EXHIBIT A

REPRESENTATION OF ACCREDITED INVESTOR

In connection with the proposed offering by Torvec, Inc., a New York corporation (the “ Company ”), of investment units (the “ Investment Units ”), each consisting of one (1) share of the Company’s Series C Voting Convertible Preferred Stock, par value $0.01 per share, initially convertible into an equivalent number of shares of common stock of the Company, par value $0.01 per share (“ Common Stock ”), and a warrant to purchase one-tenth (1/10 th ) of a share of the Common Stock, at a purchase price of $0.40 per Investment Unit in a transaction intended to qualify as a private placement of securities exempt from registration under the Securities Act of 1933, as amended (the “ Act ”), pursuant to Section 4(2) thereof and Regulation D promulgated thereunder, I, the undersigned, furnish the following representations and information:

REPRESENTATIONS

1. I have such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of an investment in the Investment Units. I am offering as evidence of my knowledge and experience in these matters the information indicated below.

2. I am an Accredited Investor (as that term is defined in Attachment 1 hereto), as evidenced by my satisfying at least one of the following standards (initial the one that applies):

             (a) I am an individual and had Income in excess of $200,000 in the two most recent years or joint Income with my spouse in excess of $300,000 in the two most recent years and reasonably expect to have Income in excess of this level in the current year. For purposes of this Representation, “Income” shall mean salary and bonus income, taxable income (gross receipts less cost of goods or services and expenses) in the case of sale of proprietorships, distributable income from trusts and partnerships, interest and dividend income (excluding unrealized gains) and vested contributions made on behalf of an individual; or

             (b) I am an individual and my net worth (i.e., excess of total assets over total liabilities), either individually or together with my spouse, is at least $1,000,000, excluding the value of my primary residence; or

             (c) I am a corporation or partnership, not formed for the purpose of acquiring the shares, with total assets in excess of $5,000,000; or

             (d) I am an entity in which all of the equity owners meet the standards set forth in any of the immediately preceding subparagraphs. (If this standard is initialed, then each such equity owner must complete and return a copy of this Representation); or

         
        (e)  
I am an executive officer or director of the Company; or
        (e)  
Other (specify by reference to Attachment 1 ):
       
 

3. I am acquiring the Investment Units for my own account as principal for my investment and not with a view toward resale or distribution.

4. My present financial position, including my other security holdings, and my financial needs are such that:

(a) my investment in the Investment Units is suitable for me, and I am able to bear the economic risk of losing all funds invested; and

(b) I am able to bear the economic burden of having all such funds tied up in an essentially illiquid investment for an extended period of time.

5. All questions that I have had concerning the investment have been answered to my complete satisfaction.

6. All documents, books and records of the Company relative to this investment have been made available for my inspection.

7. I further acknowledge that the representations and information contained herein support the reasonable belief of Torvec, Inc., that I qualify within one of the above categories of Accredited Investors.

IN WITNESS WHEREOF , I have executed this Representation of Accredited Investor this        day of September, 2011 and declare that it is truthful and correct.

     
     
Signature of Prospective Purchaser
       
Signature of Prospective Co-Purchaser
     
PRINT Purchaser Name
       
PRINT Co-Purchaser Name
     
Title, if applicable
       
Title, if applicable

(Check one)

       Individually

       Joint tenants with right of survivorship

       Tenants in common

       Partnership

       As custodian, Trustee or agent for       

       Company

ATTACHMENT 1
Definition of Accredited Investor

Accredited investor. Accredited investor shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person:

(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $ 5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $ 5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

(2) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

(3) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

(4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

(5) Any natural person whose individual net worth or joint net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000 excluding the value of the primary residence of such natural person;

(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in 17 C.F.R. § 230.506(b)(2)(ii); and

(8) Any entity in which all of the equity owners are accredited investors.

EXHIBIT B

FORM W-9

2

INVESTORS’ RIGHTS AGREEMENT

THIS INVESTORS’ RIGHTS AGREEMENT is made as of the 23rd day of September, 2011, by and among Torvec, Inc., a New York corporation (the “ Company ”), B. Thomas Golisano, a resident of the State of Florida (the “ Investor ”), and Charles T. Graham and David Still (collectively, the “ Additional Investors ”). The “Investor” and the “Additional Investors” are referred to collectively as the “Purchasers.”

