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                                                                     EXHIBIT 4.1

                                     AVIRON

                     1999 NON-OFFICER EQUITY INCENTIVE PLAN

                      ADOPTED EFFECTIVE SEPTEMBER 21, 1999

                 AMENDED BY THE BOARD OF DIRECTORS JULY 26, 2000

                AMENDED BY THE BOARD OF DIRECTORS APRIL 25, 2001

              AMENDED BY THE BOARD OF DIRECTORS SEPTEMBER 24, 2001

1.      PURPOSES.

        (a) The purpose of the Plan is to provide a means by which selected
Employees of and Consultants to the Company and its Affiliates may be given an
opportunity to benefit from increases in value of the stock of the Company
through the granting of (i) nonstatutory Stock Options, (ii) stock bonuses,
(iii) rights to purchase restricted stock, and (iv) stock appreciation rights,
all as defined below. The Plan does not extend eligibility to an Employee
considered to be an Officer of the Company or to a Director of the Company.

        (b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees of or Consultants to the Company, to secure and
retain the services of new Employees and Consultants, and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

        (c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) nonstatutory Stock Options granted pursuant to Section 6 hereof,
(ii) stock bonuses or rights to purchase restricted stock granted pursuant to
Section 7 hereof, or (iii) stock appreciation rights granted pursuant to Section
8 hereof. All Options shall be separately designated in such form as issued
pursuant to Section 6, and a separate certificate or certificates will be issued
for shares purchased on exercise of each type of Option.

2.      DEFINITIONS.

        (a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.

        (b) "BOARD" means the Board of Directors of the Company.

        (c) "CODE" means the Internal Revenue Code of 1986, as amended.

        (d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.

                                       1.
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        (e) "COMPANY" means Aviron, a Delaware corporation.

        (f) "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT RIGHT" means a
right granted pursuant to subsection 8(b)(2) of the Plan.

        (g) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.

        (h) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means the
employment or relationship as a Consultant is not interrupted or terminated. The
Board, in its sole discretion, may determine whether Continuous Status as an
Employee or Consultant shall be considered interrupted in the case of: (i) any
leave of absence approved by the Board, including sick leave, military leave, or
any other personal leave; or (ii) transfers between locations of the Company or
between the Company, Affiliates or their successors.

        (i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

        (j) "DIRECTOR" means a member of the Board.

        (k) "EMPLOYEE" means any person, excluding Non-Employee Directors and
Officers, employed by the Company or any Affiliate of the Company.

        (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

        (m) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company determined as follows:

                (1) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market of The Nasdaq Stock Market, the Fair Market Value of a share of common
stock shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such system or exchange (or the exchange with
the greatest volume of trading in common stock) on the last market trading day
prior to the day of determination, as reported in the Wall Street Journal or
such other source as the Board deems reliable;

                (2) If the common stock is quoted on The Nasdaq Stock Market
(but not on the National Market thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a share of common stock shall be the mean between the bid and asked prices for
the common stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Board deems reliable;

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                (3) In the absence of an established market for the common
stock, the Fair Market Value shall be determined in good faith by the Board.

        (n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

        (o) "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT" means
a right granted pursuant to subsection 8(b)(3) of the Plan.

        (p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or a subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or a
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any transaction as to which
disclosure would be required under Item 404(a) of Regulation S-K and is not
engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.

        (q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

        (r) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

        (s) "OPTION" means a stock option granted pursuant to the Plan.

        (t) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.

        (u) "OPTIONEE" means a person who holds an outstanding Option.

        (v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

        (w) "PLAN" means this Aviron 1999 Non-Officer Equity Incentive Plan.

        (x) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.

                                       3.
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        (y) "STOCK APPRECIATION RIGHT" means any of the various types of rights
which may be granted under Section 8 of the Plan.

        (z) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus, any right to purchase restricted stock, and any Stock
Appreciation Right.

        (aa) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

        (bb) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a right
granted pursuant to subsection 8(b)(1) of the Plan.

3.      ADMINISTRATION.

        (a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
Any interpretation of the Plan by the Board and any decision by the Board under
the Plan shall be final and binding on all persons.

        (b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:

                (1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Option, a stock bonus, a
right to purchase restricted stock, a Stock Appreciation Right, or a combination
of the foregoing; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive stock pursuant to a Stock Award; whether a person shall be permitted to
receive stock upon exercise of an Independent Stock Appreciation Right; and the
number of shares with respect to which a Stock Award shall be granted to each
such person.

                (2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

                (3) To amend the Plan or a Stock Award as provided in Section
14.

                (4) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

        (c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee may be, in the discretion of the Board, Non-Employee
Directors and may also be, in the discretion of the Board, Outside Directors. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the

                                       4.
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Board (and references in this Plan to the Board shall thereafter be to the
Committee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Notwithstanding anything in this Section 3 to the
contrary, at any time the Board or the Committee may delegate to a committee of
one or more members of the Board the authority to grant Stock Awards to eligible
persons who (1) are not then subject to Section 16 of the Exchange Act and/or
(2) are either (i) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Stock Award,
or (ii) not persons with respect to whom the Company wishes to avoid the
application of Section 162(m) of the Code.

4.      SHARES SUBJECT TO THE PLAN.

        (a) Subject to the provisions of Section 13 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate of four million two hundred thousand (4,200,000)
shares of the Company's common stock. If any Stock Award shall for any reason
expire or otherwise terminate, in whole or in part, without having been
exercised in full, the stock not acquired under such Stock Award shall revert to
and again become available for issuance under the Plan. Shares subject to Stock
Appreciation Rights exercised in accordance with Section 8 of the Plan shall not
be available for subsequent issuance under the Plan.

        (b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

5.      ELIGIBILITY.

        (a) Stock Appreciation Rights may be granted only to Non-Officer
Employees. Stock Awards other than Stock Appreciation Rights appurtenant thereto
may be granted to Non-Officer Employees or Consultants.

        (b) For purposes of this Plan, Officers and Directors shall not be
eligible to receive any Stock Awards under the Plan.

        (c) Subject to the provisions of Section 13 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options and Stock
Appreciation Rights covering more than three hundred thousand (300,000) shares
of the Company's common stock in any calendar year.

        (d) CONSULTANTS.

                (i) A Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act ("Form S-8") is not available to register either the offer or the
sale of the Company's securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does

                                       5.
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not require registration under the Securities Act in order to comply with the
requirements of the Securities Act, if applicable, and (ii) that such grant
complies with the securities laws of all other relevant jurisdictions.

                (ii) As of April 7, 1999 Form S-8 generally is available to
consultants and advisors only if (i) they are natural persons; (ii) they provide
bona fide services to the issuer, its parents, its majority-owned subsidiaries
or majority-owned subsidiaries of the issuer's parent; and (iii) the services
are not in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.

6.      OPTION PROVISIONS.

        Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

        (a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

        (b) PRICE. The exercise price of each Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted.

        (c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other common stock of the
Company) with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d), or (C) in any other form of legal
consideration that may be acceptable to the Board.

        In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement. Further, the "par value" of any stock subject to
an Option shall not be payable pursuant to a deferred payment arrangement.

        (d) TRANSFERABILITY. nonstatutory Stock Options shall not be
transferable except by will, by the laws of descent and distribution or pursuant
to a domestic relations order satisfying the requirements of Rule 16b-3 and any
administrative interpretations or pronouncements thereunder (a "DRO"), and shall
be exercisable during the lifetime of the person to whom the Option is granted
only by such person or any transferee pursuant to a DRO. Notwithstanding the
foregoing, the person to whom the Option is granted may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionee, shall thereafter be
entitled to exercise the Option.

                                       6.
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        (e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.

        (f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS AN EMPLOYEE OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee or
Consultant terminates (other than upon the Optionee's death or disability), the
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it at the date of termination) but only within such period
of time ending on the earlier of (i) the date three (3) months after the
termination of the Optionee's Continuous Status as an Employee or Consultant (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination, the Optionee does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.

        An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Status as an
Employee or Consultant (other than upon the Optionee's death or disability)
would result in liability under Section 16(b) of the Exchange Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of the
Option set forth in the Option Agreement, or (ii) the tenth (10th) day after the
last date on which such exercise would result in such liability under Section
16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may also
provide that if the exercise of the Option following the termination of the
Optionee's Continuous Status as an Employee or Consultant (other than upon the
Optionee's death or disability) would be prohibited at any time solely because
the issuance of shares would violate the registration requirements under the
Act, then the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in the first paragraph of this subsection 6(f), or
(ii) the expiration of a period of three (3) months after the termination of the
Optionee's Continuous Status as an Employee or Consultant during which the
exercise of the Option would not be in violation of such registration
requirements.

        (g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status
as an Employee or Consultant terminates as a result of the Optionee's
disability, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or

                                       7.
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her Option within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.

        (h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option after the termination of, the
Optionee's Continuous Status as an Employee or Consultant, the Option may be
exercised (to the extent the Optionee was entitled to exercise the Option at the
date of death) by the Optionee's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the option upon the Optionee's death pursuant to subsection 6(d), but
only within the period ending on the earlier of (i) the date twelve (12) months
following the date of death (or such longer or shorter period specified in the
Option Agreement), or (ii) the expiration of the term of such Option as set
forth in the Option Agreement. If, at the time of death, the Optionee was not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after death, the Option is not exercised within
the time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under the
Plan.

        (i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee or Consultant to
exercise the Option as to any part or all of the shares subject to the Option
prior to the full vesting of the Option. Any unvested shares so purchased may be
subject to a repurchase right in favor of the Company or to any other
restriction the Board determines to be appropriate.

        (j) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the Board
or Committee shall have the authority (but not an obligation) to include as part
of any Option Agreement a provision entitling the Optionee to a further Option
(a "Re-Load Option") in the event the Optionee exercises the Option evidenced by
the Option agreement, in whole or in part, by surrendering other shares of
common stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Any such Re-Load Option (i) shall be for a number of shares
equal to the number of shares surrendered as part or all of the exercise price
of such Option; (ii) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; and (iii) shall have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the common stock subject to the
Re-Load Option on the date of exercise of the original Option.

        Any such Re-Load Option shall be a nonstatutory Stock Option. Any such
Re-Load Option shall be subject to the availability of sufficient shares under
subsection 4(a) and shall be subject to such other terms and conditions as the
Board or Committee may determine which are not inconsistent with the express
provisions of the Plan regarding the terms of Options.

7.      TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.

        Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate. The terms and conditions of stock bonus or restricted
stock purchase agreements may change from

                                       8.
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time to time, and the terms and conditions of separate agreements need not be
identical, but each stock bonus or restricted stock purchase agreement shall
include (through incorporation of provisions hereof by reference in the
agreement or otherwise) the substance of each of the following provisions as
appropriate:

        (a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement but in no event shall the purchase
price be less than eighty-five percent (85%) of the stock's Fair Market Value on
the date such award is made. Notwithstanding the foregoing, the Board or the
Committee may determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company for its benefit.

        (b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws of descent
and distribution or pursuant to a qualified domestic relations order satisfying
the requirements of Rule 16b-3 and any administrative interpretations or
pronouncements thereunder, so long as stock awarded under such agreement remains
subject to the terms of the agreement.

        (c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment or other arrangement with the person to whom the stock is sold;
or (iii) in any other form of legal consideration that may be acceptable to the
Board or the Committee in its discretion. Notwithstanding the foregoing, the
Board or the Committee to which administration of the Plan has been delegated
may award stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.

        (d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.

