Document:

Settlement and Release Agreement

 EXHIBIT NO. 10(iii)(aa) 
  
 SETTLEMENT AND RELEASE AGREEMENT 
  
 This Settlement and Release Agreement (this “Agreement”) is entered into as of this 9th day of May 2003 by and among Armstrong Holdings, Inc., a
Pennsylvania corporation (“AHI”). Armstrong Worldwide, Inc., a Delaware corporation (“AWWD”). and Armstrong World Industries, Inc., a Pennsylvania corporation (“AWI”). The parties hereto may be collectively referred to
herein as the “Parties’” and each individually as a “Party”. 
  
 RECITALS: 
  
 WHEREAS, on May 1,
2000 AHI commenced operation as a publicly owned holding company for AWI, owning all of the outstanding shares of AWI indirectly through its ownership of all the outstanding shares of AWWD; and 
  
 WHEREAS, on December 6, 2000 (the “Petition Pate”). AWI filed a
voluntary petition for relief under chapter 11 of the U.S. Bankruptcy Code (“Chapter 11”) in the United States Bankruptcy Court for the District of Delaware (the “Court”),which petition was granted by the Court, and AWI has
continued since then to operate its business as a debtor-in-possession and has sought to reorganize its liabilities, business and affairs in accordance with Chapter 11 and, in that regard, on April 3,2003, AWI filed its Second Amended Plan of
Reorganization (“AWI’s Reorganization Plan.” as further defined below) with the Court; and 
  
 WHEREAS, subject to confirmation of AWI’s Reorganization Plan and satisfaction of certain conditions as provided by the plan, AWI’s business and
affairs shall be reorganized on the “Effective Date” as defined in the plan, when the plan shall be substantially consummated; and 
  
 WHEREAS, AHI today owns 100% of the outstanding shares of AWI through its wholly owned subsidiary AWWD; and 
  
 WHEREAS, AWI has the contractual and other obligations to AHI and/or AWWD,
determined as of December 31,2002 in accordance with the books and records of AHI, AWWD and AWI, described on the schedule previously provided by AHI and AWWD to AWI (the “AHI Intercompany Account Claims”), some of which arose before the
Petition Date and some of which arose after the Petition Date, and each of AHI and AWWD has the contractual or other obligations to AWI, determined as of December 31, 2002 in accordance with the books and records of AHI, AWWD and AWI, described on
the schedule previously provided by AWI ;to AHI and AWWD (the “AWI Intercompany Account Claims”), some of which arose before the Petition Date and some of which arose after the Petition Date; and 
  
 WHEREAS, in accordance with the procedures and practices that AWI, AWWD and
AHI have followed in the past, additional intercompany charges may accrue on the books and records of AWI, AWWD and AHI from and after December 31,2002, increasing the amount of such intercompany accounts; and 
  
 WHEREAS, AWI has advised AHI that AWI has incurred certain costs, and
expended certain expenses, in providing administrative services to AHI (including accounting, legal and other services) which AWI has not yet quantified but is entitled to seek reimbursement on from AHI and has not yet sought reimbursement on but
reserves the right to do so, which may, accordingly, produce additional intercompany accounts; and 
  
 WHEREAS, AWI’s Plan of Reorganization is the product of extensive negotiations among the parties in interest in AWI’s Chapter 11 proceeding,
reflecting the compromise of various claims and arguments such parties have asserted or could assert in such proceeding; and 
  
 WHEREAS, AWI’s Plan of Reorganization provides that the existing equity interest in AWI shall be cancelled in its entirety on the Effective Date but
that the holder thereof shall receive, directly from AWI but in certain circumstances as provided by the plan on account of recoveries on the claims of certain claimants under the plan, certain warrants (the “Warrants”) to purchase shares
of common stock of AWI as it will be reorganized under the Plan of Reorganization (“Reorganized AWI”); and 
  

 WHEREAS, AHI intends to distribute all the Warrants to its shareholders in connection with its
dissolution and in the course of its winding up; and 
  
 WHEREAS,
the Plan of Reorganization provides that AWI shall pay AHI’s operating costs while it seeks approval of its shareholders for its dissolution (including the cost of preparing and seeking shareholder approval of AHI’s dissolution) and, if
such approval is obtained, the costs of completing the winding up of AHI; and 
  
 WHEREAS, in connection with AWIs Reorganization Plan and AHI’s dissolution and winding up, AHI plans to cause AWWD to be merged with and into AHI on or about the Effective Date, with the result that AWWD’s
separate corporate existence shall cease and AHI shall come to own all of the then assets of AWWD and shall come to be liable for all the then obligations of AWWD; and 
  
 WHEREAS, in order for AHI or AWWD to have any recovery on the AHI Intercompany Account Claims AHI and AWWD would be required
to file the AHI Intercompany Account Claims with the Court and AWI and other parties in interest in AWI’s Chapter 11 proceeding would have the opportunity to contest those claims and any recovery on such claims that might otherwise be accorded
to AHI or AWWD, as the case may be, under AWI’s Plan of Reorganization; and 
  
