10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

         (Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from                      to

Commission File Number 000-28782

NEOTHERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	93-0979187
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
157 Technology Drive Irvine, California	92618
(Address of Principal Executive Offices)	(Zip Code)
Registrant’s Telephone Number, Including Area Code	(949) 788-6700

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [   ]

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock as of the latest practicable date:

Class	Outstanding at November 11, 2002
Common Stock, $.001 par value	1,615,094

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
	ITEM 1. Financial Statements
		Statement Regarding Financial Information
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Operations (unaudited)
		Condensed Consolidated Statements of Cash Flows (unaudited)
		Notes to Condensed Consolidated Financial Statements
	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
	ITEM 4. Controls and Procedures
PART II — OTHER INFORMATION
	ITEM 1. Legal Proceedings
	ITEM 2. Changes in Securities and Use of Proceeds
	ITEM 3. Defaults Upon Senior Securities
	ITEM 4. Submission of Matters to a Vote of Security Holders
	ITEM 5. Other Information (not previously reported in a Form 8-K)
	ITEM 6. Exhibits and Reports on Form 8-K
	ITEM 7. SIGNATURES
EXHIBIT 4.1
EXHIBIT 4.2
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.6
EXHIBIT 10.7
EXHIBIT 10.8
EXHIBIT 10.9
EXHIBIT 10.10

NEOTHERAPEUTICS, INC.

TABLE OF CONTENTS

		Page No.
PART I.	FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Statement Regarding Financial Information		3
	Condensed Consolidated Balance Sheets as of September 30, 2002 (unaudited) and December 31, 2001		4
	Condensed Consolidated Statements of Operations for the three-months ended September 30, 2002 and 2001 (unaudited) and for the nine-months ended September 30, 2002 and 2001 (unaudited)		5
	Condensed Consolidated Statements of Cash Flows for the nine-months ended September 30, 2002 and 2001 (unaudited)		6-8
	Notes to Condensed Consolidated Financial Statements (unaudited)		9
ITEM 2.	Management’s Discussion And Analysis of Financial Condition and Results of Operations		18
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		32
ITEM 4.	Controls and Procedures		32
PART II.	OTHER INFORMATION		33
ITEM 1.	Legal Proceedings		33
ITEM 2.	Changes in Securities and Use of Proceeds		33
ITEM 3.	Defaults Upon Senior Securities		33
ITEM 4.	Submission of Matters to a Vote of Security Holders		34
ITEM 5.	Other Information (not previously reported in a Form 8-K)		34
ITEM 6.	Exhibits and Reports on Form 8-K		34
SIGNATURES			35

2

NeoTherapeutics, Inc.

FORM 10-Q

For the Quarterly Period Ended September 30, 2002

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

Statement Regarding Financial Information

         The condensed consolidated financial statements of NeoTherapeutics, Inc. (the “Company”) included herein have been prepared by management, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States has been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The Company recommends that you read the consolidated financial statements included herein in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001, filed with the Securities and Exchange Commission. Due to the change in management and strategic direction announced on August 20, 2002, the Company does not believe that results will be indicative of results for future periods.

