Amendment No. 1 to Rights Agreement



 Exhibit 4.2 
 AMENDMENT NO. 1 TO RIGHTS AGREEMENT 
 This Amendment No. 1 (the “Amendment”), to the
Rights Agreement, dated as of May 19, 2005 (the “Rights Agreement”) is entered into as of November 2, 2007, by and between Neurobiological Technologies, Inc., a Delaware corporation (the
“Corporation”), and American Stock Transfer & Trust Company, a New York corporation (the “Rights Agent”). 
 W I T N E S S E T H 
 WHEREAS, Section 25.2 of the Rights Agreement provides that the Corporation may, from time
to time, supplement or amend any provision of the Rights Agreement without the approval of any holders of Rights in order to cure any ambiguity, to correct, supplement or amend any provision therein, or to make any other provision with respect to
the Rights which the Corporation may deem necessary or desirable; 
 WHEREAS, the Corporation intends to offer shares of its Common Stock to the public
pursuant to a registration statement on Form S-1 (File No. 333-145403) (the “Offering”); 
 WHEREAS, the Rights Agreement
provides that certain Persons who, together with their Affiliates and Associates, Beneficially Own 15% or more of the then outstanding shares of Common Stock shall be deemed an Acquiring Person; 
 WHEREAS, immediately prior to the completion of the Offering, Biotechnology Value Fund, L.P. (“BVF”) is not deemed an Acquiring Person under the
Rights Agreement; 
 WHEREAS, BVF, together with certain of its Affiliates and/or Associates, desire to purchase in the Offering a number of shares of Common
Stock that would cause BVF to Beneficially Own more than 15% of the Corporation’s outstanding Common Stock immediately following the completion of the Offering; 
 NOW, THEREFORE, in consideration of the promises and the mutual agreements herein set forth, the parties hereby agree as follows: 
 1. Section 1.1 of the Rights Agreement is amended and restated as follows: 
 “1.1. “Acquiring Person” means any
Person who or which, together with all Affiliates and Associates of that Person, without the prior approval of the Board, shall be the Beneficial Owner of 15% or more of the then outstanding shares of Common Stock (other than as a result of a
Permitted Offer) or was such a Beneficial Owner at any time after the date hereof, whether or not such Person continues to be the Beneficial Owner of 15% or more of the then outstanding shares of Common Stock; provided, however, that
the term “Acquiring Person” shall not include any Grandfathered Person, unless such Grandfathered Person at any time after the Grandfathered Time becomes the Beneficial Owner of a percentage of the then outstanding shares of Common Stock
equal to or exceeding the Grandfathered Percentage applicable to such Grandfathered Person. Notwithstanding the foregoing, the term “Acquiring Person” shall not include (i) the Corporation, (ii) any Subsidiary of the Corporation,
(iii) any employee benefit plan of the Corporation or of any Subsidiary of the Corporation, (iv) any Person organized, appointed or established by the Corporation or any Subsidiary of the Corporation for or pursuant to the terms of any
such plan, or (v) any Person who or which, together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 15% (or in the case of a Grandfathered Person, the Grandfathered Percentage applicable to such Grandfathered
Person) or more of the then outstanding shares of Common Stock as a result of the acquisition of shares of Common Stock directly from the Corporation. Further, no Person 








 
shall be an “Acquiring Person” either (i) as a result of the acquisition of Common Stock by the Corporation which, by reducing the number of
shares of Common Stock outstanding, increases the proportional number of shares beneficially owned by such Person together with all Affiliates and Associates of such Person (and for purposes of clarity in the case of a Grandfathered Person, such
acquisition by the Corporation causes a Grandfathered Person to become the Beneficial Owner of a percentage of the then outstanding shares of Common Stock equal to or exceeding the Grandfathered Percentage applicable to such Grandfathered Person);
provided, however, that if (1) a Person would become an Acquiring Person (but for the operation of this sentence) (and for purposes of clarity in the case of a Grandfathered Person, such Grandfathered Person would become the
Beneficial Owner of a percentage of the then outstanding shares of Common Stock equal to or exceeding the Grandfathered Percentage applicable to such Grandfathered Person), as a result of the acquisition of shares of Common Stock by the Corporation,
and (2) after such share acquisition by the Corporation, such Person, or an Affiliate or Associate of such Person, becomes the Beneficial Owner of any additional shares of Common Stock, then such Person shall be deemed an Acquiring Person, or
(ii) if (1) within eight days after such Person would otherwise have become an Acquiring Person (but for the operation of this sentence), such Person notifies the Board that such Person did so inadvertently and (2) within two Business
Days (as defined in Section 1.9 hereof) after such notification, such Person becomes the Beneficial Owner of less than 15% (or in the case of a Grandfathered Person, the Grandfathered Percentage applicable to such Grandfathered Person) of the
outstanding shares of Common Stock.” 
 2. Section 1 of the Rights Agreement is amended by adding at the end of said section the following:

