Document:

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                                                                    EXHIBIT 10.1

                              IN-CHIP SYSTEMS, INC.
               2001 INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN
                                   AS AMENDED

        1. PURPOSE OF THE PLAN. Under this Incentive and Non-Statutory Stock
Option Plan (the "Plan") of IN-CHIP SYSTEMS, INC., a California corporation
("IN-CHIP"), options may be granted to eligible employees, directors and
consultants of IN-CHIP and its Affiliates to purchase shares of IN-CHIP's Common
stock. The Plan is designed to enable IN-CHIP and its Affiliates to attract,
retain and motivate their employees, directors and consultants by providing for
or increasing the proprietary interest of such persons in IN-CHIP. The Plan
provides for options which qualify as incentive stock options ("Incentive
Options") under section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), as well as options which do not so qualify ("Non-Statutory
Options").

        2. STOCK SUBJECT TO PLAN. The maximum number of shares of stock for
which options granted hereunder may be exercised shall be 8,000,000 shares of
Common Stock, subject to the adjustments provided in SECTION 6 and SECTION 12.
Shares of stock subject to the unexercised portions of any options granted under
this Plan which expire, terminate or are canceled may again be subject to
options under the Plan. When the exercise price for an option granted under this
Plan is paid with previously outstanding shares or with shares as to which the
option is being exercised, as permitted in SECTION 9, the total number of shares
of stock for which further options may be granted under this Plan shall be
irrevocably reduced by the total number of shares for which such option is thus
exercised, without regard to the number of shares received or retained by
IN-CHIP in connection with that exercise. An Incentive Option may be granted to
an eligible person under the Plan only if the aggregate Fair Market Value
(determined at the time the option is granted) of the stock with respect to
which incentive stock options (as defined in the Code) are exercisable for the
first time by such optionee during any calendar year under all incentive stock
option plans of IN-CHIP and its Affiliates does not exceed One Hundred Thousand
Dollars ($100,000). Should it be determined that an option granted under the
Plan exceeds such maximum for any reason, such option shall be considered a
Non-Statutory Option to the extent, but only to the extent, of such excess.

        3. ELIGIBLE OPTIONEES. The persons eligible to be considered for the
grant of options hereunder are any persons regularly employed by IN-CHIP or its
Affiliates on a full-time, salaried basis, for Incentive Options, as well as any
directors of or consultants to IN-CHIP or any of its Affiliates. A director
shall in no event be eligible for the benefits of the Plan unless and until such
director is expressly declared eligible to participate in the Plan by action of
the Board or the Committee, and only if, at any time

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                                                           IN-CHIP SYSTEMS, INC.
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discretion is exercised by the Board in the selection of a director as a person
to whom options may be granted, or in the determination of the number of shares
which may be covered by options granted to a director the Plan would nonetheless
comply with the requirements of Rule 16b-3 promulgated under the Exchange Act,
as from time to time in effect. The Board shall otherwise comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act, as from time to
time in effect. The preceding sentence of this SECTION 3 shall not apply prior
to the date of the first registration of an equity security under Section 12 of
the Exchange Act. If IN-CHIP is an S corporation within the meaning of section
1361 of the Code, or any successor provision (an "S corporation"), in addition
to any other eligibility requirements, an option may only be granted to and
exercised by a person who is a permitted shareholder of an S corporation without
causing a termination of the S election of IN-CHIP and who, when added to the
other shareholders of IN-CHIP, does not cause the total number of shareholders
of IN-CHIP to exceed the number permitted by Code section 1361(b)(1)(A), or any
successor provision.

        4. MINIMUM EXERCISE PRICE. The exercise price for each option granted
hereunder shall be not less than one hundred percent (100%) of the Fair Market
Value (as defined below) of the stock at the date of the grant of the option,
for Incentive Options, and not less than eighty-five percent (85%) of such Fair
Market Value, for Non-Statutory Options. Notwithstanding the foregoing, however,
no person shall be eligible for the grant of an Incentive Option under the Plan
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 425(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of IN-CHIP or any of its
Affiliates unless the exercise price of such option is at least one hundred ten
percent (110%) of the Fair Market Value of such stock at the date of grant and
the term of the option does not exceed five (5) years from the date of grant.