 WHEREAS, AWI has advised AWWD and AHI that it has been advised by representatives of certain of the parties in interest in AWI’s Chapter 11 proceeding that they will object to AHI’s Claims if they are
presented to the Court and that other parties in interest may object as well; and 
  
 WHEREAS, if AWI were to pursue the AWI Intercompany Account Claims and AWWD and AHI were not able to offset against the AWI Intercompany Account Claims the AHI Intercompany Account Claims, AHI may not be able to
distribute to its shareholders all the Warrants; and 
  
 WHEREAS,
AHI, AWWD and AWI each deem it to be in their mutual interest and to their mutual advantage, in order to facilitate the consummation of AWI’s Reorganization Plan and the winding up of AHI, to settle the AHI Intercompany Account Claims and the
AWWD Claims, to release each from any liability arising out of their relationship, except as otherwise specifically provided herein, and to otherwise provide for the treatment of certain relationships existing between AWI, on the one hand, and
current or former directors or officers of AWWD and AHI, on the other hand, and between AWWD or AHI, on the one hand, and current or former directors or officers AWI or its subsidiaries, on the other hand, all on the terms and conditions set forth
herein; 
  
 NOW, THEREFORE, in consideration of the mutual
promises and undertakings set forth herein, the Parties, intending to be legally bound, agree as follows: 
  

	1.	Settlement of Intercompany Accounts. 

  

	 	A.	AHI Intercompany Account Claims. On the Effective Date, the AHI Intercompany Account Claims shall be deemed to be satisfied in full and any notes or agreements relating thereto
shall be deemed of no further force or effect, and neither AHI nor AWWD, nor any successor or assign of either of them or person or entity claiming through any of them, shall have any right to seek further payment of any amounts relating thereto and
AWI shall have no obligation to make any payments of any amounts relating thereto, but in consideration thereof AWI agrees to perform its obligations hereunder. 

  

	 	B.	AWI Intercompany Account Claims. On the Effective Date, the AWI Intercompany Account Claims shall be deemed to be satisfied in full and any notes or agreements relating thereto
shall be deemed of no further force or effect, and AWI, nor any successor or assign of AWI or any person or entity claiming through an^ of them, shall have any right to seek further payment of any amounts relating thereto and neither AHI or AWWD
shall have any obligation to make any payments of any amounts relating thereto. 

  

	 	C.	No Admission of the Validity of, or Representation with Respect to, Claims. Neither AWI, on the one hand, nor AWWD or AHI, on the other hand, by entering into this Agreement
acknowledge that the AHI Intercompany Account Claims, in the one case, or the AWI Intercompany Account Claims, in the other case^ are valid in whole or in part. No Party has made to any other Party any representation regarding the origin, basis,
validity or amount of any of the AHI Intercompany Account Claims or the AWI Intercompany Account Claims or relied upon any such representation, except as and to the extent provided by Section 7 hereof. 

  

	2.	Mutual General Release of all Claims Known and Unknown. 

  

	 	A.	Release by AHI and AWWD. In consideration of the premises and the covenants herein, each of AHI and AWWD, individually and on behalf of (if any) its parents, affiliates (other than
AWI), predecessors (other than AWI), successors and assigns, and the directors, officers, employees, agents, administrators, attorneys, and representatives of any kind thereof (each, an “AHI Releasor”) hereby, subject to the
substantial consummation of AWI’s Reorganization Plan and upon the occurrence of, and as of, the Effective Date (but subject to Sections 4 and 10 hereof), covenants not to sue and fully, finally, and forever RELEASES, SURRENDERS, REMISES,
ACQUITS, AND FOREVER DISCHARGES AWI (including as Reorganized AWI) and any of its successors, beneficiaries, administrators, assigns, and former and present directors, officers, employees, agents, attorneys and representatives of any kind (the
“AWI Released Parties”) jointly and severally, of and from any and all claims, demands, actions, liabilities, obligations (contractual or otherwise, including any under the Services Agreement), damages, suits in equity,
debts, accounts, suits in equity, debts, accounts, setoffs, contributions, indemnities, interest, dividends, promises, covenants, attorneys’ fees and other costs and expenses, and/or causes of action of whatever kind or character, whether past,
present, future, known or unknown, matured or unmatured, liquidated or unliquidated, accrued or unaccrued (each, for purposes of this paragraph a “Claim” that any such AHI Releasor has, may have or might claim to have against any of the
AWI Released Parties up to or as the Effective Date (including any accrued up to or as of the date hereof) and that, directly or indirectly, arise out of, concern, are connected with or in any way relate to any party’s investments in,
employment by or provision of services to, or the formation, investment activities, or other operation of, any of AHI or AW WD or any AWI Released Party’s participation in any of the foregoing (but, with respect to any agent, attorney or
representative of any kind of AWI (each, an only insofar as such Claim relates to, or arises from, such AWI Representative’s representation o£ or engagement by, AWI), including, but not limited to, any claims arising out of, relating to,
of in connection with the AHI Intercompany Account Claims (together, “AHI Released, Claims”); provided that this release shall not be deemed to diminish or affect any right of AHI or AWWD to full performance of this Agreement or the any
rights accorded to any of them under AWI’s Plan of Reorganization (other than any mat would arise in respect of the AHI . Intercompany Account Claims). The AHI Released Claims shall include any intercompany claims not reflected on the schedule
of AHI Intercompany Account Claims exchanged by the Parties and accrued up to or as of the date hereof and any that may accrue after the date hereof .in accordance with the Parties past practices and any other Claims arising before the Effective
Date in respect of services provided by AHI or AWWD to AWI, or other transactions between AWI or any of its subsidiaries and AHI or AWWD that arose or do arise, in the ordinary course of business of the Parties, except any which arise after the date
hereof and which the Parties agree in writing shall not be subject to this agreement. 

