Document:

SECURITIES PURCHASE AGREEMENT

 EXHIBIT 10.1 
  
 SECURITIES PURCHASE AGREEMENT 
  

This Securities Purchase Agreement (this “Agreement”) is dated as of March 1, 2004 among Neurobiological Technologies, Inc., a
Delaware corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, a “Purchaser” and collectively, the “Purchasers”). 
  
 WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to the Purchasers, and the Purchasers, severally and not jointly, desire to purchase from the Company,
securities of the Company as more fully described in this Agreement. 
  
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers agree as follows:

  
 ARTICLE I 
 DEFINITIONS 
  
 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated: 
  
 “Affiliate” means any Person that, directly
or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act. 
  
 “Business Day” means any day other than
Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed. 
  
 “Closing” means the closing of the purchase and sale of the Shares and the Warrants pursuant to Section 2.1. 

 
 “Closing Date” means the date of the
Closing. 
  
 “Commission” means
the Securities and Exchange Commission. 
  
 “Common Stock” means the common stock of the Company, par value $0.001 per share. 
  
 “Common Stock Equivalents” means, collectively, Options and Convertible Securities. 
  
 “Company Counsel” means Heller Ehrman White
& McAuliffe, LLP, counsel to the Company. 

 “Convertible Securities” means any stock or securities (other than
Options) convertible into or exercisable or exchangeable for Common Stock. 
  
 “Effective Date” means the date that the Registration Statement is first declared effective by the Commission. 
  

“Eligible Market” means any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ National Market or
the NASDAQ SmallCap Market. 
  
 “Exchange
Act” means the Securities Exchange Act of 1934, as amended. 
  
 “Excluded Stock” means Common Stock, Options, or any equity or equity equivalent securities, including, without limitation any debt, preferred stock or other instrument or security that is, at any
time during its life and under any circumstances, convertible into or exchangeable or exercisable for Common Stock or Common Stock Equivalents and that is issued or issuable: (A) upon exercise or conversion of any options or other securities
described in Schedule 3.1(f) (provided that such exercise or conversion occurs in accordance with the terms thereof, without amendment or modification, and that the applicable exercise or conversion price or ratio is described in such
schedule) or otherwise pursuant to any employee benefit plan described in Schedule 3.1(f) or hereafter adopted by the Company and approved by its stockholders, (B) in connection with any issuance of shares or grant of options to employees,
officers, directors or consultants of the Company pursuant to a stock option plan, employee stock purchase plan, or other incentive stock plan duly adopted by the Company’s board of directors or in respect of the issuance of Common Stock upon
exercise of any such options, (C) pursuant to a bona fide firm commitment underwritten public offering with a nationally recognized underwriter (excluding any equity line) at a per share offering price equal to at least the market price and in an
aggregate offering amount greater than $30,000,000, (D) pursuant to the Company’s bona fide acquisition of another corporation, or all or a portion of its assets, by merger, purchase of assets or stock or other corporate reorganization in each
case, as approved by the Company’s board of directors and not for the principal purpose of raising capital, or (E) in connection with a bona fide joint venture or development agreement or strategic partnership, the primary purpose of which is
not to raise equity capital. 
  
 “Filing
Date” means that date that is 30 days from the Closing Date. 
  
 “Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal or other restriction. 
  
 “Losses” means any and all losses, claims, damages, liabilities, settlement costs and
expenses, including, without limitation, costs of preparation and reasonable attorneys’ fees. 
  
 “Options” means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.

  

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 “Person” means any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or any court or other federal, state, local or other governmental authority or other entity
of any kind. 
  
 “Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. 
  
 “Prospectus” means the prospectus included in the Registration Statement (including,
without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus including post effective amendments,
and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 
  
 “Purchaser Counsel” has the meaning set forth in Section 6.2(a). 
  
 “Registrable Securities” means any Common
Stock (including the Shares and Underlying Shares) issued or issuable pursuant to the Transaction Documents, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with
respect to the foregoing. 
  
 “Registration Statement” means each registration statement required to be filed under Article VI, including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including
pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. 
  
 “Required Effectiveness Date” means 90 days from the Closing Date if the Commission does
not review the Company’s Form S-3 filed pursuant to Section 6.1, or 120 days from the Closing Date if the Commission reviews such Form S-3 filing. 
  

“Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424,
respectively, promulgated by the Commission pursuant to the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

  
 “Securities” means the
Shares, the Warrants and the Underlying Shares. 
  
 “Shares” means an aggregate of 3,880,000 shares of Common Stock, which are being issued and sold to the Purchasers at the Closing. 
  
 “Subsidiary” means any Person in which the Company, directly or indirectly, owns capital stock or holds an equity or
similar interest. 
  

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 “Trading Day” means (a) any day on which the Common Stock is listed or
quoted and traded on its primary Trading Market, (b) if the Common Stock is not then listed or quoted and traded on any Eligible Market, then a day on which trading occurs on the NASDAQ SmallCap Market (or any successor thereto), or (c) if trading
ceases to occur on the NASDAQ SmallCap Market (or any successor thereto), any Business Day. 
  
 “Trading Market” means the NASDAQ SmallCap Market or any other Eligible Market, or any national securities exchange,
market or trading or quotation facility on which the Common Stock is then listed or quoted. 
  
 “Transaction Documents” means this Agreement, the Warrants, the Transfer Agent Instructions and any other documents or
agreements executed in connection with the transactions contemplated hereunder. 
  
 “Transfer Agent Instructions” means the Irrevocable Transfer Agent Instructions, in the form of Exhibit D,
executed by the Company and delivered to and acknowledged in writing by the Company’s transfer agent. 
  
 “Underlying Shares” means the shares of Common Stock issuable upon exercise of the Warrants. 
  
 “Warrants” means, collectively, the Common
Stock purchase warrants issued and sold under this Agreement, in the form of Exhibit A, and any warrants or replacement warrants issued upon exercise transfer, exchange or partial exercise of such warrants. 
  
 ARTICLE II 
 PURCHASE AND SALE 
  
 2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to each Purchaser, and each Purchaser shall, severally and not jointly, purchase from the Company, such
number of Shares and a Warrant to purchase such number of Underlying Shares, each as indicated below such Purchaser’s name on the signature page of this Agreement, for an aggregate purchase price for such Purchaser as indicated below such
Purchaser’s name on the signature page of this Agreement. The Closing shall take place at the offices of Heller Ehrman White & McAuliffe LLP, 4350 La Jolla Village Drive, San Diego, California immediately following the execution hereof, or
at such other location or time as the parties may agree. 
  
 2.2
Closing Deliveries. 
  
 (a) At the Closing, the Company
shall deliver or cause to be delivered to each Purchaser the following: 
  
 (i) one or more stock certificates, free and clear of all restrictive and other legends (except as expressly provided in Section 4.1(b) hereof), evidencing the number of Shares indicated below such Purchaser’s
name on the signature page of this Agreement, registered in the name of such Purchaser; 
  

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 (ii) a Warrant, registered in the name of such Purchaser, pursuant to which such
Purchaser shall have the right to acquire such number of Underlying Shares indicated below such Purchaser’s name on the signature page of this Agreement, on the terms set forth therein; 
  
 (iii) a legal opinion of Company Counsel, in the form of
Exhibit B, executed by such counsel and delivered to the Purchasers; and 
  
 (iv) duly executed Transfer Agent Instructions acknowledged by the Company’s transfer agent. 
  
 (b) At the Closing, each Purchaser shall deliver or cause to be delivered to
the Company the purchase price indicated below such Purchaser’s name on the signature page of this Agreement, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company for
such purpose. 
  
 (c) Notwithstanding anything to the contrary in
this Section 2.2, in the event that the Company cannot deliver at Closing all of the items set forth in Sections 2.2(a) above, each Purchaser shall instead deliver the purchase price set forth in Section 2.2(b) (the “Escrow Funds”)
to the Wells Fargo Bank, National Association Escrow Agent (the “Escrow Agent”), to be held by the Escrow Agent in escrow on behalf of such Purchaser. Upon confirmation from all the Purchasers or Proskauer Rose LLP of receipt by the
Purchasers of all the items set forth in Sections 2.2(a) above (which may be in writing or via email), the Escrow Agent shall release the Escrow Funds to the Company. In the event all of the items set forth in Sections 2.2(a) are not delivered to a
Purchaser on or prior to March 5, 2004, the Escrow Agent shall immediately return the Escrow Funds to a Purchaser upon the request of such Purchaser. The Escrow Agent hereby acknowledges and agrees to act as escrow agent in accordance with this
Section 2.2(c). The Escrow Agent (i) shall be entitled to rely on any written or email communication received from a Purchaser and (ii) shall not be liable for any acts or omissions of any kind any unless caused by its own gross negligence or
willful misconduct. 
  
 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES 
  
 3.1 Representations and Warranties of the Company. Except as disclosed in the Company Disclosure Schedule attached hereto, the Company hereby
represents and warrants to each of the Purchasers as follows: 
  
 (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than those listed in Schedule 3.1(a). Except as disclosed in Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital stock or comparable
equity interests of each Subsidiary free and clear of any Lien and all the issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive
and similar rights. 
  
 (b) Organization and Qualification.
Each of the Company and the Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of 
  

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 the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (i) adversely affect the legality, validity or enforceability
of any Transaction Document, (ii) have or result in a material adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole on a consolidated
basis, or (iii) adversely impair the Company’s ability to perform fully on a timely basis its obligations under any of the Transaction Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”). 
  
 (c) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the
Company, its Board of Directors or its stockholders. Each of the Transaction Documents has been (or upon delivery will be) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute, the valid and
binding obligation of the Company enforceable against the Company in accordance with its terms. 
  
 (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents,
(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 or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations and the rules and regulations of any self-regulatory organization to which the Company or its securities are subject), or by which any property or asset of the Company or a
Subsidiary is bound or affected, except in the case of clauses (ii) or (iii) above, such events as could not, individually or in the aggregate, have or result in a Material Adverse Effect. 
  
 (e) Issuance of the Securities. The Securities (including the
Underlying Shares) are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all 
  

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 Liens and shall not be subject to preemptive rights or similar rights of stockholders. The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock issuable upon exercise of the Warrants. 
  
 (f) Capitalization. The number of shares and type of all authorized, issued and outstanding capital stock, options and other securities of the
Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company) is set forth in Schedule 3.1(f). All outstanding shares of capital stock are duly authorized, validly issued, fully paid
and nonassessable and have been issued in compliance with all applicable securities laws. Except as disclosed in Schedule 3.1(f), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. There are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) and the issue and sale of the Securities (including the Underlying Shares) will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. To the knowledge of the Company
and except as specifically disclosed in Schedule 3.1(f) or in any Schedule 13D or Schedule 13G filed with the Commission, no Person or group of related Persons beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has
the right to acquire, by agreement with or by obligation binding upon the Company, beneficial ownership of in excess of 5% of the outstanding Common Stock, ignoring for such purposes any limitation on the number of shares of Common Stock that may be
owned at any single time. 
  
 (g) SEC Reports; Financial
Statements. The Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was
required by law to file such material) (the foregoing materials (together with any materials filed by the Company under the Exchange Act, whether or not required) being collectively referred to herein as the “SEC Reports” and,
together with this Agreement and the Schedules to this Agreement, the “Disclosure Materials”) 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. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of
the SEC Reports, when filed, 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 the light of the circumstances under which they
were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect
at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved 
  

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 (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto, and
fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. All material agreements to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject are included as part
of or specifically identified in the SEC Reports. 
  
 (h)
Material Changes. Since June 30, 2003, except as specifically disclosed in the SEC Reports or in Schedule 3.1(h), (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that could result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting or the identity of its auditors, except
as disclosed in its SEC Reports, (iv) 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, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans. 
  
 (i) Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries that could, individually or in the aggregate, have a Material Adverse Effect. Schedule
3.1(i) contains a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it could, individually or in the
aggregate, have a Material Adverse Effect. 
  
 (j)
Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or
regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor
matters, except in each case as could not, individually or in the aggregate, have or result in a Material Adverse Effect. 
  
 (k) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and marketable title in all personal property 
  

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 owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance. 
  
 (l) Certain Fees. Except for the fees described in Schedule 3.1(l), all of which are payable to registered
broker-dealers, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement, and the Company has not taken any action that would cause any Purchaser to be liable for any such fees or commissions. 
  
 (m) Private Placement. Neither the Company nor any Person acting on the Company’s behalf has sold or offered to sell or solicited any offer to
buy the Securities by means of any form of general solicitation or advertising. Neither the Company nor any of its Affiliates nor any Person acting on the Company’s behalf has, directly or indirectly, at any time within the past six months,
made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with
the offer and sale of the Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to the Transaction Documents to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or
stockholder approval provisions, including, without limitation, under the rules and regulations of any Trading Market. 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. The Company is not a United States real property holding corporation within the meaning of the Foreign Investment in Real Property Tax Act of 1980. 
  
 (n) Form S-3 Eligibility. The Company is eligible to register its Common Stock for resale by the Purchasers using
Form S-3 promulgated under the Securities Act. 
  
 (o) Listing
and Maintenance Requirements. The Company has not, in the two years preceding the date hereof, received notice (written or oral) from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not be, in compliance with all such listing and maintenance requirements. 
  
 (p) Registration Rights. Except as described in Schedule 3.1(p), the
Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been
satisfied. 
  
 (q) Application of Takeover Protections.
There is no control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter documents or 
  

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 the laws of its state of incorporation that is or could become applicable to any of the Purchasers as a result of the
Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the
Securities. 
  
 (r) Disclosure. The Company confirms that
neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that constitutes or might constitute material, nonpublic information. The Company understands and confirms that
each of the Purchasers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Purchasers regarding the Company, its business and the transactions contemplated hereby,
including the Schedules to this Agreement, furnished by or on behalf of the Company are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed. The Company acknowledges and agrees
that no Purchaser has made (i) any representations or warranties to the Company with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2, or (ii) any oral statement, commitment or promise to the
Company or, to its knowledge, any of its representatives which is or was an inducement to the Company to enter into this Agreement or otherwise. 
  
 (s) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting
solely in the capacity of an arm’s length purchaser with respect to the Company and to this Agreement and the transactions contemplated hereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company and its representatives. 
  
 (t) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, 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 which the failure to so have could have
a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates
or infringes upon the rights of any Person. To the knowledge of the Company, (a) all such Intellectual Property Rights are enforceable and (b) there is no existing infringement by another Person of any of the Intellectual Property Rights.

  

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 (u) Insurance. 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. Neither the Company nor any Subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business as currently conducted without a significant increase in cost.

  
 (v) Regulatory 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 permits could not, individually or in the aggregate, have or result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit. 
  
 (w) Transactions With Affiliates and Employees. Except as set forth in SEC Reports filed at least ten days prior to the date hereof, none of the officers or directors of the Company and, to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing
of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or
any such employee has a substantial interest or is an officer, director, trustee or partner. 
  
 (x) Solvency. After taking into account the proceeds received by the Company from this transaction, based on the financial condition of the Company as of the Closing Date, (i) the value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company has adequate assets to carry on its
business for the current fiscal year as now conducted and as proposed to be conducted; and (iii) the current cash flow of the Company, together with the proceeds the Company will receive under this Agreement, is sufficient to pay all amounts on or
in respect of the Company’s debt when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt). 
  
 (y) Internal Accounting
Controls. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 
  

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 (z) Sarbanes-Oxley Act. The Company is in compliance with applicable requirements of the
Sarbanes-Oxley Act of 2002 and applicable rules and regulations promulgated by the Commission thereunder in effect as of the date of this Agreement, except where such noncompliance could not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect. 
  
 3.2 Representations
and Warranties of the Purchasers. Each Purchaser hereby, as to itself only and for no other Purchaser, represents and warrants to the Company as follows: 
  

(a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The purchase by such Purchaser of the Shares and the Warrants hereunder has been duly authorized by all necessary action on the part of such Purchaser. This Agreement has been duly executed and delivered by such Purchaser and constitutes
the valid and binding obligation of such Purchaser, enforceable against it in accordance with its terms. 
  
 (b) Investment Intent. Such Purchaser is acquiring the Securities for investment purposes only and not with a view to or for distributing or
reselling such Securities or any part thereof, without prejudice, however, to such Purchaser’s right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Securities pursuant to an
effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. Nothing contained herein shall be deemed a representation or warranty by such
Purchaser to hold Securities for any period of time. 
  
 (c)
Purchaser Status. At the time such Purchaser was offered the Shares and the Warrants, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. 
  
 (d) Reliance on Exemptions. Such Purchaser understands that the
Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser to
acquire such securities. 
  
 (e) Experience of such
Purchaser. Such Purchaser, either alone or together with its representatives has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

  

 12 

 (f) Information. Such Purchaser and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been requested by such Purchaser. Such Purchaser and its advisors, if any, have been afforded the opportunity
to ask questions of the Company. Such Purchaser understands that its investment in the Securities involves a high degree of risk. Neither such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its advisors shall
modify, amend or affect such Purchaser’s right to rely on the truth, accuracy and completeness of the disclosure made to such Persons in respect of the Company or this transaction and the Company’s representations and warranties contained
in this Agreement. Each Purchaser acknowledges and agrees that the Company has not made (i) any representations or warranties to such Purchaser with respect to the transactions contemplated hereby other than those specifically set forth in this
Agreement, or (ii) any oral statement, commitment or promise that is or was an inducement to such Purchaser to enter into this Agreement or otherwise. 
  
 (g) No Short Positions. Each Purchaser has not, from February 20, 2004 to the Closing Date, entered into any Short Sales. For purposes of this
Section 3.2(g), a “Short Sale” by a Purchaser means a sale of Common Stock that is marked as a short sale and that is executed at a time when such Purchaser has no equivalent offsetting long position in the Common Stock. For
purposes of determining whether a Purchaser has an equivalent offsetting long position in the Common Stock, all Common Stock and all Common Stock that would be issuable upon conversion or exercise in full of all Options then held by such Purchaser
(assuming that such Options were then fully convertible or exercisable, notwithstanding any provisions to the contrary, and giving effect to any conversion or exercise price adjustments scheduled to take effect in the future) shall be deemed to be
held long by such Purchaser. 
  