        5. NONTRANSFERABILITY. Any option granted under this Plan shall, by its
terms, be nontransferable by the optionee other than by will or the laws of
descent and distribution and shall be exercisable during the optionee's lifetime
only by the optionee or by the optionee's guardian or legal representative,
except that an option which is not intended to be an Incentive Option may, if
the instrument evidencing it so provides, also be transferable to members of the
optionee's Immediate Family (as defined below) to a partnership whose members
are only the optionee and/or members of the optionee's Immediate Family, or to a
trust for the benefit of only the Optionee and/or members of the optionee's
Immediate Family. No option may be transferred, however, to any transferee who
is not permitted to be a shareholder of an S corporation without causing the
termination of the S election by IN-CHIP or who, when added to the other
shareholders of the Company, would cause the total number of shareholders of
IN-CHIP to exceed the number permitted by Code section 1361(b)(1)(A), or any
successor provision.

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                                                           IN-CHIP SYSTEMS, INC.
                                                                          Page 3

        6. ADJUSTMENTS.

           6.1 GENERAL. If the outstanding shares of stock of the class then
subject to this Plan are increased or decreased, or are changed into or
exchanged for a different number or kind of shares or securities or other forms
of property (including cash) or rights, as a result of one or more
reorganizations, recapitalizations, spin-offs, stock splits, reverse stock
splits, stock dividends or the like, appropriate adjustments shall be made in
the number and/or kind of shares or securities or other forms of property
(including cash) or rights for which options may thereafter be granted under
this Plan and for which options then outstanding under this Plan may thereafter
be exercised. Any such adjustment in outstanding options shall be made without
changing the aggregate exercise price applicable to the unexercised portions of
such options.

           6.2 REORGANIZATIONS, ETC. In connection with any reorganization,
recapitalization, spin-off or other transaction in which the outstanding shares
of stock of the class then subject to options outstanding under this Plan are
changed into or exchanged for property (including cash), rights and/or
securities other than, or in addition to, stock of IN-CHIP's issue, an
outstanding option may, under this section, be adjusted to become exercisable
for either (a) the property (including cash), rights and/or securities
receivable in that transaction by a holder of the number and kind of outstanding
shares of stock subject to the option immediately prior to the transaction; or
(b) stock of IN-CHIP or of a successor employer corporation, or a parent or
subsidiary thereof, provided, that (i) such adjustment may preserve but may not
increase any amount by which the Fair Market Value of the stock subject to the
option exceeds the option exercise price, comparing such excess immediately
before and immediately after the transaction, and (ii) such adjustment may
preserve but may not reduce the ratio of the option exercise price to the Fair
Market Value of the stock subject to the option, comparing such ratio
immediately before and immediately after the transaction.

        7. OPTION TERM.

           7.1 MAXIMUM OPTION TERM. No option granted under this Plan may be
exercised in whole or in part more than ten (10) years after its date of grant.

           7.2 TERMINATION OF OPTION. An option shall terminate three (3) months
after termination of the optionee's employment or relationship as a consultant
or director with IN-CHIP or an Affiliate, unless (a) such termination is due to
such person's disability, in which case the option shall provide that it may be
exercised at any time for at least twelve (12) months following such termination
of employment or relationship as a consultant or director; or (b) the optionee
dies while an employee of or while serving as a consultant or director to
IN-CHIP or an Affiliate, or within not more than three (3) months after
termination of such relationship, in which case the option shall provide that it
may be exercised at any time for at least twelve (12) months following the death
of the