  

	 	B.	 Release by AWI. In consideration of the premises and the covenants herein, AWI, individually and on behalf of its subsidiaries, affiliates (other than AWWD and
AHI), predecessors, successors (other than AWWD and AHI) and assigns, and the directors, officers, employees, agents, administrators, attorneys, and representatives of any kind thereof (each, an “AWI Releasor” hereby, subject to the
substantial consummation of AWI’s Reorganization ‘ Plan and upon the occurrence of, and as of, the Effective Date (but subject to Sections 4 and 10 hereof), covenants not to sue and fully, finally, and forever RELEASES, SURRENDERS,
REMISES, ACQUITS, AND FOREVER DISCHARGES each of AWWD and AHI and any of 

  

	 	 
its successors, beneficiaries, administrators, assigns, and former and present directors, officers, employees, agents, attorneys and representatives of any
kind (the “AHI Released Parties”), jointly and severally, of and from any and all claims, demands, actions, liabilities, obligations (contractual or otherwise, including any under the Services Agreement), damages, suits in equity, debts,
accounts, setoffs, contributions, indemnities, interest, dividends, promises, covenants, attorneys’ fees and other costs and expenses, and/or causes of action of whatever kind or character, whether past, present, future, known or unknown,
matured or unmatured liquidated or unliquidated, accrued or unaccrued (each, for purposes of this paragraph a “Claim”), that any such AWI Releasor has, ‘may have or might claim to have against any of the AM Released Parties up to or
as of the Effective Date (including any up to or as of the date hereof) and that, directly or indirectly, arise out of, concern, are connected with or in any way relate to any Piety’s investments in, employment by or provision of services to,
or the formation, investment activities, or other operation or business of, AWI or any of its subsidiaries or any AMI Released Parry’s participation in any of the foregoing (but, with respect to any agent, attorney or representative of any kind
of AWWD or AHI (each, an “AHI. Representative”), only insofar as such Claim relates to or arises from, such AHI Representative’s representation of, or engagement by, AWWD or AH), including, but not limited to, any claims arising out
of, relating to, or in connection with the AWI Intercompany Account Claims (together, “AWI Released Claims”}; provided that this release shall not be deemed to diminish or affect any right of AWI to the full performance of this Agreement
or any rights accorded to AWI under AWI’s Plan or Reorganization. The AWI Released Claims shall include any intercompany claims not reflected on the schedule of AWI Intercompany Account Claims exchanged by the Parties and accrued up to or as of
the date hereof and any mat may accrue after the date hereof in accordance with the Parties’ past practices and any other Claims accrued after December 31,2002 and to the Effective Date in respect of services provided by AWI to AHI or AWWD, or
other transactions between AHI or AWWD and AWI or any of its subsidiaries, that arose or do arise in the ordinary course of business of the Parties, except any which arise after the date hereof and which that Parties agree in writing shall not be
subject to this agreement. 

  

	3.	Certain Covenants. 

  