RECITALS

WHEREAS , the Company and the Purchasers are parties to that certain Securities Purchase Agreement of even date herewith (the “ Purchase Agreement ”); and

WHEREAS , in order to induce the Company to enter into the Purchase Agreement and to induce the Purchasers to invest funds in the Company pursuant to the Purchase Agreement, the Purchasers and the Company hereby agree that this Agreement shall govern the rights of the Purchasers to cause the Company to register shares of Common Stock issuable to the Purchasers, to receive certain information from the Company, and to participate in future equity offerings by the Company, and shall govern certain other matters as set forth in this Agreement;

NOW, THEREFORE , the parties to this Agreement agree as follows:

1.  Definitions . For purposes of this Agreement:

1.1. “ Affiliate ” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person.

1.2. “ Certificate of Incorporation ” means the Company’s Certificate of Incorporation, as amended from time to time.

1.3. “ Common Stock ” means shares of the Company’s common stock, par value $0.01 per share.

1.4. “ Compensatory Equity Interest ” means any equity security (or any commitment to sell, grant or issue any equity security under any option, warrant, conversion or exchange right or otherwise) of the Company or any subsidiary or any phantom stock, stock appreciation right or similar equity or equity-based compensation right of the Company or any subsidiary, (i) awarded as compensation for or as an incentive to service or continued service with the Company (including without limitation under the 2011 Stock Option Plan or any other option or other equity incentive plan) to employees, officers, or directors or, or consultants, advisors or other providers of services to, the Company, (ii) issued as payment for rent or other sums under any lease or (iii) issued as payment of royalties or other consideration under any license agreement; provided, however that Compensatory Equity Interests shall not include (A) outstanding options and warrants, listed on Section 2.4 of the Purchase Agreement, and (B) conversion and dividend rights now provided for in the certificate of incorporation as amended to date.

1.5. “ Compensating Shares ” has the meaning given to that term in Subsection 5.2 .

1.6. “Damages ” means any loss, damage, or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, or liability (or any action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifyin g party (or any of its agents or Affiliates ) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

1.7. “Deemed Common Shares ” means, with respect to a Purchaser, (i) the number of shares of Common Stock issuable or issued upon conversion of the Series C Preferred Stock acquired by the Purchaser under the Purchase Agreement, (ii) the number of Compensating Shares, if any, issued or issuable to such Purchaser; (ii) the number of shares of Common Stock issued or issuable upon exercise of the Warrants acquired by the Purchaser under the Purchase Agreement; and (iii) the number of shares of Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i), (ii) and (iii) above, in each case as adjusted for stock splits, stock dividends, combinations, and other recapitalizations for which adjustment has not otherwise been made.

1.8. “ Derivative Securities ” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly) , Common Stock, including options and warrants.

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

1.10. “ Excluded Registration ” means (i) a registration relating to the sale of securities to employees, directors or consultants of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

1.11. “ Exempted Securities ” means (i) shares of capital stock or Derivative Securities issued as a dividend or distribution on any capital stock or Derivative Securities of the Company; (ii) shares of capital stock or Derivative Securities issued by reason of a stock split, combination, split-up or other reorganization or recapitalization of the Company’s capital stock; (iii) shares of Common Stock or Derivative Securities issued to employees or directors of, or consultants or advisors to, the Company or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Company; (iv) a Compensatory Equity Interest; (v) shares of Common Stock or Derivative Securities actually issued upon the exercise of options or warrants, or shares of Common Stock actually issued upon the conversion or exchange of Derivative Securities, in each case provided such issuance is pursuant to the terms of such Derivative Securities; (vi) securities issued pursuant to the Directors’ Investment Transaction (as defined in the Purchase Agreement); and (vii) shares of Common Stock or Derivative Securities issued pursuant to the acquisition of another company by the Company by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement or otherwise in a bona fide acquisition of business assets.

1.12. “ Form S-3 ” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

1.13. “ Holder ” means any holder of Registrable Securities who is a party to this Agreement or an assignee thereof who succeeds to rights at issue.

1.14. “ Immediate Family Member ” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to herein.

1.15. “ New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are convertible or exchangeable into or exercisable for such equity securities (including without limitation Derivative Securities).