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                                                           IN-CHIP SYSTEMS, INC.
                                                                          Page 4

optionee by the person or persons to whom the optionee's rights under such
option pass by will or by the laws of descent and distribution; (c) such
termination is for cause, as defined below, in which case the option shall
terminate on the date of termination of the optionee's employment or
relationship as a consultant or director with IN-CHIP or an Affiliate; or (d)
the option by its terms specifies either (i) that it shall terminate sooner than
three (3) months after termination of the optionee's employment or relationship
as a consultant or director, or (ii) that it may be exercised more than three
(3) months after termination of such relationship with IN-CHIP or an Affiliate.
For purposes of this SECTION 7.2, an optionee shall be deemed to have been
terminated for "cause" if terminated by IN-CHIP as the result of any one or more
of the following acts of the optionee: (a) continuing material neglect of
optionee's duties not cured by optionee within thirty (30) days following
written notice thereof from IN-CHIP; (b) fraud, embezzlement or the commission
of any act relating to the business or affairs of IN-CHIP involving moral
turpitude; (c) material violation of any provision of any employment or
consulting agreement between IN-CHIP or any of its Affiliates and the optionee
not cured within thirty (30) days following written notice thereof from IN-CHIP
or its Affiliate; (d) breach of any material term of any proprietary
information, confidentiality and/or inventions assignment agreement between
IN-CHIP or one of its Affiliates and the optionee; (e) any grounds which
constitute a "for cause" termination under any written employment or consulting
agreement between IN-CHIP or its Affiliate and optionee; or (f) any other
grounds which have, as of the date of termination, been held under the
prevailing case law or stipulated by statute to constitute valid grounds for
termination of an employee or consultant for cause under applicable state law.
This SECTION 7.2 shall not be construed to extend the term of any option or to
permit anyone to exercise the option after expiration of its term, nor shall it
be construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of the
optionee's employment or relationship as a consultant or director.

        8. PLAN DURATION. Options may not be granted under this Plan more than
ten (10) years after the date of the adoption of this Plan, or of shareholder
approval thereof, whichever is earlier.

        9. PAYMENT. Payment for stock purchased upon any exercise of an option
granted under this Plan shall be made in full in cash (including payment by
check) concurrently with such exercise. Notwithstanding the foregoing, if and to
the extent the instrument evidencing the option so provides, if the stock of
IN-CHIP obtainable from the exercise of such option is Publicly Traded (as
defined below) and if IN-CHIP is not then prohibited from purchasing or
acquiring shares of such stock, such payment may be made in lieu of cash
concurrently with such exercise. The shares so delivered shall be valued on the
basis of the Fair Market Value of the stock on the date of exercise.

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                                                           IN-CHIP SYSTEMS, INC.
                                                                          Page 5

        10. ADMINISTRATION.

            10.1 GENERAL. The Plan shall be administered by IN-CHIP's Board of
Directors (the "Board") or, at the discretion of the Board, by a committee (the
"Committee") of not less than two (2) members of the Board, each of whom shall
not, at any time during his or her service as an administrator of the Plan, be
an officer or employee of IN-CHIP or of any Affiliate.

            10.2 INTERPRETATION AND CONSTRUCTION; ADOPTION OF REGULATIONS AND
FORMS. The interpretation and construction by the Committee of any term or
provision of the Plan or of any option granted under it, including without
limitation any determination of adjustments required pursuant to SECTION 6
hereof, shall be conclusive, unless otherwise determined by the Board in which
event such determination by the Board shall be conclusive, and such
interpretation and construction shall be binding upon all those who hold or are
eligible to receive options under the Plan, and all persons claiming under them.
The Board or the Committee may, from time to time, adopt rules and regulations
for carrying out this Plan and, subject to the provisions of this Plan, may
prescribe the form or forms of the instruments evidencing any option granted
under this Plan.

            10.3 DISCRETION OF BOARD OR COMMITTEE. Subject to the provisions of
this Plan, the Board or, by delegation from the Board, the Committee, shall have
full and final authority in its discretion to select the persons to be granted
options, to grant such options and to determine the number of shares to be
subject thereto, the exercise prices, the terms of exercise, expiration dates
and other pertinent provisions thereof.