	 	A.	 Payment by AWI of Administrative Expenses of AHI and AWWD. From the date hereof and until substantial consummation of AWI’s Reorganization Plan; AWI shall
either (as AWI shall determine) pay the reasonable expenses of, or provide to AHI free of charge and without claim for reimbursement the services necessary for, the administration of AHI’s affairs (including AWWJD’s affairs and preparing
to seek shareholder approval of, and otherwise preparing for, the dissolution and winding up of AHI), all substantially in accordance with the practices which AWI has followed in such respect since the Petition Date. Upon substantial consummation of
AWI’s Reorganization Plan, AWI shall also either (as AWI shall determine) pay the reasonable expenses of, or provide to AHI free of charge the services necessary for, the ‘ administration of AHI’s affairs for a period extending up to
[the first anniversary of the Effective Date] (including the cost of preparing for, and seeking shareholder approval of, the dissolution and winding lap of AHI), and, if such approval is obtained by the end of such period, shall either (as AWI shall
determine) pay the reasonable expenses of, or provide to AHI free of charge me services necessary for, administering the winding up of ASK. Without limiting the generality of the foregoing provisions of this paragraph, AWI shall pay (i) any expenses
which AHI may incur as provided by law, AHI’s by-laws or by a contract» effect on the Effective Date in providing indemnification to, or advancing costs of defense to, a person who serves, or has served, as a director or officer of AHI
after the Petition Date and during the period in which AHI is obligated to pay for AHI’s administrative expenses as provided herein, including any deposit or other security advanced in respect of the costs of defense or to satisfy any
deductible or retention amounts specified in any directors and officers insurance policy, or (ii) any federal, state or local income taxes and any franchise taxes or similar charges for which AWWD or AHI may be or become liable in respect of any
event occurring, or period ending, on or before the first anniversary of the Effective Date and, if AHI’s shareholders approve the 

  

	 	 
dissolution and winding up of AHI by such date, in respect of the completion of the winding up of AHL The Parties acknowledge that it would be consistent
with AHI’s prior practices to provide to AMI services as contemplated by this paragraph on a basis consistent with the Affiliate Agreement, dated as of May 1,2000, between AWI and AHI, as amended by the Management Services Agreement dated as of
August 7.2000 (the “Services Agreement”). which, however, shall, except in such respect, terminate as of the execution and delivery hereof. 

  

	 	B.	Assumption by Reorganized AWI of Director and Officer Indemnification Obligations of AHI and AWWD and Continuation of Related Insurance Coverage. Without limiting the generality of
the provisions and effect of Section 3 A of this Agreement with respect to AWI’s obligations in connection with the administration of the affairs of AHI to pay expenses of responding to or defending against any claims asserted against a current
or former director or officer of AWWD or AHI, upon substantial consummation of AWI’s Plan of Reorganization and upon the occurrence of, and as of, the Effective Date, Reorganized AWI shall assume; and hereby agrees to perform, all the
obligations (which are identified on the schedule previously delivered by AHI to AWI) which which either AWWD or AHI has to indemnify or advance expenses to individuals who served as officers or directors of AHI or AWWD at any time after the
Petition Date and prior to the Effective Date (the “AHI Indemnification Agreements”). AWI shall also continue to provide, as its expense, for a period of at least four years after the Effective Date, directors and officers liability
insurance coverage with respect to persons serving or who served as directors and officers of AHI substantially on the same basis on which such coverage has been afforded under the directors and officers liability insurance policies in effect on the
date hereof. , 

  

	 	C.	Protection of AWWD and AHI under AWI’s Reorganization Plan. AWI shall include AWWD and AHI as a “PI Protected Party” under AWI’s Reorganization Plan, thereby
granting AHI as of the Effective Date the benefit of the “Asbestos PI Permanent Channeling injunction” thereunder, which permanently sod forever enjoins any person or entity from taking actions against AWWD and AHI in respect of asbestos
personal injury claims, all of which shall be channeled to a trust established for resolution of such claims pursuant to and in accordance with the terms of AWI’s Reorganization Plan. AHI shall also be exculpated under AWI’s Reorganization
Plan from all claims of liability relating to AWI’s Chapter 1l case. 

  

	4.	Certain Contingencies. 

  

	 	A.	AWI’s Reorganization Plan. In the event AWI’s Second Amended Plan of Reorganization dated April 4, 2Q03 is amended or AWI proposes a different plan of reorganization, this
Agreement shall remain unaffected and all the provisions hereof shall be given full force and effect, unless, upon confirmation by the AWI’s plan of reorganization shall, in its effect upon AHI, be in comparison to AWI’S Second Amended
Plan of Reorganization dated April 4, 2003 materially less. advantageous to AHI’s interests, and, accordingly, all references herein to “AWI’s Plan of Reorganization” shall for all purposes of this Agreement refer to such amended
or different plan: provided, however, that in the event AWTs Reorganization Plan shall not be substantially consummated by December 31,2004, this Agreement shall automatically become null and void ah iaitio in all respects (and,
accordingly, without limiting the generality of the foregoing, the AHI Intercompany Account Claims and the AWI Intercompany Account Claims shall not be considered satisfied as provided in Section 1 and shall be reinstated and the releases contained
in Section 2 shall have no further force and effect). 

  

	 	B.	 Non-Party Released Claims. Notwithstanding anything in this Agreement to the contrary, if any AWI Released Party that is not a Parry to this Agreement commences any
action (including an arbitration or similar non-judicial proceeding) against any AHI Releaser that is based on or includes any AHI Released Claim, men the release given by that AHI Releasor in paragraph 2(a) above will automatically become null and
void solely as to that AWI Released Party. Similarly, if any AHI Released Party that is not a Parry to this Agreement commences 

  

	 	 
any action (including a arbitration or similar non-judicial proceeding) against any AWI Releasor that is based on or includes any AWI Released Claim, then
the release given by that AWI Releasor in paragraph 2(|b) above will automatically become null and void solely as to that AHI Released Party. 