        (e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS AN EMPLOYEE OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee or
Consultant terminates, the Company may repurchase or otherwise reacquire any or
all of the shares of stock held by that person which have not vested as of the
date of termination under the terms of the stock bonus or restricted stock
purchase agreement between the Company and such person.

8.      STOCK APPRECIATION RIGHTS.

        (a) The Board or Committee shall have full power and authority,
exercisable in its sole discretion, to grant Stock Appreciation Rights under the
Plan to Employees and Consultants. To exercise any outstanding Stock
Appreciation Right, the holder must provide written notice of exercise to the
Company in compliance with the provisions of the Stock Award Agreement
evidencing such right. If a Stock Appreciation Right is granted to an individual
who is at the time subject to Section 16(b) of the Exchange Act (a "Section
16(b) Insider"), the Stock Award Agreement of grant shall incorporate all the
terms and conditions at the time necessary to assure

                                       9.
<PAGE>

that the subsequent exercise of such right shall qualify for the safe-harbor
exemption from short-swing profit liability provided by Rule 16b-3 promulgated
under the Exchange Act (or any successor rule or regulation). Except as provided
in subsection 5(d), no limitation shall exist on the aggregate amount of cash
payments the Company may make under the Plan in connection with the exercise of
Stock Appreciation Rights.

        (b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:

                (1) TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation
Rights will be granted appurtenant to an Option, and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains.
Tandem Stock Appreciation Rights will require the holder to elect between the
exercise of the underlying Option for shares of stock and the surrender, in
whole or in part, of such Option for an appreciation distribution. The
appreciation distribution payable on the exercised Tandem Right shall be in cash
(or, if so provided, in an equivalent number of shares of stock based on Fair
Market Value on the date of the Option surrender) in an amount up to the excess
of (A) the Fair Market Value (on the date of the Option surrender) of the number
of shares of stock covered by that portion of the surrendered Option in which
the Optionee is vested over (B) the aggregate exercise price payable for such
vested shares.

                (2) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights will
be granted appurtenant to an Option and may apply to all or any portion of the
shares of stock subject to the underlying Option and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains. A
Concurrent Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular shares of stock to
which the Concurrent Right pertains. The appreciation distribution payable on an
exercised Concurrent Right shall be in cash (or, if so provided, in an
equivalent number of shares of stock based on Fair Market Value on the date of
the exercise of the Concurrent Right) in an amount equal to such portion as
shall be determined by the Board or the Committee at the time of the grant of
the excess of (A) the aggregate Fair Market Value (on the date of the exercise
of the Concurrent Right) of the vested shares of stock purchased under the
underlying Option which have Concurrent Rights appurtenant to them over (B) the
aggregate exercise price paid for such shares.

                (3) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights
will be granted independently of any Option and shall, except as specifically
set forth in this Section 8, be subject to the same terms and conditions
applicable to Options as set forth in Section 6. They shall be denominated in
share equivalents. The appreciation distribution payable on the exercised
Independent Right shall be not greater than an amount equal to the excess of (A)
the aggregate Fair Market Value (on the date of the exercise of the Independent
Right) of a number of shares of Company stock equal to the number of share
equivalents in which the holder is vested under such Independent Right, and with
respect to which the holder is exercising the Independent Right on such date,
over (B) the aggregate Fair Market Value (on the date of the grant of the
Independent Right) of such number of shares of Company stock. The appreciation
distribution payable on the exercised Independent Right shall be in cash or, if
so provided, in an

                                      10.
<PAGE>

equivalent number of shares of stock based on Fair Market Value on the date of
the exercise of the Independent Right.

9.      CANCELLATION AND RE-GRANT OF OPTIONS.

        (a) The Board or the Committee shall have the authority to effect, at
any time and from time to time, (i) the repricing of any outstanding Options
and/or any Stock Appreciation Rights under the Plan and/or (ii) with the consent
of any adversely affected holders of Options and/or Stock Appreciation Rights,
the cancellation of any outstanding Options and/or any Stock Appreciation Rights
under the Plan and the grant in substitution therefor of new Options and/or
Stock Appreciation Rights under the Plan covering the same or different numbers
of shares of stock, but having an exercise price per share not less than
eighty-five percent (85%) of the Fair Market Value for a nonstatutory Stock
Option. Notwithstanding the foregoing, the Board or the Committee may grant an
Option and/or Stock Appreciation Right with an exercise price lower than that
set forth above if such Option and/or Stock Appreciation Right is granted as
part of a transaction to which section 424(a) of the Code applies.

        (b) Shares subject to an Option or Stock Appreciation Right canceled
under this Section 9 shall continue to be counted against the maximum award of
Options and Stock Appreciation Rights permitted to be granted pursuant to
subsection 5(d) of the Plan. The repricing of an Option and/or Stock
Appreciation Right under this Section 9, resulting in a reduction of the
exercise price, shall be deemed to be a cancellation of the original Option
and/or Stock Appreciation Right and the grant of a substitute Option and/or
Stock Appreciation Right; in the event of such repricing, both the original and
the substituted Options and Stock Appreciation Rights shall be counted against
the maximum awards of Options and Stock Appreciation Rights permitted to be
granted pursuant to subsection 5(d) of the Plan.

10.     COVENANTS OF THE COMPANY.

        (a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.

        (b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act of 1933, as amended (the "Securities Act") either the Plan,
any Stock Award or any stock issued or issuable pursuant to any such Stock
Award. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such Stock Awards unless and until such authority is obtained.

11.     USE OF PROCEEDS FROM STOCK.

        Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.

                                      11.
<PAGE>

12.     MISCELLANEOUS.

        (a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest pursuant to subsection 6(e), 7(d) or 8(b),
notwithstanding the provisions in the Stock Award stating the time at which it
may first be exercised or the time during which it will vest.

        (b) Neither an Employee, a Consultant nor any person to whom a Stock
Award is transferred in accordance with the Plan shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such Stock Award unless and until such person has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.

        (c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or any
Affiliate or to continue acting as a Consultant or shall affect the right of the
Company or any Affiliate to terminate the employment of any Employee with or
without notice and with or without cause, or the right to terminate the
relationship of any Consultant pursuant to the terms of such Consultant's
agreement with the Company or Affiliate.

        (d) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred in accordance with the Plan,
as a condition of exercising or acquiring stock under any Stock Award, (1) to
give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company 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 Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.

        (e) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the common stock otherwise issuable to the

                                      12.
<PAGE>

participant as a result of the exercise or acquisition of stock under the Stock
Award; or (3) delivering to the Company owned and unencumbered shares of the
common stock of the Company.

13.     ADJUSTMENTS UPON CHANGES IN STOCK.

        (a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan pursuant to subsection 4(a) and the maximum
number of shares subject to award to any person during any calendar year
pursuant to subsection 5(d), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of shares and price per share
of stock subject to such outstanding Stock Awards. Such adjustments shall be
made by the Board or the Committee, the determination of which shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company".)

        (b) In the event of: (1) a dissolution, liquidation or sale of all or
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; or (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, then to the extent permitted by applicable law: (i) any
surviving corporation or an Affiliate of such surviving corporation shall assume
any Stock Awards outstanding under the Plan or shall substitute similar Stock
Awards for those outstanding under the Plan, or (ii) such Stock Awards shall
continue in full force and effect. In the event any surviving corporation and
its Affiliates refuse to assume or continue such Stock Awards, or to substitute
similar Stock Awards for those outstanding under the Plan, then, with respect to
Stock Awards held by persons then performing services as Employees or
Consultants, the time during which such Stock Awards may be exercised shall be
accelerated and the Stock Awards terminated if not exercised prior to such
event.

14.     AMENDMENT OF THE PLAN AND STOCK AWARDS.

        (a) The Board at any time, and from time to time, may amend the Plan.

        (b) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.

        (c) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and obligations
under any Stock Award

                                      13.
<PAGE>

shall not be impaired by any such amendment unless (i) the Company requests the
consent of the person to whom the Stock Award was granted and (ii) such person
consents in writing.

15.     TERMINATION OR SUSPENSION OF THE PLAN.

        (a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate ten (10) years from the date the
Plan is adopted by the Board. No Stock Awards may be granted under the Plan
while the Plan is suspended or after it is terminated.

        (b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Stock Award was granted.

16.     EFFECTIVE DATE OF PLAN.

        The Plan shall become effective as determined by the Board.

                                      14.EXHIBIT 10.1

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

                              AMENDED AND RESTATED

                         EQUITY LINE FINANCING AGREEMENT

                                     between

                               BIOPURE CORPoration

                                       and

                                societe generale

                                   dated as of

                                October 23, 2001

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

<PAGE>

                         EQUITY LINE FINANCING AGREEMENT

     AMENDED AND RESTATED EQUITY LINE FINANCING AGREEMENT (this "Agreement"),
dated as of October 23, 2001, amending and restating this Agreement as
originally entered into as of June 21, 2001, between BIOPURE CORPORATION, a
Delaware corporation (the "Company"), and SOCIETE GENERALE, a bank organized
under the laws of France (the "Investor").

                              W I T N E S S E T H:

     WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company may issue and sell to the Investor from
time to time as provided herein, and the Investor shall purchase from the
Company, shares of Common Stock for an aggregate purchase price up to
$75,000,000 on a private placement basis pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933;

     WHEREAS, the Investor shall be entitled to resell shares of Common Stock
acquired hereunder pursuant to a resale registration statement established by
the Company pursuant to the terms of the Registration Rights Agreement between
the Company and the Investor which shall be declared effective by the Commission
prior to the delivery of a Draw Down Notice hereunder; and

     WHEREAS, the parties originally entered into the predecessor Agreement on
June 21, 2001 and have agreed to amend and restate the predecessor Agreement
solely for the purpose of modifying various provisions relating to the
transactions contemplated by the Agreement but not for purposes of changing the
date as of which the representations, warranties, covenants or other agreements
of the parties were made to other than June 21, 2001 or otherwise modifying the
occurrence of the Closing on the Closing Date of June 21, 2001 or similar
matters.

     NOW THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

     SECTION 1.01. Certain Definitions. For purposes of this Agreement,
capitalized terms used herein and not otherwise defined shall have the following
respective meanings:

     "Affiliate" of a Person means another Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first- mentioned Person. The term "control" (including
the terms "controlling," "controlled by" and "under common control with") means
the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

<PAGE>

     "Average Daily Trading Volume" with respect to any Draw Down effected by
the Company shall mean the average daily volume of shares of Common Stock traded
on the Principal Market as reported by Bloomberg Financial during the five (5)
consecutive Trading Day period ending on the Trading Day immediately preceding
the date on which a Draw Down Notice is delivered pursuant to Section 2.03(b)
hereof.

     "Bloomberg Financial" shall mean Bloomberg Financial Markets or an
equivalent reliable reporting service acceptable to and hereafter designated by
the Investor.

     "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock, including each class of common stock and preferred stock, of such Person.

     "Closing" shall have the meaning set forth in Section 2.02(a).

     "Closing Date" shall mean the date on which the Closing occurs.

     "Comfort Letter" shall mean a letter from Ernst & Young LLP or another "Big
Five" independent public accounting firm, in form and substance satisfactory to
the Investor, addressed to the Investor and dated as of the Effective Date or
the filing date of any Current Report on Form 8-K incorporated by reference into
the Registration Statement, if such report contains substantial financial
information, (i) confirming that they are independent auditors within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and (ii) stating, as of the Effective Date or
filing date, as applicable, the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with registered
public offerings included in the Registration Statement on Form 8-K, as
applicable.

     "Commission" means the United States Securities and Exchange Commission.