        11. OTHER OPTION PROVISIONS.

            11.1 OTHER TERMS. Options granted under this Plan shall contain such
other terms and provisions which are not inconsistent with this Plan as the
Board or Committee may authorize, including but not limited to (a) vesting
schedules governing the exercisability of such options; (b) the right of IN-CHIP
to repurchase any option shares, and the price at which such option right of
repurchase may be exercised; (c) provisions for acceleration of such vesting
schedules in certain events; (d) arrangements whereby IN-CHIP may fulfill any
tax withholding obligations it may have in connection with the exercise of such
options; (e) provisions imposing restrictions upon the transferability of stock
acquired on exercise of such option, whether required by this Plan or applicable
securities laws or imposed for other reasons; and (f) provisions regarding the
termination or survival of any such option upon the optionee's death, retirement
or other terminations of employment and the extent, if any, to which any such
option may be exercised after such event. Shares shall, however, vest at a rate
of no less than twenty percent (20%) per full year of continuous employment by
the option holder from the date of the option grant.

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                                                           IN-CHIP SYSTEMS, INC.
                                                                          Page 6

            11.2 WRITTEN ASSURANCES FROM OPTIONEES. IN-CHIP may require any
optionee, or any person to whom an option is transferred in compliance with the
Plan, as a condition of exercising any such option, (a) to give written
assurances satisfactory to IN-CHIP as to the optionee's knowledge and experience
in financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to IN-CHIP who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative the merits and risks of
exercising the option; and (b) to give written assurances satisfactory to
IN-CHIP stating that such person is acquiring the stock subject to the option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (a) the issuance of the
shares upon the exercise of the option has been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"); or (b) as to any particular requirement, a
determination is made by counsel for IN-CHIP that such requirement need not be
met in the circumstances under the then applicable securities laws.

            11.3 TERMS FOR INCENTIVE OPTIONS. Incentive Options shall contain
the terms and provisions required of them by the Code.

        12. CORPORATION REORGANIZATIONS. Upon the dissolution or liquidation of
IN-CHIP, or upon a reorganization, merger or consolidation of IN-CHIP as a
result of which the outstanding securities of the class then subject to options
hereunder are changed into or exchanged for property (including cash), rights or
securities not of IN-CHIP's issue, or any combination thereof, or upon a sale of
substantially all the property of IN-CHIP to, or the acquisition of stock
representing more than eighty percent (80%) of the voting power of the stock of
IN-CHIP then outstanding by, another corporation or person, the Plan shall
terminate, and all options theretofore granted hereunder shall terminate, unless
provision be made in writing in connection with such transaction for the
continuance of the Plan and/or for the assumption of options theretofore
granted, or the substitution for such options of options covering the stock of a
successor employer corporation, or a parent or a subsidiary thereof, with
appropriate adjustments in accordance with SECTION 6 hereof as to the number and
kind of shares optioned and their exercise prices, in which event the Plan and
options theretofore granted shall continue in the manner and under the terms so
provided. The instrument evidencing any option also may provide for the
acceleration of otherwise unexercisable portions of the option (a) with
acceleration to become effective, if the option shall terminate pursuant to the
foregoing sentence, at such time prior to the consummation of the transaction
causing such termination as IN-CHIP shall designate; and (b) upon other
specified events or occurrences, such as involuntary termination of the option
holder's employment following certain changes in the control of IN-CHIP.

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                                                           IN-CHIP SYSTEMS, INC.
                                                                          Page 7

        13. LIMITATIONS OF RIGHTS OF PARTICIPANTS.

            13.1 INTEREST IN OPTION SHARES. A person to whom an option is
granted under this Plan shall not have any interest in the optioned shares or in
any dividends paid thereon, and shall not have any of the rights or privileges
of a shareholder with respect to such shares, until the certificates therefore
have been issued and delivered to him or her.

            13.2 ISSUANCE OF SHARES. No shares of stock issuable under the Plan
shall be issued and no certificate therefore delivered unless and until, in the
opinion of legal counsel for IN-CHIP, such securities may be issued and
delivered without causing IN-CHIP to be in violation of, or to incur any
liability under, any federal, state or other securities law, or any other
requirement of law or of any regulatory body having jurisdiction over IN-CHIP.

            13.3 ENGAGEMENT. The receipt of an option does not give the optionee
any right to continued employment by IN-CHIP or an Affiliate for any period, nor
shall the granting of the option or the issuance of shares on exercise thereof
give IN-CHIP or any Affiliate any right to the continued services of the
optionee for any period.

            13.4 GRANT OF OPTION. Nothing contained in this Plan shall
constitute the granting of an option hereunder, which shall occur only pursuant
to express authorization by the Board or the Committee.