3

NEOTHERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

				September 30,			December 31,
				2002			2001
				(Unaudited)
Assets
Current Assets:
		Cash and cash equivalents		$	41,440		$	749,213
		Marketable securities and short-term investments			254,982			6,407,388
		Licensing fee receivable			2,000,000			—
		Other receivables			106,887			474,007
		Prepaid expenses and refundable deposits			244,131			386,229
			Total current assets		2,647,440			8,016,837
Property and Equipment, at cost:
		Equipment			4,881,278			5,397,052
		Leasehold improvements			1,910,350			1,937,912
		Accumulated depreciation and amortization			(3,259,828	)		(2,646,103	)
			Property and equipment, net		3,531,800			4,688,861
Other Assets — refundable deposits					98,614			119,164
			Total assets	$	6,277,854		$	12,824,862
Liabilities and Stockholders’ Equity
Current Liabilities:
		Accounts payable and accrued expenses		$	3,053,135		$	4,186,085
		Accrued payroll and related taxes			358,825			236,223
		Current portion of capitalized lease obligations			333,568			654,434
		Note payable to related party			—			135,574
			Total current liabilities		3,745,528			5,212,316
Capital lease obligations, net of current portion					220,540			463,705
Deferred revenue and other non-current liabilities					230,377			361,831
Commitments and Contingencies (note 8)
Stockholders’ Equity:
	Preferred stock, par value $0.001 per share, 5,000,000 shares authorized:
	None issued or outstanding at September 30, 2002 and December 31, 2001				—			—
	Common stock, par value $0.001 per share, 50,000,000 shares authorized:
	Issued and outstanding, 1,590,112 and 951,086 shares at September 30, 2002 and December 31, 2001, respectively				1,590			951
	Additional paid in capital				141,863,690			134,682,093
	Deferred compensation				(283,473	)		(1,889,628	)
	Notes receivable from directors and officers				(225,000	)		(615,649	)
	Accumulated other comprehensive income				1,117			87,065
	Accumulated deficit				(139,276,515	)		(125,477,822	)
			Total stockholders’ equity		2,081,409			6,787,010
			Total liabilities and stockholders’ equity	$	6,277,854		$	12,824,862

The accompanying notes are an integral part of these
condensed consolidated balance sheets.

4

NEOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Operations (unaudited)

		Three-Months Ended						Nine-Months Ended
		September 30, 2002			September 30, 2001			September 30, 2002			September 30, 2001
Revenues		$	2,008,334		$	8,334		$	2,219,307		$	16,668
Operating expenses:
	Research and development		2,685,555			4,710,184			11,437,910			13,267,689
	General and administrative		461,201			1,508,790			3,349,012			5,304,251
	Restructuring expenses		1,381,088			—			1,381,088			—
Total operating expenses			4,527,844			6,218,974			16,168,010			18,571,940
Loss from operations			(2,519,510	)		(6,210,640	)		(13,948,703	)		(18,555,272	)
Other income, net			166,378			85,077			150,011			504,209
Minority interest			—			146,547			—			(48,453	)
Net loss		$	(2,353,132	)	$	(5,979,016	)	$	(13,798,692	)	$	(18,099,516	)
Basic and diluted net loss per share		$	(1.50	)	$	(7.02	)	$	(11.23	)	$	(24.23	)
Basic and diluted weighted average common shares outstanding			1,564,664			851,129			1,228,911			746,866

The accompanying notes are an integral part of these
condensed consolidated statements.

5

NEOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows (unaudited)

					Nine-Months			Nine-Months
					Ended			Ended
					September 30, 2002			September 30, 2001
Cash Flows From Operating Activities:
Net loss					$	(13,798,692	)	$	(18,099,516	)
Adjustments to reconcile net loss to net cash used in operating activities:
			Depreciation and amortization			745,404			569,303
			Impairment on investment in marketable security			50,904			—
			Amortization of employee stock option compensation			375,146			1,155,144
			Minority interest in net loss			—			(162,380	)
			Amortization of debt discount			—			9,827
			Issuance of common stock for services			102,000			22,750
			Beneficial conversion feature related to preferred stock of consolidated subsidiary			—			—
			Amortization of discount on convertible debentures and beneficial conversion feature			—			—
			Fair value of warrants issued for consulting services			—			—
			Issuance of common stock in settlement of litigation			—			—
			Offset of retirement benefit obligation to an officer against a note receivable from the officer			390,649			—
			Compensation expense for extension of debt conversion agreements, net			—			—
			Gain on sale of assets			—			—
			Changes in operating assets and liabilities:
				(Increase) decrease in other receivables, prepaid expenses and refundable deposits		(1,490,782	)		49,459
				(Decrease) increase in accounts payable and accrued expenses		(1,132,950	)		(1,137,249	)
				Increase (decrease) in accrued payroll and related taxes		122,602			(1,024	)
				(Decrease) increase in other non-current liabilities		(131,454	)		91,897
				(Repayment of) proceeds from notes payable to related parties, net		(135,574	)		(150,000	)
				Increase in employee expense reimbursement and accrued interest to related parties		—			—
Net cash used in operating activities						(14,902,747	)		(17,651,789	)
Cash Flows From Investing Activities:
		Redemption (purchases) of marketable securities and short-term investments, net				6,015,555			(2,152,114	)
		Purchases of property and equipment				(59,121	)		(1,034,038	)
		Increase (decrease) in other assets				20,550			(179,693	)
		Payment of organization costs				—			—
		Proceeds from sale of equipment				470,779			—
		Issuance of notes receivable				—			—
	Net cash provided by (used in) investing activities					6,447,763			(3,365,845	)