     "Commitment Period" shall mean the period commencing on the Effective Date
and expiring on the earliest to occur of (x) the date on which the Investor
shall have purchased Draw Down Shares pursuant to this Agreement for an
aggregate Purchase Price of $75,000,000, (y) the date this Agreement is
terminated pursuant to Article VII and (z) the date occurring twenty-four (24)
months from June 21, 2001.

     "Common Stock" shall mean the Company's Class A Common Stock, $.01 par
value per share.

     "Common Shares" shall mean shares of the Company's Common Stock issued or
issuable pursuant to this Agreement.

     "Draw Down" shall mean each occasion the Company elects to exercise its
right to deliver a Draw Down Notice requiring the Investor to purchase the
Common Shares as specified in such Draw Down Notice, subject to the terms and
conditions of this Agreement.

     "Draw Down Cancellation" shall have the meaning set forth in Section
6.04(a).

                                       2

<PAGE>

     "Draw Down Cancellation Date" shall have the meaning set forth in Section
6.04(a).

     "Draw Down Cancellation Notice" shall have the meaning set forth in Section
6.04(a).

     "Draw Down Date" shall mean any Trading Day during the Commitment Period
that a Draw Down Notice to sell Common Stock to the Investor is deemed delivered
pursuant to Section 2.03(b) hereof.

     "Draw Down Notice" shall mean a written notice to the Investor delivered in
accordance with this Agreement in the form attached hereto as Exhibit A setting
forth the Investment Amount that the Company intends to sell to the Investor
pursuant to such Draw Down and the Floor Price applicable to such Draw Down.

     "Draw Down Shares" shall mean all shares of Common Stock issued or issuable
pursuant to a Draw Down that has occurred or may occur in accordance with the
terms and conditions of this Agreement.

     "DWAC Transfer" shall have the meaning set forth in Section 2.04.

     "Effective Date" shall mean the date on which the Commission first declares
effective a Registration Statement registering the resale of the Registrable
Securities as set forth in Section 6.02(a).

     "Exchange Act" means the Securities Exchange Act of 1934.

     "Floor Price" shall mean the lowest VWAP (before taking into account any
discount used to calculate the Purchase Price hereunder) at which the Company
will sell its Common Stock as specified in the Draw Down Notice delivered in
connection with any Draw Down effected pursuant to this Agreement, but in no
event shall the Floor Price be less than $13.00.

     "Governmental Authority" means any federal or state government or political
subdivision thereof and any agency or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

     "Investment Amount" shall mean the aggregate dollar amount (within the
range specified in Section 2.03) of any Draw Down Shares to be purchased by the
Investor with respect to any Draw Down effected by the Company in accordance
with Section 2.03 hereof.

     "Irrevocable Transfer Agent Instructions" shall have the meaning set forth
in Article IX.

     "Material Adverse Effect" has the meaning set forth in Section 3.01.

     "Maximum Draw Down Amount" with respect to any Draw Down effected by the
Company in accordance with Section 2.03 hereof shall mean the lesser of (i)
$3,000,000 (subject

                                       3

<PAGE>

to increase to (x) $3,750,000 in the event the average VWAP for the Common Stock
for each of the five Trading Days immediately preceding the applicable Draw Down
Date, multiplied by the Average Daily Trading Volume of the Common Stock
applicable with respect to such Draw Down Date shall exceed $6,250,000 and (y)
$4,500,000 in the event the average VWAP for the Common Stock for each of the
five Trading Days immediately preceding the applicable Draw Down Date,
multiplied by the Average Daily Trading Volume of the Common Stock applicable
with respect to such Draw Down Date shall exceed $7,500,000) and (ii) 15% of the
product of (x) the average VWAP for the Common Stock for each of the five
Trading Days immediately preceding the applicable Draw Down Date, multiplied by
(y) the Average Daily Trading Volume of the Common Stock applicable with respect
to such Draw Down Date, multiplied by (z) 5.

     "Maximum Share Amount" shall have the meaning set forth in Section 2.01(c).

     "Minimum Draw Down Amount" shall mean $500,000.

     "Periodic Accountant's Report" shall mean a review report from Ernst &
Young or another "Big Five" independent public accounting firm, delivered to the
Investor within 45 days of the end of each of the Company's fiscal quarters
(other than the fourth fiscal quarter) in conjunction with such accounting
firm's issuance to the Company of a SAS No. 71 review report with respect to
each of the Company's quarterly financial statements.

     "Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind.

     "Principal Market" shall mean the Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange, whichever is at the time the
principal trading exchange or market for the Common Stock.

     "Prospectus Supplement" shall have the meaning set forth in Section
6.02(o).

     "Purchase Price" with respect to each Trading Day during a Valuation Period
shall mean 97% of the VWAP for such Trading Day.

     "Registrable Securities" shall mean the Draw Down Shares, and any other
shares of capital stock issued or issuable as a dividend on or with respect to
the Draw Down Shares and until (i) the Registration Statement has been declared
effective by the Commission and all such shares have been disposed of pursuant
to the Registration Statement, (ii) all such shares have been sold under
circumstances under which all of the applicable conditions of Rule 144 (or any
similar provision then in force) are met, (iii) all such shares have been
otherwise transferred to holders who may trade such shares without restriction
under the Securities Act, and the Company shall have delivered a new certificate
or other evidence of ownership for such securities not bearing a restrictive
legend, (iv) such time as, in the opinion of counsel to the Investor, all such
shares may be sold without any time, volume or manner limitations pursuant to
Rule 144(k) (or any similar provision then in effect) under the Securities Act
or (v) any combination of the foregoing relating to all such shares.

                                       4

<PAGE>

     "Registration Rights Agreement" shall mean the agreement regarding the
filing of the Registration Statement for the resale of the Registrable
Securities entered into between the Company and the Investor as of the Closing
Date.

     "Registration Statement" shall mean a registration statement on such form
promulgated by the Commission for which the Company then qualifies and which
counsel for the Company shall deem appropriate and which form shall be available
for the resale of the Registrable Securities to be registered thereunder in
accordance with the provisions of this Agreement and the Registration Rights
Agreement, and in accordance with the intended method of distribution of such
securities, for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.

     "SEC Reports" means the Company's Annual Report on Form 10-K for the year
ended October 31, 2000 and the Company's Quarterly Reports on Form 10-Q for the
quarters ended January 31, 2001 and April 30, 2001.

     "Securities Act" means the Securities Act of 1933.

     "Settlement Date" shall mean the sixth Trading Day following the Draw Down
Date.

     "Trading Day" shall mean any day during which the Principal Market shall be
open for trading.

     "Transaction Documents" means, collectively, this Agreement and the
Registration Rights Agreement.

     "Valuation Period" shall mean the period of five (5) consecutive Trading
Days following the Trading Day on which a Draw Down Notice is delivered or
deemed to be delivered pursuant to Section 2.03(b) hereof.

     "VWAP" for any given Trading Day shall mean the daily volume weighted
average price of the Common Stock on such date on the Principal Market as
reported by Bloomberg Financial using the AQR function.

                                   ARTICLE II

                        SALE AND PURCHASE of common stock

     SECTION 2.01. Investments. (a) Purchase and Sale of Common Stock. Subject
to the terms and conditions of this Agreement, the Company, at its sole and
exclusive option, may issue and sell to the Investor, and the Investor shall
purchase from the Company shares of the Company's Common Stock, based on such
number of Draw Downs (subject to the Maximum Draw Down Amount and the Minimum
Draw Down Amount) as the Company, in its sole discretion, shall choose to
deliver during the Commitment Period until the aggregate Investment Amount with
respect to Common Shares purchased under this Agreement equals $75,000,000 or
this Agreement is otherwise terminated.

                                       5

<PAGE>

     (b) Draw Downs. Upon the terms and subject to the conditions set forth
herein, on any Trading Day as provided in Section 2.03(b) hereof during the
Commitment Period on which the conditions set forth in Section 6.02 and 6.03
hereof have been satisfied, the Company may exercise a Draw Down by the delivery
of a Draw Down Notice, executed by the President, Chairman or Chief Financial
Officer of the Company, to the Investor. The aggregate number of Draw Down
Shares that the Investor shall be obligated to purchase pursuant to such Draw
Down shall be the sum of the Draw Down Shares issuable in respect of each day
during the Valuation Period, determined on a daily basis during the applicable
Valuation Period in accordance with Section 2.03(c) below (unless Common Shares
may not be sold in respect of any Trading Day during the Valuation Period as
provided by this Agreement). Each Draw Down will be settled on the applicable
Settlement Date following the Draw Down Date.

     (c) Maximum Amount of Draw Down Shares. No more than 5,000,000 shares of
Common Stock (the "Maximum Share Amount") may be issued and sold pursuant to all
Draw Downs hereunder.

     (d) Limitation on Issuance of Common Shares. During any 61 consecutive day
period, the Company may not issue or sell Common Shares to the Investor under
this Agreement aggregating in excess of 9.9% of the total number of shares of
Common Stock outstanding on the first day of such period. The foregoing
limitation may not be waived, amended or modified.

     SECTION 2.02. Effectiveness. The effectiveness of this Agreement (the
"Closing") shall be deemed to take place concurrently with the execution and
delivery of this Agreement by the parties hereto and the completion of the
closing transactions set forth in the immediately following sentence. At the
Closing, the following closing transactions shall take place, each of which
shall be deemed to occur simultaneously with the Closing: (i) the Company and
the Investor shall execute and deliver the Registration Rights Agreement; (ii)
the Company shall deliver to the Investor a certificate executed by the
Secretary of the Company, signing in such capacity, dated the date of the
Closing (A) certifying that attached thereto are true and complete copies of the
resolutions duly adopted by the Board of Directors of the Company authorizing
the execution and delivery of the Transaction Documents and the consummation of
the transactions contemplated thereby (including, without limitation, the
reservation and issuance of the Common Stock pursuant to this Agreement), which
authorization shall be in full force and effect on and as of the date of such
certificate and (B) certifying and attesting to the office, incumbency, due
authority and specimen signatures of each Person who executed any Transaction
Document for or on behalf of the Company; (iii) the Company shall deliver to the
Investor a certificate executed by the President, the Chairman or the Chief
Financial Officer of the Company, signing in such capacity, dated the date of
the Closing, confirming the accuracy of the representations and warranties of
the Company contained in this Agreement; (iv) LeBoeuf, Lamb, Greene & MacRae
L.L.P., counsel to the Company, shall deliver to the Investor an opinion, dated
the date of the Closing and addressed to the Investor, covering customary
matters; and (v) the Company shall pay the expenses set forth in Section 9.02
hereof by wire transfer to the account designated by the Investor in writing
prior to the Closing.

     SECTION 2.03. Mechanics of Draw Downs. (a) Draw Down Notice. On any Trading
Day during the Commitment Period, the Company may deliver a Draw Down Notice to
the

                                       6

<PAGE>

Investor, subject to the satisfaction of the conditions set forth in Sections
6.02 and 6.03; provided, however, the Investment Amount for each Draw Down as
designated by the Company in the applicable Draw Down Notice shall be neither
less than the Minimum Draw Down Amount nor more than the Maximum Draw Down
Amount (as determined as of the applicable Draw Down Date); provided further,
however, that if the Maximum Draw Down Amount as of the applicable Draw Down
Date is less than the Minimum Draw Down Amount, the Company shall not be
entitled to deliver any such Draw Down Notice.

     (b) Delivery of Draw Down Notice. A Draw Down Notice shall be deemed
delivered on (i) the Trading Day that it is received by facsimile or otherwise
(and the Company confirms such delivery by e-mail notice or by telephone
(including voicemail message)) by the Investor if received prior to 12:00 noon,
New York City time such Trading Day, or (ii) in the event it is received by
facsimile or otherwise (and the Company confirms such delivery by e-mail notice
or telephone (including voicemail message)) subsequent to 12:00 noon, New York
City time, on a Trading Day, the immediately succeeding Trading Day. No Draw
Down Notice may be delivered other than on a Trading Day during the Commitment
Period.