 ARTICLE IV 
 OTHER AGREEMENTS OF THE PARTIES 
  
 4.1 Transfer Restrictions. 
  
 (a) Securities may only be disposed of pursuant to an effective registration statement under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act, and in compliance with any applicable state securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or to the Company or pursuant
to Rule 144(k), except as otherwise set forth herein, the Company may require the transferor to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under the Securities Act. Notwithstanding the foregoing, the Company hereby consents to and agrees to register on the books of the Company and with its transfer agent, without
any such legal opinion, any transfer of Securities by a Purchaser to an Affiliate of such Purchaser, provided that the transferee certifies to the Company that it is an “accredited investor” as defined in Rule 501(a) under the Securities
Act. 
  

 13 

 (b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b), of the
following legend on any certificate evidencing Securities: 
  
 [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE] HAVE [NOT] 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING, 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 OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES. 
  
 Certificates evidencing Securities shall not be required to contain such legend (i) while a Registration Statement covering the resale of
such Securities is effective under the Securities Act, or (ii) following any sale of such Securities pursuant to Rule 144, or (iii) if such Securities are eligible for sale under Rule 144(k) or (iv) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). The Company shall cause its counsel to issue the legal opinion included in the Transfer Agent Instructions to the
Company’s transfer agent on the Effective Date. Following the Effective Date or at such earlier time as a legend is no longer required for certain Securities, the Company will no later than three Trading Days following the delivery by a
Purchaser to the Company or the Company’s transfer agent of a legended certificate representing such Securities, deliver or cause to be delivered to such Purchaser a certificate representing such Securities that is free from all restrictive and
other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section, except as required by law, regulation or the
requirements of the applicable Trading Market. Each Purchaser agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the
Registration Statement and will be deemed to have acknowledged this covenant by presenting a legended certificate for removal of such legend after the Effective Date but before the Securities may otherwise be freely transferred. Each Purchaser,
individually as to itself only, agrees to indemnify the Company or any of its officers or directors from any Losses and any reasonable legal and other expenses (including the costs of any investigation, preparation and travel) arising solely out of
such Purchaser’s failure to (i) comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of the Registrable Securities pursuant to the Registration Statement, or (ii) sell such
Registrable Securities in a manner described in the Registration Statement. The indemnification obligations under this paragraph shall be in addition to any liability that the Purchaser may otherwise have and shall be binding upon and inure to the
benefit of any successors or assigns of the Company. 
  

 14 

 (c) The Company acknowledges and agrees that a Purchaser may from time to time pledge or grant a security
interest in some or all of the Securities in connection with a bona fide margin agreement or other loan or financing arrangement secured by the Securities and, if required under the terms of such agreement, loan or arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of the pledgee, secured party or pledgor shall be required in connection
therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in
connection with a pledge or transfer of the Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder. 
  
 4.2 Furnishing
of Information. As long as any Purchaser owns Securities, the Company covenants to file all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. Upon the request of any Purchaser, the Company shall
deliver to such Purchaser a written certification of a duly authorized officer as to whether it has complied with the preceding sentence. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to such laws,
it will prepare and furnish to the Purchasers and make publicly available in accordance with paragraph (c) of Rule 144 such information as is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it
will take such further action as any holder of Securities may reasonably request to satisfy the provisions of Rule 144 applicable to the issuer of securities relating to transactions for the sale of securities pursuant to Rule 144. 
  
 4.3 Integration. For a period of 12 months from the Closing, the
Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market. 
  
 4.4 Reservation of Securities. The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to
fulfill its obligations in full under the Transaction Documents. In the event that at any time the then authorized shares of Common Stock are insufficient for the Company to satisfy its obligations in full under the Transaction Documents, the
Company shall promptly take such actions as may be required to increase the number of authorized shares. 
  
 4.5 Subsequent Placements. From the date hereof until 30 Trading Days after the Effective Date (the “Blockout Period”), the
Company will not, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any 
  

 15 

 option to purchase or other disposition of) any of its or the Subsidiaries’ equity or equity equivalent securities,
including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for Common Stock or Common Stock Equivalents
(any such offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”). Notwithstanding the foregoing, the foregoing restrictions shall not apply to Excluded Stock or prevent the Company from
engaging in non-binding preliminary discussions with a Person that is not publicly disclosed. 
  
 4.6 Securities Laws Disclosure; Publicity. The Company shall, on or before 8:30 a.m., New York City time, on March 2, 2004, issue a press release acceptable to the Purchasers disclosing the material terms of
the transactions contemplated hereby. Within two days following the Closing Date, the Company shall file a Current Report on Form 8-K with the Commission describing the terms of the transactions contemplated by the Transaction Documents and
including as exhibits to such Current Report on Form 8-K this Agreement and the form of the Warrants, in the form required by the Exchange Act. Thereafter, the Company shall timely file any filings and notices required by the Commission or
applicable law with respect to the transactions contemplated hereby. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such Purchaser, until and except to the extent such disclosure (but not any disclosure as to the controlling Persons thereof) is required by law or Trading Market regulations,
in which case the Company shall provide the Purchasers with prior notice of such disclosure. The Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers and directors not to, provide any Purchaser
with any material nonpublic information regarding the Company or any of its Subsidiaries from and after the filing of the 8-K Filing without the consent of such Purchaser, provided, however, that any such information provided at the request of such
Purchaser or in response to an inquiry from such Purchase shall be deemed to have been provided with the consent of that Purchaser. In the event of a breach of the foregoing covenant, such Purchaser shall promptly notify the Company in writing of
such breach and the Company, upon the advice of counsel, shall promptly publicly announce such material non-public information by way of press release or filing with the Commission. Each press release disseminated during the six months preceding the
date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit 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 are made, not misleading. 
  
 4.7 Use of
Proceeds. Except as set forth on Schedule 4.7, the Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes and not (i) for the satisfaction of any portion of the Company’s debt (other
than payment of trade payables, and accrued expenses in the ordinary course of the Company’s business and prior practices), (ii) to redeem any Company equity or equity-equivalent securities, or (iii) to settle any outstanding litigation.

  
 4.8 Reimbursement. If any Purchaser or any of its
Affiliates or any officer, director, partner, controlling Person, employee or agent of a Purchaser or any of its Affiliates (a “Related Person”) becomes involved in any capacity in any Proceeding brought by or against any Person

  

 16 

 in connection with or as a result of the transactions contemplated by the Transaction Documents, the Company will
indemnify and hold harmless such Purchaser or Related Person for its reasonable legal and other expenses (including the costs of any investigation, preparation and travel) and for any Losses incurred in connection therewith, as such expenses or
Losses are incurred, excluding only Losses that result directly from such Purchaser’s or Related Person’s gross negligence or willful misconduct. In addition, the Company shall indemnify and hold harmless each Purchaser and Related Person
from and against any and all Losses, as incurred, arising out of or relating to any breach by the Company of any of the representations, warranties or covenants made by the Company in this Agreement or any other Transaction Document, or any
allegation by a third party that, if true, would constitute such a breach. The conduct of any Proceedings for which indemnification is available under this paragraph shall be governed by Section 6.4(c) below. The indemnification obligations of the
Company under this paragraph shall be in addition to any liability that the Company may otherwise have and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. If the Company breaches its obligations under any Transaction Document, then, in addition to any other liabilities the Company may have under any Transaction Document or applicable law, the Company shall pay or reimburse the
Purchasers for all costs of collection and enforcement, including the indemnification obligations under this paragraph and reasonable attorneys fees and expenses. 
  
 ARTICLE V 
 CONDITIONS 
  
 5.1 Conditions Precedent to the
Obligations of the Purchasers. The obligation of each Purchaser to acquire Securities at the Closing is subject to the satisfaction or waiver by such Purchaser, at or before the Closing, of each of the following conditions: 
  
 (a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date; and 
  
 (b) Performance. The Company and each other Purchaser shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing. 
  
 5.2 Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell Securities at the
Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions: 
  
 (a) Representations and Warranties. The representations and warranties of the Purchasers contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made on and as of such date; and 
  
 (b) Performance. The Purchasers shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied with by the Purchasers at or prior to the Closing. 
  

 17 

 ARTICLE VI 
 REGISTRATION RIGHTS 
  
 6.1
Shelf Registration 
  
 (a) As promptly as possible, and in
any event on or prior to the Filing Date, the Company shall prepare and file with the Commission a “Shelf” Registration Statement covering the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in
accordance herewith as the Purchasers may consent) and shall contain (except if otherwise directed by the Purchasers) the “Plan of Distribution” attached hereto as Exhibit C. 
  
 (b) The Company shall use its best efforts to cause the Registration
Statement to be declared effective by the Commission as promptly as possible after the filing thereof, but in any event prior to the Required Effectiveness Date, and shall use its best efforts to keep the Registration Statement continuously
effective under the Securities Act until the fifth anniversary of the Effective Date or such earlier date when all Registrable Securities covered by such Registration Statement have been sold publicly or may be sold pursuant to paragraph (k) of Rule
144 (the “Effectiveness Period”). 
  
 (c) The
Company shall notify each Purchaser in writing promptly (and in any event within one business day) after receiving notification from the Commission that the Registration Statement has been declared effective. 
  
 (d) Upon the occurrence of any Event (as defined below) and on every monthly
anniversary thereof until the applicable Event is cured, as partial relief for the damages suffered therefrom by the Purchasers (which remedy shall not be exclusive of any other remedies available under this Agreement, at law or in equity), the
Company shall pay to each Purchaser an amount in cash, as liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase price paid by such Purchaser hereunder for every month, prorated for any partial month. The payments to which
a Purchaser shall be entitled pursuant to this Section 6.1(d) are referred to herein as “Event Payments”. Any Event Payments payable pursuant to the terms hereof shall apply on a pro-rata basis for any portion of a month
prior to the cure of an Event. In the event the Company fails to make Event Payments in a timely manner, such Event Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. 
  
 For such purposes, each of the following shall constitute an “Event”:

  
 (i) the Registration Statement is not filed
on or prior to the Filing Date or is not declared effective on or prior to the Required Effectiveness Date; 
  
 (ii) subject to Section 6.1(e), after the Effective Date, a Purchaser is not permitted to sell Registrable Securities under the
Registration Statement (or a 

  

 18 

 
subsequent Registration Statement filed in replacement thereof) for any reason for five or more Trading Days, unless such Purchaser may sell the Registrable
Securities pursuant to Rule 144(k); or 
  
 (iii)
the Company fails to have available a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock available to issue Underlying Shares upon any exercise of the Warrants. 
  
 (e) Notwithstanding anything in this Agreement to the contrary, the Company
may, by written notice to the Purchasers following the 45th Trading Day following the Effective Date, suspend sales
under a Registration Statement and/or require that the Purchasers immediately cease the sale of shares of Common Stock pursuant thereto and/or defer the filing of any subsequent Registration Statement if the Board of Directors determines in good
faith, by appropriate resolutions, that, (A) it would be materially detrimental to the Company (other than as relating solely to the price of the Common Stock) to maintain a Registration Statement at such time and (B) it is in the best interests of
the Company to defer proceeding with such registration at such time. Upon receipt of such notice, each Purchaser shall immediately discontinue any sales of Registrable Securities pursuant to such registration until such Purchaser has received copies
of a supplemented or amended Prospectus or until such Purchaser is advised in writing by the Company that the then-current Prospectus may be used and has received copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such Prospectus. In no event, however, shall this right be exercised to suspend sales beyond the period during which (in the good faith determination of the Company’s Board of Directors) the failure to require such
suspension would be materially detrimental to the Company. The Company’s rights under this Section 6.1(e) may be exercised for a period of no more than 25 days at a time and not more than two times in any twelve-month period, without such
suspension being considered as part of an Event Payment determination. Immediately after the end of any suspension period under this Section 6.1(e), the Company shall take all actions that may be reasonably necessary (including filing any required
supplemental prospectus) to restore the effectiveness of the applicable Registration Statement and the ability of the Purchasers to publicly resell their Registrable Securities pursuant to such effective Registration Statement. 
  
 (f) The Company shall not, prior to the Effective Date of the Registration
Statement, prepare and file with the Commission a registration statement (other than a Registration Statement filed on a Form S-4 or S-8) relating to an offering for its own account or the account of others under the Securities Act of any of its
equity securities. 
  
 6.2 Registration Procedures.

  
 (i) In connection with the Company’s registration obligations hereunder,
the Company shall: 
  
 (a) Not less than three Trading Days prior
to the filing of a Registration Statement or any related Prospectus or any amendment, or not less than one Trading Day for any supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference),
the Company shall (i) furnish to each Purchaser and any counsel designated by any Purchaser (each, a “Purchaser Counsel”, and Smithfield Fiduciary 
  

 19 

 LLC, a Purchaser, has initially designated Proskauer Rose LLP as its Purchaser Counsel) copies of all such documents
proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of each Purchaser and Purchaser Counsel, and (ii) cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. The Company shall not file a
Registration Statement or any such Prospectus or any amendments or supplements thereto to which Purchasers holding a majority of the Registrable Securities shall reasonably object in writing. 
  
 (b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by
any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible, and in any event within ten Trading Days, to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and, at the request of any Purchaser, as promptly as reasonably possible provide such Purchaser true and complete copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Registration Statement during the applicable
period in accordance with the intended methods of disposition by the Purchasers thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented 
  
 (c) Notify the Purchasers of Registrable Securities to be sold and each Purchaser Counsel as promptly as reasonably
possible, and (if requested by any such Person) confirm such notice in writing no later than one Trading Day thereafter, of any of the following events: (i) the Commission notifies the Company whether there will be a “review” of any
Registration Statement; (ii) the Commission comments in writing on any Registration Statement (in which case the Company shall deliver to each Purchaser upon their request a copy of such comments and of all written responses thereto); (iii) any
Registration Statement or any post-effective amendment is declared effective; (iv) the Commission or any other Federal or state governmental authority requests any amendment or supplement to any Registration Statement or Prospectus or requests
additional information related thereto; (v) the Commission issues any stop order suspending the effectiveness of any Registration Statement or initiates any Proceedings for that purpose; (vi) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (vii) the financial statements included in any Registration Statement become
ineligible for inclusion therein or any statement made in any Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference is untrue in any material respect or any revision to a Registration
Statement, Prospectus or other document is required so that it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. 
  

 20 

 (d) Use its best efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order
suspending the effectiveness of any Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as possible. 
  
 (e) Furnish to each Purchaser and Purchaser Counsel, without charge, at least
one conformed copy of each Registration Statement and each amendment thereto, including financial statements and schedules, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission. 
  
 (f) Promptly deliver to each Purchaser and Purchaser Counsel, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably
request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Purchasers in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto. 
  
 (g) (i) In the time and
manner required by each Trading Market, prepare and file with such Trading Market an additional shares listing application covering all of the Registrable Securities; (ii) take all steps necessary to cause such Registrable Securities to be approved
for listing on each Trading Market as soon as possible thereafter; (iii) provide to the Purchasers evidence of such listing; and (iv) maintain the listing of such Registrable Securities on each such Trading Market or another Eligible Market.

  
 (h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling Purchasers and respective Purchaser Counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Purchaser requests in writing, to keep each such registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement. 
  
 (i) Cooperate with the Purchasers to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by this Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such names as any such Purchasers may request. 
  
 (j) Upon the occurrence of any event described in Section 6.2(c)(vii), as promptly as reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any 
  

 21 

 document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. 
  
 (k) Cooperate with any due diligence investigation undertaken by the Purchasers in connection with the sale of Registrable Securities, including, without limitation, by making available any documents and information; provided that the
Company will not deliver or make available to any Purchaser material, nonpublic information unless such Purchaser specifically requests in advance to receive material, nonpublic information in writing. 
  
 (l) If Holders of a majority of the Registrable Securities being offered
pursuant to a Registration Statement select underwriters for the offering, the Company shall enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, by providing customary
legal opinions, comfort letters and indemnification and contribution obligations. 
  
 (m) Comply with all applicable rules and regulations of the Commission. 
  
 (ii) In connection with the registration of the Registrable Securities, it shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Purchaser (or to make any payments or other damages to such Purchaser pursuant to Section 6.1) that such Purchaser shall furnish to the Company the Selling Stockholder Questionnaire set forth on Exhibit E
hereto within 10 Trading Days of the Company’s written request. 
  
 6.3 Registration Expenses. The Company shall pay (or reimburse the Purchasers for) all fees and expenses incident to the performance of or compliance with this Agreement by the Company, including without limitation (a) all
registration and filing fees and expenses, including without limitation those related to filings with the Commission, any Trading Market and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including without
limitation expenses of printing certificates for Registrable Securities and of printing prospectuses requested by the Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company, (e) fees and
expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market. 
  
 6.4 Indemnification 
  
 (a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless each Purchaser, the officers, directors, partners, members, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a
pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees of each of them, each Person who controls any such Purchaser (within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, partners, members, agents and employees of each such 
  

 22 

 controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred,
arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of
the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding such
Purchaser furnished in writing to the Company by such Purchaser expressly for use therein, or to the extent that such information relates to such Purchaser or such Purchaser’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Purchaser expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (ii) in the case of an occurrence of an event of
the type specified in Section 6.2(c)(v)-(vii), the use by such Purchaser of an outdated or defective Prospectus after the Company has notified such Purchaser in writing that the Prospectus is outdated or defective and prior to the receipt by such
Purchaser of the Advice contemplated in Section 6.5. The Company shall notify the Purchasers promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this
Agreement. 
  
 (b) Indemnification by Purchasers. Each
Purchaser shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not
subject to appeal or review) arising out of or relating to any untrue statement of a material fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising out of or
relating to any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were
made) not misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Purchaser to the Company specifically for inclusion in such Registration Statement or
such Prospectus or to the extent that (i) such untrue statements or omissions are based solely upon information regarding such Purchaser furnished in writing to the Company by such Purchaser expressly for use therein, or to the extent that such
information relates to such Purchaser or such Purchaser’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Purchaser expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement thereto or (ii) in the case of an occurrence of an event of the type specified in Section 6.2(c)(v)-(vii), the use by such Purchaser of an outdated or defective
Prospectus after the Company has notified such Purchaser in writing that the Prospectus is outdated or defective and prior to the receipt by such Purchaser of the Advice contemplated in Section 6.5. In no event shall the liability of any
selling Purchaser hereunder be greater in amount than the dollar amount of the net proceeds received by such Purchaser upon the sale of the Registrable Securities giving rise to such indemnification obligation. 
  