  

	 	C.	Knowing Release. The Parties have knowingly and voluntarily executed this Agreement after consultation with counsel regarding its binding and irrevocable effect. The Agreement is
binding on and for the benefit of the AWI Released Parties and the AHI Released Parties, including their successors, assigns, and personal representatives. Neither party has relied on any oral or written representation of any other party in/agreeing
to the terms of this Agreement (other than those set forth expressly herein). All Parties also assume the risk of nondisclosure, waive any rights to receive full disclosure, and agree that this Agreement releases the AM Released Parties and the AWI
Released Parties from any claim based in whole or in part on an actual or alleged obligation of disclosure. The Parties waive any right to challenge the validity of this Agreement based on actual or alleged nondisclosure of any fact or circumstance.

  

	5.	No Admission of Wrongdoing. Neither this Agreement nor any negotiations, discussions or proceedings leading thereto are, or shall be construed, described, or characterized by any
Parry hereto or any of its agents or representatives as, an admission or concession by any Party of any liability, wrongdoing or misconduct of any kind; and each of the Parties specifically denies that it engaged in any wrongdoing or misconduct or
is liable to any other Party in any way. 

  

	6.	Nonaassignment of Claims. AWI represents that it has neither assigned, transferred, conveyed, or subrogated any AWI Released Claims that it may have against any of the AHI Released
Parties, nor authorized any person or entity to assert any AWI Released Claims against the AHI Released Parties on AWI’s behalf. AWI intends that all AWI Released Claims, asserted and unassisted, be released pursuant to this Agreement, Each of
AHI and AWI represent that it has neither assigned, transferred, conveyed, or subrogated any AHI Released Claims that it may have against any of the AWI Released Parties, nor authorized any person or entity to assert any AHI Released Claims against
any AWI Released Parties on its behalf. Each of AHI and AWWD intends that all AHI Released Claims, asserted and unasserted, be released pursuant to this Agreement. 

  

	7.	Authority to Settle and Release. Each Party executing this Agreement represents that such Party has the power and authority to execute this Agreement and to grant me releases in
this Agreement. 

  

	8.	Goy<<ml>>g Law. THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT GIVING EFFECT TO THE
PROVISIONS, POLICIES OR PRINCIPLES THEREOF RELATING TO CHOICE OR CONFLICT OF LAWS. 

  

	9.	Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY CAUSE OF ACTION RELATING TO THE
AGREEMENT. 

  

	10.	Certain Rules of Construction. The Parties hereto hereby agree that the provisions of this Agreement have been negotiated by sophisticated parties. Each of the Parties acknowledges
that such party has carefully reviewed and understands the provisions of this Agreement No provision of this Agreement shall be interpreted in favor of, or against, any party hereto by reason of the extent to which such party or its counsel
participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof or by reason of any fiduciary or other relationship between the Parties.

  

	11.	Entire Agreement This Agreement constitutes the entire agreement of the Parties with respect to the subject matters contained herein and supersedes all prior oral and written
agreements relating to the subject matter of this Agreement 

  

	12.	No Third-Party Beneficiaries. The Parties acknowledge that this Agreement is not intended to make any persons or entities third-party beneficiaries of this Agreement, except that
all AWI Released Parties who are apt Parties and AHI Released Parties who are not Parties are intended third-party beneficiaries of this Agreement. 

  

	13.	No Waiver for Failure to Act A failure or a delay by a Party to this Agreement in exercising any right under this Agreement will not constitute a waiver of the right In addition, a
single or partial exercise of a right under this Agreement will not constitute a waiver of any other right relating to this Agreement 

  

	14.	Modifications and Amendments. This Agreement may not be altered, modified, or amended, except by a written agreement signed by all the Parties including the Party sought to be
charged with such alteration, modification, or amendment, 

  

	15.	Additional Instruments and Acts. The Parties agree to execute any additional instruments and to perform any additional acts that may become necessary to effectuate the purposes of
this Agreement. 

  

	16.	Captions and Headings. Captions and headings in this Agreement are employed for convenience of reference and shall not affect the construction of any provision.

  

	17.	Counterparts. This Agreement may be signed in several counterparts, each of which shall be deemed an original. 

  
 IN WITNESS WHEREOF, the parties hereto, being duly authorized, have duly
executed this Agreement as a binding contract as of the day and year first above written. 
  

			
	 ARMSTRONG HOLDINGS, INC.

		
	By:	 	 /s/ Leonard A. Campanaro

	 	 	

	 Name:
	 	Leonard A. Campanaro
	 Title:
	 	Chief Financial Officer

  

			
	ARMSTRONG WORLD INDUSTRIES, INC. 
		