     (c) Determination of Draw Down Shares Issuable. Subject to Section 2.03(d)
and (e) hereof, the number of Draw Down Shares to be purchased by the Investor
with respect to any Draw Down shall be determined on a daily basis during the
applicable Valuation Period and shall equal with respect to any such Trading Day
the quotient of (x) one-fifth (1/5) of the Investment Amount, divided by (y) the
Purchase Price for such Trading Day. The portion of the Investment Amount for
which Draw Down Shares may be issued for each Trading Day during the Valuation
Period may not exceed one-fifth (1/5) of the Investment Amount.

     (d) Floor Price Limitation. If the VWAP on any Trading Day during a
Valuation Period is less than the Floor Price specified in the applicable Draw
Down Notice, the Company shall not sell and the Investor shall not purchase the
Draw Down Shares otherwise to be purchased for such Trading Day. In such case,
the Investment Amount shall be reduced by one-fifth (1/5) of the Investment
Amount for each such Trading Day.

     (e) Minimum Trading Hours Limitation. In the event that the Common Stock is
not listed and approved for trading on a Principal Market and free from any
halts or suspensions of trading (whether imposed generally on such Principal
Market or specifically with respect to the Common Stock) for a period of at
least six (6) hours on any Trading Day during a Valuation Period, then the
Company shall not sell and the Investor shall not purchase the Draw Down Shares
otherwise to be purchased in respect of such Trading Day. In such case, the
Investment Amount shall be reduced by one-fifth (1/5) of the Investment Amount
for each such Trading Day.

     SECTION 2.04. Settlements. Subject to the provisions of Section 6.04, on
each Settlement Date the Company shall, unless the Investor otherwise instructs
the Company to transmit shares of Common Stock to the Investor by other means,
cause the Transfer Agent to electronically transmit shares of Common Stock to
the Investor (by crediting the account of the Investor's Prime Broker, as
designated by the Investor, with The Depository Trust Company through its
Deposit Withdrawal Agent Commission system ("DWAC Transfer")) representing the
Draw Down Shares to be purchased by the Investor on such Settlement Date with
respect to

                                       7

<PAGE>

the Draw Down Period immediately preceding such Settlement Date pursuant to
Section 2.03(c) hereof against delivery by the Investor of the portion of the
Investment Amount representing the Draw Down Shares to be purchased on such
Settlement Date by wire transfer of immediately available funds to an account
designated by the Company on or before the Settlement Date. In addition, on or
prior to each such Settlement Date, each of the Company and the Investor shall
deliver all documents, instruments and writings required to be delivered by
either of them pursuant to this Agreement in order to implement and effect the
transactions contemplated herein. The Investor acknowledges that although the
Draw Down shares acquired from the Company pursuant to a DWAC Transfer do not
bear a restrictive legend, they constitute "restricted securities" within the
meaning of the Securities Act and the Investor agrees it will transfer the Draw
Down Shares through the facilities of The Depository Trust Company only pursuant
to the Registration Statement or pursuant to Rule 144 under the Securities Act.

     SECTION 2.05. Damages for Late Delivery or Non-Delivery of Draw Down
Shares; Investor Right to Void Draw Down Notice. (a) In the event the Draw Down
Shares are not delivered by the Company on any Settlement Date, the Company will
pay the Investor, the actual damages, if any, incurred by the Investor as a
result of such late delivery or non-delivery. For purposes of the foregoing, the
actual damages of the Investor shall mean the actual costs, penalties and
interest expense incurred by the Investor resulting from its failure to deliver
on the Settlement Date any Draw Down Shares it was entitled to receive from the
Company on any Settlement Date to any unaffiliated third party to whom it had
agreed to deliver shares of Common Stock. The Investor agrees to act in good
faith to minimize its actual damages in any such event and shall provide the
Company with a detailed calculation of its actual damages and supporting
documentation therefor. Except as provided by Section 2.05(c) below, such amount
may be offset by the Investor against the portion of the Investment Amount
otherwise payable by the Investor with respect to such Draw Down Shares or
future payment obligations of the Investor with respect to subsequent Draw Down
Notices. No amounts shall be payable in the event the Investor does not incur
any actual damages.

     (b) The Company may not deliver a Draw Down Notice in the event (1) all
prior required deliveries of Draw Down Shares have not been made or (2) the
Company has not paid any amounts owed to the Investor pursuant to Section
2.05(a) unless, in connection with such notice, the Company shall have advised
the Investor in writing that the Investor may offset the amounts payable by the
Company (which amount shall be set forth in such notice and shall be consistent
with the Investor's calculation thereof) against the portion of the Investment
Amount otherwise payable by the Investor with respect to such Draw Down Notice.

     (c) In the event the Company, acting in good faith, disputes in writing the
determination by the Investor of the amount of its actual damages resulting from
the failure of the Company to deliver Draw Down Shares on a Settlement Date (or
deliver such Draw Down Shares at all), the Company may continue to deliver Draw
Down Notices for a period of 30 days following such Settlement Date without
paying the Investor such damages, whether in cash or by offset, provided that
the aggregate Investment Amount drawn down during such 30-day period does not
exceed $7,500,000. Notwithstanding any payment of damages by the Company,
whether in cash or by offset, if the Company, acting in good faith, disputes the
determination by the Investor of the amount of its actual damages, such payment
shall in no manner constitute an agreement by the Company with the Investor's
calculations. The Company may deliver Draw

                                       8

<PAGE>

Down Notices for up to an additional 90 days from the date of payment (not to
extend beyond 120 days from the applicable Settlement Date) while the Company
challenges the Investor's calculations. If the Company and the Investor have not
resolved their dispute by such time as to the amount of actual damages incurred
by the Investor, the ability of the Company to deliver Draw Down Notices shall
thereafter be suspended until such matter is resolved.

                                  ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     As a material inducement to the Investor to enter into this Agreement, the
Company hereby represents and warrants to the Investor that, except as set forth
in the Disclosure Schedules delivered by the Company to the Investor and
attached hereto, on and as of June 21, 2001:

     SECTION 3.01. Organization and Standing. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority necessary for it to own its properties
and assets and to carry on its business as it is now being conducted (and, to
the extent described therein, as described in the SEC Reports). The Company and
each of its subsidiaries is duly qualified to transact business and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it or the nature of its businesses makes such qualification necessary,
except where the failure to so qualify or be in good standing would not have a
material adverse effect on the business, assets, operations, properties,
condition (financial or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole, or any adverse effect on the Company's ability
to consummate the transactions contemplated by, or to execute, deliver and
perform its obligations under, each of the Transaction Documents (a "Material
Adverse Effect").

     SECTION 3.02. Securities of the Company. The authorized Capital Stock of
the Company consists of 100,000,000 shares of Common Stock, 179 shares of Class
B Common Stock and 30,000,000 shares of preferred stock; as of May 31, 2001,
25,034,993 shares of Common Stock, 117.7 shares of Class B Common Stock and no
shares of preferred stock were outstanding and 5,275,299 shares of Common Stock
were reserved for issuance upon exercise of outstanding convertible securities,
warrants or options or pursuant to the Company's 1988 Stock Option Plan, the
1998 Stock Option Plan and the 1999 Omnibus Securities and Incentive Plan.
Except as set forth in the SEC Reports, the Company has no other authorized,
issued or outstanding equity securities or securities containing any equity
features, or any other securities convertible into, exchangeable for or
entitling any person to otherwise acquire any other securities of the Company
containing any equity features. The Company has no stock option, incentive or
similar plan other than the 1998 Stock Option Plan and the 1999 Omnibus
Securities and Incentive Plan. All of the outstanding shares of Capital Stock of
the Company have been duly and validly authorized and issued, and are fully paid
and nonassessable. The Common Shares (in an amount up to the Maximum Share
Amount) have been duly and validly authorized and have been duly reserved, and
will remain available for issuance, pursuant to this Agreement. When issued
against payment therefor as provided in this Agreement, the Common Shares will
be validly issued, fully paid and nonassessable, free and clear of all
preemptive rights, claims,

                                       9

<PAGE>

liens, charges, encumbrances and security interests of any nature whatsoever.
Except as set forth in this Section 3.02 or the SEC Reports, there are no
outstanding options, warrants, conversion rights, subscription rights,
preemptive rights, rights of first refusal or other rights or agreements of any
nature outstanding to subscribe for or to purchase any shares of Common Stock of
the Company or any other securities of the Company of any kind binding on the
Company. The issuance of the Common Shares pursuant to this Agreement is not
subject to any preemptive rights, rights of first refusal or other similar
limitation. Except as otherwise required by law, there are no restrictions upon
the voting or transfer of any shares of the Company's Common Stock pursuant to
the Company's Certificate of Incorporation or bylaws. Except as provided herein
or in the other Transaction Documents, there are no agreements or other
obligations (contingent or otherwise) that may require the Company to repurchase
or otherwise acquire any shares of its Common Stock except for the Company's
obligation to exchange "non-lapse" restricted shares issued under its 1990
Incentive Compensation and Company Stock Purchase Plan.

     SECTION 3.03. Authorization; Enforceability. The Company has the corporate
power and authority to execute, deliver and perform the terms and provisions of
each of the Transaction Documents to be executed, delivered or performed by it
and has taken all necessary corporate action to authorize the execution,
delivery and performance by it of, and the consummation of the transactions
contemplated by, the Transaction Documents. No other corporate proceeding on the
part of the Company is necessary, and no consent of any shareholder of the
Company is required, for the valid execution and delivery by the Company of the
Transaction Documents, and the performance and consummation by the Company of
the transactions contemplated by the Transaction Documents to be performed by
the Company. The Company has duly executed and delivered, or concurrently
herewith is executing and delivering, each of the Transaction Documents.
Assuming the due execution of this Agreement and the Registration Rights
Agreement by the Investor, this Agreement and the Registration Rights Agreement
constitute the valid and binding obligations of the Company, enforceable against
the Company in accordance with each of their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).

     SECTION 3.04. No Violation; Consents.

     (a) The execution, delivery and performance by the Company of the
Transaction Documents and the consummation of the transactions contemplated
thereby to be performed by the Company do not and will not (i) contravene the
applicable provisions of any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or Governmental Authority to or by
which the Company or any of its subsidiaries or any of its respective property
or assets is bound, (ii) violate, result in a breach of or constitute (with due
notice or lapse of time or both) a default or give rise to an event of
acceleration under any contract, lease, loan or credit agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Company is a party or by which it or any of its subsidiaries is bound or to
which any of its respective properties or assets is subject, nor result in the
creation or imposition of any lien, security interest, charge or encumbrance of
any kind upon any of the properties, assets or Capital

                                       10

<PAGE>

Stock of the Company or any of its subsidiaries, or (iii) violate any provision
of the organizational and other governing documents of the Company or any of its
subsidiaries.

     (b) No consent, approval, authorization or order of, or filing or
registration with, any court or Governmental Authority or other Person is
required to be obtained or made by the Company for the execution, delivery and
performance of the Transaction Documents or the consummation of any of the
transactions contemplated thereby (other than (i) the registration of the resale
of the Common Shares with the Commission and (ii) compliance with any state
"blue sky" laws as contemplated by the Registration Rights Agreement, except for
those consents or authorizations previously obtained and those filings
previously made.