 “1.41 “Grandfathered Percentage” shall initially be 20.40%; provided that in the event any Grandfathered Person shall sell,
transfer, or otherwise dispose of any outstanding shares of Common Stock after the Grandfathered Time, the Grandfathered Percentage shall, immediately after such sale, transfer or disposition, be adjusted, with respect to such Grandfathered Person,
to equal the lesser of (i) the Grandfathered Percentage as in effect immediately prior to such sale, transfer or disposition or (ii) the percentage of outstanding shares of Common Stock that such Grandfathered Person Beneficially Owns
immediately following such sale, transfer or disposition plus an additional 0.50%. 
 1.42 “Grandfathered Person” shall mean
Biotechnology Value Fund, L.P. and its Affiliates and Associates including, without limitation, Biotechnology Value Fund II, L.P., BVF Investments, L.L.C., Investment 10, L.L.C., BVF Partners L.P., BVF Inc., and Mark N. Lampert. Notwithstanding
anything to the contrary provided in this Agreement, any Grandfathered Person who after the Grandfathered Time becomes the Beneficial Owner of less than 15% of the shares of Common Stock then outstanding shall cease to be a Grandfathered Person and
shall be subject to all of the provisions of this Agreement in the same manner as any Person who is not and was not a Grandfathered Person. 
 1.43
“Grandfathered Time” shall mean the closing on November 2, 2007 of the Corporation’s underwritten public offering pursuant to the Corporation’s registration statement on Form S-1 (File
No. 333-145403).” 
 3. Section 23.1.2 of the Rights Agreement is amended and restated as follows: 
 “In addition, the Board may, at its option, at any time after the occurrence of a Section 11 Event, and the expiration of any period during which the holder of
Rights may exercise the Rights under Section 11.1.2, but before any Section 13 Event, redeem all, but not less than all, of the then outstanding Rights at the Redemption Price (A) in connection with any merger, consolidation or sale
or other transfer (in one transaction or in a series of related transactions) of assets or earning power totaling 50% or more of the earning power of the Corporation and its Subsidiaries (taken as a whole) in which all holders of shares of Common
Stock are treated alike and not involving (other than as a holder of shares of Common Stock 








 
being treated like all other such holders) an Interested Stockholder, or (B) (i) if and for so long as the Acquiring Person is not thereafter the
Beneficial Owner of 15% (or in the case of a Grandfathered Person, the Grandfathered Percentage applicable to such Grandfathered Person) or more of the Common Stock, and (ii) at the time of redemption no other Persons are Acquiring
Persons.” 
 4. By execution of this Agreement, the Corporation shall not be deemed to have compromised or waived any of its rights under the Rights
Agreement. 
 5. Any capitalized term used herein and not defined shall have the meaning ascribed to such term in the Rights Agreement. 
 6. Except as expressly modified herein, all terms and conditions of the Rights Agreement shall continue in full force and effect. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 
  







 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and
year first above written. This Amendment may be executed in one or more counterparts all of which shall be considered one and the same amendment and each of which shall be deemed to be an original. 
  

									
	ATTEST:	 		 	NEUROBIOLOGICAL TECHNOLOGIES, INC.
					
	By:	 	/s/ Paul E. Freiman	 		 	By:	 	/s/ Craig W. Carlson
	Name:	 	Paul E. Freiman	 		 	Name:	 	Craig W. Carlson
	Title:	 	President and Chief Executive Officer	 		 		 	Vice President and Chief Financial Officer

  

									
	ATTEST:	 		 	 AMERICAN STOCK TRANSFER &
 TRUST
COMPANY, as Rights Agent

					
	By:	 	/s/ Isaac J. Kagan	 		 	By:	 	/s/ Herbert J. Lemmer
	Name:	 	Isaac J. Kagan	 		 	Name:	 	Herbert J. Lemmer
	Title:	 	Vice President	 		 		 	Vice President