	By:	 	 /s/ John N. Rigas

	 	 	

	 Name:
	 	John N. Rigas
	 Title:
	 	General Counsel

  

			
	 ARMSTRONG WORLDWIDE, INC.

		
	By:	 	 /s/ Walter T. Gangl

	 	 	

	 Name:
	 	Walter T. Gangl
	 Title:
	 	Director and Assistant SecretaryFORM OF COMMON STOCK WARRANT

 EXHIBIT 4.1 
  

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY
LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. 
  
 NEUROBIOLOGICAL TECHNOLOGIES, INC. 
  
 WARRANT 
  

			
	 Warrant No. [    ]
	 	Dated: March 1, 2004

  
 Neurobiological
Technologies, Inc., a Delaware corporation (the “Company”), hereby certifies that, for value received,                  or its registered assigns
(the “Holder”), is entitled to purchase from the Company up to a total of [            ] shares of common stock, $0.001 par value per share (the “Common
Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price equal to $6.73 per share (as adjusted from time to time as provided in Section
9, the “Exercise Price”), at any time and from time to time from and after the six month anniversary of the date hereof and through and including the date that is five years and six months from the date of issuance hereof (the
“Expiration Date”), and subject to the following terms and conditions. This Warrant (this “Warrant”) is one of a series of similar warrants issued pursuant to that certain Securities Purchase Agreement, dated as of
the date hereof, by and among the Company and the Purchasers identified therein (the “Purchase Agreement”). All such warrants are referred to herein, collectively, as the “Warrants.” 
  
 1. Definitions. In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Purchase Agreement. 
  
 2. Registration of Warrant. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent actual notice to the contrary. 

 3. Registration of Transfers. The Company shall register the transfer of any portion of this
Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Transfer Agent or to the Company at its address specified herein. Upon any such registration or transfer,
a new warrant to purchase Common Stock, in substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the
rights and obligations of a holder of a Warrant. 
  
 4.
Exercise and Duration of Warrants. 
  
 (a) This Warrant
shall be exercisable by the registered Holder at any time and from time to time on or after the six-month anniversary of the date hereof to and including the Expiration Date. At 6:30 P.M., New York City time on the Expiration Date, the portion of
this Warrant not exercised prior thereto shall be and become void and of no value; provided that, if the average of the Closing Prices for the five Trading Days immediately prior to (but not including) the Expiration Date exceeds the Exercise Price
on the Expiration Date, then this Warrant shall be deemed to have been exercised in full (to the extent not previously exercised) on a “cashless exercise” basis at 6:30 P.M. New York City time on the Expiration Date if a “cashless
exercise” may occur at such time pursuant to Section 10 below. 
  
 (b) A Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached hereto (the “Exercise Notice”), appropriately completed and duly signed, and (ii) payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice and if a “cashless exercise” may occur at such time
pursuant to this Section 10 below), and the date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.” The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares. 
  
 5. Delivery of Warrant Shares.

  
 (a) Upon exercise of this Warrant, the Company shall promptly
(but in no event later than three Trading Days after the Exercise Date) issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the
Warrant Shares issuable upon such exercise, free of restrictive legends unless a registration statement covering the resale of the Warrant Shares and naming the Holder as a selling stockholder thereunder is not then effective and the Warrant Shares
are not freely transferable without volume restrictions pursuant to Rule 144 under the 
  

 2 

 Securities Act. The Holder, or any Person so designated by the Holder to receive Warrant Shares, shall be deemed to have
become holder of record of such Warrant Shares as of the Exercise Date. The Company shall, upon request of the Holder, use its reasonable best efforts to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or
another established clearing corporation performing similar functions. 
  
 (b) This Warrant is exercisable, either in its entirety or, from time to time, for a portion of the number of Warrant Shares. Upon surrender of this Warrant following one or more partial exercises, the Company shall issue or cause to be
issued, at its expense, a New Warrant evidencing the right to purchase the remaining number of Warrant Shares. 
  
 (c) In addition to any other rights available to a Holder, if due to the Company’s action or inaction, the Company fails to deliver to the Holder a
certificate representing Warrant Shares by the third Trading Day after the date on which delivery of such certificate is required by this Warrant, and if after such third Trading Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three Trading Days after the
Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the
“Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates
representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Price on the date of the event giving rise
to the Company’s obligation to deliver such certificate. 
  
 (d) The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with
the issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief
with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. 
  
 6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon exercise of
this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be
paid by the Company; provided, however, that the Company shall not be required to pay any tax which may 
  

 3 

 be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in
a name other than that of the Holder or an Affiliate thereof. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

  
 7. Replacement of Warrant. If this Warrant is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable bond or indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations
and procedures and pay such other reasonable third-party costs as the Company may prescribe. 
  
 8. Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for
the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (after giving effect to the adjustments and restrictions of Section 9, if any). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. The Company will take all such action as may be necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed. 
  
 9. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9. 
  