1.16. “ Ownership Percentage ” means at the time of measurement, the proportion that the Deemed Common Shares then beneficially held by a Purchaser, bears to the total Common Stock of the Company then outstanding or issuable pursuant to outstanding Derivative Securities, assuming full conversion and/or exercise, as applicable, of all such Derivative Securities then outstanding, expressed as a percentage. For avoidance of doubt, such Derivative Securities include, but are not limited to, the preferred stock, warrants and options described in Section 2.4(a) of the Purchase Agreement, and the Series C Preferred Stock.

1.17. “ Person ” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

1.18. “ Purchased Securities ” means the Series C Preferred Stock and Warrants purchased by the Purchasers under the Purchase Agreement.

1.19. “Registrable Securities ” means (i) the Common Stock issuable or issued upon conversion of the Series C Preferred Stock acquired by the Purchasers under the Purchase Agreement and any Compensating Shares issued to such Persons; (ii) any Common Stock issued or issuable upon exercise of the Warrants acquired by the Purchasers under the Purchase Agreement; and (iii) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clauses (i) and (ii) above; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Subsection 6.1 , and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Subsection 2.12 of this Agreement.

1.20. “ Requisite Holders ” means, as of any date and as to any provision of this Agreement, the holders (and their assignees) who have the benefit of the provision of this Agreement at issue, of at least two-thirds (2/3) of the Deemed Common Shares deemed owned by all such holders.

1.21. “ Restricted Securities ” means the securities of the Company required to bear the legend set forth in Subsection 2.11(b) hereof.

1.22. “ Sale of the Company ” means a Deemed Liquidation Event, as that term is defined in the Certificate of Amendment to the Company’s Certificate of Incorporation that creates the Series C Preferred Stock.

1.23. “ SEC ” means the Securities and Exchange Commission.

1.24. “ SEC Rule 144 ” means Rule 144 promulgated by the SEC under the Securities Act.

1.25. “ SEC Rule 145 ” means Rule 145 promulgated by the SEC under the Securities Act.

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

1.27. “ Selling Expenses ” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Subsection 2.6 .

1.28. “ Series C Preferred Stock ” means shares of the Company’s Series C Voting Convertible Preferred Stock, par value $0.01 per share.

1.29. “ Underlying Shares ” shall have the meaning given thereto in the Purchase Agreement.

1.30. “ Warrant ” or “ Warrants ” shall have the meaning given thereto in the Purchase Agreement.

2.  Registration Rights . The Company covenants and agrees as follows:

2.1. Registration .

(a) If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price of at least $500,000 (the “Initiating Holders”), then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsection 2.1(b) .

(b) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Subsection 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential, provided that the Company’s officers and directors are prohibited from trading in the Company’s securities during the same period; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than one hundred twenty (120) days after the request of the Initiating Holders is given; provided , however , that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such one hundred twenty (120) day period other than an Excluded Registration.

2.2. Limitation on Registration Rights . The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Subsection 2.1(a) (i) during the period that is ninety (90) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided, that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the Company has effected one registration pursuant to Subsection 2.1(a) during the twelve (12) month period immediately preceding the date of such request. A registration shall not be counted as “effected” for purposes of this Subsection 2.2 until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, and elect not to pay the registration expenses therefor that they are required to pay pursuant to Subsection 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Subsection 2.2.

2.3. Underwriting Requirements .

(a) If, pursuant to Subsection 2.1 , the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Subsection 2.1 , and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Initiating Holders; provided, that such underwriter(s) shall be reasonably acceptable to the Company’s Board of Directors (such approval not to be unreasonably withheld, conditioned or delayed). In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Subsection 2.4(e) ) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Subsection 2.2, if the managing underwriter(s) advise(s) the Company in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Company shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided , however , that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.

(b) For purposes of Subsection 2.1 , a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Subsection 2.2(a) , fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

2.4. Obligations of the Company . Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided , however , that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to eighteen (18) months, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

(b) prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

(c) furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

(d) use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

(f) use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

(g) provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

(h) promptly make available for inspection by the selling Holders, any managing underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

(i) notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

(j) after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

2.5. Furnish Information . It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

2.6. Expenses of Registration . All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2 , including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements of one counsel for the selling Holders (“ Selling Holder Counsel ”), shall be borne and paid by the Company; provided , however , that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Subsection 2.1 if the registration request is subsequently withdrawn (other than because of material adverse information relating to the Company that is different from the information known or available, upon request from the Company or otherwise, to the Holders requesting registration at the time of their request for registration) at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Initiating Holders agree to forfeit their right to the registration for such twelve month period pursuant to Subsection 2.1 . All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

2.7. Delay of Registration . No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2 .

2.8. Indemnification . If any Registrable Securities are included in a registration statement under this Section 2 :

(a) To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided , however , that the indemnity agreement contained in this Subsection 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

(b) To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided , however , that the indemnity agreement contained in this Subsection 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Subsections 2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

(c) Promptly after receipt by an indemnified party under this Subsection 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Subsection 2.8 , give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided , however , that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Subsection 2.8 , only to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Subsection 2.8 .