The accompanying notes are an integral part of these
condensed consolidated statements.

6

NEOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows (unaudited) (continued)

		Nine-Months			Nine-Months
		Ended			Ended
		September 30, 2002			September 30, 2001
Cash Flows From Financing Activities:
	Proceeds from issuance of common stock and warrants, net of related offering costs and expenses		8,454,242			21,772,736
	Payments made on capital lease obligations		(564,031	)		(506,703	)
	Proceeds from issuance of common stock in consolidated Subsidiary		—			1,000
	Proceeds from preferred stock issuance, net of offering costs and expenses		—			—
	Proceeds from sale of preferred stock of consolidated Subsidiary, net of issuance costs and expenses		—			(4,684,193	)
	Proceeds from exercise of stock options and warrants		—			—
	Proceeds from sale of convertible debentures, net of issuance costs		—			—
	Proceeds from long-term debt		—			—
	Proceeds from notes receivables from officers and directors for exercise of stock options		—			—
	Purchase of preferred stock of consolidated Subsidiary		—			—
	Payment of dividend on preferred stock of consolidated Subsidiary		—			(815,807	)
	Purchase of common stock and warrants		(143,000	)		—
	Purchase of Series C preferred stock		—			(300,000	)
	Dividends paid to preferred stockholders		—			—
	Cash at acquisition		—			—
	Net cash provided by financing activities		7,747,211			15,467,033
	Net (decrease) increase in cash and cash equivalents		(707,773	)		(5,550,601	)
	Cash and cash equivalents, beginning of period		749,213			6,158,375
	Cash and cash equivalents, end of period	$	41,440		$	607,774

The accompanying notes are an integral part of these
condensed consolidated statements.

7

NEOTHERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows (unaudited) (continued)

		Nine-Months		Nine-Months
		Ended		Ended
		September 30, 2002		September 30, 2001
Schedule of Non-Cash Investing and Financing Activities:
	Unrealized loss (gain) on marketable securities	$	85,948	$	(101,295	)
	Forfeiture of stock options in consolidated Subsidiary	$	818,124	$	—
	Expiration of stock options granted to employees and non-employees below fair market value	$	412,885	$	—
	Stock and stock options granted to employees and non-employees below fair market value	$	—	$	2,391,118
	Fixed assets financed by capital leases	$	—	$	197,689
	Conversion of subsidiary preferred stock into Company Series C preferred stock	$	—	$	—
	Conversion of preferred stock and convertible debentures into shares of common stock	$	—	$	1,677,465
	Retirement of preferred stock	$	—	$	3,977
	Reclassification of warrants and other	$	—	$	453,348
	Minority interest share of proceeds from issuance of common stock in consolidated Subsidiary	$	—	$	(100	)
	Financing of insurance policies and other assets	$	—	$	—
	Issuance of warrants in connection with equity and debt financings	$	—	$	—
	Dividends on preferred stock paid in shares of common stock	$	—	$	6,808
	Conversion of other accrued liabilities into shares of common stock	$	—	$	—
	Conversion of accrued interest into notes payable to related Parties	$	—	$	—
	Conversion of revenue participation units into shares of common stock	$	—	$	—

The accompanying notes are an integral part of these
condensed consolidated statements.