 (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a
smaller number of shares, then in each such case (A) the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such event, and (B) the number of Warrant Shares shall be divided by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately
before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or
combination. 
  

 4 

 (b) Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding,
distributes to holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe for or purchase any security, or (iv)
any other asset (in each case, “Distributed Property”), then in each such case the Holder shall be entitled upon exercise of this Warrant for the purchase of any or all of the Warrant Shares, to receive the amount of Distributed
Property which would have been payable to the Holder had such Holder been the holder of such Warrant Shares on the record date for the determination of stockholders entitled to such Distributed Property. The Company will at all times set aside in
escrow and keep available for distribution to such holder upon exercise of this Warrant a portion of the Distributed Property to satisfy the distribution to which such Holder is entitled pursuant to the preceding sentence. 
  
 (c) Fundamental Transactions. If, at any time while this Warrant is
outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender
offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of
shares of Common Stock covered by Section 9(a) above) (in any such case, a “Fundamental Transaction”), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of
securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable
upon exercise in full of this Warrant (the “Alternate Consideration”). The aggregate Exercise Price for this Warrant will not be affected by any such Fundamental Transaction, but the Company shall apportion such aggregate Exercise
Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder’s request, any successor
to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate
Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (c) and
insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. If, before September 1, 2006, any Fundamental Transaction constitutes or results in: (a)
a “going private” transaction as defined in Rule 13e-3 under the Exchange Act, or (b) an acquisition primarily for cash, or (c) an acquisition, merger or sale with or into a Person not traded on an Eligible Market, then the Company (or any
such successor or surviving entity) will redeem this Warrant from the Holder for a purchase price, payable in cash on the closing date of such “going private” transaction, equal to the lesser of (i) the Black Scholes value of the remaining
unexercised portion of this 
  

 5 

 Warrant on the closing date of such “going private” transaction and (ii) the product of (x) the number of
Warrant Shares that are then issuable upon exercise of this Warrant on the closing date of such “going private” transaction (without regard to any limitations on exercisability of the Warrants), and (y) 200% of the Exercise Price.

  
 (d) Calculations. All calculations under this
Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and
the disposition of any such shares shall be considered an issue or sale of Common Stock. 
  
 (e) Notice of Adjustments. Upon the occurrence of an adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant
and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number of Warrant Shares, describing the transactions giving rise to such adjustments and showing in detail the facts upon
which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent. 
  
 (f) Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities
or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental Transaction (defined below) or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall either make a public
announcement of such transaction or deliver to the Holder a notice describing the material terms and conditions of such transaction, in either case, at least 20 calendar days prior to the applicable record or effective date on which a Person would
need to hold Common Stock in order to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action. 
  
 10. Payment of Exercise Price. The Holder shall pay the Exercise Price
in immediately available funds; provided, however, that the Holder may satisfy its obligation to pay the Exercise Price through a “cashless exercise,” in which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows: 
  

			
	 	  	X = Y [(A-B)/A]
	 where:
	  	 
	 	  	X = the number of Warrant Shares to be issued to the Holder.
		
	 	  	Y = the number of Warrant Shares with respect to which this Warrant is being exercised.
		
	 	  	A = the average of the Closing Prices for the five Trading Days immediately prior to (but not including) the Exercise Date.
		
	 	  	 B = the Exercise Price.

  

 6 

 For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was
originally issued pursuant to the Purchase Agreement. 
  
 11.
Limitation on Exercise. Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock
would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% (the “Maximum Percentage”) of the total number of issued and outstanding shares of Common Stock (including for such
purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Each delivery of
an Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Warrant Shares requested in such Exercise Notice is
permitted under this paragraph. The Company’s obligation to issue shares of Common Stock in excess of the limitation referred to in this Section shall be suspended (and shall not terminate or expire notwithstanding any contrary provisions
hereof) until such time, if any, as such shares of Common Stock may be issued in compliance with such limitation, but in no event later than the Expiration Date. By written notice to the Company, the Holder may waive the provisions of this Section
or increase or decrease the Maximum Percentage to any other percentage specified in such notice, but (i) any such waiver or increase will not be effective until the 61st day after such notice is delivered to the Company, and (ii) any such waiver or
increase or decrease will apply only to the Holder and not to any other holder of Warrants. 
  