     SECTION 3.05. Securities Act Representations. The Company has not offered
or sold and will not offer or sell any shares of its Capital Stock in this
offering other than to the Investor. Assuming the accuracy of the Investor's
representations pursuant to Section 4.02 hereof, the sale of the Common Shares
hereunder will be exempt from the registration requirements of the Securities
Act. Neither the Company, nor any of its Affiliates, or, to its knowledge, any
Person acting on its or their behalf has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Common Shares
hereunder. Neither the Company, nor any of its Affiliates, nor any Person acting
on its or their behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security other than pursuant to
this Agreement under circumstances that would require registration under the
Securities Act of the Common Shares to be issued under this Agreement. The
Company is eligible to use Form S-3 under the Securities Act to file the
Registration Statement (as defined in the Registration Rights Agreement). The
Company has not provided the Investor with any material non-public information
that, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to engaging in the transactions
contemplated by the Transaction Documents but that has not been so disclosed.

     SECTION 3.06. Solvency; No Default. (a) The Company is, and upon giving
effect to the transactions contemplated hereby to be performed by it as of the
Closing will be, Solvent. "Solvent" means that, as of the date of determination,
(i) the then fair saleable value of the assets of the Company (on a consolidated
basis) exceeds the then total amount (on a consolidated basis) of its debts and
other liabilities (including any guarantees and other contingent, subordinated,
unmatured or unliquidated liabilities whether or not reduced to judgment,
disputed or undisputed, secured or unsecured), (ii) the Company has sufficient
funds and cash flow to pay its liability on its existing debts as they become
absolute and matured without taking into account future lease payments under
operating leases or payments due after June 30, 2003 under financing leases,
(iii) final judgments against the Company in pending or, to the Company's
knowledge, threatened actions for money damages will not be rendered at a time
when, or in an amount such that, the Company will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into account (a) the
maximum reasonable amount of such judgments in any such actions (other than
amounts that would be remote), (b) the earliest reasonable time at which such
judgments would be rendered and (c) any reasonably expected insurance recovery
with respect thereto), and (iv) the Company does not have unreasonably small
capital with which to engage in its present business.

                                       11

<PAGE>

     (b) The Company is not, and immediately after the consummation of the
transactions contemplated hereby to be performed by the Company will not be, in
default of (whether upon the passage of time, the giving of notice or both) its
organizational and other governing documents, or any provision of any security
issued by the Company, or of any agreement, instrument or other undertaking to
which the Company is a party or by which it or any of its property or assets is
bound, or the applicable provisions of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or Governmental
Authority to or by which the Company or any of its property or assets is bound,
which default or violation, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

     SECTION 3.07. No Brokers. Other than Shoreline Pacific Institutional
Finance, the Institutional Division of Financial West Group, no broker, finder,
agent or similar intermediary is entitled to any broker's, finder's, placement
or similar fee or other commission in connection with the transactions
contemplated hereby based on any agreement, arrangement or understanding with
the Company.

     SECTION 3.08. SEC Reports; Financial Condition; No Adverse Changes. (a) The
audited consolidated financial statements of the Company and the related notes
thereto as of October 31, 2000 reported on by Ernst & Young LLP, independent
auditors, contained in the SEC Reports, present fairly the consolidated
financial position, results of operations and cash flows of the Company at such
date and for the periods set forth therein . The unaudited consolidated
financial statements of the Company and related notes thereto as of January 31,
2001 (such audited and unaudited financial statements, collectively, the
"Financial Statements") contained in the SEC Reports present fairly the
consolidated financial position, results of operations and cash flows of the
Company at such date and for the periods set forth therein. The Financial
Statements, including the related schedules and notes thereto, have been
prepared in accordance with generally accepted accounting principles in the
United States as in effect on the date of filing of such documents with the
Commission, applied on a consistent basis (except for changes concurred in by
the Company's independent public auditors) unless otherwise expressly stated
therein. Except as disclosed in the SEC Reports, from and after November 1,
2000, there has been no sale, transfer or other disposition by the Company of
any material part of the business, property or securities of the Company (other
than the grant of options and warrants and shares of Common Stock issued upon
the exercise of outstanding options and warrants) and no purchase or other
acquisition of any business, property or securities by the Company material in
relation to the financial condition of the Company.

     (b) Except as are fully reflected or reserved against in the Financial
Statements and the notes thereto, there are no liabilities or obligations with
respect to the Company or any of its subsidiaries of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due)
that, either individually or in the aggregate, after taking into account (a) the
maximum reasonable amount of any liability that may arise on account of any
litigation or any other contingent liability or obligation (other than amounts
that would be remote), (b) the earliest reasonable time at which any such
liability or obligation may become due and (c) any reasonably expected insurance
recovery with respect thereto, could reasonably be expected to have a Material
Adverse Effect.

                                       12

<PAGE>

     (c) Since October 31, 2000, except as set forth in the SEC Reports, there
has been no development or event, nor any prospective development or event known
to the Company or any of its subsidiaries, or any litigation, proceeding or
other action seeking an injunction or other restraining order, damages or other
relief from a court or administrative agency of competent jurisdiction pending,
threatened or, to the knowledge of the Company, contemplated, or any action of
any Governmental Authority, that has had or could reasonably be expected to have
a Material Adverse Effect.

     SECTION 3.09. Use of Proceeds; Federal Regulations. No part of the net
proceeds from the sale of the Common Stock issued hereunder will be used in a
manner that would violate the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System. The Company will not use such proceeds
other than for or in connection with general working capital purposes.

     SECTION 3.10. Subsidiaries. The Company has no subsidiaries other than
those set forth in the SEC Reports or those that conduct no active business.

     SECTION 3.11. No Integrated Offering. Neither the Company, nor any of its
Affiliates, nor to its knowledge any Person acting on its or their behalf, has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would require
registration under the Securities Act of the offer and sale of the Common Stock
hereunder.

     SECTION 3.12. No Litigation. Except as disclosed in the SEC Reports, no
litigation or claim (including those for unpaid taxes), or environmental
proceeding against the Company or any of its subsidiaries is pending, threatened
or, to the Company's best knowledge, contemplated that, if determined adversely,
would (after taking into consideration any reasonably expected insurance
recovery with respect thereto) have a Material Adverse Effect on the Company.

     SECTION 3.13. Environmental Matters. The Company and each of its
subsidiaries is in compliance in all material respects with all applicable state
and federal environmental laws, and no event or condition has occurred that may
interfere in any material respect with the compliance by the Company or any of
its subsidiaries with any environmental law or that may give rise to any
liability under any environmental law that, individually or in the aggregate,
would have a Material Adverse Effect.

     SECTION 3.14. Intellectual Property. The Company (and/or its subsidiaries)
owns or has licenses to use certain patents, copyrights and trademarks
("intellectual property") associated with its business. The Company and its
subsidiaries have all intellectual property rights that are needed to conduct
the business of the Company and its subsidiaries as it is now being conducted as
disclosed in the SEC Reports. To the Company's knowledge, the intellectual
property rights that the Company (and/or its subsidiaries) owns are valid and
enforceable. To the Company's knowledge, the use of such intellectual property
by the Company (and/or its subsidiaries') does not infringe upon or conflict
with any right of any third party, and, except as disclosed in the SEC Reports
neither the Company nor any of its subsidiaries has received notice, written or
otherwise, of any such infringement or conflict other than with respect to
alleged infringements or conflicts that, individually or in the aggregate, if
determined adversely to the Company would

                                       13

<PAGE>

not have a Material Adverse Effect. Except as set forth in the SEC Reports, the
Company has no knowledge of any infringement of its (and/or its subsidiaries)
intellectual property by any third party.

     SECTION 3.15. Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent. The Company has no reason to believe that it and its subsidiaries 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 without a significant increase in cost.

     SECTION 3.16. Related Party Transactions. Except as disclosed in the SEC
Reports and except for such transactions for which disclosure pursuant to
Regulation S-K would not be required in an annual report on Form 10-K or
otherwise, none of the officers, directors, employees or 5% or greater
shareholders of the Company is presently a party to any transaction with the
Company or any of its subsidiaries (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 the advances of money or otherwise requiring
payments to or from any such officer, director, employee or shareholder or, to
the knowledge of the Company, any corporation, partnership, trust or other
entity in which any such officer, director, employee or shareholder has a
substantial interest or is an officer, director, trustee or partner other than
the Company's merger on May 24, 2001 with an affiliated company.

     SECTION 3.17. Permits. The Company and each of its subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits except for such Company
Permits the failure of which to possess, or the cancellation or suspension of
which, would not, individually or in the aggregate, have a Material Adverse
Effect. To the best of its knowledge neither the Company nor any of its
subsidiaries is in material conflict with, or in material default or material
violation of, any of the Company Permits.

     SECTION 3.18. Internal Accounting Controls. The Company and each of its
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.

     SECTION 3.19. Tax Returns. The Company has filed or caused to be filed all
Federal tax returns and all material state and local tax returns required to
have been filed by it and has

                                       14

<PAGE>

paid or caused to be paid all taxes shown to be due and payable by it on such
returns or on any assessments received by it, except any such tax, the validity
or amount of which is being contested in good faith by appropriate proceedings
and as to which the Company has set aside on its books adequate reserves with
respect thereto in accordance with generally accepted accounting principles.
Neither the Company nor its subsidiaries has received any tax assessment, notice
of audit, notice of proposed adjustment or deficiency notice from any taxing
authority.

     SECTION 3.20. Disclosure. The representations and warranties of the Company
in this Agreement and the statements contained in the SEC Reports (at the time
they were filed with the SEC and, except as modified by subsequent SEC Reports)
and the schedules, certificates and exhibits furnished to the Investor by or on
behalf of the Company in connection herewith did not and do not contain any
untrue statement of a material fact and do not omit to state any material fact
necessary to make the statements herein or therein not misleading. The SEC
Reports contain all material information concerning the Company required to be
set forth therein, and no event or circumstance has occurred or exists since
October 31, 2000, that would require the Company to disclose such event or
circumstance in order to make the statements in the SEC Reports not misleading
as of the date of the Closing that has not been so disclosed. The Company hereby
acknowledges that the Investor is and will be relying on the SEC Reports and the
Company's representations, warranties and covenants contained herein in making
an investment decision with respect to the Common Shares and will be relying
thereon (together with future reports filed with the Commission) in connection
with any transfer of Common Shares.

                                   ARTICLE IV

            REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR

     The Investor hereby acknowledges, represents, warrants and covenants, to
the Company as follows:

SECTION 4.01.     Authorization; Enforceability; No Violations.

     (a) The Investor is duly organized, validly existing and in good standing
under the laws of its jurisdiction, has all requisite power and authority to
execute, deliver and perform the terms and provisions of this Agreement and the
Registration Rights Agreement and has taken all necessary action to authorize
the execution, delivery and performance by it of this Agreement and the
Registration Rights Agreement and to consummate the transactions contemplated
hereby and thereby to be performed by it.

     (b) The execution, delivery and performance by the Investor of this
Agreement and the Registration Rights Agreement and the consummation by the
Investor of the transactions contemplated hereby and thereby to be performed by
it do not and will not violate any provision of (i) the Investor's
organizational documents or (ii) any law, statute, rule, regulation, order,
writ, injunction, judgment or decree to which the Investor is subject. The
Investor has duly executed and delivered this Agreement and has executed and
delivered, or concurrently herewith is executing and delivering, the
Registration Rights Agreement. Assuming the due execution hereof and thereof by
the Company, each of this Agreement and the Registration Rights

                                       15

<PAGE>

Agreement constitutes the legal, valid and binding obligation of the Investor,
enforceable against the Investor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).