        14. FINANCIAL ASSISTANCE. IN-CHIP is vested with authority under this
Plan to assist any person to whom an option is granted hereunder in the payment
of the purchase price payable on exercise of that option, by lending the amount
of such purchase price to such person on such terms and at such rates of
interest and upon such security (or unsecured) as shall have been authorized by
or under authority of the Board.

        15. AMENDMENT AND TERMINATION. The Board may alter, amend, suspend or
terminate this Plan, provided that no such action shall deprive an optionee,
without his or her consent, of any option granted to the optionee pursuant to
this Plan or of any of his or her rights under such option. Except as herein
provided, no such action of the Board, unless taken with the approval of the
shareholders of IN-CHIP, may (a) increase the maximum number of shares for which
options granted under this Plan may be exercised; (b) reduce the minimum
permissible exercise price; (c) extend the 10-year duration of this Plan set
forth herein; (d) alter the class of and/or others eligible to receive options
under the Plan; or (e) amend the Plan in any other manner which the Board, in
its discretion, determines should become effective only if approved by the
shareholders even though such shareholder approval is not expressly required by
this Plan.

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                                                          IN-CHIP SYSTEMS, INC.
                                                                          Page 8

        16. CERTAIN DEFINITIONS. The following terms shall have the following
meanings.

            16.1 FAIR MARKET VALUE. "Fair Market Value" of corporate stock
means:

                 16.1.1 PUBLICLY TRADED. If the stock is then Publicly Traded,
the closing price of stock of that class as of the day in question (or, if such
day is not a trading day in the principal securities market or markets for such
stock, on the nearest preceding trading day), as reported with respect to the
market (or the composite of markets, if more than one) in which shares of such
stock are then traded, or, if no such closing prices are reported, on the basis
of the mean between the high bid and low asked prices that day on the principal
market or quotation system on which shares of such stock are then quoted, or, if
not so quoted, as furnished by a professional securities dealer making a market
in such stock selected by the Board or the Committee.

                 16.1.2 NOT PUBLICLY TRADED. If the stock is then not Publicly
Traded, the price at which one could reasonably expect such stock to be sold in
an arm's length transaction, for cash, other than on an installment basis, to a
person not employed by, controlled by, in control of or under common control
with the issuer of such stock. Such Fair Market Value shall be that which has
currently or most recently been determined for this purpose by the Board, or at
the discretion of the Board by an independent appraiser or appraisers selected
by the Board, in either case giving due consideration to recent transactions
involving shares of such stock, if any, the issuer's net worth, prospective
earning power and dividend-paying capacity, the goodwill of the issuer's
business, the issuer's industry position and its management, that industry's
economic outlook, the values of securities of issuer's whose stock is Publicly
Traded and which are engaged in similar businesses, the effect of transfer
restrictions to which such stock may be subject under law and under the
applicable terms of any contract governing such stock, the absence of a public
market for such stock and such other matters as the Board or its appraiser or
appraisers deem pertinent. The determination by the Board or its appraiser or
appraisers of the Fair Market Value shall, if not unreasonable, be conclusive
and binding notwithstanding the possibility that other persons might make a
different, and also reasonable, determination. If the Fair Market Value to be
used was thus fixed more than six (6) months prior to the day as of which Fair
Market Value is being determined, it shall in any event be no less than the book
value of the stock being valued at the end of the most recent period for which
financial statements of the issuer are available.

            16.2 IMMEDIATE FAMILY. An individual's "Immediate Family" includes
only his or her spouse, parents or other ancestors, and children and other
direct descendants of that individual or of his or her spouse (including such
ancestors and descendants by adoption).

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                                                           IN-CHIP SYSTEMS, INC.
                                                                          Page 9

            16.3 PUBLICLY TRADED. Corporate stock is "Publicly Traded" if stock
of that class is listed or admitted to unlisted trading privileges on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc. ("NASD") or if sales or bid and offer quotations are reported for that
class of stock in the automated quotation system ("NASDAQ") operated by the
NASD.