 (b) Notwithstanding anything to the contrary contained herein, if the Trading Market is the New York Stock Exchange or any other market or exchange with similar applicable rules, then the maximum number of shares of
Common Stock that the Company may issue pursuant to the Transaction Documents at an effective purchase price less than the Closing Price on the Trading Day immediately preceding the Closing Date equals 19.99% of the shares of Common Stock
outstanding immediately preceding the Closing Date (the “Issuable Maximum”), unless the Company obtains stockholder approval in accordance with the rules and regulations of such Trading Market. If, at the time any Holder requests an
exercise of any of the Warrants, the Actual Minimum (excluding any shares issued or issuable at an effective purchase price in excess of the Closing Price on the Trading Day immediately preceding the Closing Date) exceeds the Issuable Maximum (and
if the Company has not previously obtained the required stockholder approval), then the Company shall issue to the Holder requesting such exercise a number of shares of Common Stock not exceeding such Holder’s pro-rata portion of the Issuable
Maximum (based on such Holder’s share (vis-à-vis other Holders) of the aggregate purchase price paid under the Purchase Agreement and taking into account any Warrant Shares previously 
  

 7 

 issued to such Holder). For the purposes hereof, “Actual Minimum” shall mean, as of any date, the
maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants, without giving effect to (x)
any limits on the number of shares of Common Stock that may be owned by a Holder at any one time, or (y) any additional Underlying Shares that could be issuable as a result of any future possible adjustments made under Section 9(d). 
  
 12. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such fraction a sum in cash equal to such fraction (calculated to the nearest
1/100th of a share) multiplied by the then effective Exercise Price on the Exercise Date. 
  
 13. Notices. Any and all notices or other communications or deliveries hereunder (including without limitation any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day
following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices or communications shall be as set forth in
the Purchase Agreement. 
  
 14. Warrant Agent. The Company
shall serve as warrant agent under this Warrant. Upon 30 days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from
any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholders services business shall be a
successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the
Holder’s last address as shown on the Warrant Register. 
  
 15. Miscellaneous. 
  
 (a) Subject to the
restrictions on transfer set forth on the first page hereof, this Warrant may be assigned by the Holder. This Warrant may not be assigned by the Company except to a successor in the event of a Fundamental Transaction. This Warrant shall be binding
on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or
equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns. 
  

 8 

 (b) The Company will not, by amendment of its governing documents 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 of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company (i) will not
increase the par value of any Warrant Shares above the amount payable therefor on such exercise, (ii) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares on the exercise of this Warrant, and (iii) will not close its stockholder books or records in any manner which interferes with the timely exercise of this Warrant. 
  
 (c) GOVERNING LAW; VENUE;
WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW
YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF
THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO
ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED
IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF
VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF
DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO
IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE
GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY
WAIVES ALL RIGHTS TO A TRIAL BY JURY. 
  

(d) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof. 
  
 (e) In case any one or more of the
provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant. 
  
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK, 
 SIGNATURE PAGE FOLLOWS] 
  

 9 

 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as
of the date first indicated above. 
  

			
	NEUROBIOLOGICAL TECHNOLOGIES, INC.
		
	 By:
	 	  

	 Name:
	 	  

	 Title:
	 	  

  

 10 

 FORM OF EXERCISE NOTICE 
  
 (To be executed by the Holder to exercise the right to purchase shares of Common Stock under the foregoing Warrant) 
  
 To: NEUROBIOLOGICAL TECHNOLOGIES, INC. 
  
 The undersigned is the Holder of Warrant No.
             (the “Warrant”) issued by Neurobiological Technologies, Inc., a Delaware corporation (the “Company”). Capitalized terms used herein and
not otherwise defined have the respective meanings set forth in the Warrant. 
  

	1.	The Warrant is currently exercisable to purchase a total of
                     Warrant Shares. 

  

	2.	The undersigned Holder hereby exercises its right to purchase
                     Warrant Shares pursuant to the Warrant. 

  

	3.	The Holder intends that payment of the Exercise Price shall be made as (check one): 

  
                  “Cash
Exercise” under Section 10 
  
                  “Cashless Exercise” under Section 10 
  

	4.	If the holder has elected a Cash Exercise, the holder shall pay the sum of
$                     to the Company in accordance with the terms of the Warrant. 

  

	5.	Pursuant to this exercise, the Company shall deliver to the holder
                     Warrant Shares in accordance with the terms of the Warrant. 

  

	6.	Following this exercise, the Warrant shall be exercisable to purchase a total of
                     Warrant Shares. 

  

					
	 Dated:                 ,
        
	 	 Name of Holder:

			
	 	 	 (Print)
	 	  

			
	 	 	 By:
	 	  

	 	 	 Name:
	 	  

	 	 	 Title:
	 	  

		
	 	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

 FORM OF ASSIGNMENT 
  
 [To be completed and signed only upon transfer of Warrant] 
  
 FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                        
         the right represented by the within Warrant to purchase                      shares of
Common Stock of Neurobiological Technologies, Inc. to which the within Warrant relates and appoints                      attorney to transfer
said right on the books of Neurobiological Technologies, Inc. with full power of substitution in the premises. 
  

							
	Dated:                     ,
        	 	 	 	 	  	 
				
	 	 	 	 	
	  	 
	 	 	 	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)	  	 
				
	 	 	 	 	  

	  	 
	 	 	 	 	Address of Transferee	  	 
				
	 	 	 	 	  

	  	 
				
	 	 	 	 	  

	  	 
				
	In the presence of:

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