8

NEOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements

 
September 30, 2002
(Unaudited)

1. Organization and Business and Basis of Presentation, Liquidity and Going Concern

Organization and Business

Organization

         NeoTherapeutics, Inc., was incorporated in Colorado as Americus Funding Corporation (or AFC) in December 1987. In August 1996, AFC changed its name to NeoTherapeutics, Inc. and in June 1997, the Company was reincorporated in the state of Delaware. NeoTherapeutics had five subsidiaries at September 30, 2002: NeoOncoRx, Inc., 90.48% owned by NeoTherapeutics and incorporated in California in November 2000; NeoTherapeutics GmbH, wholly owned by NeoTherapeutics and incorporated in Switzerland in April 1997; NeoGene Technologies, Inc., 88.4% owned by NeoTherapeutics and incorporated in California in October 1999; NeoTravel, Inc., wholly owned by NeoTherapeutics and incorporated in California in April 2001; and NeoJB LLC, organized in California in April 2002 and intended to be 80% owned by NeoTherapeutics. Advanced ImmunoTherapeutics, Inc., a previously wholly owned subsidiary of NeoTherapeutics, was merged into NeoTherapeutics in 2001. Unless the context otherwise requires, all references to the “Company”, “we”, “our”, “us” and “NeoTherapeutics” refer to all of the companies above as a consolidated entity.

Business

We were a development stage pharmaceutical company through the second quarter ended June 30, 2002. Beginning in the third quarter ended September 30, 2002, we are no longer a development stage enterprise in that we have commenced our planned principal operations of (1) in-licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates and (2) the discovery of neurology drugs and out-licensing these drug candidates to strategic partners and have generated revenue from these operations.

         Our functional genomics business is engaged in discovering gene functions and validating novel molecular targets for innovative drug development. On July 19, 2002, we adopted a formal plan to discontinue the operations of our functional genomics business. However, as part of a change in management and reassessment of the Company’s strategy in August 2002, we altered our plans to discontinue the operations and changed the focus of the business to out-licensing the genomics technology and the administration of two Pfizer collaboration agreements. We have eliminated all further functional genomics research operations and the associated research funding commitments to the University of California, Irvine.

         We conduct our pharmaceutical activities as NeoTherapeutics and NeoOncoRx, and our functional genomics activities as NeoGene Technologies.

Basis of Presentation, Liquidity and Going Concern

Basis of Presentation

         Our independent auditors issued a report on our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2001, that included an explanatory paragraph regarding our ability to continue as a going concern. We have prepared the accompanying unaudited condensed consolidated financial statements under the assumption that we are a going concern. Accordingly, they do not include adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that would be required if we were not able to continue as a going concern. Additionally, the accompanying unaudited condensed consolidated financial statements are prepared on a consistent basis in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP

9

NEOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements
(continued)

September 30, 2002
(Unaudited)

for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and consolidation and elimination entries) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2001.

         Certain quarterly amounts have been reclassified to conform to the current period presentation. All share and per share information has been restated to affect for the 25-for-1 reverse split of our outstanding common stock approved on September 5, 2002 and executed on September 6, 2002.

Liquidity and Going Concern

         On August 20, 2002, we announced a shift in our strategic focus from discovery and development of neurology drugs to the in-licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates and the discovery of neurology drugs and out-licensing these drug candidates to strategic partners. As a result of these changes and the completion of a large Alzheimer’s disease clinical trial, our expense burn rate fell from approximately $7 million per quarter to approximately $5 million during the three-month period ended June 30, 2002 to approximately $3 million (excluding the restructuring charge and the GPC Biotech license fee revenue) during the three-month period ended September 30, 2002, and we expect it to continue to fall to approximately $1.5 million, or lower, per quarter beginning in the fourth quarter of 2002. The recent and the prospective reduction in the burn rate is principally due to reductions in clinical, research and administrative personnel, representing an approximate 77% reduction in personnel since December 2001, the termination of a facility lease for office space used to administer the Alzheimer’s disease clinical trial, the reduction of expenses for the manufacturing of Neotrofin supplies, a reduction in our research and fellowship grant commitments, and the elimination of the research operations of our functional genomics business.

