AGREEMENT


         THIS  AGREEMENT  is entered  into as of June 22,  1996,  by and between
MICHAEL  OSTRACH (the  "Employee")  and  NEUROBIOLOGICAL  TECHNOLOGIES,  INC., a
Delaware corporation (the "Company").


         1.       Term of Agreement.

         This  Agreement  shall  remain in effect from the date hereof until the
date when the Company has met all of its obligations under this Agreement.

         2.       Entitlement to Severance Pay and Benefits.

         The Employee  shall be entitled to receive the  severance pay described
in Section 4 (the  "Severance  Pay") from the Company if (a) his employment with
the Company terminates for any reason and (b) he executes a waiver of claims and
general  release in favor of the Company;  provided that  Employee  shall not be
required to waive or release the Company from obligations,  if any, which it may
have to indemnify  Employee.  The Company  shall  execute a waiver of claims and
general  release in favor of the Employee.  The Company shall not be required to
give advance  notice of  termination  if it elects to terminate  the  Employee's
employment.

         3.       Definition of Continuation Period.

         For all purposes under this Agreement, "Continuation Period" shall mean
the  period  commencing  on the date  when  the  termination  of the  Employee's
employment is effective and ending on the earliest of:

                  (a) The date 12  months  after  the date  when the  employment
         termination was effective;

                  (b) The date when the Employee commences full-time  employment
         with another employer; or

                  (c) The date of the Employee's death.

         4.       Amount of Severance Pay.

         During the  Continuation  Period,  the Company  shall pay the  Employee
Severance  Pay at an annual  rate equal to his base  compensation  at the annual
rate in effect  on the date  when the  termination  of his  employment  with the
Company  is  effective.  Such  amount  shall be paid at  periodic  intervals  in
accordance  with the  Company's  standard  payroll  procedures,  except that the
Severance Pay for the first three months of the Continuation

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Period shall be paid in a lump sum within five working days after the Employee's
employment  with the Company  terminated.  Such lump sum shall not be subject to
repayment,  even if the Employee  commences  full-time  employment  with another
employer within three months after his employment with the Company terminates.

         5.       Stock Options and Group Insurance.

         (a)  Stock  Options.  If the  Employee's  employment  with the  Company
terminates  for  any  reason,  all of his  options  to  purchase  shares  of the
Company's stock shall immediately become exercisable in full. Such options shall
remain  exercisable  for 12 months  following the employment  termination  date,
notwithstanding   any  contrary   provisions  in  the  applicable  stock  option
agreements.  The Employee represents that he has consulted or will consult a tax
adviser  regarding  the impact of this  Subsection  (a) on the tax  treatment of
incentive stock options.

         (b) Group Insurance. During the Continuation Period, the Employee (and,
where applicable, his dependents) shall be entitled to continue participation in
the group insurance plans maintained by the Company,  including life, disability
and health insurance  programs,  as if he were still an employee of the Company.
Where  applicable,  the  Employee's  salary for  purposes of such plans shall be
deemed  to be equal to his base  compensation  at the rate in effect on the date
when the termination of the Employee's employment with the Company is effective.
To the extent that the Company finds it  impossible to cover the Employee  under
its group insurance  policies during the Continuation  Period, the Company shall
provide the  Employee  with  individual  policies  which offer at least the same
level of  coverage  and which  impose not more than the same  costs on him.  Any
group health  continuation  coverage that the Company is required to offer under
the Consolidated  Omnibus Budget  Reconciliation Act of 1986 shall commence when
coverage under this Subsection (b) terminates.

         6.       Consulting Services.

         During the Continuation  Period,  Employee agrees to provide consulting
services  to the  Company,  as  requested  by the  Company,  up to a maximum  of
one-half of one full work day per month.

         7.       Successors.

         (a)  Company's  Successors.  The Company  shall  require any  successor
(whether   direct  or  indirect   and  whether  by  purchase,   lease,   merger,
consolidation,  liquidation  or  otherwise) to all or  substantially  all of the
Company's  business  and/or  assets,  by an  agreement  in  substance  and  form
satisfactory to the Employee, to assume this Agreement and to agree expressly to
perform this

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Agreement  in the same  manner and to the same  extent as the  Company  would be
required to perform it in the absence of a  succession.  For all purposes  under
this Agreement,  the term "Company" shall include any successor to the Company's
business  and/or  assets which  executes and delivers the  assumption  agreement
described in this  Subsection  (a) or which becomes  bound by this  Agreement by
operation of law.

         (b)  Employee's  Successors.  This  Agreement  and  all  rights  of the
Employee  hereunder  shall inure to the benefit of, and be  enforceable  by, the
Employee's  personal  or legal  representa-  tives,  executors,  administrators,
successors, heirs, distributees, devisees and legatees.

         8.       Miscellaneous Provisions.

         (a) Notice.  Notices and all other communications  contemplated by this
Agreement  shall be in writing  and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt  requested  and postage  prepaid.  In the case of the  Employee,  mailed
notices  shall be addressed to him at the home  address  which he most  recently
communicated  to the  Company in  writing.  In the case of the  Company,  mailed
notices shall be addressed to its corporate headquarters,  and all notices shall
be directed to the attention of its Chief Executive Officer.

         (b) Waiver. No provision of this Agreement shall be modified, waived or
discharged unless the modification,  waiver or discharge is agreed to in writing
and signed by the Employee and by an  authorized  officer of the Company  (other
than the Employee). No waiver by either party of any breach of, or of compliance
with,  any condition or provision of this  Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.

         (c) Whole Agreement.  No agreements,  representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this  Agreement have been made or entered into by either party with
respect to the subject matter hereof.

         (d) No Setoff;  Withholding Taxes. There shall be no right of setoff or
counterclaim, with respect to any claim, debt or obligation, against payments to
the Employee under this Agreement.  All payments made under this Agreement shall
be subject to reduction to reflect taxes required to be withheld by law.

         (e) Choice of Law. The  validity,  interpretation,  con-  struction and
performance  of this  Agreement  shall be  governed  by the laws of the State of
California.

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         (f) Severability.  The invalidity or  unenforceability of any provision
or provisions of this Agreement shall not affect the validity or  enforceability
of any other provision hereof, which shall remain in full force and effect.

         (g) Arbitration. Any controversy or claim arising out of or relating to
this Agreement,  or the breach  thereof,  shall be settled by arbitration in San
Francisco in accordance  with the Commercial  Arbitration  Rules of the American
Arbitration Association. Discovery shall be permitted to the same extent as in a
proceeding  under  the  Federal  Rules of Civil  Procedure,  including  (without
limitation)  such discovery as is specifically  authorized by section 1283.05 of
the  California  Code of Civil  Procedure,  without  need of prior  leave of the
arbitrator under section 1283.05(e) of such Code. Judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction  thereof.  All
fees  and  expenses  of the  arbitrator  and such  Association  shall be paid as
determined by the arbitrator.

         (h) No  Assignment.  The rights of any person to  payments  or benefits
under this Agreement  shall not be made subject to option or assignment,  either
by  voluntary  or  involuntary  assignment  or by  operation  of law,  including
(without  limitation)  bankruptcy,  garnishment,  attachment or other creditor's
process, and any action in violation of this Subsection (h) shall be void.


         IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized  officer,  as of the day and year
first above written.


                                            MICHAEL S. OSTRACH



                                            /s/ Michael S. Ostrach
                                            -----------------------------------

                                            NEUROBIOLOGICAL TECHNOLOGIES, INC.



                                            By: /s/ Jeffrey s. Price, Ph.D.
                                            -----------------------------------
                                            Title: President and Chief
                                                   Executive Officer



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