(d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Subsection 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Subsection 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Subsection 2.8 , then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided , however , that, in any such case, (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Subsection 2.8(d) , when combined with the amounts paid or payable by such Holder pursuant to Subsection 2.8(b) , exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder ) , except in the case of willful misconduct or fraud by such Holder.

(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

(f) Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Subsection 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2 , and otherwise shall survive the termination of this Agreement.

2.9. Reports Under Exchange Act . With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

(a) make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144;

(b) use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act.

2.10. “Market Stand-off” Agreement .

(a) Each Holder hereby agrees that in connection with an underwritten public offering by the Company other than an Excluded Registration, it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of its Common Stock under the Securities Act and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days, plus such additional period (not to exceed seventeen (17) days) as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Subsection 2.10 shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, or the transfer of any shares to any trust for the direct or indirect benefit of the Holder or the immediate family of the Holder, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than one percent (1%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding Derivative Securities). The underwriters in connection with such registration are intended third-party beneficiaries of this Subsection 2.10 and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with and no more burdensome to the Holders than, this Subsection 2.10 or that are necessary to give further effect thereto. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements. The provisions of this Subsection 2.10(a) shall not apply to any Person with respect to Common Stock of the Company acquired from a party to this Agreement or otherwise, in open market transactions.

(b) In order to enforce the foregoing covenants of this Subsection 2.10 , the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and transferees and assignees thereof) until the end of such lock-up period.

2.11. Restrictions on Transfer .

(a) The Series C Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Series C Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

(b) Each certificate or instrument representing (i) the Series C Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Subsection 2.11(c) ) be stamped or otherwise imprinted with a legend substantially in the following form:

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Subsection 2.11 .

(c) The holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 2 . Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; or (ii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. Each certificate or instrument evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to a registration statement or SEC Rule 144 or if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act, the appropriate restrictive legend set forth in Subsection 2.11(b) . Notwithstanding the foregoing, it is agreed that, provided that an opinion of counsel is not required by the Company’s transfer agent, (i) the Company shall not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances, and (ii) no registration statement or opinion of counsel shall be necessary for a transfer without consideration by a Holder to an Affiliate of such Holder or without consideration by a Holder which is (A) a partnership to its partners or retired partners in accordance with partnership interests, (B) a corporation to its shareholders in accordance with their interest in the corporation, (C) a limited liability company to its members or former members in accordance with their interests in the limited liability company, (D) an individual Holder to such Holder’s Immediate Family Member or a trust for the benefit of the individual Holder or an Immediate Family Member thereof.

2.12. Termination of Registration Rights . The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Subsection 2.1 shall terminate upon the earliest to occur of: (a) the closing of a Sale of the Company; (b) dissolution of the Company or (c) such time as (i) Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation during a three-month period without registration and (ii) if requested by Purchaser and he has provided the necessary documentation, the Company has removed restrictive legends and stop transfer orders with respect to such shares, and the Company covenants to remove such restrictive legends promptly upon the furnishing of such documentation.

3.  Information and Observer Rights .

3.1. Inspection Rights . Subject to Section 3.3 and 3.6 below, the Company shall permit, during normal business hours and upon reasonable request and reasonable notice, the Investor or any employees, agents or representatives thereof, so long as Investor shall beneficially own at least Three Million (3,000,000) Deemed Common Shares, for purposes reasonably related to Investor’s interests as a stockholder to examine and make reasonable copies of and extracts from the records and books of account of, and visit and inspect the properties, assets, operations and business of the Company and any subsidiary, and to discuss the affairs, finances and accounts of the Company and any subsidiary with any of its officers, consultants, directors, and key employees.