         During the three-month period ended September 30, 2002, we sold 258,824 shares of our common stock for net cash proceeds of approximately $1 million and issued warrants to purchase 120 shares of our common stock at an exercise price of $7.50 per share.

         On September 5, 2002, our stockholders approved an amendment to our certificate of incorporation to effect a 25-for-1 reverse split of our outstanding common stock at a Special Meeting of Stockholders.

         As of the filing of this quarterly report on Form 10-Q, approximately 2.3 million shares of our 50 million shares of authorized common stock are outstanding or subject to warrants or reserved under stock option plans.

         On September 30, 2002, we entered into a co-development and license agreement with GPC Biotech AG for the development and commercialization of our lead drug candidate, satraplatin. Under the co-development and licensing agreement, NeoTherapeutics may receive up to $22 million in license fees and milestone payments. The license fee consists of a total of $4 million; $2 million upon signing (which was received in October of 2002) and $1 million in cash and a $1 million equity investment within 30 days after the first dosing of a patient in a registrational study. GPC Biotech has agreed to make additional payments totaling up to $18 million upon achieving agreed upon milestones. However, there can be no assurance that any milestone will be achieved. Furthermore, GPC Biotech has agreed to fully fund development and commercialization expenses for satraplatin. Upon commercial sale of satraplatin, if any, NeoTherapeutics will be entitled to receive royalty payments based upon net sales.

         At September 30, 2002 our cash and investment balance was approximately $296,000. Subsequent to September 30, 2002 we received net cash proceeds from a licensing agreement with GPC Biotech AG of $2 million. We will not be able to continue as a going concern after December 2002 unless we succeed in raising additional funds through public or private financings, including equity financings, or through other arrangements, merge with another company that has sufficient resources for us to continue our planned operations, or successfully out-license some or all of our technology. We may not be successful in raising additional funds, selling the company, or out-licensing our technology, or we may not be able to do so at terms that are favorable to us. We do not know whether we will be able to secure sufficient new funds to continue our businesses. If we are not able to obtain sufficient funding within the

10

NEOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements
(continued)

September 30, 2002
(Unaudited)

time frame estimated by us, we will have to take other actions that we otherwise would not take, such as selling some or all of our intellectual property rights or further restructuring our operations, or a combination of these activities, including the possibility of a restructuring or liquidation provided for by one of the sections of the United States Bankruptcy Code.

         Our common stock was transferred from the Nasdaq National Market to the Nasdaq SmallCap Market where it began trading on October 16, 2002 under the ticker symbol NEOT. To remain listed on this market, we must meet Nasdaq’s continued listing requirements. Among other requirements, Nasdaq rules require that a SmallCap Market company maintain a minimum stockholders equity of $2.5 million or a minimum market value of listed securities of $35 million or a net income from continuing operations (in latest fiscal year or 2 of the last 3 fiscal years) of at least $500,000. We are currently not in compliance with this standard. There is no assurance that we will be able to regain compliance with this standard or maintain compliance with any of the other continued listing requirements. If we fail to do so, our common stock could be delisted from the Nasdaq SmallCap Market. Please see “Risk Factors” under “Item 2 – Management’s Discussion and Results of Operations and Financial Condition” for alternatives should our common stock be delisted.

         In June 2002, we retained an investment banker and financial advisor to assist us in searching out strategic alternatives, including the sale or merger of the Company or any of our businesses. In September 2002, we terminated the services of the investment banker, however, we continue to discuss strategic alternatives with several pharmaceutical companies, including the out-licensing of some of our neurology technology platforms or oncology drug products, or a sale of the Company.