 23 

 (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against
any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party. 
  
 An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised in writing by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. 
  
 All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally
judicially determined that such Indemnified Party is not entitled to indemnification hereunder). 
  
 (d) Contribution. If a claim for indemnification under Section 6.4(a) or (b) is unavailable to an Indemnified Party (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any 
  

 24 

 other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6.4(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding
to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. 
  
 The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.4(d), no Purchaser shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 
  
 The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 
  
 6.5 Dispositions. Each Purchaser agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the
Registration Statement. Each Purchaser further agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 6.2(c)(v), (vi) or (vii), such Purchaser will discontinue
disposition of such Registrable Securities under the Registration Statement until such Purchaser’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 6.2(j), or until it is
advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. 
  
 6.6 No Piggyback on Registrations. Neither the Company nor any of its security holders (other than the Purchasers in
such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right to any of its
security holders. 
  

 25 

 6.7 Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an
effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under
the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Purchaser written notice of such determination and if, within fifteen days after receipt of
such notice, any such Purchaser shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Purchaser requests to be registered. 
  
 ARTICLE VII 
 MISCELLANEOUS 
  
 7.1 Termination. This Agreement may be terminated by the Company or any Purchaser, by written notice to the other parties, if the Closing has not been consummated by the third Business Day following the date of this Agreement;
provided that no such termination will affect the right of any party to sue for any breach by the other party (or parties). 
  
 7.2 Fees and Expenses. At the Closing, the Company shall pay to Smithfield Fiduciary LLC an aggregate of $40,000 for their legal fees and expenses
incurred in connection with its due diligence and the preparation and negotiation of the Transaction Documents, of which amount $10,000 has been previously paid by the Company to the Purchaser Counsel. In lieu of the foregoing payment, Smithfield
Fiduciary LLC may retain such amount at the Closing. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with
the issuance of the Securities. 
  
 7.3 Entire Agreement.
The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company will execute and deliver to the Purchasers such further
documents as may be reasonably requested in order to give practical effect to the intention of the parties under the Transaction Documents. Notwithstanding anything to the contrary herein, Securities may be assigned to any Person in connection with
a bona fide margin account or other loan or financing arrangement secured by such Company Securities. 
  
 7.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of (a) 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 
  

 26 

 time) on a Trading Day, (b) 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, (c) the Trading Day following the date of deposit with a nationally
recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses and facsimile numbers for such notices and communications are those set forth on the signature pages hereof, or
such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person. 
  
 7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed by the Company and the
holders of a majority of the Shares. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. 
  
 7.6 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall
not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against
any party. 
  
 7.7 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchasers. Any
Purchaser may assign its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions
hereof that apply to the “Purchasers.” Notwithstanding anything to the contrary herein, Securities may be assigned to any Person in connection with a bona fide margin account or other loan or financing arrangement secured by such
Securities. 
  
 7.8 No Third-Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that each Related Person is an
intended third party beneficiary of Section 4.8 and each Indemnified Party is an intended third party beneficiary of Section 6.4 and (in each case) may enforce the provisions of such Sections directly against the parties with obligations thereunder.

  
 7.9 Governing Law; Venue; Waiver Of Jury Trail. ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY
SUBMIT 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 BROUGHT BY THE COMPANY OR ANY 
  

 27 

 PURCHASER HEREUNDER, 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 WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY PURCHASER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR 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 AND PURCHASERS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY. 
  
 7.10 Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and/or exercise of the Securities, as applicable. 
  
 7.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

  
 7.12 Severability. If any provision of this Agreement
is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 
  
 7.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may
rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights. 
  
 7.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably 
  

 28 

 satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The
applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities. 
  
 7.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including
recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 
  
 7.16 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser hereunder or pursuant to the Warrants, or any Purchaser enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company by a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 
  
 7.17 Adjustments in Share Numbers and Prices. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common
Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference
in any Transaction Document to a number of shares or a price per share shall be amended to appropriately account for such event. 
  
 7.18 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. The decision of each Purchaser to purchase
Shares pursuant to this Agreement has been made by such Purchaser independently of any other Purchaser and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities,
results of operations, condition (financial or otherwise) or prospects of the Company or of the Subsidiary which may have been made or given by any other Purchaser or by any agent or employee of any other Purchaser, and no Purchaser or any of its
agents or employees shall have any liability to any other Purchaser (or any other Person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Transaction Document, and no action
taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated by the Transaction Document. Each 
  

 29 

 Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection with making its
investment hereunder and that no other Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment hereunder. Each Purchaser shall be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser represents
that it has been represented by its own separate legal counsel in its review and negotiations of this Agreement and the Transaction Documents. For reasons of administrative convenience only, the Purchasers acknowledge and agree that they and their
respective counsel have chosen to communicate with the Company through Proskauer Rose, but Proskauer Rose represents only Smithfield Fiduciary LLC. 
  
 [SIGNATURE PAGES TO FOLLOW] 
  

 30 

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	 NEUROBIOLOGICAL TECHNOLOGIES, INC..

		
	 By:
	 	 /s/ Paul E. Freiman

	 Name:
	 	 Paul E. Freiman

	 Title:
	 	 Chief Executive Officer

  

					
	 	  	 Address for Notice:

		
	 	  	 3260 Blume Dr., Ste 200

	 	  	 Richmond, CA 94806

	 	  	 Phone: (510) 262-1730

	 	  	 Fax: (510) 262-0204

	 	  	 Attn: Chief Executive Officer

		
	 With a copy to:
	  	 Heller Ehrman White & McAuliffe LLP

	 	  	 4350 La Jolla Village Dr.

	 	  	 San Diego, CA 92122

	 	  	 Facsimile No.: (858) 450-8499

	 	  	 Telephone No.: (858) 450-8400

	 	  	 Attn: Stephen C. Ferruolo

  
 [REMAINDER OF
PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGES FOR PURCHASERS FOLLOW] 
  
 ACKNOWLEDGED AND AGREED to 
 with respect to Section 2.2(c) 
  

			
	WELLS FARGO BANK, NATIONAL ASSOCIATION
		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

			
	 SMITHFIELD FIDUCIARY LLC

		
	 By:
	 	 /s/ Adam Chill

	 Name:
	 	 Adam J. Chill

	 Title:
	 	 Authorized Signatory

	
	 Purchase Price:             $ 3,000,000

	
	 Number of Shares to be
acquired:            600,000

	
	 Underlying Shares subject to Warrants:        90,000

	
	 Address for Notice:

	
	 c/o Highbridge Capital Management, LLC

	 9 West 57th Street, 27th Floor

	 New York, NY 10019

	 Facsimile No.: (212) 751-0755

	 Telephone No.: (212) 287-4720

	 Attn: Ari J. Storch / Adam J. Chill

  

							
	 With a copy to:
	  	 Proskauer Rose LLP

	 	  	 1585 Broadway

	 	  	 New York, New York 10036-8299

	 	  	 Facsimile No.: (212) 969-2900

	 	  	 Telephone No.: (212) 969-3000

	 	  	 Attn: Adam J. Kansler, Esq.

			
	 Knott Partners, L.P.

		
	 By:
	 	 /s/ David M. Knott

	 Name:
	 	 David M. Knott

	 Title:
	 	 General Partner

	 Purchase Price: $2,264,500

	 Number of Shares to be acquired: 452,900

	 Underlying Shares subject to Warrants: 67,935

	
	 Common Fund Hedged Equity Company

		
	 By:
	 	 /s/ David M. Knott

	 Name:
	 	 David M. Knott

	 Title:
	 	 Partner, Dorset Management Corp.

	 Purchase Price: $400,500

	 Number of Shares to be acquired: 80,100

	 Underlying Shares subject to Warrants: 12,015

	
	 Shoshone Partners, L.P.

		
	 By:
	 	 /s/ David M. Knott

	 Name:
	 	 David M. Knott

	 Title:
	 	 Partner, Dorset Management Corp.

	 Purchase Price: $555,000

	 Number of Shares to be acquired: 111,000

	 Underlying Shares subject to Warrants: 16,650

	
	 Matterhorn Offshore Fund

		
	 By:
	 	 /s/ David M. Knott

	 Name:
	 	 David M. Knott

	 Title:
	 	 Partner, Dorset Management Corp.

	 Purchase Price: $1,213,000

	 Number of Shares to be acquired: 242,600

	 Underlying Shares subject to Warrants: 36,390

	
	 Anno, L.P.

		
	 By:
	 	 /s/ David M. Knott

	 Name:
	 	 David M. Knott

	 Title:
	 	 Partner, Dorset Management Corp.

	 Purchase Price: $67,000

	 Number of Shares to be acquired: 13,400

	 Underlying Shares subject to Warrants: 2,010

			
	 The Riverview Group, LLC

		
	 By:
	 	 /s/ Terry Feeney

	 Name:
	 	 Terry Feeney

	 Title:
	 	 COO

	 Purchase Price: $3,000,000

	 Number of Shares to be acquired: 600,000

	 Underlying Shares subject to Warrants: 90,000

	
	 Heimdall Investments, Ltd.

		
	 By:
	 	 /s/ Kevin O’Neal

	 Name:
	 	 Kevin O’Neal

	 Title:
	 	 Authorized Signatory

	 Purchase Price: $2,150,000

	 Number of Shares to be acquired: 430,000

	 Underlying Shares subject to Warrants: 64,500

	
	 Deephaven Small Cap Growth Fund LLC

		
	 By:
	 	 /s/ Bruce Lieberman

	 Name:
	 	 Bruce Lieberman

	 Title:
	 	 Director of Private Placements

	 Purchase Price: $1,500,000

	 Number of Shares to be acquired: 300,000

	 Underlying Shares subject to Warrants: 45,000

	
	 Bay Star Capital II, L.P.

		
	 By:
	 	 /s/ Steve Derby

	 Name:
	 	 Steve Derby

	 Title:
	 	 Managing Member

	 Purchase Price: $1,000,000

	 Number of Shares to be acquired: 200,000

	 Underlying Shares subject to Warrants: 30,000

	
	 Bristol Investment Fund, Ltd.

		
	 By:
	 	 /s/ Paul Kessler

	 Name:
	 	 Paul Kessler

	 Title:
	 	 Director

	 Purchase Price: $1,000,000

	 Number of Shares to be acquired: 200,000

	 Underlying Shares subject to Warrants: 30,000

			
	 Agnes Wing-Chi Li

	
	 /s/ Agnes Wing-Chi Li

	 Purchase Price: $1,000,000

	 Number of Shares to be acquired: 200,000

	 Underlying Shares subject to Warrants: 30,000

	
	 Vertical Ventures, LLC

		
	 By:
	 	 /s/ Joshua Silverman

	 Name:
	 	 Joshua Silverman

	 Title:
	 	 Partner

	 Purchase Price: $300,000

	 Number of Shares to be acquired: 60,000

	 Underlying Shares subject to Warrants: 9,000

	
	 Iroquois Capital, L.P.

		
	 By:
	 	 /s/ Joshua Silverman

	 Name:
	 	 Joshua Silverman

	 Title:
	 	 Partner

	 Purchase Price: $200,000

	 Number of Shares to be acquired: 40,000

	 Underlying Shares subject to Warrants: 6,000

	
	 Cranshire Capital, L.P.

		
	 By:
	 	 /s/ [illegible]

	 Name:
	 	 [illegible]

	 Title:
	 	 President - Downsview Capital / General Partner

	 Purchase Price: $500,000

	 Number of Shares to be acquired: 100,000

	 Underlying Shares subject to Warrants: 15,000

	
	 Portside Growth and Opportunity Fund

		
	 By:
	 	 /s/ Jeff Solomon

	 Name:
	 	 Jeff Solomon

	 Title:
	 	 Managing Member

	 Purchase Price: $500,000

	 Number of Shares to be acquired: 100,000

	 Underlying Shares subject to Warrants: 15,000

	
	 TCMP3 Partners LLP

		
	 By:
	 	 /s/ Walter Schenker

	 Name:
	 	 Walter Schenker

	 Title:
	 	 Principal

	 Purchase Price: $500,000

	 Number of Shares to be acquired: 100,000

	 Underlying Shares subject to Warrants: 15,000

			
	 Bryan Descendants Trust

		
	 By:
	 	 /s/ John M. Bryan

	 Name:
	 	 John M. Bryan, Attorney-in-fact for

	 Title:
	 	 Amanda A. Bryan, Trustee

	 Purchase Price: $200,000

	 Number of Shares to be acquired: 40,000

	 Underlying Shares subject to Warrants: 6,000

	
	 Robert William Ledoux

	
	 /s/ Robert W. Ledoux

	 Purchase Price: $50,000

	 Number of Shares to be acquired: 10,000

	 Underlying Shares subject to Warrants: 1,500

 EXHIBIT A 
 FORM OF WARRANT 
  
 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     , 2004 
  
 Neurobiological
Technologies, Inc., a Delaware corporation (the “Company”), hereby certifies that, for value received, [Name of Holder] 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 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 

 
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. 

 (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 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. 

 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 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. 

 (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] 
  
 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:
	 	 

 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: 

 EXHIBIT B 
 FORM OF LEGAL OPINION 
  
 To the Purchasers listed on the Signature Pages 
 to the Securities Purchase Agreement 
 dated as of                  
  
 Re:    Neurobiological Technologies,
Inc. 
  
 Ladies and Gentlemen: 
  
 We have acted as counsel to Neurobiological Technologies, Inc., a Delaware corporation (the
“Company”), in connection with the issuance and sale of up to 3,880,000 shares of Common Stock of the Company (the “Shares”) and warrants to purchase up to 582,000 shares of Common Stock of the Company (the “Warrants”)
(the shares of Common Stock issuable upon the exercise of the Warrants being the “Warrant Shares”) pursuant to that certain Securities Purchase Agreement, dated as of
            , 2004, among the Company and the Investors identified therein (the “Agreement”). This opinion letter is rendered to you pursuant to Section 2.2(a)(iii) of the
Agreement. The Agreement and the Warrants are collectively referred to in this opinion as the “Transaction Documents.” Capitalized terms used without definition in this opinion letter have the meanings given to them in the Agreement.

  
 I. 
  
 In rendering this opinion, we have reviewed the following documents: 
  
 (a) The Agreement and the Warrants; 
  
 (b) The Restated Certificate of Incorporation of the Company, as amended, together with any Certificates of Designation thereto (the “Restated Certificate”),
certified by the Secretary of State of the State of California as of             , 2004, and certified to us by an officer of the Company as being complete and in full force and
effect as of the date of this opinion; 
  
 (c) The Bylaws of the Company certified
to us by an officer of the Company as being complete and in full force and effect as of the date of this opinion; 
  
 (d) Records certified to us by an officer of the Company as constituting all records of proceedings and actions of the board of directors of the Company relating to the
transactions contemplated by the Agreement; 
  
 (e) A Certificate of Good Standing
relating to the Company issued by the Delaware Secretary of State, dated             , 2004; 
  

(f) A Certificate of Officers signed by the President and Secretary of the Company, dated
            , 2004 (the “Officer Certificate”); and 

 (g) Each of the agreements and instruments (the “Material Contracts”) listed (i) as an exhibit to the
Company’s Annual Report on Form 10-K for the year ended June 30, 2003, (ii) as an exhibit to the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2003 and (iii) or as an exhibit to the Company’s Quarterly
Report on Form 10-Q for the period ended December 31, 2003. 
  
 Our opinion
expressed in Paragraph 1 of Part IV as to the good standing and due qualification of the Company under the laws of the State of Delaware is based solely upon item (e) above without further investigation as to the criteria for good standing or any
related legal issues. We have made no additional investigation after the respective dates of that item in rendering our opinion expressed in Paragraph 1 of Part IV. We have relied upon the Officer Certificate and the Company’s representations
and warranties in the Agreement with respect to factual matters in or underlying our opinion. 
  
 II. 
  
 We have also assumed the following:

  
 (a) The authenticity of all records, documents and instruments submitted to
us as originals, the genuineness of all signatures, the legal capacity of natural persons, the conformity to the originals of all records, documents and instruments submitted to us as copies, faxes or .pdf files, and the authenticity of the
originals thereof. 
  
 (b) That the representations and warranties made in the
Agreement by you are true. 
  
 (c) That the Agreement has been duly executed and
delivered by you and is enforceable by the Company against you. 
  
 (d) That there
are no facts or circumstances relating to you that might prevent you from enforcing any of the rights to which our opinion relates (for example, lack of due incorporation, statutory or regulatory prohibitions applicable to any of the Investors,
failure to pay state taxes, or failure to qualify to do business in the State of California). 
  
 (e) That any wire transfers, drafts or checks tendered by you will be honored. 
  
 III. 
  
 We express no opinion as to: 

 
 (a) Any state or federal laws, rules or regulations applicable to the transactions
contemplated by the Transaction Documents because of the nature of the business of any party thereto other than the Company. 
  
 (b) The Company’s or this transaction’s compliance or noncompliance with applicable federal or state antifraud or antitrust laws, rules or regulations or with
Section 721 of the Defense Production Act of 1950, as amended by Section 5021 of the Omnibus Trade and Competitiveness Act of 1988 (the so-called “Exon-Florio” provision) and the regulations thereunder. 

 (c) Any foreign, regional or local laws, rules or regulations. 
  
 (d) The past, present or future fair market value of any securities. 
  
 (e) To the extent that any of such agreements and instruments is governed by the laws of any
jurisdiction other than California, the opinion relating to those agreements and instruments is based solely upon the plain meaning of their language without regard to interpretation or construction that might be indicated by the laws governing
those agreements and instruments. 
  
 (f) The enforceability under certain
circumstances of any provisions prohibiting waivers of any terms of the Transaction Documents other than in writing, or prohibiting oral modifications thereof or modification by trade practice or course of conduct. In addition, our opinions are
subject to the effect of judicial decisions that may permit the introduction of extrinsic evidence to interpret the terms of written contracts such as the Transaction Documents. 
  
 (g) The enforceability under certain circumstances of provisions to the effect that rights or remedies may be exercised without notice, or
that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such right or remedy. 
  