3.2. Reporting Requirements . If the Company ceases to file its periodic reports with the Commission, or if the Commission ceases making these periodic reports available via the Internet without charge, then at Investor’s request the Company shall furnish the following to Investor so long as Investor shall beneficially own at least Three Million (3,000,000) Deemed Common Shares:

(a) Quarterly Reports filed with the Commission on Form 10-Q as soon as available, and in any event within forty-five (45) days after the end of each of the first three fiscal quarters of the Company;

(b) Annual Reports filed with the Commission on Form 10-K as soon as available, and in any event within ninety (90) days after the end of each fiscal year of the Company; and

(c) Copies of all notices and information, including without limitation notices and proxy statements in connection with any meetings, that are provided to holders of shares of Common Stock, contemporaneously with the delivery of such notices or information to such holders of Common Stock.

3.3. Observer Rights . As long as Investor (a) shall beneficially own at least Three Million (3,000,000) Deemed Common Shares, and (b) shall not be serving as a director of the Company or have a representative serving as director of the Company, the Company shall invite the Investor, or his representative, to attend all meetings of its Board of Directors in a nonvoting observer capacity and shall provide the Investor, or his representative with all information provided by the Company to the Board of Directors at the same time it is so provided; provided, however, that the Investor and such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and provided further, that the Company reserves the right to withhold any information and to exclude the Investor and such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets that would not be precluded by the confidential information covenants of the Investor in this Agreement and any other confidential information agreement or other assurance that the Investor and any representative choose to provide, or a material conflict of interest, or if such Investor or its representative is a competitor of the Company. The Investor may voluntarily terminate the right set forth in this Section 3.3 by his written, signed election to do so, which election shall make reference to this Section 3.3.

3.4. Appointment to the Board of Directors . As long as Investor shall beneficially own at least Three Million (3,000,000) Deemed Common Shares, at the Investor’s request, the Company will cause Investor to be appointed to the Company’s Board of Directors to serve until the following annual meeting of shareholders and until a successor is elected. The Investor may voluntarily terminate the right set forth in this Section 3.4 by his written, signed election to do so, which election shall make reference to this Section 3.4.

3.5. Termination of Information . The covenants set forth in Subsections 3.1 , 3.2, 3.3 and 3.4 shall terminate and be of no further force or effect upon the closing of a Sale of the Company or the dissolution of the Company, whichever event occurs first.

3.6. Confidentiality . Investor and each Holder agrees to keep confidential and not disclose, divulge, or use for any purpose (other than to monitor and otherwise protect its interests with respect to its investment in the Company or as otherwise permitted by this Agreement) any material confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Subsection 3.6 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor or Holder by a third party without a breach of any obligation of confidentiality such third party may have to the Company, or (d) has been disclosed to another Person by the Company other than under a reservation of confidentiality; provided , however , that Investor or a Holder may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Subsection 3.6 ; or (iii) as may otherwise be required by law, provided that the Investor or Holder promptly notifies the Company in advance of such disclosure and affords the Company the opportunity to take such steps as it may desire to minimize the extent of any such required disclosure.

4.  Rights to Future Stock Issuances .

4.1. Right of First Offer . Subject to the terms and conditions of this Subsection 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to the Investor, and then the other Purchasers.

(a) The Company shall give notice (the “ Offer Notice ”) to the Purchasers, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

(b) By notification to the Company within twenty (20) days after the Offer Notice is given, each Purchaser may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Deemed Common Shares then attributable to such Purchaser based on Common Stock, Warrants or Series C Preferred Stock held of record by such Purchaser bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Series C Preferred Stock and other Derivative Securities then outstanding). Each Purchaser shall have a right of over-allotment such that if any Purchaser fails to exercise its right hereunder to purchase its share of New Securities, the other Purchasers may purchase such non-purchasing Purchaser’s portion on a pro rata basis (or as they may otherwise agree among themselves) within ten (10) days from the date such non-purchasing Purchaser fails to exercise its right to purchase. The closing of any sale pursuant to this Subsection 4.1(b) shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Subsection 4.1(c) .

(c) If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Subsection 4.1(b) , the Company may, during the one hundred (180) day period following the expiration of the periods provided in Subsection 4.1(b) , offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Purchasers in accordance with this Subsection 4.1 .

(d) The right of first offer in this Subsection 4.1 shall not be applicable to Exempted Securities.