            16.4 AFFILIATE. "Affiliate" means a parent or subsidiary corporation
of the Corporation in accordance with the definition of such terms as provided
in Sections 424(e) and 424(f) of the Code.

        17. MISCELLANEOUS.

            17.1 NUMBER AND GENDER. The masculine, feminine and neuter, wherever
used in the Plan or in any option granted hereunder, shall refer to either the
masculine, feminine or neuter; and, unless the context otherwise requires, the
singular shall include the plural and the plural the singular.

            17.2 GOVERNING LAW. This Plan and each option granted hereunder
shall be construed and administered in accordance with the laws of the State of
California without giving effect to principles relating to conflict of laws.

            17.3 HEADINGS AND LABELS. Article, section and subsection titles and
captions contained in this Plan and any option granted hereunder are inserted as
a matter of convenience and for reference and in no way define, extend or
describe the scope of the Plan, any option granted hereunder or the intent of
any of its or their provisions.<PAGE>
                                                                     EXHIBIT 4.1

                             NEOTHERAPEUTICS, INC.

                                     WARRANT

DATED:  JUNE 7, 2002                                              NUMBER NEOT___

        NeoTherapeutics, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for value received, ________ or its registered assigns
("Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company up to a total of ____ shares of Common Stock, $.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 $0.275
per share (as adjusted from time to time as provided in Section 7, the "Exercise
Price"), at any time and from time to time from and after the date hereof and
through and including June 7, 2007 (the "Expiration Date"), and subject to the
following terms and conditions:

        1. 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, and the Company shall not be affected by
notice to the contrary.

        2. Registration of Transfers and Exchanges.

               (a) This Warrant may not be sold, transferred, assigned pledged,
hypothecated or otherwise disposed, directly or indirectly, in whole or in part,
without the prior written consent of the Company. Any attempted sale, transfer,
assignment, pledge, hypothecation or other disposition of this Warrant, or any
portion thereof, shall be void and without any force or effect; provided,
however, that, subject to compliance with any applicable securities laws, the
Holder may transfer this Warrant, or any portion thereof, without the prior
written consent of the Company, if such transfer is to (i) a spouse, child,
grandchild, parent, sibling or custodian or trustee for the benefit of any such
relatives, or (ii) any shareholder or affiliate entity.

               (b) The Company shall register the transfer of any portion of
this Warrant in conformance with Section 2(a) in the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Company at the office specified in or pursuant to
Section 10. 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 of such transferee of all of the rights and obligations of
a holder of this Warrant.

               (c) This Warrant is exchangeable, upon the surrender hereof by
the Holder to the office of the Company specified in or pursuant to Section 10
for one or more New Warrants,

<PAGE>

evidencing in the aggregate the right to purchase the number of Warrant Shares
which may then be purchased hereunder.

        3. Duration and Exercise of Warrant.

               (a) This Warrant shall be exercisable by the then registered
Holder on any business day before 5:00 P.M., California time, at any time and
from time to time on or after the date hereof to and including the Expiration
Date. At 5:00 P.M., California time on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value.

               (b) Upon surrender of this Warrant, with the Form of Election to
Purchase attached hereto duly completed and signed, to the Company at its
address for notice set forth in Section 10 and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, in the manner provided hereunder, all as specified by the
Holder in the Form of Election to Purchase, the Company shall promptly (and in
any event, within four business days) 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. 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 Date of Exercise of this Warrant.

               A "Date of Exercise" means the date on which the Company shall
have received (i) this Warrant (or any New Warrant, as applicable), with the
Form of Election to Purchase attached hereto (or attached to such New Warrant)
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares so indicated by the holder hereof to be
purchased.

               (c) This Warrant shall be exercisable, either in its entirety or,
from time to time, for a portion of the number of Warrant Shares. If less than
all of the Warrant Shares which may be purchased under this Warrant are
exercised at any time, 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 for which no exercise has been evidenced by this Warrant.

               (d) Prior to the exercise of this Warrant, the Holder shall not
be entitled to any rights as a stockholder of the Company with respect to the
Warrant Shares, including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon or be notified of stockholder
meetings (except as otherwise set forth in Section 7(f) herein).