 (h) The enforceability under certain circumstances of liquidated damages provisions and provisions to the effect that rights or remedies are not exclusive, that every
right or remedy is cumulative and may be exercised in addition to or with any other right or remedy, or that election of a particular remedy or remedies does not preclude recourse to one or more remedies. 
  
 (i) The effect of subsequent issuances of securities of the Company, to the extent that (1)
further issuances which may be integrated with the Closing may include purchasers that do not meet the definition of “accredited investors” under Rule 501 of Regulation D and equivalent definitions under state securities or “blue
sky” laws, or (2) notwithstanding its current reservation of shares of Common Stock the Company may issue so many shares of Common Stock that there are not enough remaining authorized but unissued shares of Common Stock upon the exercise of the
Warrant. 
  
 (j) With respect to the Material Contracts examined under Paragraph 7
of Part (IV): (i) financial covenants or similar provisions therein requiring financial calculations or determinations to ascertain compliance, (ii) provisions therein relating to the occurrence of a “material adverse event” or words of
similar import or (iii) parol evidence bearing on interpretation or construction. Moreover, to the extent that any of such agreements and instruments is governed by the laws of any jurisdiction other than California, the opinion relating to those
agreements and instruments is based solely upon the plain meaning of their language without regard to interpretation or construction that might be indicated by the laws governing those agreements and instruments. 

 (k) The applicable choice of law rules that may affect the interpretation or enforcement of any of the Transaction
Documents. 
  
 (l) Any provision purporting to waive rights to trial by jury or
service of process in connection with any litigation arising out of or pertaining to the Transaction Documents. 
  
 This opinion is limited to the federal laws of the United States of America and the laws of the States of California and, with respect to the opinion expressed in
Paragraph 4 of Part IV, the laws of the State of New York; and we disclaim any opinion as to any other laws. 
  
 IV. 
  
 Based upon the foregoing and our
examination of such matters of fact and questions of law as we have deemed advisable or appropriate for our opinion, and subject to the assumptions, exceptions, limitations and qualifications expressed in this opinion letter, it is our opinion that:

  
 1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has all requisite power and authority, and all material governmental licenses, authorizations, consents and approvals, required to own and operate its properties and assets and to carry
on, to our knowledge, its business as now conducted and as proposed to be conducted (all as described in the Company’s Annual Report on Form 10-K for its fiscal ended June 30, 2003). 
  
 2. The Company has all requisite corporate power and corporate authority to execute, deliver and perform its obligations under the
Transaction Documents, to issue, sell and deliver the Shares pursuant to the Transaction Documents, and to carry out and perform its obligations under, and to consummate the transactions contemplated by, the Transaction Documents. 
  
 3. The Company has taken all corporate action necessary to authorize the execution, delivery
and performance of each of the Transaction Documents and has duly executed and delivered each of the Transaction Documents. 
  
 4. The Agreement is a valid and binding obligation of the Company, enforceable by you against the Company in accordance with its terms. 
  
 5. Subject to the accuracy of your representations in the Agreement and the Company’s
representation to us that the Company has not offered or sold Shares by means of advertising or public solicitation, the offer, sale and issuance of the Shares to you in conformity with the terms of the Agreement constitute transactions exempt from
the registration requirement of Section 5 of the Securities Act of 1933 and, under such securities laws as they presently exist, the issuance of the Warrant Shares to you upon exercise of the Warrants would also be exempt from such registration and
qualification requirements. 
  
 6. When issued at the Closing in compliance with
the Agreement, the Shares will be duly authorized, validly issued, fully paid and nonassessable; provided, however, that the Shares may be subject to restrictions on transfer under state and federal securities laws. The Warrant Shares have been duly
and validly reserved, and when and if issued upon exercise of the Warrants will be validly issued, fully paid and nonassessable; provided, however, that the Warrant Shares may be subject to restrictions on transfer under state and federal securities
laws. 

 7. Other than in connection with any securities laws (with respect to which we direct you to Paragraph 5 above), neither
the execution and delivery of the Transaction Documents on behalf of the Company, nor the issuance and sale of the Shares to you at the Closing (i) violates any provision of the Restated Certificate or Bylaws of the Company, or (ii) results in a
breach or violation of, or constitutes a default under, any term of any Material Contract. 
  
 8. To our knowledge, there is no claim, action, suit, proceeding, arbitration, investigation or inquiry, pending or threatened, before any court or governmental or administrative body or agency, or any private
arbitration tribunal, against the Company, or any of its officers, directors or employees (in connection with the discharge of their duties as officers, directors and employees), or affecting any of its properties or assets. 
  
 9. No consent, approval or authorization of, or registration or filing with, any court,
governmental or regulatory authority, or self-regulatory organization, is required in connection with the valid execution and delivery by the Company of the Transaction Documents, or the offer, sale, issuance or delivery of the Shares and Warrants
or the consummation of the transactions contemplated thereby, other than filings required to be made by the Company with the Securities and Exchange Commission and certain state securities commissions under applicable federal and state securities
laws, filings with NASDAQ, and such consents, approvals, authorizations, registrations or filings as have been obtained or made. 
  
 V. 
  
 We further advise you that: 
  
 (a) Our opinion is subject, as to
enforcement, (i) to bankruptcy, insolvency, fraudulent transfers, reorganization, arrangement, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights generally, and (ii) to general principles of
equity, whether such enforceability is considered in a proceeding in equity or at law. These principles include, without limitation, concepts of commercial reasonableness, materiality and good faith and fair dealing. As applied to the Transaction
Documents, these principles will require you to act reasonably, in good faith and in a manner that is not arbitrary or capricious in the administration and enforcement of the Transaction Documents and will preclude you from invoking penalties or
other remedies for defaults that bear no reasonable relation to the damage suffered or that would otherwise work a forfeiture. In addition, the enforceability of the Transaction Documents may be subject to the effects of state statutes that (i)
provide that obligations of good faith, diligence, reasonableness and care may not be disclaimed by agreement, although the parties may by agreement determine the standards by which the performance of such obligations is to be measured if those
standards are not manifestly unreasonable, (ii) impose an obligation of good faith in the performance or enforcement of a contract and (iii) provide that a court may refuse to enforce, or may limit the enforcement of, a contract or any clause of a
contract that a court finds as a matter of law to have been unconscionable at the time it was made. 

 (b) The enforceability of indemnities, rights of contribution, exculpatory provisions and waivers of the benefits of
statutory provisions may be limited on public policy grounds. 
  
 (c) Unless our
opinions expressly extend to such other agreements or instruments, our opinions with regard to each respective Transaction Document do not extend to other agreements or instruments (or forms of agreements or instruments) which may be attached
thereto as exhibits or which are contemplated by such Transaction Documents. 
  
 VI. 
  
 This opinion letter is rendered to you in connection with the
Agreement and is solely for your benefit in connection with the Transaction Documents. This opinion letter may not be relied upon by you for any other purpose, or relied upon by any other person, firm, corporation or other entity without our prior
written consent. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Shares or the Transaction Documents. We disclaim any
obligation to advise you of any change of law that occurs, or any facts, circumstances, events or developments of which we become aware, after the date of this opinion letter, even if they would alter, affect or modify the opinion expressed herein.

  
 This opinion letter is based on the customary practice of lawyers who
regularly give, and lawyers who regularly advise opinion recipients regarding, opinions of the kind involved, including customary practice as described in bar association reports. 
  
 Very truly yours, 

 EXHIBIT C 
 PLAN OF DISTRIBUTION 
  
 The
selling stockholders may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated
prices. The selling stockholders may use any one or more of the following methods when selling shares: 
  

	•	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; 

  

	•	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

  

	•	purchases by a broker-dealer as principal and resale by the broker-dealer for its account; 

  

	•	an exchange distribution in accordance with the rules of the applicable exchange; 

  

	•	privately negotiated transactions; 

  

	•	short sales; 

  

	•	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; 

  

	•	a combination of any such methods of sale; and 

  

	•	any other method permitted pursuant to applicable law. 

  
 The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. 
  
 The selling stockholders may also engage in short sales against the box, puts
and calls and other transactions in our securities or derivatives of our securities and may sell or deliver shares in connection with these trades. 
  
 Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved. Any profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the shares if liabilities are imposed on that person under the Securities Act. 

 The selling stockholders may from time to time pledge or grant a security interest in some or all of the
shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed an
amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under
this prospectus. 
  
 The selling stockholders also may transfer
the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to
time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus. 
  
 The selling stockholders and any broker-dealers or agents that are involved in selling the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. 
  
 We are required to pay all fees and expenses incident to the registration of
the shares of common stock, including the fees and disbursements of counsel to the selling stockholders. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the
Securities Act. 
  
 The selling stockholders have advised us that
they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a
proposed sale of shares of common stock by any selling stockholder. If we are notified by any selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will
file a supplement to this prospectus. If the selling stockholders use this prospectus for any sale of the shares of common stock, they will be subject to the prospectus delivery requirements of the Securities Act. 
  
 The anti-manipulation rules of Regulation M under the Securities Exchange Act
of 1934 may apply to sales of our common stock and activities of the selling stockholders. 

 EXHIBIT D 
 TRANSFER AGENT INSTRUCTIONS 
  
 [date] 
  

	 	Re:	Registration Order relating to the Offering of Common Stock of Neurobiological Technologies, Inc. 

  
 Dear             : 
  
 This Registration Order relates to the Common Stock financing of
Neurobiological Technologies, Inc., a Delaware corporation (the “Company”) that will close on or about             , 2004. Pursuant to this financing, the
Company has agreed to issue to the purchasers listed on Exhibit A attached hereto that number of shares of Common Stock, par value $0.001 per share, set forth opposite each respective name (the “Shares”). 

 
 As Transfer Agent and Registrar for the Company’s Common Stock, you
are hereby instructed at this time to issue certificates representing the Shares set forth on Exhibit A hereto and to register such shares in the respective names set forth on Exhibit A. Please fax copies (front and back) of the share
certificates as soon as possible to                  at                 
and send the original certificates by overnight courier to the address set forth below: 
  
 _________________ 
  
 _________________ 
  
 _________________ 
  
 _________________ 
  
 The Shares are being issued in a private placement and they have not been registered under the Securities Act of 1933. Accordingly, the Shares shall bear
the legend set forth on Exhibit B attached hereto until the Company authorizes removal. The Company intends to register the shares for resale on Form S-3 and will promptly notify you of the effectiveness of such registration statement. Upon
the effectiveness of this registration statement, we have instructed our counsel to deliver to you their opinion letter in the form attached hereto as Exhibit C to the effect that the registration statement has been declared effective by the
Commission and that Common Stock registered thereby is thereafter freely tradable pursuant to such registration statement. Additionally, the Company has agreed that such legends may be removed following effectiveness of the registration statement in
reliance on the investors’ covenants to sell pursuant to the registration statement following such removal. 

 If you have any questions regarding these instructions, please contact me or our counsel, at
                , at your earliest convenience. 
  

			
	 Very truly yours,

	
	 Neurobiological Technologies, Inc.

		
	 By:
	 	  

	 	 	 Paul E. Freiman

	 	 	 Chief Executive Officer

  
 The undersigned, as Transfer
Agent, acknowledges receipt of the foregoing instructions. 
  

			
	 AMERICAN STOCK TRANSFER & TRUST COMPANY

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

 EXHIBIT A 
 SCHEDULE OF BUYERS 
  

					
	Buyer’s Name

	 	Buyer’s Address

	 	Number of
Shares (#)

 EXHIBIT B 
  
 LEGEND 
  
 THESE SECURITIES HAVE NOT 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING, THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES. 

 EXHIBIT C 
  
 [                        ] 
 [                        ] 
 [                        ] 
  

	Re:	Neurobiological Technologies, Inc. (NTII) 

  
 Dear [                    ]:

  
 We are writing on behalf of our client, Neurobiological
Technologies, Inc., a Delaware corporation (the “Company”), in connection with the Company’s recent filing of a Registration Statement on Form S-3 (File No.
            ) (the “Registration Statement”) with the Securities and Exchange Commission relating to 4,462,000 shares of the Company’s Common Stock, $0.001 par value
per share (the “Shares”), issued or to be issued to the selling stockholders (the “Stockholders”) listed in the selling stockholders table at pages      and      of the final
prospectus, a copy of which is attached hereto as Exhibit A. 
  
 Please be advised that at [9:00 a.m. on             , 2004], the SEC declared the Registration Statement effective under the Securities Act of 1933 (the “Act”). We
have no knowledge that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC. Accordingly, the Company has no objection to the sale or other transfer of the
Shares pursuant to the Registration Statement, notwithstanding any restrictive legends on the certificates representing the Shares that may otherwise prohibit any such sale or other transfer under the Act. 
  
 If you have any questions regarding this matter, please do not hesitate to
call me. Thank you for your assistance. 
  
 Very
truly yours, 

 EXHIBIT E 
 SELLING STOCKHOLDER QUESTIONNAIRE 
  
 NEUROBIOLOGICAL TECHNOLOGIES, INC. 
  
 Selling
Stockholder Questionnaire 
  
 The undersigned beneficial owner of Ordinary
Shares of Neurobiological Technologies, Inc. (the “Company”) (the “Registrable Securities”) understands that the Company has filed or intends to file with the Securities and Exchange Commission a registration
statement (the “Registration Statement”) for the registration and resale under the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities. This Questionnaire is delivered pursuant
to the terms of the Securities Purchase Agreement, dated as of February     , 2004 (the “Purchase Agreement”), among the Company and the purchasers named therein. A copy of the Purchase Agreement is
available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Agreement. 
  
 Certain legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling
securityholder in the Registration Statement and the related prospectus. 
  
 The
undersigned beneficial owner (the “Selling Securityholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it and listed below in Item 3 (unless otherwise specified under such Item 3) in the
Registration Statement. 
  
 The undersigned hereby provides the following
information to the Company and represents and warrants that such information is accurate: 
  

	1.	Name. 

  

	 	(a)	Full Legal Name of Selling Securityholder 

  
 __________________________________________________________________________________________________ 
  

	 	(b)	Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held: 

  
 __________________________________________________________________________________________________ 

	 	(c)	Full Legal Name of Natural Control Person (which means a natural person who directly you indirectly alone or with others has power to vote or dispose of the securities covered by
the questionnaire): 

  
 __________________________________________________________________________________________________ 
  

	2.	Address for Notices to Selling Securityholder: 

  
 ___________________________________________________________________________________________________________ 
 ___________________________________________________________________________________________________________ 
 ___________________________________________________________________________________________________________ 
 Telephone:__________________________________________________________________________________________________ 
 Fax:________________________________________________________________________________________________________ 
 Contact Person:______________________________________________________________________________________________ 
  

	3.	Beneficial Ownership of Registrable Securities: 

  

	 	(a)	Type and Principal Amount of Registrable Securities beneficially owned: 

  
 __________________________________________________________________________________________________ 
  
 __________________________________________________________________________________________________ 
  
 __________________________________________________________________________________________________ 
  

	4.	Broker-Dealer Status: 

  

	 	(a)	Are you a broker-dealer? 

  
 Yes   ̈    No   ̈ 
  

			
	 Note:
	 	If yes, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

  

	 	(b)	Are you an affiliate of a broker-dealer? 

  
 Yes   ̈    No   ̈ 
  

	 	(c)	If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the
Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities? 

  
 Yes   ̈    No   ̈ 

			
	 Note:
	 	If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

  

	5.	Beneficial Ownership of Other Securities of the Company Owned by the Selling Securityholder. 

  
 Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of
the Company other than the Registrable Securities listed above in Item 3. 
  

	 	(a)	Type and Amount of Other Securities beneficially owned by the Selling Securityholder: 

  
 __________________________________________________________________________________________________

 __________________________________________________________________________________________________ 
  

	6.	Relationships with the Company: 

  
 Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of
the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years. 
  
 State any exceptions here: 
  
 ______________________________________________________________________________________________________ 
 ______________________________________________________________________________________________________ 
  
 By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 6 and the inclusion of such information
in the Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus.

  
 IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly authorized agent. 
  

							
	 Dated:
	 	  

	 	 Beneficial Owner:

				
	 	 	 	 	 By:
	 	  

	 	 	 	 	 Name:
	 	 
	 	 	 	 	 Title:
	 	 

 PLEASE FAX THE COMPLETED AND EXECUTED QUESTIONNAIRE TO 
  

	
	Smithfield Fiduciary LLC
	c/o Highbridge Capital Management, LLC
	9 West 57th Street, 27th Floor
	New York, NY 10019
	Facsimile No.: (212) 751-0755
	Telephone No.: (212) 287-4720
	Attn: Ari J. Storch / Adam J. Chill<PAGE>

                                                                     Exhibit 4.1

================================================================================

                                MGI PHARMA, INC.