         As shown in the accompanying condensed consolidated financial statements, we continue to incur significant losses and negative cash flow from operations. During the nine-month period ended September 30, 2002, we incurred a loss of approximately $13.8 million. Our burn rate during the three-month period ended September 30, 2002 was approximately $3.0 million, excluding the charges related to the restructuring and the revenue related to the GPC Biotech AG licensing agreement.

2. New Accounting Standards

         In October 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS 144). This statement supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of” (SFAS 121), and amends Accounting Principles Board Statement No. 30, “Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions” (APB 30). SFAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less costs to sell. SFAS 144 retains the fundamental provisions of SFAS 121 for (a) recognition and measurement of the impairment of long-lived assets to be held and used and (b) measurement of long-lived assets to be disposed of by sale. This statement also retains APB 30’s requirement that companies report discontinued operations separately from continuing operations. All provisions of SFAS 144 were effective for us on January 1, 2002. The adoption of SFAS 144 did not have an impact on our consolidated financial position or results of operations.

         The FASB has issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical Correction, which establishes a requirement to classify gains and losses on extinguishment of debt as income or loss from continuing operations rather than as extraordinary items as previously required under SFAS 4. Extraordinary treatment will be required for certain extinguishments as provided in APB Opinion No. 30. SFAS 145 also amends SFAS 13 to require certain modifications to capital leases be treated as a sale-leaseback and modifies the accounting for sub-leases when the original lessee remains a secondary obligor or guarantor. We do not anticipate the adoption of SFAS 145 to have a material impact on our financial condition or results of operations.

         In June 2002, the FASB issued SFAS No. 146 “Accounting for Costs Associated with Exit or Disposal Activities” (SFAS 146). This statement supercedes Emerging Issues Task Force (EITF) Issue No. 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability is recognized at the date an entity commits to an exit plan. SFAS 146 also establishes that the liability should initially be

11

NEOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements
(continued)

September 30, 2002
(Unaudited)

measured and recorded at fair value. The provisions of SFAS 146 will be effective for any exit and disposal activities initiated after December 31, 2002.

3. Joint Venture

         On April 17, 2002, we formed a joint venture with J.B. Chemicals & Pharmaceuticals, Ltd. of Mumbai, India (“JBCPL”) and created a new entity, NeoJB, LLC, a Delaware limited liability company (“NeoJB”). We will own 80% of NeoJB and a JBCPL subsidiary will own 20% of NeoJB. The business operations of NeoJB will initially be to seek U.S. regulatory approval on JBCPL pharmaceutical products and to subsequently market these products in the U.S. and possibly other countries. We will initially fund 100% of NeoJB’s operating expenses. In conjunction with the formation of NeoJB, we granted a five-year warrant to JBCPL to purchase up to 4,000 shares of our common stock at an exercise price of $11.25 per share, equal to the market price of our common stock on the date of grant. The fair value of the warrant was estimated to be $38,000 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%; expected volatility of 119.8%; risk free interest rate of 5.0%; and an expected life of five years.

         Minimal activity has occurred under this joint venture because we have not had sufficient funds available. Following the change in management on August 19, 2002, we have continued to develop the joint venture but have not entered into any commitments at this time.

         The Company is also reviewing other possible joint ventures to promote its strategic focus.

4. Marketable Securities

         As of September 30, 2002, we had one investment of approximately $61,000 in WorldCom, Inc. corporate bonds that matures on May 15, 2003. The fair market value of these corporate bonds at September 30, 2002 was approximately $7,000, based on a market quotation. In July 2002, WorldCom Inc. and its subsidiaries filed a voluntary jointly administered petition under the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. We believe that it is probable that we will be unable to collect all amounts due to us according to the contractual terms of the corporate bonds, therefore, we consider the impairment as other than temporary and recorded a loss for approximately $51,000 in other expense during the three-month period ended June 30, 2002.