4.2. Termination . The covenants set forth in Subsection 4.1 shall terminate and be of no further force or effect (a) immediately when the Purchasers collectively cease to beneficially own at least Three Million (3,000,000) Deemed Common Shares; or (b) upon the closing of a Sale of the Company, or (iii) upon the dissolution of the Company, whichever event occurs first.

5.  Additional Covenants .

5.1. Investor Approvals . The Company shall not, directly or indirectly, do any of the following (or permit any subsidiary to do any of the following) without the written consent of the Investor:

(a) create, sell, grant or issue any Compensatory Equity Interest;

(b) reduce the per-share exercise or conversion price of any Derivative Security that is a Compensatory Equity Interest, other than pursuant to its terms;

(c) create, incur, assume or guarantee any indebtedness for borrowed money in excess of $1,000,000 in the aggregate at any one time; or

(d) guarantee the indebtedness of any third party for borrowed money except for trade accounts of the Company or any subsidiary arising in the ordinary course of business.

5.2. Compensating Shares . In the event the Company shall at any time after the date hereof issue Compensatory Equity Interests in violation of Subsection 5.1(a) or breach Subsection 5.1(b) with the effect that additional equity interests are issuable as a result of such breach, then the Company shall be obligated to issue to each Purchaser immediately such aggregate number of additional shares of Common Stock (“ Compensating Shares ”) so that immediately following such violation such Purchaser’s Ownership Percentage shall equal his Ownership Percentage immediately prior to said violation. Such payments shall constitute the Purchaser’s exclusive monetary remedy for such events, but shall not affect the right of the Investor to seek injunctive relief. A Purchaser shall be deemed to have reconfirmed as to such Compensating Shares the representations and warranties set forth in Section 3 of the Purchase Agreement, and such Compensating Shares shall contain the restrictive legend set forth therein.

5.3. Termination of Covenants . The covenants set forth in Subsection 5.1 , shall terminate and be of no further force or effect (a) immediately when the Investor ceases to beneficially own at least Three Million (3,000,000) Deemed Common Shares; (b) upon the closing of a Sale of the Company or (c) upon the dissolution of the Company, whichever occurs first.

6.  Miscellaneous .

6.1. Successors and Assigns .

(a) A Holder’s rights under Section 2 of this Agreement may be assigned (but only with all related obligations) to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members and, in the case of B. Thomas Golisano only, The Golisano Foundation; or (iii) after such transfer, holds shares of Registrable Securities representing at least 500,000 shares of Common Stock (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided , however , that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Subsection 2.10 . For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement.

(b) A Purchaser’s rights under Section 4 may be assigned to a Person who acquires in such assignment beneficial ownership of at least Five Hundred Thousand (500,000) Deemed Common Shares; provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Deemed Common Shares with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, as applicable to the rights being assigned.

(c) A Purchaser’s rights under Subsection 5.2 may be assigned to a Person who acquires in such assignment beneficial ownership of at least One Hundred Thousand (100,000) Deemed Common Shares, provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Deemed Common Shares with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, as applicable to the rights being assigned.

(d) Without limiting any other provision of this Agreement, the Investor may assign any rights and all under this Agreement to an Affiliate of the Investor.

(e) Except as set forth in Subsections 6.1(a), 6.1(b) 6.1(c) and 6.1(d) , this Agreement and the rights hereunder shall not be assignable or transferable by the Purchasers or the Company. Subject to the preceding sentence, the terms and conditions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

6.2. Governing Law . This Agreement shall be deemed to be a contract made under, and shall be construed in accordance with, the laws of the State of New York, without giving effect to conflict of laws principles thereof.

6.3. Waiver of Jury Trial . EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

6.4. Counterparts . 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. Counterparts may be delivered via facsimile, electronic mail (including .pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

6.5. 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.