     SECTION 4.02. Securities Act Representations; Legends.

     (a) The Investor understands that: (i) the offering and sale of the Common
Shares to be issued and sold hereunder is intended to be exempt from the
registration requirements of the Securities Act; (ii) the initial offer and sale
of the Common Shares issuable hereunder has not been registered under the
Securities Act or any other applicable securities laws and such securities may
be resold only if registered under the Securities Act and any other applicable
securities laws or if an exemption from such registration requirements is
available; and (iii) the Company is required to register any resale of the
Common Shares under the Securities Act and any other applicable securities laws
only to the extent provided in the Registration Rights Agreement.

     (b) The Investor represents that the Common Shares to be acquired by the
Investor pursuant to this Agreement are being acquired for its own account and
not with a view to, or for sale in connection with, any distribution thereof or
(other than the resale of such Common Shares pursuant to an effective
registration statement as contemplated by the Registration Rights Agreement) in
violation of the Securities Act or any other securities laws that may be
applicable.

     (c) The Investor represents that the Investor is not an affiliate (as such
term is defined in the Securities Act) of the Company.

     (d) The Investor represents that the Investor (i) is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D under the
Securities Act, (ii) has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of its
investment in the Common Stock and is capable of bearing the economic risks of
such investment, including a complete loss of its investment in the Common
Shares; (ii) believes that its investment in the Common Shares is suitable for
it based upon its objectives and financial needs, and the Investor has adequate
means for providing for its current financial needs and business contingencies
and has no present need for liquidity of investment with respect to the Common
Shares; (iii) has no present plan, intention or understanding and has made no
arrangement to sell the Common Shares at any predetermined time or for any
predetermined price; (iv) has not purchased, sold or entered into any put
option, short position or similar arrangement with respect to the Common Shares,
and will not, for the term of this Agreement purchase, sell or enter into any
such put option, short position or similar arrangement in any manner that
violates the provisions of the Securities Act or the Exchange Act.

     (e) The Investor acknowledges that no oral or written statements or
representations have been made to the Investor by or on behalf of the Company in
connection with the offering and sale of the Common Shares hereunder other than
those set forth in the SEC Reports, or as set forth herein or in the other
Transaction Documents, and the Investor represents that it is not subscribing
for the Common Shares as a result of, or in response to, any advertisement,
article,

                                       16

<PAGE>

notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or presented at any seminar or
meeting.

     (f) The Investor acknowledges that the Securities Act restricts the
transferability of securities, such as the Common Shares, issued in reliance
upon the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereunder, and that, unless sold pursuant to the
Registration Statement, the transfer of such Common Shares is restricted.

     (g) The Investor has 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 Common Shares which have been requested by the Investor.
The Investor has been afforded the opportunity to ask questions of the Company.
The Investor understands that its investment in the Common Shares involves a
significant degree of risk.

     SECTION 4.03. No Brokers. No broker, finder, agent or similar intermediary
is entitled to any broker's, finder's, placement or similar fee or other
commission in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Investor.

     SECTION 4.04. No Influence on Business. The Investor (whether in its
capacity as holder of the Common Stock or otherwise) covenants and agrees with
the Company that it will not: (a) in any manner exercise or attempt to exercise
a controlling influence over the management or policies of the Company or
attempt to influence the business activities or decisions of the Company; (b)
propose a director or slate of directors to serve on the board of directors of
the Company; (c) have or seek to have a representative of the Investor be
appointed to serve as a director of the Company or participate as an observer at
meetings of the board of directors (or committees thereof) or have or seek to
have any employee or representative of the Investor serve as an officer, agent
or employee of the Company; (d) attempt to influence the dividend policies or
practices of the Company; (e) solicit or participate in soliciting proxies with
respect to any matter presented to the shareholders of the Company; (f) dispose
or threaten to dispose of the Common Shares to any third party in any manner as
a condition to specific action or non-action by the Company; or (g) enter into
any joint venture, enterprise or undertaking of any kind with the Company.

     SECTION 4.05. Limitations on Resales. The Investor further covenants and
agrees that it will not knowingly transfer to any Person (together with such
Person's Affiliates), other than the Company or Affiliates of the Investor, in a
transaction or series of transactions, Common Stock in an aggregate amount in
excess of 2% of the issued and outstanding shares of Common Stock of the Company
(based upon the number of shares of Common Stock of the Company issued and
outstanding on the applicable date of transfer); in furtherance thereof, the
Investor covenants and agrees that it shall not during any five (5) consecutive
trading days transfer Common Stock in secondary market transactions in which the
identity of the acquiror is not known to the Investor in an amount in excess of
2% of the issued and outstanding shares of Common Stock of the Company (based
upon the number of shares of Common Stock of the Company issued and outstanding
on the applicable date of transfer). The Investor covenants and agrees that the
foregoing transfers to third parties shall be made in bona fide, arms-length

                                       17

<PAGE>

transactions and that upon any such transfer, it will not retain the power to
control the disposition of the securities transferred or to direct the voting
with respect thereto.

     SECTION 4.06. Trading Guidelines. The Investor has the right to sell shares
of Common Stock during the Commitment Period. The Investor agrees, however, that
during the Commitment Period, neither the Investor nor any of its affiliates
will intentionally sell shares of Common Stock other than the shares of Common
Stock which the Investor has purchased under this Agreement (including for this
purpose, in the case of a Draw Down Notice that has been delivered, the number
of Draw Down Shares issuable in connection with such Draw Down Notice (assuming
that the number of Draw Down Shares to be issued pursuant to such Draw Down
Notice equals the Investment Amount specified in such Draw Down Notice divided
by ninety-seven percent (97%) of the Floor Price)).

     SECTION 4.07. Ownership of Common Stock. As of the date of this Agreement,
the Investor and its affiliates beneficially own in aggregate no shares of
Common Stock.

     SECTION 4.08. Investment Limitation. The Investor warrants and will take
any necessary action to ensure that Common Shares issuable to the Investor in
respect of a Draw Down, together with the shares of Common Stock beneficially
owned (as defined in the Exchange Act) by the Investor and its affiliates shall
not exceed 4.9% of the total outstanding shares of Common Stock as of such date.
The Investor will have sole responsibility for maintaining compliance with this
limitation. In no event shall this limitation affect the rights of the Company
under this Agreement to deliver a Draw Down Notice to the Investor or to issue
and sell Common Shares to the Investor on any Settlement Date.

     SECTION 4.09. Limitation on Sales of Common Stock. The Investor agrees that
it will not during any 61 consecutive day period sell shares of Common Stock
(whether acquired pursuant to this Agreement or otherwise) aggregating in excess
of 9.9% of the total number of shares of Common Stock outstanding on the first
day of such period. Investor will have sole responsibility for maintaining
compliance with this limitation. In no event shall this limitation affect the
rights of the Company under this Agreement to deliver a Draw Down Notice to the
Investor or to issue and sell Common Stock to the Investor on any Settlement
Date.

                                    ARTICLE V

                                    COVENANTS

     SECTION 5.01. Exemption from Registration; Limitation on Issuance of
Securities.

     The Company will not make any offer to sell, solicit any offer to buy,
agree to sell or sell any security or right to acquire any security, except at
such time and in such manner so as not to cause the loss of any of the
exemptions for the offer and sale of the Common Shares from the registration
requirements under the Securities Act or under the securities or "blue sky" laws
of any jurisdiction in which such offer, sale or issuance is made.

                                       18

<PAGE>

     SECTION 5.02. Transfer Restrictions.

     The Investor acknowledges that any proposed offer, sale, pledge or other
transfer of Common Shares prior to the date that is two (2) years from the date
of issuance (or such other date as may be required pursuant to Rule 144 under
the Securities Act (or similar successor provision) as in effect from time to
time), in the absence of registration under the Securities Act, is limited.
Accordingly, prior to such passage of time or such registration, the Common
Shares may be offered, sold, pledged or otherwise transferred only (i) to the
Company, (ii) in an offshore transaction in accordance with Rule 904 under the
Securities Act, (iii) pursuant to any other exemption from registration provided
by the Securities Act, (iv) pursuant to Rule 144 under the Securities Act or (v)
pursuant to an effective registration statement under the Securities Act; in the
case of any transfer pursuant to clause (ii), (iii) or (iv), the Company shall
be entitled to receive an opinion of the selling Investor's counsel, in form and
substance reasonably satisfactory to the Company, to the effect that
registration is not required in connection with such disposition.

     SECTION 5.03. Rule 144; Current Information. For so long as this Agreement
is in effect or there are outstanding any Common Shares which constitute
Registrable Securities, the Company will (i) cause its Common Stock to continue
to be registered under Section 12 of the Exchange Act, file all reports required
to be filed by it under the Securities Act and the Exchange Act and will take
such further actions as the Investor may reasonably request, all to the extent
required from time to time to enable any Purchaser to sell Common Shares without
registration under the Securities Act pursuant to the safe harbors and
exemptions provided by Rule 144 under the Securities Act (to the extent
applicable), as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission, and (ii) furnish the Investor
with all reports, proxy statements and registration statements that the Company
files with the Commission or distributes to its securityholders pursuant to the
Securities Act and the Exchange Act at the times of such filings and
distributions (unless such documents are available electronically from the
Commission or elsewhere without charge and within a period reasonably
contemporaneous with the filing thereof with the Commission, in which case such
documents need not be provided to the Investor). Upon the request of the
Investor, the Company will deliver to the Investor a written statement as to
whether it has complied with the foregoing requirements.

     SECTION 5.04. Reservation of Common Shares. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, sufficient shares of Common Stock to provide for the
issuance of the Common Shares in an amount equal to the Maximum Share Amount
less the number of Common Shares previously issued hereunder.

     SECTION 5.05. Stock Listing. The Company shall have the Common Shares in an
amount equal to the Maximum Share Amount approved for quotation or listing,
prior to issuance, upon the Principal Market upon which the Common Stock is
listed or traded at the time of issuance of such Common Shares and shall use its
best efforts to maintain such listing.

     SECTION 5.06. Reporting Status. The Company's Common Stock is registered
under Section 12(g) of the Exchange Act. So long as the Investor beneficially
owns any Registrable Securities, the Company shall timely file all reports
required to be filed with the SEC pursuant to the Exchange Act, and the Company
shall not terminate its status as an issuer required to file

                                       19

<PAGE>

reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.

     SECTION 5.07. No Integration. The Company shall not make any offers or
sales of any security (other than the Common Shares) under circumstances that
would require registration of the Common Shares being offered or sold hereunder
under the Securities Act.

     SECTION 5.08. Registration Rights. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all respects with the terms thereof.

     SECTION 5.09. Notice of Certain Events Affecting Registration; Suspension
of Right to Deliver a Draw Down Notice. The Company will immediately notify the
Investor upon the occurrence of any of the following events in respect of the
Registration Statement or related prospectus in respect of the resale of the
Registrable Securities: (i) receipt of any request for additional information
from the Commission or any other federal or state governmental authority during
the period of effectiveness of the Registration Statement, the response to which
would require any amendments or supplements to the Registration Statement or
related prospectus; (ii) the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose; (iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of the Registration Statement, 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 not misleading, and that in the case of the related prospectus, 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; (v) a post-effective amendment or supplement to the Registration to
reflect events covered by the Company's annual report on Form 10-K, quarterly
report or Form 10-Q or current report on Form 8-K is necessary or will be
necessary during the subsequent ten Trading Days, (vi) the withdrawal of any
relevant Comfort Letter or Periodic Accountant's Report; and (vii) the Company's
reasonable determination that a post-effective amendment or supplement to the
Registration Statement would otherwise be appropriate; and the Company will
promptly make available to the Investor any such supplement or amendment to the
related prospectus. The Company shall not deliver to the Investor any Draw Down
Notice during the continuation of any of the foregoing events and shall cancel
an existing Draw Down by delivering a Draw Down Cancellation Notice in the
manner required by Section 6.04 of this Agreement.