5. Deferred Revenue

         As of September 30, 2002 and December 31, 2001, we had deferred revenue of $152,000 and $259,000, respectively, included in other non-current liabilities in our balance sheet.

         During 2001 we received initial payments totaling $300,000 under two licensing agreements that we have between our functional genomic business segment and Pfizer Inc. We are obligated to pay to the University of California, Irvine (“UCI”), 25% of all payments received from Pfizer under our agreement with UCI. On May 10, 2002, we received the first milestone payment of $250,000 from Pfizer Inc. under our technology out-license agreement dated March 15, 2001 with Pfizer. This milestone payment became due at the time Pfizer formally approved the funding and implementation of a research program with respect to a pharmaceutical lead based on the technology that we licensed to Pfizer. Under these agreements, we entered into strategic alliances with Pfizer for investigating potential drug targets. We may receive additional payments from Pfizer if they achieve certain milestones as defined in the agreements. In accordance with our revenue recognition policy these initial payments, less amounts owed to UCI, will be recognized as revenue over a three-year period from the date of inception of the respective agreement, whereas substantive milestone payments will be recognized as revenue, less amounts owed to UCI, upon receipt. We recognized licensing revenue related to this agreement of $219,307 during the nine-month period ended September 30, 2002. The two Pfizer agreements will remain in effect, if we are successful in our negotiations with UCI to extend the rights to the receptors underlying the two Pfizer agreements, following the reduction of operations at our NeoGene subsidiary.

12

NEOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements
(continued)

September 30, 2002
(Unaudited)

6. Co-Development and License Agreement with GPC Biotech AG

         On September 30, 2002, we entered into a co-development and license agreement with GPC Biotech AG for the development and commercialization of our lead drug candidate, satraplatin. Under the Co-Development and Licensing Agreement, NeoTherapeutics may receive up to $22 million in license fees and milestone payments. The license fee consists of a total of $4 million; $2 million upon signing (which was received in October of 2002) and $1 million in cash and a $1 million equity investment within 30 days after the first dosing of a patient in a registrational study. GPC Biotech has agreed to make additional payments totaling up to $18 million upon achieving agreed upon milestones. However, there can be no assurance that any milestone will be acquired. Furthermore, GPC Biotech has agreed to fully fund development and commercialization expenses for satraplatin. Upon commercial sale of satraplatin, if any, NeoTherapeutics will be entitled to receive royalty payments based upon net sales. In accordance with our revenue recognition policy this initial payment was recognized as revenue as the Company has satisfied its commitments under the license agreement.

7. Restructuring Expenses

         During the nine-month period ended September 30, 2002, we shifted our strategic focus from discovery and development of neurology drugs to the in-licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates and the discovery of neurology drugs and out-licensing these drug candidates to strategic partners. As a result of this change in focus, we terminated all research efforts related to Neotrofin and functional genomics as well as reduced the level of research activity related to neurology. As part of the restructuring, 21 employees were terminated resulting in severance related expenses of $59,000, two senior executives retired and entered into retirement agreements with an associated expense of $704,000, the Company exchanged assets for certain payables to the University of California, Irvine which resulted in a net loss of $312,000 and the Company incurred restructuring related administrative and legal expenses of $306,000 during the quarter. As of September 30, 2002, we had completed substantially all of the activities related to the restructuring except for a review of possible impairment related to the Company’s property, plant and equipment. We expect that this review will be completed by December 31, 2002.

         Effective August 16, 2002, Dr. Alvin J. Glasky retired from his positions as Chairman of our Board of Directors, Chief Executive Officer and Chief Science Officer. In connection with his retirement, we have entered into an agreement with Dr. Glasky which provides for the payment of approximately $113,000 in severance benefits through December 31, 2002, accrued vacation benefits and deferred salary of approximately $54,000, and an additional payment of approximately $106,000, representing the repayment of certain loans from Dr. Glasky to us, net of other offsets. In addition, in lieu of the payment of additional contractually obligated severance benefits of approximately $390,000, the Company relieved Dr. Glasky of his obligation to repay a loan in the amount of $390,000. As of September 30, 2002, $85,000 of unpaid severance benefits due to Dr. Glasky are reflected as accrued payroll and related taxes in the accompanying balance sheet as of September 30, 2002.