6.6. Notices . Any notice or demand which is required or provided to be given under this Agreement shall be deemed to have been sufficiently given and received for all purposes when delivered in writing by hand, telecopy, telex, facsimile, email or other method of electronic delivery, or five (5) days after being sent by certified or registered mail, postage and charges prepaid, return receipt requested, or two (2) days after being sent by overnight delivery providing receipt of delivery, to the following addresses: If to the Company, it shall be sent to: Torvec Inc., 1999 Mt. Read Boulevard, Building 3, Rochester, NY 14615, Attention: Chief Executive Officer, Fax: 585-254-1105, Email: dickk@torvec.com, with copies (which shall not constitute notice) to (Torvec Inc., 1999 Mt. Read Boulevard, Building 3, Rochester, NY 14615, Attention: General Counsel, Fax: 585-254-1105, Email: dsullivan@torvec.com; if to the Investor, to: B. Thomas Golisano, 3175 Green Dolphin Lane, Naples, Florida 34102, Fax: 585-383-3428, Email: tgolisano@bluetie.com, with a copy to (which shall not constitute notice), Fisher Asset Management,        , Attention: David Still, Fax: 585-340-1202, Email:        , if to Charles T. Graham, to: 10 Turtle Creek, Pittsford, NY 14534, Fax:        , Email:        ; if to David Still, to: 18 Wrenfield Lane, Pittsford, NY 14534, Fax: 585-340-1202, Email:       .

6.7. Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of (a) the Company, and (b) the Requisite Holders; provided , that the Company may in its sole discretion waive compliance with Subsection 2.11(c) ; and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Subsection 6.7 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

6.8. Severability . The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

6.9. Aggregation of Stock . All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

6.10. Entire Agreement; Termination of Prior Agreements . This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

6.11. Delays or Omissions . No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

6.12. Non-Circumvention . The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the covenants or agreements to be observed or performed by it under this Agreement, but will at all times in good faith assist in the carrying out of all such provisions and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Purchasers against impairment.

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

THE COMPANY :

TORVEC, INC.

By: /s/ Richard A. Kaplan—

 
    Name:     Richard A. Kaplan
    Title:     Chief Executive Officer

INVESTOR :

/s/ B. Thomas Golisano       

B.   Thomas Golisano

ADDITIONAL INVESTORS :

/s/ Charles T. Graham       

    Charles T. Graham

/s/ David Still       

    David Still

Torvec Raises $6.5 Million
Golisano Invests Along with Company Directors and Officers

ROCHESTER, NY—(Marketwire – September 26, 2011) — Richard A. Kaplan, Chief Executive Officer of Torvec, Inc. (OTCQB: TOVC.OB – News) (Pinksheets: TOVC.OB – News), announced today that the Company has raised $6.5 million in a private placement of a new series of preferred stock. The Company has issued a total of 16,250,000 shares of Series C Preferred Stock at a price of $0.40 per share.

As the result of the private placement, a group led by B. Thomas Golisano, founder and Chairman of Paychex, has taken a major position in Torvec with its investment of $6.225 million, while Company directors and executive officers have increased their ownership through their $275,000 investment.

As part of the same private placement, the investors received common stock purchase warrants entitling them to purchase up to an aggregate total of 1,625,000 common shares at 80 percent of the volume weighted average price of the Company’s common stock based on the 10 trading days immediately preceding the date of exercise. The warrants are immediately exercisable and have a 10 year term. 

The Company intends to use the $6.5 million raised to continue developing and intensify the marketing of its IsoTorque® and Rota-Torque™ technologies for the automotive and commercial pump industries, including the Company’s anticipated entry into the automotive aftermarket with its patented differential.

Mr. Kaplan said, “We at Torvec are very excited about this investment. From personal experience, I know that Mr. Golisano brings far more than money to our Company. His opinions and insights have served to help create success in many organizations. His own incredible success through the years is no accident and coupled with our present board of directors, I believe Torvec will be extremely well served. These are all world-class people.”

Mr. Kaplan also emphasized that the participation by some of the Company’s directors and officers affirms their commitment to the Company and their expectations concerning its future growth.

The Series C Preferred Shares issued in the private placement are convertible into the Company’s common stock on a 1:1 basis, have voting rights and a liquidation preference.

Forward-Looking Statements

This news release may contain forward looking statements regarding Torvec’s future economic performance and prospects that are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ from those described in such statements. Such risks and uncertainties include those described from time to time in Torvec’s SEC reports, including its most recent Annual Report on Form 10-K.

About Torvec, Inc.

Torvec, Inc. is a publicly traded company that develops and markets advanced automotive and hydraulic power technologies.  Its IsoTorque® differential sets the bar for differential design. The IsoTorque improves the traction, handling, performance and safety of a vehicle without the need for complex electronics and clutches that wear out.  The Rota-Torque pump is a breakthrough in hydraulic design, which delivers unsurpassed performance, all in a package that is over 50% smaller and lighter than existing technologies. For additional information, please visit www.torvec.com .