                            (a Minnesota corporation)

                                  $301,000,000

                 Senior Subordinated Convertible Notes due 2024

                               PURCHASE AGREEMENT

                            Dated: February 25, 2004

================================================================================

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

SECTION 1.  Representations and Warranties.....................................3

     (a)  Representations and Warranties by the Company........................3
          (i)       Offering Memorandum........................................3
          (ii)      Incorporated Documents.....................................3
          (iii)     Independent Accountants....................................3
          (iv)      Financial Statements.......................................4
          (v)       No Material Adverse Change in Business.....................4
          (vi)      Good Standing of the Company...............................4
          (vii)     Subsidiaries...............................................4
          (viii)    Capitalization.............................................4
          (ix)      Authorization of Agreement.................................5
          (x)       Authorization of the Indenture.............................5
          (xi)      Authorization of the Registration Rights Agreement.........5
          (xii)     Authorization of Pledge Agreement and Control Agreement....5
          (xiii)    Authorization of the Securities............................6
          (xiv)     Description of the Securities, the Indenture, the
                    Registration Rights Agreement and the Pledge Agreement.....6
          (xv)      Authorization and Description of Common Stock..............6
          (xvi)     Absence of Defaults and Conflicts..........................7
          (xvii)    Absence of Labor Dispute...................................7
          (xviii)   Absence of Proceedings.....................................8
          (xix)     Absence of Manipulation....................................8
          (xx)      Possession of Intellectual Property........................8
          (xxi)     Absence of Further Requirements............................8
          (xxii)    Possession of Licenses and Permits.........................9
          (xxiii)   Title to Property..........................................9
          (xxiv)    Environmental Laws.........................................9
          (xxv)     Investment Company Act....................................10
          (xxvi)    Similar Offerings.........................................10
          (xxvii)   Rule 144A Eligibility.....................................10
          (xxviii)  No General Solicitation...................................10
          (xxix)    No Registration Required..................................10
          (xxx)     ERISA.....................................................10
          (xxxi)    Insurance.................................................11
          (xxxii)   Taxes.....................................................11
          (xxxiii)  Internal Controls.........................................11
          (xxxiv)   No Unlawful Payments......................................11
          (xxxv)    No Brokerage Commission; Finder's Fee.....................11
          (xxxvi)   Reporting Company.........................................12
          (xxxvii)  Registration Rights.......................................12
          (xxxviii) Accuracy of Exhibits......................................12
          (xxxix)   Suppliers.................................................12

                                       -i-

<PAGE>

          (xl)      Disclosure Controls.......................................12
          (xli)     Related Party Transactions................................12
          (xlii)    Listing of Common Stock...................................13
     (b)  Officer's Certificates..............................................13

SECTION 2.  Sale and Delivery to Initial Purchasers; Closing..................13

     (a)  Initial Securities..................................................13
     (b)  Option Securities...................................................13
     (c)  Payment.............................................................14
     (d)  Denominations; Registration.........................................14

SECTION 3.  Covenants of the Company..........................................14

     (a)  Offering Memorandum.................................................14
     (b)  Notice and Effect of Material Events................................15
     (c)  Amendments to Offering Memorandum and Supplements...................15
     (d)  Qualifications of Securities for Offer and Sale.....................15
     (e)  DTC.................................................................16
     (f)  Use of Proceeds.....................................................16
     (g)  Listing on Securities Exchange......................................16
     (h)  Restriction on Sale of Convertible Securities and Common Stock......16
     (i)  Restriction on Sale of Securities...................................16
     (j)  Stabilization and Manipulation......................................16
     (k)  PORTAL Designation..................................................17
     (l)  Reporting Requirements..............................................17
     (m)  Reservation of Shares of Common Stock...............................17
     (n)  Registration Rights Agreement.......................................17
     (o)  Qualification Under the Trust Indenture Act.........................17

SECTION 4.  Payment of Expenses...............................................17

     (a)  Expenses............................................................17
     (b)  Termination of Agreement............................................18

SECTION 5.  Conditions of the Initial Purchasers' Obligations.................18

     (a)  Opinion of Counsel for the Company..................................18
     (b)  Opinion of Counsel for Initial Purchasers...........................18
     (c)  Officers' Certificate...............................................18
     (d)  Accountants' Comfort Letter.........................................19
     (e)  Bring-down Comfort Letter...........................................19
     (f)  Lock-up Agreements..................................................19
     (g)  Indenture, Registration Rights Agreement, Pledge Agreement and
          Control Agreement...................................................19
     (h)  Rating..............................................................19
     (i)  Conditions to Purchase of Option Securities.........................19
          (i)    Officers' Certificate........................................20
          (ii)   Opinion of Counsel for the Company...........................20
          (iii)  Opinion of Counsel for Initial Purchasers....................20
          (iv)   Bring-down Comfort Letter....................................20

                                      -ii-

<PAGE>

     (j)  PORTAL Market.......................................................20
     (k)  Additional Documents................................................20
     (l)  Termination of Agreement............................................20

SECTION 6.  Subsequent Offers and Resales of the Securities...................20

     (a)  Offer and Sale Procedures...........................................21
          (i)    Offers and Sales to Qualified Institutional Buyers...........21
          (ii)   No General Solicitation......................................21
          (iii)  Purchases by Non-Bank Fiduciaries............................21
          (iv)   Subsequent Purchaser Notification............................21
          (v)    Restriction on Transfer......................................21
          (vi)   Minimum Principal Amount.....................................21
     (b)  Covenants of the Company............................................22
          (i)    Integration..................................................22
          (ii)   Rule 144A Information........................................22
          (iii)  Restriction on Purchases.....................................22
     (c)  Qualified Institutional Buyer.......................................22

SECTION 7.  Indemnification...................................................22

     (a)  Indemnification of Initial Purchasers...............................22
     (b)  Indemnification of the Company......................................23
     (c)  Actions Against Parties; Notification...............................24
     (d)  Settlement without Consent if Failure to Reimburse..................24

SECTION 8.  Contribution......................................................24

SECTION 9.  Representations, Warranties and Agreements to Survive.............26

SECTION 10. Termination of Agreement..........................................26

     (a)  Termination; General................................................26
     (b)  Liabilities.........................................................26

SECTION 11. Default by One or More of the Initial Purchasers..................26

SECTION 12. Default by the Company............................................27

SECTION 13. Notices...........................................................27

SECTION 14. Parties...........................................................28

SECTION 15. GOVERNING LAW.....................................................28

SECTION 16. TIME..............................................................28

SECTION 17. Effect of Headings................................................28

SECTION 18. Counterparts......................................................28

                                      -iii-

<PAGE>

SCHEDULES

Schedule A   List of Initial Purchasers
Schedule B   MGI PHARMA, INC. - Senior Subordinated Convertible Notes Due 2024
Schedule C   List of Persons Subject to the Lock-Up Agreement

EXHIBITS

Exhibit A    Form of Registration Rights Agreement
Exhibit B    Form of Pledge Agreement
Exhibit C    Form of Control Agreement
Exhibit D    Form of Opinion of Dorsey & Whitney LLP, Counsel for the Company,
             to be Delivered Pursuant to Section 5(a)
Exhibit E    Form of Lock-Up Agreement

                                      - iv-

<PAGE>

                                MGI PHARMA, INC.

                                  $301,000,000

                 Senior Subordinated Convertible Notes due 2024

                               PURCHASE AGREEMENT

                                                               February 25, 2004
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
as Representative of the several Initial Purchasers
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
    4 World Financial Center
    New York, New York 10080

Ladies and Gentlemen:

     MGI PHARMA, INC., a Minnesota corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and each of the other Initial Purchasers named in
Schedule A hereto (collectively, the "Initial Purchasers", which such term shall
also include any initial purchaser substituted as hereinafter provided in
Section 11 hereof) for whom Merrill Lynch is acting as representative (in such
capacity the "Representative") with respect to (i) the issue and sale by the
Company and the purchase by the Initial Purchasers, acting severally and not
jointly, of the respective principal amounts set forth in said Schedule A hereto
of $301,000,000 aggregate principal amount at maturity of the Company's Senior
Subordinated Convertible Notes due 2024 (the "Notes"), and (ii) the grant by the
Company to the Initial Purchasers of the option described in Section 2(b) hereof
to purchase all or any part of an additional $47,000,000 aggregate principal
amount at maturity of Notes. The aforesaid $301,000,000 aggregate principal
amount at maturity of Notes (the "Initial Securities") to be purchased by the
Initial Purchasers and all or any part of the $47,000,000 aggregate principal
amount at maturity of Notes subject to the option described in Section 2(b)
hereof (the "Option Securities") are hereinafter called, collectively, the
"Securities." The Securities are to be issued pursuant to an indenture, to be
dated as of the Closing Time (as defined in Section 2(c)) (the "Indenture"),
between the Company and Wells Fargo Bank, National Association, as trustee (the
"Trustee").

     The Securities are convertible, subject to certain conditions, at the
option of the holder prior to maturity (unless previously redeemed or otherwise
purchased by the Company) into shares of common stock, par value $0.01 per
share, of the Company (the "Common Stock") in accordance with the terms of the
Securities and the Indenture, as described in Schedule B hereto. Securities
issued in book-entry form will be issued to Cede & Co. as nominee of The
Depository Trust Company ("DTC") pursuant to a letter agreement, to be dated as
of the Closing Time (as defined in Section 2(c)), among the Company, the Trustee
and DTC (the "DTC Agreement").

     The holders of Securities will be entitled to the benefits of a Pledge
Agreement, substantially in the form attached hereto as Exhibit B, with such
changes as shall be agreed to by the parties thereto (the "Pledge Agreement"),
pursuant to which the Company will deposit with

<PAGE>

and pledge to the Trustee for the benefit of the holders of Securities a
portfolio of securities (the "Pledged Securities") consisting of U.S. government
securities in such amount as the Company expects will be sufficient, upon
receipt of scheduled interest and principal payments thereof, to provide for the
payment of the first six scheduled interest payments on the Securities when due.
Pursuant to a Control Agreement, substantially in the form attached hereto as
Exhibit C, with such changes as shall be agreed to by the parties thereto (the
"Control Agreement"), the Pledged Securities shall be held in an account
maintained by an account holder (the "Account Holder").

     The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
agrees that the Initial Purchasers may initially resell, subject to the
conditions set forth herein, all or a portion of the Securities to purchasers
("Subsequent Purchasers") at any time after this Agreement has been executed and
delivered. The Securities are to be offered and sold through the Initial
Purchasers and offered and resold by the Initial Purchasers without being
registered under the Securities Act of 1933, as amended (the "1933 Act"), in
reliance upon exemptions therefrom. Pursuant to the terms of the Securities and
the Indenture, investors that acquire Securities may only resell or otherwise
transfer such Securities if such Securities are hereafter registered under the
1933 Act or if an exemption from the registration requirements of the 1933 Act
is available (including the exemption afforded by Rule 144A ("Rule 144A") of the
rules and regulations promulgated under the 1933 Act by the Securities and
Exchange Commission (the "Commission").

     It is also understood and acknowledged that holders (including subsequent
transferees) of the Securities and the shares of Common Stock issuable upon the
conversion thereof will have the registration rights set forth in the
registration rights agreement (the "Registration Rights Agreement"), to be dated
as of Closing Time (as defined in Section 2(c) hereof), substantially in the
form attached hereto as Exhibit A. Pursuant to the Registration Rights
Agreement, the Company will agree (i) to file with the Commission, a
registration statement on the appropriate form under the 1933 Act relating to
the resale of the Securities and the shares of Common Stock issuable upon the
conversion thereof by certain holders thereof from time to time in accordance
with the methods of distribution set forth in such registration statement and
Rule 415 under the Act (the "Shelf Registration Statement") and (ii) to use its
reasonable efforts to cause any such Shelf Registration Statement to be declared
effective.

     The Company has prepared and delivered to the Initial Purchasers copies of
a preliminary offering memorandum dated February 24, 2004 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to the Initial
Purchasers, on the date hereof or the next succeeding day, copies of a final
offering memorandum dated February 25, 2004 (the "Final Offering Memorandum") to
be used by the Initial Purchasers in connection with its solicitation of
purchases of, or offering of, the Securities. "Offering Memorandum" means, with
respect to any date or time referred to in this Agreement, the most recent
offering memorandum (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document),
including exhibits thereto and any documents incorporated therein by reference,
which has been prepared and delivered by the Company to the Initial Purchasers
in connection with its solicitation of purchases of, or offering of, the
Securities.

     All references in this Agreement to financial statements and schedules and
other information which is "given," "discussed," "contained," "included,"
"stated" or "described" in

                                       -2-

<PAGE>

the Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Offering Memorandum.

     SECTION 1.  Representations and Warranties.

     (a)  Representations and Warranties by the Company. The Company represents
and warrants to each Initial Purchaser as of the date hereof, as of the Closing
Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if
any) referred to in Section 2(b) hereof, and agrees with each Initial Purchaser,
as follows:

          (i)       Offering Memorandum. The Preliminary Offering Memorandum and
     the Final Offering Memorandum as of their respective dates do not, and at
     the Closing Time (and, if any Option Securities are purchased, at the Date
     of Delivery) will not, include an untrue statement of a material fact or
     omit to state a material fact (except, in the case of the Preliminary
     Offering Memorandum, for pricing and other financial terms intentionally
     left blank) necessary in order to make the statements therein, in the light
     of the circumstances under which they were made, not misleading; provided
     that this representation, warranty and agreement shall not apply to
     statements in or omissions from the Offering Memorandum made in reliance
     upon and in conformity with information furnished in writing to the Company
     by any Initial Purchaser through Merrill Lynch expressly for use in the
     Offering Memorandum.

          (ii)      Incorporated Documents. The Offering Memorandum as delivered
     from time to time shall incorporate by reference the most recent Annual
     Report of the Company on Form 10-K filed with the Commission including
     those portions of the Company's most recent definitive proxy statement on
     Schedule 14A incorporated therein, each Quarterly Report on Form 10-Q and
     each Current Report of the Company on Form 8-K, filed with the Commission
     since the end of the fiscal year to which such Annual Report relates. The
     documents incorporated or deemed to be incorporated by reference in the
     Offering Memorandum at the time they were or hereafter are filed with the
     Commission complied and will comply in all material respects with the
     requirements of the 1934 Act and the rules and regulations of the
     Commission thereunder (the "1934 Act Regulations"), and did not and do not
     contain an untrue statement of a material fact or omit to state a material
     fact required to be stated therein or necessary to make the statements
     therein not misleading, and when read together with the other information
     in the Offering Memorandum, at the time the Offering Memorandum was issued
     and at the Closing Time (and, if any Option Securities are purchased, at
     Date of Delivery), did not and will not include an untrue statement of a
     material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein not misleading.

          (iii)     Independent Accountants. The accountants who certified the
     financial statements and supporting schedules included in the Offering
     Memorandum, are

                                       -3-

<PAGE>

     independent public accountants with respect to the Company within the
     meaning of Regulation S-X under the 1933 Act.

          (iv)      Financial Statements. The financial statements included in
     the Offering Memorandum, together with the related schedules and notes,
     present fairly the financial position of the Company at the dates indicated
     and the statement of operations, stockholders' equity and cash flows of the
     Company for the periods specified; said financial statements have been
     prepared in conformity with United States generally accepted accounting
     principles ("GAAP") applied on a consistent basis throughout the periods
     involved, except as disclosed therein. The supporting schedules, if any,
     included in the Offering Memorandum present fairly in accordance with GAAP
     the information required to be stated therein. The selected financial data
     and the summary financial information included in the Offering Memorandum
     present fairly the information shown therein and have been compiled on a
     basis consistent with that of the audited financial statements included in
     the Offering Memorandum.

          (v)       No Material Adverse Change in Business. Since the respective
     dates as of which information is given in the Offering Memorandum, except
     as otherwise stated therein or contemplated thereby, (A) there has been no
     material adverse change in the condition, financial or otherwise, or in the
     earnings, business affairs or business prospects of the Company, whether or
     not arising in the ordinary course of business (a "Material Adverse
     Effect"), (B) there have been no transactions entered into by the Company,
     other than those in the ordinary course of business, which are material
     with respect to the Company, and (C) there has been no dividend or
     distribution of any kind declared, paid or made by the Company on any class
     of its capital stock.

          (vi)      Good Standing of the Company. The Company has been duly
     incorporated and is validly existing as a corporation in good standing
     under the laws of the State of Minnesota and has corporate power and
     authority to own, lease and operate its properties and to conduct its
     business as described in the Offering Memorandum and to enter into and
     perform its obligations under this Agreement; and the Company is duly
     qualified as a foreign corporation to transact business and is in good
     standing in each other jurisdiction in which such qualification is
     required, whether by reason of the ownership or leasing of property or the
     conduct of business, except where the failure so to qualify or to be in
     good standing would not result in a Material Adverse Effect.

          (vii)     Subsidiaries. The Company has no subsidiaries.

          (viii)    Capitalization. The authorized, issued and outstanding
     capital stock of the Company is, as of the date indicated, as set forth in
     the Offering Memorandum in the column entitled "Actual" under the caption
     "Capitalization" (except for subsequent issuances, if any, pursuant to this
     Agreement, pursuant to reservations, agreements, employee benefit plans
     referred to in the Offering Memorandum or pursuant to the exercise of
     convertible securities or options referred to in the Offering Memorandum).
     The shares of issued and outstanding capital stock of the Company have been
     duly authorized and validly issued and are fully paid and non-assessable;
     none of the

                                       -4-

<PAGE>

     outstanding shares of capital stock of the Company was issued in violation
     of the preemptive or other similar rights of any securityholder of the
     Company.

          (ix)      Authorization of Agreement. This Agreement has been duly
     authorized, executed and delivered by the Company.

          (x)       Authorization of the Indenture. The Indenture has been duly
     authorized by the Company and, when executed and delivered by the Company
     and the Trustee (assuming due authorization thereof by the Trustee), will
     constitute a valid and binding agreement of the Company, enforceable
     against the Company in accordance with its terms, except as the enforcement
     thereof may be limited by bankruptcy, insolvency (including, without
     limitation, all laws relating to fraudulent transfers), reorganization,
     moratorium or similar laws affecting enforcement of creditors' rights
     generally and except as enforcement thereof is subject to general
     principles of equity (regardless of whether enforcement is considered in a
     proceeding in equity or at law). The Company has full corporate power and
     authority to enter into the Indenture.

          (xi)      Authorization of the Registration Rights Agreement. The
     Registration Rights Agreement has been authorized by the Company and, when
     executed and delivered by the Company and the Initial Purchasers (assuming
     due authorization thereof by the Initial Purchasers), will constitute a
     valid and binding agreement of the Company, enforceable against the Company
     in accordance with its terms, except as the enforcement thereof may be
     limited by bankruptcy, insolvency (including, without limitation, all laws
     relating to fraudulent transfers), reorganization, moratorium or similar
     laws affecting enforcement of creditors' rights generally and except as
     enforcement thereof is subject to general principles of equity (regardless
     of whether enforceability is considered in a proceeding in equity or at
     law).