               (e) If by the tenth business day after a Date of Exercise the
Company fails to deliver the required number of Warrant Shares in the manner
required pursuant to Section 3(b), then the Holder will have the right to
rescind such exercise.

               (f) 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

                                       2
<PAGE>

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.

        4. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; 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. 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.

        5. 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 indemnity, if
requested, satisfactory to it. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.

        6. 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 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 actual contingent purchase
rights of persons other than the Holder. The Company covenants that all Warrant
Shares that shall be so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly authorized, validly issued and fully paid and nonassessable.

        7. 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 7. Upon each such adjustment of the Exercise
Price pursuant to this Section 7, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of Warrant Shares obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.

               (a) If the Company, at any time while this Warrant is
outstanding, (i) shall pay a stock dividend (except scheduled dividends paid on
outstanding preferred stock which contain a stated dividend rate) or otherwise
make a distribution or distributions on shares of its

                                       3
<PAGE>

Common Stock payable in shares of Common Stock, (ii) subdivide outstanding
shares of Common Stock into a larger number of shares, or (iii) combine
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
before such event and the denominator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding after such event. Any
adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision or combination, and shall apply to
successive subdivisions and combinations.

               (b) In case of any reclassification of the Common Stock, any
consolidation or merger of the Company with or into another person, the sale or
transfer of all or substantially all of the assets of the Company or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, consolidation, merger, sale,
transfer or share exchange, and the Holder shall be entitled upon such event to
receive such amount of securities or property equal to the amount of Warrant
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification, consolidation, merger, sale,
transfer or share exchange. The terms of any such consolidation, merger, sale,
transfer or share exchange shall include such terms so as to continue to give to
the Holder the right to receive the securities or property set forth in this
Section 7(b) upon any exercise following any such reclassification,
consolidation, merger, sale, transfer or share exchange.

               (c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to holders
of this Warrant) evidences of its indebtedness or assets or rights or warrants
to subscribe for or purchase any security (excluding those referred to in
Sections 7(a), and (b)), other than as part of its dissolution or liquidation or
the winding up of its affairs, then in each such case the Exercise Price shall
be determined by multiplying the Exercise Price in effect immediately prior to
the record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the fair market
value of a share of Common Stock determined as of the record date mentioned
above, and of which the numerator shall be the fair market value of a share of
Common Stock determined as of such record date less the fair market value at
such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Company's independent certified public accountants that regularly examines
the financial statements of the Company (an "Appraiser").

               (d) For the purposes of this Section 7, the following clauses
shall also be applicable:

                      (i)    Record Date. In case the Company shall take a
                             record of the holders of its Common Stock for the
                             purpose of entitling them (A) to receive a dividend
                             or other distribution payable in Common

                                       4
<PAGE>

                             Stock or in securities convertible or exchangeable
                             into shares of Common Stock, or (B) to subscribe
                             for or purchase Common Stock or securities
                             convertible or exchangeable into shares of Common
                             Stock, then such record date shall be deemed to be
                             the date of the issue or sale of the shares of
                             Common Stock deemed to have been issued or sold
                             upon the declaration of such dividend or the making
                             of such other distribution or the date of the
                             granting of such right of subscription or purchase,
                             as the case may be.

                      (ii)   Treasury Shares. 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) All calculations under this Section 7 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.

               (f)    If:

                      (i)    the Company shall declare a dividend (or any other
                             distribution) on its Common Stock; or

                      (ii)   the Company shall declare a special nonrecurring
                             cash dividend on or a redemption of its Common
                             Stock; or

                      (iii)  the Company shall authorize the granting to all
                             holders of the Common Stock rights or warrants to
                             subscribe for or purchase any shares of capital
                             stock of any class or of any rights; or

                      (iv)   the approval of any stockholders of the Company
                             shall be required in connection with any
                             reclassification of the Common Stock of the
                             Company, any consolidation or merger to which the
                             Company is a party, any sale or transfer of all or
                             substantially all of the assets of the Company, or
                             any compulsory share exchange whereby the Common
                             Stock is converted into other securities, cash or
                             property; or

                      (v)    the Company shall authorize the voluntary
                             dissolution, liquidation or winding up of the
                             affairs of the Company,

then the Company shall cause to be mailed to each Holder at their last addresses
as they shall appear upon the Warrant Register, at least 30 calendar days prior
to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to

                                       5
<PAGE>

become effective or close, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up; provided, however, that the failure to
mail such notice or any defect therein or in the mailing thereof shall not
affect the validity of the corporate action required to be specified in such
notice.