     SECTION 5.10. Disclosure of Material Information. In the event that the
Company comes into possession of any material non-public information, the
Company shall make full and complete public disclosure at such times and by such
means as are required by applicable securities laws (including all common law
formulations thereof).

                                       20

<PAGE>

     SECTION 5.11. Issuance of Draw Down Shares. The sale and issuance of the
Draw Down Shares shall be made in accordance with the provisions and
requirements of Section 4(2) of the Securities Act and any applicable state law.

                                   ARTICLE VI

                       CONDITIONS TO DELIVERY OF DRAW DOWN
                      NOTICES AND CONDITIONS TO SETTLEMENT

     SECTION 6.01. Conditions Precedent to the Obligation of the Company to
Issue and Sell Common Stock. The obligation hereunder of the Company to issue
and sell the Draw Down Shares to the Investor incident to each Settlement is
subject to the satisfaction, at or before each such Settlement, of each of the
conditions set forth below.

     (a) Accuracy of the Investor's Representation and Warranties. The
representations and warranties of the Investor shall be true and correct in all
material respects as of the date when made and as of the date of each such
Settlement as though made at each such time (except for representations and
warranties specifically made as of a particular date which shall be true and
correct in all material respects as of the date when made).

     (b) Performance by the Investor. The Investor shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to such Settlement.

     SECTION 6.02. Conditions Precedent to the Right of the Company to Deliver a
Draw Down Notice. The right of the Company to deliver a Draw Down Notice
hereunder is subject to the satisfaction, on the date of delivery of such Draw
Down Notice, of each of the following conditions:

     (a) Effective Registration Statement. (I) As set forth in the Registration
Rights Agreement, the Registration Statement shall have previously been declared
effective and shall remain effective and sales of all of the Registrable
Securities (including all of the Draw Down Shares issued with respect to all
prior Draw Downs and all of the Draw Down Shares expected to be issued in
connection with the Draw Down specified by the current Draw Down Notice
(assuming for such purpose that the Purchase Price applicable to such Draw Down
is the Floor Price)) may be made by the Investor thereunder and (i) neither the
Company nor the Investor shall have received notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement or that the Commission otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently,
or intends or has threatened to do so, (ii) no other suspension of the use or
withdrawal of the effectiveness of the Registration Statement or related
prospectus shall exist and (iii) no event specified in Section 5.09 shall have
occurred and be continuing.

     (II) The Company shall not have failed to obtain effectiveness of the
Registration Statement within 180 days from the Closing Date, and shall not have
failed to obtain the effectiveness of any additional Registration Statement
required to be filed pursuant to the

                                       21

<PAGE>

Registration Rights Agreement within sixty (60) days after the occurrence of the
event that requires such filing, and no such Registration Statement, after its
initial effectiveness, shall have lapsed in effect such that sales of all of the
Registrable Securities otherwise cannot be made thereunder (whether by reason of
the Company's failure to amend or supplement the prospectus included therein in
accordance with the Registration Rights Agreement, the Company's failure to file
and obtain effectiveness with the Commission of an additional Registration
Statement required pursuant to the Registration Rights Agreement or otherwise)
for more than fifteen (15) consecutive Trading Days or more than thirty (30)
Trading Days in any twelve (12) month period after such Registration Statement
becomes effective;

     (b) Accuracy of the Company's Representations and Warranties. (I) The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the applicable Draw Down
Date as though made at such time (except for representations and warranties
specifically made as of a particular date which shall be true and correct in all
material respects as of the date when made).

     (II) The Company shall not at any time have breached any material
representation or warranty as of any date as of which such representation or
warranty was made or any covenant contained in this Agreement or the other
Transaction Documents (unless such breach shall have been cured within ten (10)
days after the Company becomes aware or should have become aware of such
breach).

     (c) Performance by the Company. (I) Subject to Section 2.05, the Company
shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement and the
Registration Rights Agreement to be performed, satisfied or complied with by the
Company at or prior to such date, nor shall there have occurred an Event of
Default under this Agreement.

     (II) The Company shall not have (i) failed to issue shares of Common Stock
to the Investor on any Settlement Date as provided herein, (ii) failed to remove
any restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate or any shares of Common Stock issued to the Investor
on any Settlement Date as and when required by this Agreement or the
Registration Rights Agreement, or (iii) failed to fulfill its obligations
pursuant to this Agreement (or made any announcement, statement or threat that
it does not intend to honor the obligations described in this paragraph), and
any such failure shall continue uncured (or any announcement, statement or
threat not to honor its obligations shall not be rescinded in writing) for five
(5) days after the Company shall have been notified thereof in writing by the
Investor; provided that notice in respect of a breach pursuant to clause (i)
shall not be given if and so long as the Company, shall not have delivered
shares on a Settlement Date and (A) shall not have paid the Investor actual
damages resulting therefrom within the 30-day period following the Settlement
Date or (B) shall have paid the Investor actual damages resulting therefrom but
shall have disputed the Investor's determination thereof, during the 90-day
period following payment, in each case as contemplated by Section 2.05(c).

     (d) No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having

                                       22

<PAGE>

authority over the matters contemplated hereby that prohibits or directly and
adversely affects any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced that may have the effect of prohibiting or
adversely affecting any of the transactions contemplated by this Agreement.

     (e) Material Adverse Changes. For the thirty (30) days preceding the date
of delivery of such Draw Down Notice, no event known to the Company that had or
is reasonably likely to have a Material Adverse Effect shall have occurred
(provided that any changes resulting from general economic or market conditions
or conditions affecting the biopharmaceutical industry in general shall not be
deemed to constitute a "Material Adverse Effect" for purposes hereof).

     (f) No Suspension of Trading In or Delisting of Common Stock. The trading
of the Common Stock (including without limitation the Draw Down Shares) shall
not have been suspended by the Commission, the Principal Market or the NASD and
the Common Stock (including without limitation the Draw Down Shares) shall have
been approved for listing or quotation on and shall not have been delisted from
the Principal Market.

     (g) Comfort Letter; Periodic Accountant's Report. The Comfort Letter(s) in
respect of the Registration Statement or any Form 8-K containing substantial
financial information incorporated by reference into the Registration Statement
shall have been delivered prior to the date of delivery of such Draw Down
Notice, satisfactory in form and substance to the Investors, and shall not have
been rescinded, and a Periodic Accountant's Report covering the Company's most
recently completed fiscal quarter (other than the fourth fiscal quarter) in
respect of which the Company has its results of operations shall have been
delivered prior to the date of delivery of such Draw Down Notice, satisfactory
in form and substance to the Investor, covering customary matters, and shall not
have been rescinded.

     (h) No Knowledge. The Company shall have no knowledge of any event that
would reasonably be expected to have the effect of causing such Registration
Statement to be suspended or otherwise ineffective (which event is more likely
than not to occur within the five (5) Trading Days following the Trading Day on
which such Draw Down Notice is deemed delivered).

     (i) Trading Cushion. A period of five (5) Trading Days shall have elapsed
since the delivery of the preceding Draw Down Notice.

     (j) Maximum Share Amount. In no event may the Company issue a Draw Down
Notice to sell an Investment Amount to the extent that the sum of (x) the number
of shares of Common Stock represented by the quotient of (i) the requested
Investment Amount, divided by (ii) the Floor Price set forth in such Draw Down
Notice, plus (y) the cumulative total of all Common Shares issued under all
previous Draw Downs effected pursuant to this Agreement, would exceed the
Maximum Share Amount.

     (k) Prospectus Supplement. A supplement to the prospectus included in the
Registration Statement (the "Prospectus Supplement"), in form and substance to
be agreed upon by the parties, setting forth information regarding the Draw Down
including, without limitation, the Draw Down Date, the Investment Amount, the
number of shares sold to the Investor in connection with all previous Draw
Downs, if not previously disclosed in an SEC Document, and

                                       23

<PAGE>

any additional information required by SEC rules and regulations, including
Item 507 of Regulation S-K, shall have been filed with the Commission and
sufficient copies thereof delivered to the Investor on the Trading Day
immediately following the delivery of the Draw Down Notice.

     (l) Outside Counsel Letter. A letter of outside counsel with respect to the
Registration Statement, rendered in form and substance in which "10b-5" letters
are typically delivered, shall have been delivered, dated as of the date of
delivery, which date shall not be earlier than the later to occur of (i) the
effective date of the Registration Statement, (ii) the date of any filing of a
Form 8-K by the Company subsequent to the effective date of the Registration
Statement and (iii) the date of filing by the Company subsequent to the
effective date of the Registration Statement of an Annual Report on Form 10-K;
provided, however, that in the case of clause (iii), if the Company shall
consummate an underwritten offering of securities at any time, the Company may
elect, at the time of such underwritten offering, to cause its outside counsel
to deliver such letter to the Investor at the time of such underwritten offering
in lieu of otherwise having to deliver a letter with respect to the next
subsequently filed Annual Report on Form 10-K.

     (m) Change of Control. The Company shall not have sold, conveyed or
disposed of all or substantially all of the assets of the Company, nor shall the
Company have effected a transaction or series of related transactions in which
more than 50% of the voting power of the Company is disposed of, nor shall the
Company have engaged in the consolidation, merger or other business combination
of the Company with or into any other Person or Persons when the Company is not
the survivor.

     SECTION 6.03. Documents Required to be Delivered on each Draw Down Date.
The Investor's obligation to purchase Common Shares pursuant to a Draw Down
hereunder shall additionally be conditioned upon the delivery to the Investor on
or before the Draw Down Date of a certificate in form and substance satisfactory
to the Investor, executed by an executive officer of the Company to the effect
that all conditions to the delivery of such Draw Down Notice shall have been
satisfied as at the date of such certificate (which certificate shall not be
required if the foregoing representations shall be set forth in the Draw Down
Notice):

     SECTION 6.04. Draw Down Cancellation.

     (a) Mechanics of Draw Down Cancellation. If at any time during a Valuation
Period, (i) any of the events specified in Section 5.09 of this Agreement shall
occur, (ii) any of the conditions precedent to a Draw Down set forth in Section
6.02 shall no longer be satisfied as of any date during the Valuation Period or
(iii) the Company discovers that the document referred to in Section 6.03 or the
Comfort Letter(s) or the Periodic Accountant's Report covering the Company's
most recently completed fiscal quarter (other than the fourth fiscal quarter) in
respect of which the Company has announced its results of operations would not
be deliverable in the precise form so delivered if delivered as of such date
during the Valuation Period, then the Company shall cancel the Draw Down (a
"Draw Down Cancellation") immediately by delivering written notice to the
Investor specifying the reasons therefor (the "Draw Down Cancellation Notice"),
by facsimile (simultaneously sent by e-mail and with telephonic advice of the
sending (which requirement will be deemed satisfied by leaving of recorded
message)). The Draw Down

                                       24

<PAGE>

Cancellation Notice shall be deemed delivered on (i) the Trading Day it is
received by facsimile or otherwise by the Investor if such notice is received
prior to 9:30 a.m., New York City time, or (ii) the immediately succeeding
Trading Day if it is received by facsimile or otherwise after 9:30 a.m., New
York City time, on a Trading Day, or at any time on a day which is not a Trading
Day. No Draw Down Cancellation Notice may be deemed delivered on a day that is
not a Trading Day. "Draw Down Cancellation Date" shall be the date the Draw Down
Cancellation Notice is deemed delivered pursuant to the preceding sentence.