          (xii)     Authorization of Pledge Agreement and Control Agreement.
     Each of the Pledge Agreement and the Control Agreement has been duly
     authorized by the Company and, when duly executed and delivered by the
     Company and the other parties thereto, will constitute a valid and binding
     agreement of the Company, enforceable against the Company in accordance
     with its terms, except as the enforcement thereof may be limited by
     bankruptcy, insolvency (including, without limitation, all laws relating to
     fraudulent transfers), reorganization, moratorium or similar laws affecting
     enforcement of creditors' rights generally and except as the enforcement
     thereof is subject to general principles of equity (regardless of whether
     enforcement is considered in a proceeding in equity or at law). Upon
     delivery to the Trustee of the certificates or instruments, if any,
     representing the Pledged Financial Assets in accordance with the Pledge
     Agreement, compliance with Sections 4(b), (c) and (d) of the Pledge
     Agreement with respect to Collateral (as defined therein) constituting
     uncertificated securities, security entitlements and security accounts, and
     the filing of financing statements, if any, in the appropriate government
     offices, the pledge and grant of a security interest in the Pledged
     Financial Assets under the Pledge Agreement for the benefit of the Trustee
     and the ratable benefit of the holders of the Securities, as the case may
     be, will constitute a first priority security interest in the Pledged
     Financial Assets, enforceable as against all creditors of the Company,
     except as (a) the enforcement thereof may be limited by bankruptcy,
     insolvency (including, without

                                       -5-

<PAGE>

     limitation, all laws relating to fraudulent transfers), reorganization,
     moratorium or similar laws affecting enforcement of creditors' rights
     generally, (b) the enforcement thereof is subject to general principles of
     equity (regardless of whether enforcement is considered in a proceeding in
     equity or at law), and (c) procedural requirements and limitations imposed
     by applicable law.

          (xiii)    Authorization of the Securities. The Securities have been
     duly authorized and, at the Closing Time (or, if any Option Securities are
     being purchased, at the Date of Delivery), will have been duly executed by
     the Company and, when authenticated, issued and delivered in the manner
     provided for in the Indenture and delivered against payment of the purchase
     price therefor as provided in this Agreement, will constitute valid and
     binding obligations of the Company, enforceable against the Company in
     accordance with their terms, except as the enforcement thereof may be
     limited by bankruptcy, insolvency (including, without limitation, all laws
     relating to fraudulent transfers), reorganization, moratorium or similar
     laws affecting enforcement of creditors' rights generally and except as
     enforcement thereof is subject to general principles of equity (regardless
     of whether enforcement is considered in a proceeding in equity or at law),
     and will be substantially in the form contemplated by, and entitled to the
     benefits of, the Indenture. The Company has full corporate power and
     authority to issue, sell and deliver the Securities to be sold by it to the
     Initial Purchasers as provided herein and therein.

          (xiv)     Description of the Securities, the Indenture, the
     Registration Rights Agreement and the Pledge Agreement. As of the Closing
     Time, the terms and conditions of the Securities, the Indenture, the
     Registration Rights Agreement and the Pledge Agreement and the rights,
     preferences and privileges of the capital stock of the Company, including
     the shares of Common Stock issuable on conversion of the Securities, will
     conform in all material respects to the respective statements thereto
     contained in the Offering Memorandum.

          (xv)      Authorization and Description of Common Stock. The Common
     Stock conforms in all material respects to the description thereof set
     forth in the Offering Memorandum, or any document incorporated by reference
     therein. Upon issuance and delivery of the Securities in accordance with
     this Agreement and the Indenture, the Securities will be convertible at the
     option of the holder thereof into shares of Common Stock in accordance with
     the terms of the Securities and the Indenture; the shares of Common Stock
     issuable upon conversion of the Securities have been duly authorized and
     reserved for issuance upon such conversion by all necessary corporate
     action and such shares, when issued upon such conversion in accordance with
     the terms of the Securities, will be validly issued and will be fully paid
     and non-assessable; the issuance of such shares upon such conversion will
     not be subject to the preemptive or other similar rights of any
     securityholder of the Company; and, to the Company's knowledge, no holder
     of such shares will be subject to personal liability by reason of being
     such a holder. All corporate action required to be taken by the Company for
     the issuance and delivery of the shares of Common Stock issuable upon
     conversion of the Securities has been duly and validly taken by the
     Company. The Company has authorized and has reserved and covenants to
     continue to reserve free of any preemptive rights or similar rights, a
     sufficient number of authorized but reserved shares of Common Stock to
     satisfy the

                                       -6-

<PAGE>

     conversion rights of the Securities. Except as set forth in the Offering
     Memorandum or the documents incorporated by reference in the Offering
     Memorandum, there are no outstanding subscriptions, rights, warrants,
     options, calls, convertible securities, commitments of sale or rights
     related to or entitling any person to purchase or otherwise to acquire any
     shares of, or any security convertible into or exchangeable or exercisable
     for, the capital stock of, or other ownership interest in, the Company.

          (xvi)     Absence of Defaults and Conflicts. The Company is not in
     violation of its charter or by-laws or in default in the performance or
     observance of any obligation, agreement, covenant or condition contained in
     any contract, indenture, mortgage, deed of trust, loan or credit agreement,
     note, lease or other agreement or instrument to which the Company is a
     party or by which it may be bound, or to which any of the property or
     assets of the Company is subject (collectively, "Agreements and
     Instruments") except for such defaults that would not result in a Material
     Adverse Effect; and the execution, delivery and performance of this
     Agreement, the Indenture, the Registration Rights Agreement, the Pledge
     Agreement and the Securities and any other agreement or instrument entered
     into or issued or to be entered into or issued by the Company in connection
     with the transactions contemplated hereby or thereby or in the Offering
     Memorandum and the consummation of the transactions contemplated hereby or
     thereby and in the Offering Memorandum (including the issuance and sale of
     the Securities and the use of the proceeds from the sale of the Securities
     as described in the Offering Memorandum under the caption "Use of
     Proceeds") and compliance by the Company with its obligations hereunder
     have been duly authorized by all necessary corporate action and do not and
     will not, whether with or without the giving of notice or passage of time
     or both, conflict with or constitute a breach of, or default or Repayment
     Event (as defined below) under, or other than pursuant to the terms of the
     Pledge Agreement and the other documents contemplated thereby, result in
     the creation or imposition of any lien, charge or encumbrance upon any
     property or assets of the Company pursuant to, the Agreements and
     Instruments (except for such conflicts, breaches or defaults or Repayment
     Events or liens, charges or encumbrances that, singly or in the aggregate,
     would not result in a Material Adverse Effect), nor will such action result
     in any violation of the provisions of the charter or by-laws of the
     Company, or any applicable law, statute, rule, regulation, judgment, order,
     writ or decree of any government, government instrumentality or court,
     domestic or foreign, having jurisdiction over the Company or any of its
     assets, properties or operations, except for such violations of applicable
     law, statute, rule, regulation, judgment, order, writ or decree that would
     not result in a Material Adverse Effect. As used herein, a "Repayment
     Event" means any event or condition which gives the holder of any note,
     debenture or other evidence of indebtedness (or any person acting on such
     holder's behalf) the right to require the repurchase, redemption or
     repayment of all or a portion of such indebtedness by the Company.

          (xvii)    Absence of Labor Dispute. No labor dispute with the
     employees of the Company exists or, to the knowledge of the Company, is
     imminent, and the Company is not aware of any existing or imminent labor
     disturbance by the employees of any of its principal suppliers, vendors,
     manufacturers, customers or contractors, which, in either case, may
     reasonably be expected to result in a Material Adverse Effect.

                                       -7-

<PAGE>

          (xviii)   Absence of Proceedings. There is no action, suit,
     proceeding, inquiry or investigation before or brought by any court or
     governmental agency or body, domestic or foreign, now pending, or, to the
     knowledge of the Company, threatened, against or affecting the Company, or
     which could be expected to result in a Material Adverse Effect, or which
     could be expected to materially and adversely affect the properties or
     assets thereof or the consummation of the transactions contemplated in this
     Agreement or the performance by the Company of its obligations hereunder;
     the aggregate of all pending legal or governmental proceedings to which the
     Company is a party or of which any of its property or assets is the subject
     which are not described in the Offering Memorandum, including ordinary
     routine litigation incidental to the business, could not reasonably be
     expected to result in a Material Adverse Effect.

          (xix)     Absence of Manipulation. Neither the Company nor any of its
     affiliates, as such term is defined in Rule 501(b) under the 1933 Act
     (each, an "Affiliate") over which the Company has control has taken, nor
     will the Company or any such Affiliate take, directly or indirectly, any
     action which is designed to or which has constituted or which would be
     expected to cause or result in stabilization or manipulation of the price
     of any security of the Company to facilitate the sale or resale of the
     Securities.

          (xx)      Possession of Intellectual Property. The Company owns or
     possesses, or can acquire on reasonable terms, adequate patents, patent
     rights, licenses, inventions, copyrights, know-how (including trade secrets
     and other unpatented and/or unpatentable proprietary or confidential
     information, systems or procedures), trademarks, service marks, trade names
     or other intellectual property (collectively, "Intellectual Property")
     necessary to carry on the business now operated by it, and the Company has
     not received any notice nor is otherwise aware of any infringement of or
     conflict with asserted rights of others with respect to any Intellectual
     Property or of any facts or circumstances which would render any
     Intellectual Property invalid or inadequate to protect the interest of the
     Company therein, and which infringement or conflict (if the subject of any
     unfavorable decision, ruling or finding) or invalidity or inadequacy,
     singly or in the aggregate, would result in a Material Adverse Effect.

          (xxi)     Absence of Further Requirements. No filing with, or
     authorization, approval, consent, license, order, registration,
     qualification or decree of, any court or governmental authority or agency
     is necessary or required for the performance by the Company of its
     obligations hereunder, in connection with the offering, issuance or sale of
     the Securities hereunder or the consummation of the transactions
     contemplated by this Agreement or for the due execution, delivery or
     performance of the Indenture by the Company, except the filing of any
     financing statements as contemplated by the Pledge Agreement, and except
     such as have been already obtained, such as may be required under state
     securities laws, such as may be required in the future to satisfy the
     Company's obligations under the Indenture or the Registration Rights
     Agreement, or where the failure to make any such filing or to obtain any
     such authorization, approval, consent, license, order, registration,
     qualification or decree would not result in a Material Adverse Effect.

                                       -8-

<PAGE>

          (xxii)    Possession of Licenses and Permits. The Company possess such
     permits, licenses, approvals, consents and other authorizations
     (collectively, "Governmental Licenses") issued by the appropriate federal,
     state, local or foreign regulatory agencies or bodies necessary to conduct
     the business now operated by them, except where the failure so to possess
     would not, singly or in the aggregate, result in a Material Adverse Effect;
     the Company is in compliance with the terms and conditions of all such
     Governmental Licenses, except where the failure so to comply would not,
     singly or in the aggregate, result in a Material Adverse Effect; all of the
     Governmental Licenses are valid and in full force and effect, except where
     the invalidity of such Governmental Licenses or the failure of such
     Governmental Licenses to be in full force and effect would not, singly or
     in the aggregate, result in a Material Adverse Effect; and the Company has
     not received any notice of proceedings relating to the revocation or
     modification of any such Governmental Licenses which, singly or in the
     aggregate, if the subject of an unfavorable decision, ruling or finding,
     would result in a Material Adverse Effect.

          (xxiii)   Title to Property. The Company has good and marketable
     title to all real property owned by it and good title to all other
     properties owned by it, free and clear of all mortgages, pledges, liens,
     security interests, claims, restrictions or encumbrances of any kind except
     such as (a) are described in the Offering Memorandum or (b) do not, singly
     or in the aggregate, materially adversely affect the value of such property
     and do not materially interfere with the use made and proposed to be made
     of such property by the Company; and all of the leases and subleases
     material to the business of the Company, and under which the Company holds
     properties described in the Offering Memorandum, are in full force and
     effect (assuming compliance therewith by the other parties thereto), and
     the Company does not have any notice of any material claim of any sort that
     has been asserted by anyone adverse to the rights of the Company under any
     of the leases or subleases mentioned above, or affecting or questioning the
     rights of the Company to the continued possession of the leased or
     subleased premises under any such lease or sublease.

          (xxiv)    Environmental Laws. Except as described in the Offering
     Memorandum and except such matters as would not, singly or in the
     aggregate, reasonably be expected to result in a Material Adverse Effect,
     (A) the Company is not in violation of any federal, state, local or foreign
     statute, law, rule, regulation, ordinance, code, policy or rule of common
     law or any judicial or administrative interpretation thereof, including any
     judicial or administrative order, consent, decree or judgment, relating to
     pollution or protection of human health, the environment (including,
     without limitation, ambient air, surface water, groundwater, land surface
     or subsurface strata) or wildlife, including, without limitation, laws and
     regulations relating to the release or threatened release of chemicals,
     pollutants, contaminants, wastes, toxic substances, hazardous substances,
     petroleum or petroleum products, asbestos containing materials or mold
     (collectively, "Hazardous Materials") or to the manufacture, processing,
     distribution, use, treatment, storage, disposal, transport or handling of
     Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
     has all permits, authorizations and approvals required under any applicable
     Environmental Laws and is in compliance with their requirements, (C) there
     are no pending or, to the Company's knowledge, threatened administrative,
     regulatory or judicial actions, suits, demands, demand letters, claims,

                                       -9-

<PAGE>

     liens, notices of noncompliance or violation, investigation or proceedings
     relating to any Environmental Law against the Company and (D) to the
     Company's knowledge, there are no events or circumstances that would
     reasonably be expected to form the basis of an order for clean-up or
     remediation, or an action, suit or proceeding by any private party or
     governmental body or agency, against or affecting the Company relating to
     Hazardous Materials or Environmental Laws.

          (xxv)     Investment Company Act. The Company is not required, and
     upon the issuance and sale of the Securities as herein contemplated and the
     application of the net proceeds therefrom as described in the Offering
     Memorandum will not be required, to register as an "investment company"
     under the Investment Company Act of 1940, as amended (the "1940 Act").

          (xxvi)    Similar Offerings. Neither the Company nor, to the Company's
     knowledge, any of its Affiliates, has, directly or indirectly, solicited
     any offer to buy, sold or offered to sell or otherwise negotiated in
     respect of, or will solicit any offer to buy, sell or offer to sell or
     otherwise negotiate in respect of, in the United States or to any United
     States citizen or resident, any security which is or would be integrated
     with the sale of the Securities in a manner that would require the
     Securities to be registered under the 1933 Act.

          (xxvii)   Rule 144A Eligibility. The Securities are eligible for
     resale pursuant to Rule 144A and (except for the shares of Common Stock
     into which they are convertible) will not be, at the Closing Time, of the
     same class as securities listed on a national securities exchange
     registered under Section 6 of the 1934 Act, or quoted in a U.S. automated
     interdealer quotation system.

          (xxviii)  No General Solicitation. None of the Company, its Affiliates
     or any person acting on its or any of their behalf (other than the Initial
     Purchasers or any of its Affiliates, as to whom the Company makes no
     representation) has engaged or will engage, in connection with the offering
     of the Securities, in any form of general solicitation or general
     advertising within the meaning of Rule 502(c) under the 1933 Act
     Regulations.

          (xxix)    No Registration Required. Subject to compliance by the
     Initial Purchasers with the representations and warranties set forth in
     Section 2 and the procedures set forth in Section 6 hereof and its other
     covenants and agreements set forth herein, it is not necessary in
     connection with the offer, sale and delivery of the Securities to the
     Initial Purchasers and to each Subsequent Purchaser in the manner
     contemplated by this Agreement and the Offering Memorandum to register the
     Securities under the 1933 Act or to qualify the Indenture under the Trust
     Indenture Act of 1939, as amended (the "1939 Act").

          (xxx)     ERISA. The Company is in compliance in all material respects
     with all presently applicable provisions of the Employee Retirement Income
     Security Act of 1974, as amended, including the regulations and published
     interpretations thereunder ("ERISA"); no "reportable event" (as defined in
     ERISA) has occurred with respect to any

                                      -10-

<PAGE>

     "pension plan" (as defined in ERISA) for which the Company would have any
     material liability; the Company has not incurred and does not expect to
     incur material liability under (A) Title IV of ERISA with respect to the
     termination of, or withdrawal from, any "pension plan" or (B) Section 412
     or 4971 of the Internal Revenue Code of 1986, as amended, including the
     regulations and published interpretations thereunder (the "Code"); and each
     "pension plan" for which the Company would have any material liability that
     is intended to be qualified under Section 401(a) of the Code is so
     qualified in all material respects and nothing has occurred, whether by
     action or by failure to act, which would cause the loss of such
     qualification.

          (xxxi)    Insurance. The Company carries or is entitled to the
     benefits of insurance, with financially sound and reputable insurers, in
     such amounts and covering such risks as is generally maintained by
     companies of established repute engaged in the same or similar business,
     and all such insurance is in full force and effect except where the failure
     for any such insurance to be in full force would not result in a Material
     Adverse Effect.

          (xxxii)   Taxes. The Company has filed all federal, state and local
     income and franchise tax returns required to be filed through the date
     hereof and has paid all taxes due and payable thereon, except such as are
     being contested in good faith by appropriate proceedings or such that the
     failure to so file or to pay such taxes has not resulted in, and would not
     result in, a Material Adverse Effect, and no tax deficiency has been
     determined adversely to the Company which has had, nor does the Company
     have any knowledge of any tax deficiency which, if determined adversely to
     the Company, would have, a Material Adverse Effect.

          (xxxiii)  Internal Controls. The Company maintains internal accounting
     controls sufficient to provide reasonable assurance that (i) transactions
     are executed in accordance with management's authorization, (ii)
     transactions are recorded as necessary to permit preparation of its
     financial statements and to maintain accountability for its assets, (iii)
     access to its assets is permitted only in accordance with management's
     authorization and (iv) its reported assets are compared with existing
     assets at reasonable intervals.

          (xxxiv)   No Unlawful Payments. To the Company's knowledge after due
     inquiry, neither the Company nor any director, officer, or employee of the
     Company, has (a) used any corporate funds for any unlawful contribution,
     gift, entertainment or other unlawful expense relating to political
     activity; (b) made any direct or indirect unlawful payment to any foreign
     or domestic government official or employee from corporate funds; (c)
     violated or is in violation of any provision of the Foreign Corrupt
     Practices Act of 1977; or (d) made any bribe, rebate, payoff, influence
     payment, kickback or other unlawful payment, in the case of any of (a),
     (b), (c) or (d) that would have a Material Adverse Effect.

          (xxxv)    No Brokerage Commission; Finder's Fee. To the Company's
     knowledge, except as disclosed in the Offering Memorandum, there are no
     contracts, agreements or understandings between the Company and any person
     that would give rise to a valid claim against the Company or the Initial
     Purchasers for a brokerage commission, finder's fee or other like payment
     in connection with this offering.

                                      -11-

<PAGE>

          (xxxvi)   Reporting Company. The Company is subject to the reporting
     requirements of Section 13 of the 1934 Act.