        8. Payment of Exercise Price. The Holder shall pay the Exercise Price in
immediately available funds by certified check or bank draft payable to the
order of the Company or by wire transfer to an account designated by the
Company.

        9. 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 number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 9, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.

        10. Notices. Any and all notices or other communications or deliveries
hereunder 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 telephone number specified in this
Section prior to 5:00 p.m. (California time) on a business day, (ii) the
business day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 5:00 p.m. (California time) on any date and earlier than
11:59 p.m. (California time) on such date, (iii) the business 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 addresses for such communications shall be: (i) if to the Company, to
157 Technology Drive, Irvine, CA 92618, Attention: Chief Financial Officer, or
to facsimile no. (949) 788-6706, or (ii) if to the Holder, to the Holder at the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section 10.

        11. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. The Company may appoint a new warrant agent upon notice to the Holder
in accordance with Section 10. Any corporation into which the Company may be
merged or any corporation resulting from any consolidation to which the Company
shall be a party or any corporation to which the Company transfers substantially
all of its corporate assets 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.

                                       6
<PAGE>

        12. Miscellaneous.

               (a) This Warrant shall be binding on and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.

               (b) Subject to Section 12(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.

               (c) This Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of California without regard
to the principles of conflicts of law thereof. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in Orange County, California, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, 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, or that such suit, action or proceeding is
improper. Each of the Company and the Holder hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by receiving a copy thereof sent to it at the address in effect
for notices to it under this instrument and in the manner set forth in Section
10 above, 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.

               (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.

                                       7
<PAGE>

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

                                       NEOTHERAPEUTICS, INC.

                                       By:    /s/ Samuel Gulko
                                             -----------------------------------

                                       Name:  Samuel Gulko
                                             -----------------------------------

                                       Title: Sen. VP Finance, CFO, Sec & Treas.
                                             -----------------------------------

                                       8
<PAGE>

                          FORM OF ELECTION TO PURCHASE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)

To NeoTherapeutics, Inc.:

        In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase __________
shares of Common Stock ("Common Stock"), $.001 par value per share, of
NeoTherapeutics, Inc. encloses herewith $__________ in cash, certified or
official bank check or checks, which sum represents the aggregate Exercise Price
(as defined in the Warrant) for the number of shares of Common Stock to which
this Form of Election to Purchase relates, together with any applicable taxes
payable by the undersigned pursuant to the Warrant.

        The undersigned requests that certificates for the shares of Common
Stock issuable upon this exercise be issued in the name of

                                             PLEASE INSERT SOCIAL SECURITY OR
                                             TAX IDENTIFICATION NUMBER

                                             -----------------------------------

--------------------------------------------------------------------------------
                         (Please print name and address)

        If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise evidenced
hereby be issued in the name of and delivered to:

-------------------------------------------------------------------------------
                         (Please print name and address)

-------------------------------------------------------------------------------

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)

<PAGE>

                               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 Warrant enclosed with
this Form of Assignment to purchase __________ shares of Common Stock of
NeoTherapeutics, Inc. to which the Warrant relates and appoints
____________________ attorney to transfer said right on the books of
NeoTherapeutics, 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:

----------------------------------------

                                      -1-

<PAGE>

                                   Schedule I

<TABLE>
<CAPTION>
  -----------------------------------------------------------------------
   Warrant Number               Purchaser               Warrant Shares
  -----------------------------------------------------------------------
  <S>                <C>                                <C>
        060          Stonestreet Limited Partnership       193,548
  -----------------------------------------------------------------------
        061               Brighton Capital Ltd.             2,250
  -----------------------------------------------------------------------
        062                Atwood Capital Ltd.              2,250
  -----------------------------------------------------------------------
        063           BNC Bach International, Ltd.         400,000
  -----------------------------------------------------------------------
</TABLE>

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