     (b) Effect of Draw Down Cancellation. If a Draw Down Cancellation Notice
has been delivered to the Investor after a Draw Down Date, the Valuation Period
for such Draw Down shall end on the Trading Day immediately preceding the Draw
Down Cancellation Date. In such event, the Investment Amount relating to such
Draw Down shall be reduced by one-fifth (1/5) with respect to each Trading Day
during the period beginning on and including the Draw Down Cancellation Date and
ending on the last Trading Day of such Valuation Period. Anytime a Draw Down
Cancellation Notice is delivered to the Investor, such Draw Down shall remain
effective as to the portion of the Investment Amount not canceled pursuant to
the preceding sentence.

                                   ARTICLE VII
                                   TERMINATION

     SECTION 7.01. Term; Termination by Mutual Consent. Subject to the
provisions of Section 7.02, the term of this Agreement shall run until the end
of the Commitment Period; provided that the right of the Company to effect any
Draw Downs under this Agreement may be terminated at any time by mutual consent
of the parties. Notwithstanding the foregoing, the Company may terminate this
Agreement at any time provided that, simultaneously with such termination, it
shall make any payment required by Section 9.13.

     SECTION 7.02. Termination by the Investor. The Investor may terminate the
right of the Company to effect any Draw Downs under this Agreement upon one (i)
Trading Day's notice if any of the following events (each, an "Event of
Default") shall occur:

     (a) The Company or any subsidiary shall make an assignment for the benefit
of creditors, or apply for or consent to the appointment of a receiver or
trustee for it or for all or substantially all of its property or business; or
such a receiver or trustee shall otherwise be appointed;

     (b) Bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the relief
of debtors shall be instituted by or against the Company or any subsidiary of
the Company; or

     (c) The Company shall fail to maintain the listing of the Common Stock on a
Principal Market or trading in such Common Stock shall otherwise be halted or
suspended for a period of ten (10) consecutive Trading Days.

                                       25

<PAGE>

                                  ARTICLE VIII
                NON-DISCLOSURE OF MATERIAL NON-PUBLIC INFORMATION

     SECTION 8.01. Non-Disclosure of Material Non-Public Information.

     (a) The Company covenants and agrees that it shall refrain from disclosing,
and shall cause its officers, directors, employees and agents to refrain from
disclosing, any material non-public information to the Investor, unless prior to
disclosure of such information the Company identifies such information as being
material non-public information and provides the Investor and its advisors and
representatives with the opportunity to accept or refuse to accept such material
non-public information for review.

     (b) The Company acknowledges and understands that the Investor is entering
into this Agreement and the Registration Rights Agreement at the request of the
Company and in good faith reliance on (i) the Company's representation set forth
in this Agreement that neither it nor its agents have disclosed to the Investor
any material non-public information; and (ii) the Company's covenant set forth
in this Agreement that if the Company comes into possession of any material
non-public information, the Company shall make full and complete public
disclosure of such information in accordance with all applicable securities
laws.

     (c) Nothing herein shall require the Company to disclose material
non-public information to the Investor or its advisors or representatives, and
the Company represents that it does not disseminate material non-public
information to any investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts; provided, however, that
notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the Investor and its advisors and
representatives and, if any, underwriters, of the existence of any event or
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting material non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements therein, in light
of the circumstances in which they were made, not misleading.

                                   ARTICLE IX

                                  MISCELLANEOUS

     SECTION 9.01. Press Releases and Disclosure. The Company shall issue a
press release describing the material terms of the transactions contemplated
hereby as soon as practicable following the Closing Date but in no event more
than five (5) days following the Closing Date, and shall file with the
Commission a Current Report on Form 8-K describing the material terms of the
transactions contemplated hereby. No party hereto shall issue any press release
or make any other public disclosure related to this Agreement or any of the
transactions contemplated hereby without the prior written approval of the other
party hereto, except as may be necessary or appropriate in the opinion of the
party seeking to make disclosure to comply with the requirements of applicable
law or stock exchange rules. If any such press release or public

                                       26

<PAGE>

disclosure is so required, the party making such disclosure shall consult with
the other party prior to making such disclosure, and the parties shall use all
reasonable efforts, acting in good faith, to agree upon a text for such
disclosure that is satisfactory to all parties.

     SECTION 9.02. Expenses. The Company will pay the reasonable attorneys' fees
and expenses of the Investor in connection with the negotiation of the
Transaction Documents subject to a maximum of $35,000, $10,000 of which has been
paid and the balance of $25,000 of which shall be payable at the Closing.

     SECTION 9.03. Notices. All notices, demands, requests, consents, approvals
or other communications required or permitted to be given hereunder or that are
given with respect to this Agreement shall be in writing and shall be personally
served or deposited in the mail, registered or certified, return receipt
requested, postage prepaid or delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice: (i) if to the Company, to: Biopure
Corporation, 11 Hurley Street Cambridge, MA, Attention: Francis H. Murphy,
Facsimile No.: (617) 234-6507, with copies (which shall not constitute notice)
to: LeBoeuf, Lamb, Greene & MacRae LLP, 125 West 55th Street, New York, NY
10019, Attention: Joseph Ferraro, Facsimile No.: (212) 424-8500; and (ii) if to
the Investor, Societe Generale c/o SG Cowen Securities Corporation, 1221 Avenue
of the Americas, New York, NY 10020 Attention: Guillaume Pollet, Facsimile No.:
(212) 278-5467, with copies (which shall not constitute notice) to: Jones, Day,
Reavis & Pogue, 599 Lexington Avenue, New York, NY 10022, Attention: J. Eric
Maki, Facsimile No.: (212) 755-7306. Notice shall be deemed given on the date of
service or transmission if personally served or transmitted by telegram, telex
or facsimile. Notice otherwise sent as provided herein shall be deemed given on
the third business day following the date mailed or on the next business day
following delivery of such notice to a reputable air courier service.

     SECTION 9.04. Entire Agreement. This Agreement (together with the other
Transaction Documents and all other documents delivered pursuant hereto and
thereto) constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof.

     SECTION 9.05. Amendment and Waiver. This Agreement may not be amended,
modified, supplemented, restated or waived except by a writing executed by the
party against which such amendment, modification or waiver is sought to been
enforced. Waivers may be made in advance or after the right waived has arisen or
the breach or default waived has occurred. Any waiver may be conditional. No
waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof nor of any other
agreement or provision herein contained. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts.

     SECTION 9.06. No Assignment; No Third Party Beneficiaries. This Agreement
and the rights, duties and obligations hereunder may not be assigned or
delegated by the Company or

                                       27

<PAGE>

the Investor. Any purported assignment or delegation of rights, duties or
obligations hereunder shall be void and of no effect. This Agreement and the
provisions hereof shall be binding upon and shall inure to the benefit of each
of the parties and their respective successors. This Agreement is not intended
to confer any rights or benefits on any Persons other than as set forth above.

     SECTION 9.07. Severability. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.

SECTION 9.08. Further Assurances. Each party hereto, upon the request of any
other party hereto, shall do all such further acts and execute, acknowledge and
deliver all such further instruments and documents as may be necessary or
desirable to carry out the transactions contemplated by this Agreement.

     SECTION 9.09. Titles and Headings. Titles, captions and headings of the
sections of this Agreement are for convenience of reference only and shall not
affect the construction of any provision of this Agreement.

     SECTION 9.10. GOVERNING LAW; SUBMISSION TO JURISDICTION; ETC. (A) THIS
AGREEMENT SHALL BE GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS THEREOF. THE PARTIES HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK (UNLESS U.S. FEDERAL JURISDICTION IS LACKING, IN WHICH CASE
THE PARTIES AGREE TO SUBMIT TO THE JURISDICTION OF ANY STATE COURT OF GENERAL
JURISDICTION SITTING IN NEW YORK COUNTY IN THE STATE OF NEW YORK) IN RESPECT OF
ANY ACTION, SUIT OR PROCEEDING IN CONNECTION WITH ANY OF THE TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT
THE ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE ACTION, SUIT OR PROCEEDING IS IMPROPER OR THAT MATTERS RELATING TO
THE TRANSACTION DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN
OR BY SUCH COURTS.

     (b) The Investor hereby irrevocably appoints SG Cowen Securities
Corporation, 1221 Avenue of the Americas, New York, NY 10020 as its agent for
the purposes specified in

                                       28

<PAGE>

Section 9.10(a) above and covenants and agrees that service of process in any
such action, suit or proceeding may be made upon it at the office of such agent.

     SECTION 9.11. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, all of which taken together shall
constitute one and the same instrument.

     SECTION 9.12. Reporting Entity for the Common Stock. The reporting entity
relied upon for the determination of the VWAP, trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this Agreement
shall be Bloomberg Financial.

     SECTION 9.13. Commitment Fee Payment. In the event Company shall not issue
Draw Down Shares for an aggregate Investment Amount of at least $18,000,000
prior to the earlier to occur of (x) the termination of this Agreement and (y)
such time as any condition specified in Sections 6.02 (a)(II), (b)(II), (c)(II)
or (m) shall not be satisfied (subject in the case of clause (y) to the receipt
of notice described below), the Company shall pay the Investor the amount of
$900,000 (pro rated for issuances prior to the termination of this Agreement or
the date on which payment pursuant to this Section 9.13 is made by the Company
in respect of any such specified condition not being satisfied), payable two
business days following (A) termination of this Agreement or (B) in the case of
clause (y), the date on which the Investor shall notify the Company to make such
payment. In no event shall the Investor receive payment from the Company
pursuant to this Section 9.13 on more than one occasion.

     SECTION 9.14. Adjustments for Stock Splits, etc. The Maximum Share Amount,
the minimum Floor Price and calculations of the Average Daily Trading Volume
shall be equitably adjusted to reflect stock splits, stock dividends, reverse
stock splits and similar events.

                                       29

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Agreement to be executed by the undersigned, thereunto duly authorized,
as of the date first set forth above.

                                    BIOPURE CORPORATION

                                    By:    \s\ Francis H. Murphy
                                           -------------------------------------
                                           Name:  Francis H. Murphy
                                           Title:    Chief Financial Officer

                                    SOCIETE GENERALE

                                    By:    \s\ Francois Barthelemy
                                           -------------------------------------
                                           Name: Francois Barthelemy
                                           Title:   Authorized Signatory

<PAGE>

                                    EXHIBIT A

                               BIOPURE CORPORATION

                                DRAW DOWN NOTICE
                                                                          [Date]

Societe Generale
c/o SG Cowen Securities Corporation
1221 Avenue of the Americas
New York, New York 10022
Attn: Guillaume Pollet/John Lee

     Reference is made to the Equity Line Financing Agreement between Biopure
Corporation (the "Company") and Societe Generale dated as of June __, 2001. The
Company confirms that all conditions to the delivery of this Draw Down Notice
are satisfied as of the date hereof.

Effective Date of Delivery of Draw Down Notice (determined pursuant to Section
2.03(b)):                     .
          --------------------

First Date of Valuation Period:                    .
                                -------------------

Last Date of Valuation Period:                      .
                               ---------------------

Settlement Date:                     .
                 --------------------

Draw Down Amount (not to exceed Maximum Draw Down Amount):                    .
                                                           -------------------

Calculation of Maximum Draw Down Amount:                   .
                                         ------------------

Floor Price Limitation (if none specified, $13.00):                          .
                                                    -------------------------

                                        BIOPURE CORPORATION

                                        By:
                                               ---------------------------------
                                               Name:
                                               Title:

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