          (xxxvii)  Registration Rights. Except as disclosed in the Offering
     Memorandum or as otherwise disclosed in writing to the Initial Purchasers,
     there are no persons with registration rights or other similar rights to
     have any securities registered by the Company under the 1933 Act.

          (xxxviii) Accuracy of Exhibits. There are no contracts or documents
     which are required to be filed as exhibits to the documents incorporated by
     reference in the Offering Memorandum which have not been so filed as
     required.

          (xxxix)   Suppliers. No supplier to the Company has ceased shipments
     to the Company or indicated, to the Company's knowledge, an interest in
     decreasing or ceasing its sales to the Company or otherwise modifying its
     relationship with the Company, other than in the normal and ordinary course
     of business consistent with past practices in a manner which would not,
     singly or in the aggregate, result in a Material Adverse Effect.

          (xl)      Disclosure Controls. As required by 1934 Act Rule 13a-15(b),
     an evaluation was performed of the effectiveness of the design and
     operation of the Company's disclosure controls and procedures (as defined
     in Rule 13a-15(e) and 15d-15(e) under the 1934 Act) as of the end of the
     quarter ended December 31, 2003. As required by Rule 13a-15(b), this
     evaluation was conducted under the supervision and with the participation
     of the Company's management, including its chief executive officer and its
     chief financial officer. The Company notes, however, that there are
     inherent limitations to the effectiveness of any system of disclosure
     controls and procedures, including cost limitations, judgments used in
     decision making, assumptions regarding the likelihood of future events,
     soundness of internal controls, fraud, the possibility of human error and
     the circumvention or overriding of the controls and procedures, and
     accordingly, even effective disclosure controls and procedures can provide
     only reasonable, and not absolute, assurance of achieving their control
     objectives. Based on the evaluation, the Company's management concluded
     that the Company's disclosure controls and procedures are effective in all
     material respects at a reasonable assurance level with respect to the
     recording, processing, summarizing and reporting, within the time periods
     specified in the 1934 Act rules and forms, of information required to be
     disclosed by the Company in the reports that it files or submits under the
     Exchange Act.

          (xli)     Related Party Transactions. No relationship, direct or
     indirect, exists between or among any of the Company or any affiliate of
     the Company, on the one hand, and any director, officer, stockholder,
     customer or supplier of the Company or any affiliate of the Company, on the
     other hand, which is required by the 1933 Act, the 1934 Act or the rules
     and regulations promulgated thereunder to be described in the Offering
     Memorandum or the documents incorporated by reference in the Offering
     Memorandum which is not so described as required. There are no outstanding
     loans, advances (except normal advances for business expenses in the
     ordinary course of business) or guarantees of indebtedness by the Company
     to or for the benefit of any of the officers or directors of

                                      -12-

<PAGE>

     the Company or any of their respective family members, except as disclosed
     in the Offering Memorandum or the documents incorporated by reference in
     the Offering Memorandum. The Company has not, in violation of Section 402
     of the Sarbanes-Oxley Act of 2002, directly or indirectly, extended or
     maintained credit, arranged for the extension of credit, or renewed an
     extension of credit, in the form of a personal loan to or for any director
     or executive officer of the Company.

          (xlii)    Listing of Common Stock. The Company's Common Stock is
     registered pursuant to Section 12(g) of the 1934 Act and is listed on the
     Nasdaq National Market (the "NASDAQ") and the Company has taken no action
     designed to, or likely to have the effect of, terminating the registration
     of the Common Stock under the 1934 Act or delisting the Common Stock from
     the NASDAQ, nor has the Company received any notification that the
     Commission or the NASDAQ is contemplating terminating such registration or
     listing.

     (b)  Officer's Certificates. Any certificate signed by any officer of the
Company delivered to the Representative or to counsel for the Initial Purchasers
shall be deemed a representation and warranty by the Company to each Initial
Purchaser as to the matters covered thereby.

     SECTION 2.  Sale and Delivery to Initial Purchasers; Closing.

     (a)  Initial Securities. On the basis of the representations, warranties
and agreements herein contained and subject to the terms and conditions herein
set forth, the Company agrees to sell to each Initial Purchaser, severally and
not jointly, and each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company, at the price set forth in Schedule B, the aggregate
principal amount at maturity of the Initial Securities set forth in Schedule A
opposite the name of such Initial Purchaser, plus any additional principal
amount of Initial Securities which such Initial Purchaser may become obligated
to purchase pursuant to the provisions of Section 11 hereof.

     (b)  Option Securities. In addition, on the basis of the representations,
warranties and agreements herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the Initial
Purchasers, severally and not jointly, to purchase up to an additional
$47,000,000 aggregate principal amount at maturity of Option Securities at the
same price per Security set forth in Schedule B for the Initial Securities. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time on one or more occasions and
only upon notice by Merrill Lynch to the Company setting forth the number of
Option Securities as to which the several Initial Purchasers are then exercising
the option and the time and date of payment and delivery for such Option
Securities. Any such time and date of delivery (a "Date of Delivery") shall be
determined by Merrill Lynch, but shall not be later than seven full business
days after the exercise of said option, nor in any event prior to the Closing
Time, as hereinafter defined. If the option is exercised as to all or any
portion of the Option Securities, each of the Initial Purchasers, acting
severally and not jointly, will purchase that proportion of the aggregate
principal amount at maturity of Option Securities then being purchased which the
principal amount of Initial Securities set forth in Schedule A

                                      -13-

<PAGE>

opposite the name of such Initial Purchasers bears to the aggregate principal
amount at maturity of Initial Securities.

     (c)  Payment. Payment of the purchase price for, and delivery of one or
more global certificates for, the Initial Securities shall be made at the
offices of Shearman & Sterling LLP, 1080 Marsh Road, Menlo Park, California
94025, or at such other place as shall be agreed upon by the Initial Purchasers
and the Company, at 9:00 A.M. (New York time) on the third (fourth, if the
pricing occurs after 4:30 p.m. (Eastern Time)) business day after the date
hereof (unless postponed in accordance with the provisions of Section 11
hereof), or at such other time not later than ten business days after such date
as shall be agreed upon by the Initial Purchasers and the Company (such time and
date of payment and delivery being herein called the "Closing Time").

     In addition, in the event that any or all of the Option Securities are
purchased by the Initial Purchasers, payment of the purchase price for, and
delivery of one or more global certificates for, such Option Securities shall be
made at the above-mentioned offices, or at such other place as shall be agreed
upon by the Representative and the Company, on each Date of Delivery as
specified in the notice from the Representative to the Company.

     Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representative for the respective accounts of the Initial Purchasers of
certificates for the Initial Securities or the Option Securities, if any, to be
purchased by them. It is understood that each Initial Purchaser has authorized
the Representative, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase. Merrill Lynch, individually
and not as representative of the Initial Purchasers, may (but shall not be
obligated to) make payment of the purchase price for the Initial Securities or
the Option Securities, if any, to be purchased by any Initial Purchaser whose
funds have not been received by the Closing Time or the relevant Date of
Delivery, as the case may be, but such payment shall not relieve such Initial
Purchaser from its obligations hereunder.

     (d)  Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations ($1,000 or
integral multiples thereof) and registered in such names as the Representative
may request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be; provided that any Securities
in global form will be registered in the name of Cede & Co. The certificates
representing the Initial Securities and the Option Securities, if any, will be
made available for examination by the Representative in The City of New York not
later than 10:00 A.M. (Eastern time) on the business day prior to the Closing
Time or the relevant Date of Delivery, as the case may be.

     SECTION 3.  Covenants of the Company. The Company covenants with each of
the Initial Purchasers as follows:

     (a)  Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum and the Final Offering Memorandum (and any
amendments and supplements thereto) and any documents incorporated by reference
therein as such Initial Purchaser may

                                      -14-

<PAGE>

reasonably request, which Preliminary Offering Memorandum and Final Offering
Memorandum shall be in form and substance reasonably satisfactory to the Initial
Purchasers.

     (b)  Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities by the Initial Purchasers with any securities exchange or any other
securities regulatory body in the United States or any other jurisdiction, and
(y) prior to the completion of the placement of the Securities by the Initial
Purchasers as evidenced by a notice from the Initial Purchasers to the Company
in writing, any material changes in or events affecting the condition, financial
or otherwise, or the earnings, business or business prospects of the Company
which (i) make any statement in the Offering Memorandum (or any amendment or
supplement) false or misleading or (ii) are not disclosed in the Offering
Memorandum. In such event or if during such time any event shall occur as a
result of which it is necessary, in the reasonable opinion of any of the
Company, its counsel, the Initial Purchasers or counsel for the Initial
Purchasers, to amend or supplement the Preliminary Offering Memorandum or Final
Offering Memorandum in order that the Offering Memorandum not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in the light of the circumstances
then existing, the Company will forthwith amend or supplement the Offering
Memorandum by preparing and furnishing to each Initial Purchaser an amendment or
amendments of, or a supplement or supplements to, the Offering Memorandum (in
form and substance satisfactory in the reasonable opinion of counsel for the
Initial Purchasers) so that, as so amended or supplemented, the Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.

     (c)  Amendments to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering Memorandum (including an amendment by filing a document with the
Commission which is incorporated by reference in the Offering Memorandum) and
will not effect any such amendment or supplement without the consent of the
Initial Purchasers, which consent shall not be unreasonably withheld, delayed or
conditioned. Neither the consent of the Initial Purchasers, nor the Initial
Purchasers delivery of any such amendment or supplement, shall constitute a
waiver of any of the conditions set forth in Section 5 hereof.

     (d)  Qualifications of Securities for Offer and Sale. The Company shall use
its reasonable best efforts, in cooperation with the Initial Purchasers, to
qualify the Securities and the shares of Common Stock issuable upon conversion
of Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions, domestic or foreign, as the Initial Purchasers
may designate and will maintain such qualification in effect as long as required
for the distribution of the Securities; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will also supply the Initial Purchasers with such
information as is necessary for the determination of the legality of the
Securities for investment under the laws of such jurisdictions as the Initial
Purchasers may request.

                                      -15-

<PAGE>

     (e)  DTC. The Company will cooperate with the Initial Purchasers and use
its reasonable best efforts to permit the Securities to be eligible for
clearance and settlement through the facilities of DTC and will comply with all
of the terms and conditions set forth in the representation letter of the
Company to DTC relating to the approval of the Securities by DTC for book-entry
transfer.

     (f)  Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner indicated in the Offering
Memorandum under "Use of Proceeds."

     (g)  Listing on Securities Exchange. The Company will use its best efforts
to cause all shares of Common Stock issuable upon conversion of the Securities
to be listed on the NASDAQ or listed on a "national securities exchange"
registered under Section 6 of the 1934 Act on which shares of its Common Stock
are then listed.

     (h)  Restriction on Sale of Convertible Securities and Common Stock. During
a period of 90 days from the date of the Offering Memorandum, the Company will
not, without the prior written consent of Merrill Lynch, (i) directly or
indirectly, offer, pledge, announce the intention to sell, 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 for the sale of, lend
or otherwise transfer or dispose of, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for or repayable with Common
Stock, or file any registration statement under the 1933 Act with respect to any
of the foregoing or (ii) enter into any swap or other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, any of
the economic consequence of ownership of the Common Stock, or any securities
convertible into or exchangeable or exercisable for or repayable with Common
Stock, whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Securities
to be sold hereunder or the Common Stock to be delivered upon conversion
thereof, (B) the resale registration statement to be filed by the Company
pursuant to the Registration Rights Agreement relating to the resale of the
Securities and the shares of Common Stock or any other registration statement
filed pursuant to registration rights described in the Offering Memorandum, or
(C) the Common Stock to be issued pursuant to employee benefit plans, qualified
stock option plans or other employee compensation benefit plans to new employees
of the Company or in relation to promotions of existing employees of the
Company.

     (i)  Restriction on Sale of Securities. During a period of 90 days from the
date of the Final Offering Memorandum, the Company will not, without the prior
written consent of Merrill Lynch, directly or indirectly, issue, sell, offer or
agree to sell, grant any option for the sale of, or otherwise transfer or
dispose of, any other debt securities of the Company, or securities of the
Company that are convertible into, or exchangeable for, the Notes or such other
debt securities.

     (j)  Stabilization and Manipulation. The Company has not taken and will not
take, directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Securities to facilitate the sale or resale of the Securities. Except as
permitted by the 1933 Act, the Company will not distribute any

                                      -16-

<PAGE>

prospectus, offering memorandum or any other offering materials other than the
Offering Memorandum in connection with the offer and sale of the Securities.

     (k)  PORTAL Designation. The Company shall use its reasonable best efforts
to permit the Securities to be designated as PORTAL securities in accordance
with the rules and regulations adopted by the National Association of Securities
Dealers, Inc. ("NASD") relating to the PORTAL Market.

     (l)  Reporting Requirements. Until the offering of the Securities is
complete the Company will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by the 1934
Act and the 1934 Act Regulations.

     (m)  Reservation of Shares of Common Stock. The Company will reserve and
keep available at all times, free of preemptive rights, shares of Common Stock
for the purpose of enabling the Company to satisfy any obligations to issue
shares of Common Stock upon conversion of the Securities.

     (n)  Registration Rights Agreement. The Company agrees to enter into and
comply with all the terms and conditions of the Registration Rights Agreement.

     (o)  Qualification Under the Trust Indenture Act. The Company agrees that
simultaneously with any registration of the Securities pursuant to the
Registration Rights Agreement, or at such earlier time as may be required, the
Indenture shall be qualified under the 1939 Act and any necessary supplemental
indentures will be entered into in connection therewith.

     SECTION 4.  Payment of Expenses.

     (a)  Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing, delivery to the Initial Purchasers and any filing of the
Offering Memorandum (including financial statements and any schedules or
exhibits and any document incorporated by reference therein) and of each
amendment or supplement thereto, (ii) the preparation, printing and delivery to
the Initial Purchasers of this Agreement, any Agreement among Initial
Purchasers, the Indenture, the Securities, the Registration Rights Agreement and
such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities or the issuance or
delivery of the Common Stock issuable upon conversion thereof, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Initial Purchasers and the certificates for the Common Stock issuable upon
conversion thereof, including any transfer taxes, any stamp or other duties
payable upon the sale, issuance and delivery of the Securities to the Initial
Purchasers, the issuance and delivery of the Common Stock issuable upon
conversion thereof and any charges of DTC in connection therewith, (iv) the fees
and disbursements of the Company's counsel, accountants and other advisors, (v)
the qualification of the Securities and the shares of Common Stock issuable upon
conversion of the Securities under securities laws in accordance with the
provisions of Section 3(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchasers in connection therewith
and in connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) any

                                      -17-

<PAGE>

fees of the NASD in connection with the Securities, (vii) the fees and expenses
of the Trustee, including the fees and disbursements of counsel for the Trustee
in connection with the Indenture, the Securities, the Pledge Agreement and the
Control Agreement, (viii) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with the
marketing of the Securities including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations, travel and
lodging expenses of the officers of the Company, and that portion of the cost of
aircraft and other transportation chartered in connection with the road show
attributable to officers of the Company, (ix) the fees and expenses of any
transfer agent or registrar for the Common Stock, (x) any fees payable in
connection with the rating of the Securities, and (xi) any fees and expenses
payable in connection with the initial and continued designation of the
Securities as PORTAL securities under the PORTAL Market Rules pursuant to NASD
Rule 5322.

     (b)  Termination of Agreement. If this Agreement is terminated by the
Representative in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
its out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Initial Purchasers.

     SECTION 5.  Conditions of the Initial Purchasers' Obligations. The
obligations of the several Initial Purchasers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company delivered
pursuant to the provisions hereof, to the performance by the Company of its
covenants and other obligations hereunder, and to the following further
conditions:

     (a)  Opinion of Counsel for the Company. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of the
Closing Time, of Dorsey & Whitney LLP, counsel for the Company, in form and
substance satisfactory to counsel for the Initial Purchasers, to the effect set
forth in Exhibit B hereto and to such further effect as counsel to the Initial
Purchasers may reasonably request.

     (b)  Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Initial Purchasers shall have received the opinion, dated as of the Closing
Time, of Shearman & Sterling LLP, counsel for the Initial Purchasers, in form
and substance reasonably satisfactory to the Initial Purchasers. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York and the federal law of
the United States, upon the opinions of counsel satisfactory to the
Representative. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and certificates of public officials.

     (c)  Officers' Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Final Offering Memorandum (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement), any material
adverse change in the condition, financial or otherwise, or in the earnings,
business or business prospects of the Company, whether or not arising in the
ordinary course of business, and the Representative shall have received a
certificate of the President or a

                                      -18-

<PAGE>

Vice President of the Company and of the chief financial officer or chief
accounting officer of the Company, dated as of the Closing Time, to the effect
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct with
the same force and effect as though expressly made at and as of the Closing
Time, and (iii) the Company has complied with all of the agreements entered into
in connection with the transaction contemplated herein and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Time.

     (d)  Accountants' Comfort Letter. At the time of the execution of this
Agreement, the Representative shall have received from KPMG LLP a letter dated
such date, in form and substance reasonably satisfactory to the Initial
Purchasers, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to initial purchasers with respect to
the financial statements and certain financial information contained, in the
Offering Memorandum.

     (e)  Bring-down Comfort Letter. At the Closing Time, the Initial Purchasers
shall have received from KPMG LLP a letter, dated as of the Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (d) of this Section, except that the specified date referred to
shall be a date not more than three days prior to the Closing Time.

     (f)  Lock-up Agreements. On or prior to the date of this Agreement, the
Initial Purchasers shall have received an agreement substantially in the form of
Exhibit C hereto signed by the persons listed in Schedule C hereto.

     (g)  Indenture, Registration Rights Agreement, Pledge Agreement and Control
Agreement. At or prior to the Closing Time, each of the Company and the Trustee
shall have executed and delivered the Indenture and the Pledge Agreement, the
Company and the Initial Purchasers shall have executed and delivered the
Registration Rights Agreement and the Company, the Trustee and the Account
Holder shall have executed and delivered the Control Agreement.

     (h)  Rating. Since the date of this Agreement, there shall not have
occurred a downgrading in the rating, if any, assigned to the Securities or any
of the Company's other debt securities by any "nationally recognized statistical
rating agency" as that term is defined by the Commission for purposes of Rule
436(g)(2) under the 1933 Act, and no such securities rating agency shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the Company's
other debt securities.

     (i)  Conditions to Purchase of Option Securities. In the event that the
Initial Purchasers exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the obligations of the
Initial Purchasers to purchase such Option Securities is subject to the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder being true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Representative shall have received:

                                      -19-

<PAGE>

          (i)   Officers' Certificate. A certificate, dated such Date of
     Delivery, of the President or Vice President of the Company and the chief
     financial officer or chief accounting officer of the Company confirming
     that the certificate delivered at the Closing Time pursuant to Section 5(c)
     hereof remains true and correct as of such Date of Delivery.

          (ii)  Opinion of Counsel for the Company. The opinion of Dorsey &
     Whitney LLP, counsel for the Company, in form and substance satisfactory to
     counsel for the Initial Purchasers, dated such Date of Delivery, relating
     to the Option Securities to be purchased on such Date of Delivery and
     otherwise to the same effect as the opinion required by Section 5(a)
     hereof.

          (iii) Opinion of Counsel for Initial Purchasers. The opinion of
     Shearman & Sterling LLP, counsel for the Initial Purchasers, dated such
     Date of Delivery, relating to the Option Securities to be purchased on such
     Date of Delivery and otherwise to the same effect as the opinion required
     by Section 5(b) hereof.

          (iv)  Bring-down Comfort Letter. A letter from KPMG LLP, in form and
     substance satisfactory to the Initial Purchasers and dated such Date of
     Delivery, substantially in the same form and substance as the letter
     furnished to the Initial Purchasers pursuant to Section 5(d) hereof, except
     that the "specified date" in the letter furnished pursuant to this
     paragraph shall be a date not more than three business days prior to such
     Date of Delivery.

     (j)  PORTAL Market. At the Closing Time, the Securities and the Common
Stock issuable upon conversion of the Securities shall have been designated for
trading on PORTAL.

     (k)  Additional Documents. At the Closing Time and at each Date of
Delivery, counsel for the Initial Purchasers shall have been furnished with such
documents, certificates and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy and completeness of any of
the representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Representative and counsel for the
Initial Purchasers.

     (l)  Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement (or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Initial Purchasers to purchase the relevant Option
Securities on such Date of Delivery) may be terminated by the Representative by
notice to the Company at any time at or prior to the Closing Time or such Date
of Delivery, as the case may be, and such termination shall be without liability
of any party to any other party except as provided in Section 4 and except that
Sections 1, 7, 8 and 9 shall survive any such termination and remain in full
force and effect.

     SECTION 6.  Subsequent Offers and Resales of the Securities.

                                      -20-

<PAGE>

     (a)  Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby covenant and agree to observe the following procedures in
connection with the offer and sale of the Securities:

          (i)   Offers and Sales to Qualified Institutional Buyers. Offers and
     sales of the Securities shall only be made to persons whom the offeror or
     seller reasonably believes to be qualified institutional buyers, as defined
     in Rule 144A under the 1933 Act ("Qualified Institutional Buyers"). The
     Initial Purchasers understand that the Securities have not been, and,
     except as required by the Registration Rights Agreement, will not be,
     registered under the 1933 Act and may not be offered or sold within the
     United States or to, or for the account or benefit of, U.S. persons, except
     pursuant to an exemption from the registration requirements of the 1933
     Act.

          (ii)  No General Solicitation. No general solicitation or general
     advertising (within the meaning of Rule 502(c) under the 1933 Act) will be
     used in the United States in connection with the offering or sale of the
     Securities.

          (iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
     Subsequent Purchaser of Securities acting as a fiduciary for one or more
     third parties, each third party shall, in the judgment of the Initial
     Purchasers, be a Qualified Institutional Buyer.

          (iv)  Subsequent Purchaser Notification. Each Initial Purchaser will
     take reasonable steps to inform, and cause each of its United States
     Affiliates to take reasonable steps to inform, persons acquiring Securities
     from such Initial Purchaser or its affiliate, as the case may be, in the
     United States that the Securities (A) have not been and will not be
     registered under the 1933 Act, (B) are being sold to them without
     registration under the 1933 Act in reliance on Rule 144A or in accordance
     with another exemption from registration under the 1933 Act, as the case
     may be, and (C) may not be offered, sold or otherwise transferred except
     (1) to the Company, (2) in accordance with Rule 144A to a person whom the
     seller reasonably believes is a Qualified Institutional Buyer that is
     purchasing such Securities for its own account or for the account of a
     Qualified Institutional Buyer to whom notice is given that the offer, sale
     or transfer is being made in reliance on Rule 144A or (3) pursuant to
     another available exemption from registration under the 1933 Act.

          (v)   Restriction on Transfer. The transfer restrictions and the
     other provisions set forth in the Offering Memorandum under the caption
     "Transfer Restrictions," including the legend required thereby, shall apply
     to the Securities except as otherwise agreed by the Company and the Initial
     Purchasers.

          (vi)  Minimum Principal Amount. No sale of the Securities to any one
     Subsequent Purchaser will be for less than U.S. $1,000 principal amount and
     no Security will be issued in a smaller principal amount. If the Subsequent
     Purchaser is a non-bank fiduciary acting on behalf of others, each person
     for whom it is acting must purchase at least U.S. $1,000 principal amount
     of the Securities.

                                      -21-

<PAGE>

     (b)  Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:

          (i)   Integration. The Company agrees that it will not and will cause
     its Affiliates over which it exercises control not to, directly or
     indirectly, solicit any offer to buy, sell or make any offer or sale of, or
     otherwise negotiate in respect of, securities of the Company or any such
     Affiliate thereof of any class if, as a result of the doctrine of
     "integration" referred to in Rule 502 under the 1933 Act, such offer and
     sale would render invalid (for the purpose of (A) the sale of the offered
     Securities by the Company to the Initial Purchasers, (B) the resale of the
     offered Securities by the Initial Purchasers to Subsequent Purchasers, or
     (C) the resale of the offered Securities by such Subsequent Purchasers to
     others) the exemption from the registration requirements of the 1933 Act
     provided by Section 4(2) thereof or by Rule 144A thereunder or otherwise.

          (ii)  Rule 144A Information. The Company agrees that, in order to
     render the offered Securities eligible for resale pursuant to Rule 144A
     under the 1933 Act, while any of the offered Securities (or shares of
     Common Stock issuable upon conversion thereof) remain outstanding and are
     "restricted securities" within the meaning of Rule 144 under the 1933 Act,
     it will make available, upon request, to any holder of Securities or
     prospective purchasers of Securities the information specified in Rule
     144A(d)(4), unless the Company furnishes information to the Commission
     pursuant to Section 13 or 15(d) of the 1934 Act.

          (iii) Restriction on Purchases. Until the expiration of two years
     after the original issuance of the offered Securities or the Delivery Date,
     if later, the Company will not, and will cause its Affiliates over which it
     exercises control not to, purchase or agree to purchase or otherwise
     acquire any offered Securities or the Shares of Common Stock issuable upon
     conversion thereof which are "restricted securities" (as such term is
     defined under Rule 144(a)(3) under the 1933 Act), whether as beneficial
     owner or otherwise (except as agent on behalf of and for the account of
     customers in the ordinary course of business as a securities broker in
     unsolicited broker's transactions).

     (c)  Qualified Institutional Buyer. Each Initial Purchaser, severally and
not jointly, represents and warrants to, and agrees with, the Company that it is
a Qualified Institutional Buyer.

     SECTION 7.  Indemnification.

     (a)  Indemnification of Initial Purchasers. The Company agrees to
indemnify and hold harmless each Initial Purchaser, and each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:

          (i)   against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, arising out of any untrue statement or alleged
     untrue statement of a material fact contained in any Preliminary Offering
     Memorandum or the Final Offering Memorandum (or any amendment or supplement
     thereto), or the omission or alleged

                                      -22-

<PAGE>

     omission therefrom of a material fact necessary in order to make the
     statements therein, in the light of the circumstances under which they were
     made, not misleading;

          (ii)  against any and all loss, liability, claim, damage and expense
     whatsoever, as incurred, to the extent of the aggregate amount paid in
     settlement of any litigation, or any investigation or proceeding by any
     governmental agency or body, commenced or threatened, or of any claim
     whatsoever based upon any such untrue statement or omission, or any such
     alleged untrue statement or omission; provided that (subject to Section
     7(d) below) any such settlement is effected with the written consent of the
     Company; and

          (iii) against any and all expense whatsoever, as incurred (including
     the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
     incurred in investigating, preparing or defending against any litigation,
     or any investigation or proceeding by any governmental agency or body,
     commenced or threatened, or any claim whatsoever based upon any such untrue
     statement or omission, or any such alleged untrue statement or omission, to
     the extent that any such expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum (or any amendment or supplement thereto); and provided further that
the Company shall not be liable to the Initial Purchasers with respect to any
Preliminary Offering Memorandum to the extent that any such loss, liability,
claim, damage or expense resulted from the fact that the Initial Purchasers sold
Securities to a person to whom the Initial Purchasers failed to send or give, at
or prior to the Closing Time, a copy of the Final Offering Memorandum, as then
amended or supplemented if: (i) the Company has previously furnished copies
thereof (sufficiently in advance o the Closing Time to allow for distribution by
the Closing Time) to the Initial Purchasers, and the loss, liability, claim,
damage or expense of the Initial Purchasers resulted from an untrue statement or
omission of a material fact contained in or omitted from the Preliminary
Offering Memorandum which was corrected in the Final Offering Memorandum as, if
applicable, amended or supplemented prior to the Closing Time and (ii)
furnishing such Final Offering Memorandum by the Closing Time to the party or
parties asserting such loss, liability, claim, damage or expense would have
constituted a defense to the claim asserted by such person.

     (b)  Indemnification of the Company. Each Initial Purchaser severally
agrees to indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Offering Memorandum in reliance upon
and in conformity with written information furnished to the Company by such
Initial Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum.

                                      -23-

<PAGE>

     (c)  Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by the Representative, and,
in the case of parties indemnified pursuant to Section 7(b) above, counsel to
the indemnified parties shall be selected by the Company. An indemnifying party
may participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 7 or Section
8 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

     (d)  Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel pursuant to the terms hereof,
such indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into, and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided that an indemnifying party shall not be
liable for any such settlement effected without its consent if such indemnifying
party, prior to the date of such settlement, (1) reimburses such indemnified
party in accordance with such request for the amount of such fees and expenses
of counsel as the indemnifying party believes in good faith to be reasonable,
and (2) provides written notice to the indemnified party that the indemnifying
party disputes in good faith the reasonableness of the unpaid balance of such
fees and expenses.

     SECTION 8.  Contribution. If the indemnification provided for in Section 7
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect

                                      -24-

<PAGE>

the relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Initial Purchasers on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

     The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.

     The relative fault of the Company, on the one hand, and the Initial
Purchasers, on the other hand, shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

     The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

     Notwithstanding the provisions of this Section 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities purchased and sold by it hereunder exceeds
the amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.

     No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

     For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall

                                      -25-

<PAGE>

have the same rights to contribution as the Company. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the principal amount at maturity of Initial Securities set forth
opposite their respective names in Schedule A hereto and not joint.

     SECTION 9.  Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto shall remain
operative and in full force and effect, regardless of (i) any investigation made
by or on behalf of any Initial Purchaser, any person controlling any Initial
Purchaser or any person controlling the Company (within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act), or its officers or directors,
and (ii) delivery of and payment for the Securities.

     SECTION 10. Termination of Agreement.

     (a)  Termination; General. The Representative may terminate this Agreement,
by notice to the Company, at any time at or prior to the Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Final Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), any material adverse change in the condition, financial
or otherwise, or in the earnings, business or business prospects of the Company,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or in the international financial markets, any outbreak of hostilities or
escalation thereof or acts of terrorism involving the United States, a
declaration of a national emergency or war by the United States or if there
shall have been any other calamity or crisis or any change or development
involving a prospective change in national or international political, financial
or economic conditions, in each case the effect of which is such as to make it,
in the judgment of the Representative, impracticable or inadvisable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company has been suspended or materially
limited by the Commission or the NASDAQ or if trading generally on the NYSE, the
American Stock Exchange or in the NASDAQ system has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority or a material disruption has occurred
in commercial banking or securities settlement or clearance services in the
United States, or (iv) if a banking moratorium has been declared by either
Federal or New York authorities.

     (b)  Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 7,
8 and 9 shall survive such termination and remain in full force and effect.

     SECTION 11. Default by One or More of the Initial Purchasers. If one or
more of the Initial Purchasers shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representative shall have the right,
within 24 hours thereafter, to make arrangements for one or

                                      -26-

<PAGE>

more of the non-defaulting Initial Purchasers, or any other initial purchasers,
to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Representative shall not have completed such arrangements within such
24-hour period, then:

          (i)   if the number of Defaulted Securities does not exceed 10% of the
     aggregate principal amount at maturity of the Securities to be purchased on
     such date, each of the non-defaulting Initial Purchasers shall be
     obligated, severally and not jointly, to purchase the full amount thereof
     in the proportions that their respective underwriting obligations hereunder
     bear to the underwriting obligations of all non-defaulting Initial
     Purchasers, or

          (ii)  if the number of Defaulted Securities exceeds 10% of the
     aggregate principal amount at maturity of the Securities to be purchased on
     such date, this Agreement or, with respect to any Date of Delivery which
     occurs after the Closing Time, the obligation of the Initial Purchasers to
     purchase and of the Company to sell the Option Securities to be purchased
     and sold on such Date of Delivery shall terminate without liability on the
     part of any non-defaulting Initial Purchaser.

     No action taken pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.

     In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the Initial
Purchasers to purchase and the Company to sell the relevant Option Securities,
as the case may be, either (i) the Representative or (ii) the Company shall have
the right to postpone Closing Time or the relevant Date of Delivery, as the case
may be, for a period not exceeding seven days in order to effect any required
changes in the Offering Memorandum or in any other documents or arrangements. As
used herein, the term "Initial Purchasers" includes any person substituted for
an Initial Purchaser under this Section 11.

     SECTION 12. Default by the Company. If the Company shall fail at Closing
Time or at the Date of Delivery to sell the aggregate principal amount at
maturity of Securities that it is obligated to sell hereunder, then this
Agreement shall terminate without any liability on the part of any
non-defaulting party; provided, however, that the provisions of Sections 1, 4,
7, 8 and 9 shall remain in full force and effect. No action taken pursuant to
this Section shall relieve the Company from liability, if any, in respect of
such default.

     SECTION 13. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed, if to the
Company, or mailed or transmitted by any standard form of telecommunication to
any of the other Notice parties. Notices to the Initial Purchasers shall be
directed c/o the Representative at 4 World Financial Center, New York, New York
10080, attention of Investment Banking Counsel, with a copy to Bruce Czachor,
Shearman & Sterling LLP, 1080 Marsh Road, Menlo Park, California 94025; and
notices to the Company shall be directed to it at 5775 West Old Shakopee Road,
Suite 100, Bloomington, Minnesota 55437, attention of William Brown, with a copy
to Dorsey & Whitney LLP at 50 South Sixth Street, Minneapolis, Minnesota, 55902,
attention of Timothy Hearn.

                                      -27-

<PAGE>

     SECTION 14. Parties. This Agreement shall inure to the benefit of and be
binding upon each of the Initial Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Initial Purchasers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Initial Purchasers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Initial Purchaser shall be deemed to be a successor by reason merely of such
purchase.

     SECTION 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     SECTION 16. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

     SECTION 17. Effect of Headings. The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.

     SECTION 18. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.

                                      -28-

<PAGE>

     If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Initial Purchasers and the Company in accordance with its terms.

                                          Very truly yours,

                                          MGI PHARMA, INC.

                                          By:  /s/ William C. Brown
                                             -----------------------------------
                                          Name:  William C. Brown
                                          Title: Executive Vice President and
                                                 Chief Executive Officer

<PAGE>

CONFIRMED AND ACCEPTED, as of the date
 first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
 INCORPORATED

By: /s/  Anthony J. Sterling
   -----------------------------------
         Authorized Signatory

For itself and as Representative of the other Initial Purchasers named in
Schedule A hereto.

                                       -2-

<PAGE>

                                   SCHEDULE A

                                                     Principal Amount
                                                        at Maturity
Name of Initial Purchaser                              of Securities
Merrill Lynch, Pierce, Fenner & Smith Incorporated   $    165,550,000
Banc of America Securities LLC                       $     45,150,000
Piper Jaffray & Co.                                  $     45,150,000
UBS Securities LLC                                   $     45,150,000

                                    SCH A-1

<PAGE>

                                   SCHEDULE B

                                MGI PHARMA, INC.

                 SENIOR SUBORDINATED CONVERTIBLE NOTES DUE 2024

          (i)   The initial issue price of the Securities shall be 74.762% of
     the principal amount at maturity thereof.

          (ii)  The purchase price to be paid by the Initial Purchasers for the
     Initial Securities shall be 72.519% of the principal amount at maturity
     thereof.

          (iii) Cash interest on the Securities at the rate of 1.6821% per annum
     on the principal amount at maturity (equivalent to a rate of 2.25% per year
     of the Issue Price) shall be payable semiannually in arrears on September 2
     and March 2 of each year, beginning on September 2, 2004, until March 2,
     2011.

          (iv)  The Securities shall be convertible in certain circumstances set
     forth in the Offering Memorandum into shares of Common Stock at an initial
     conversion price of $62.92 per share (equivalent to an initial conversion
     rate of 11.8821 shares of Common Stock per $1,000 principal amount at
     maturity of the Securities).

          (v)   On or after March 2, 2007, the Securities will be redeemable at
     the Company's option at the prices specified in the Offering Memorandum,
     plus accrued and unpaid interest and liquidated damages (if any) to the
     redemption date.

          (vi)  The Securities will mature on March 2, 2024.

                                    SCH B-1

<PAGE>

                                   SCHEDULE C

                LIST OF PERSONS SUBJECT TO THE LOCK-UP AGREEMENT

Andrew Ferrara

Edward Mehrer

Hugh Miller

Lee Schroeder

David Sharrock

Arthur Weaver

William Brown

John MacDonald

Leon Moulder

R. Bowerman

Michael Cullen

Nancy Evertz

K. Gustafson

Robert Johnson

Edward B. Rubenstein

Waneta C. Tuttle

Gilla Kaplan

Stephen Waters

                                    SCH C-1

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