         Effective August 21, 2002, Samuel Gulko retired from his positions as Senior Vice President Finance, Chief Financial Officer, Secretary, Treasurer and a Director. In connection with his retirement, we have entered into an agreement with Mr. Gulko, which provides for the payment of approximately $200,000 in severance benefits and accrued vacation benefits and deferred salary of approximately $34,000. In connection with his retirement, Mr. Gulko repaid a loan from the Company in amount of $75,000.

8. Commitments and Contingencies

Research and Fellowship Grants

         We periodically make non-binding commitments to various universities and not-for-profit research organizations to fund scientific research and fellowship grants that may further our research programs. During the three-month period ended September 30, 2002, several grants were terminated. At September 30, 2002, we had no non-binding commitments to pay research or fellowship grants. Grant expense for the nine-month periods ended September 30, 2002 and 2001, were approximately $351,000 and $600,000, respectively, and is included in research and development on the consolidated statement of operations.

13

NEOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements
(continued)

September 30, 2002
(Unaudited)

Debt and Capital Leases

         As of June 30, 2002, we were not in compliance with one of our debt covenants under our Master Note and Security Agreement secured by certain items of our lab equipment and computer software. An event of default had occurred because we had not maintained the required minimum balance of cash or equivalents. During the three-months ended September 30, 2002, we executed a modification of the lease providing the leaseholder a security interest in the property and equipment and accounts of the Company and in return, the leaseholder waived its rights to any remedies or actions due to the default. As a result of the waiver of the default, we have classified all of the amounts not due in one year as a non-current liability, “Capital lease obligations, net of current portion”, in our condensed consolidated balance sheet as of September 30, 2002.

Other

         On June 29, 2001, we became obligated to issue shares of our common stock pursuant to a license agreement. Pursuant to the terms of the agreement, if at one year from the date of signing the agreement the value of the shares is less than $100,000 we will pay the licensor such sum in cash, our common stock, or other negotiable security as will bring their value up to $100,000. As of September 30, 2002, we accrued $94,000 in our balance sheet as a current liability under accounts payable and accrued expenses.

         On September 30, 2002, the Company entered into a co-development and license agreement with GPC Biotech AG for the development and commercialization of our lead drug candidate, satraplatin. Under the agreement, we became obligated to maintain certain contractual obligations related to an underlying license agreement for satraplatin.

9. Stockholders’ Equity

Common Stock and Warrant Transactions

         On March 12 and March 20, 2002, we sold an aggregate of 124,000 shares of our common stock under our shelf registration statement at a negotiated purchase price of $50.00 per share resulting in $6.2 million of gross cash proceeds. The investors also received warrants to purchase up to 31,000 shares of our common stock at an exercise price of $68.75 per share. Under a preexisting agreement with a placement agent, a five-year warrant became exercisable with respect to 267 shares of our common stock at an exercise price of $50.00 per share. We also issued to two other placement agents five-year warrants to purchase up to a total of 800 shares of our common stock at an exercise price of $68.75 per share. The fair value of these warrants was estimated to be $24,800 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%; expected volatility of 75.4% risk free interest rate of 5.0%; and an expected life of five years. Offering costs, including cash commissions paid to placement agents of these transactions, were approximately $360,000.

         On June 5, 2002 we sold 32,000 shares of our common stock under our shelf registration statement at a negotiated purchase price of $8.75 per share for gross cash proceeds of $280,000. The investor also received a warrant to purchase up to 8,000 shares of our common stock at an exercise price of $11.25 per share. The fair value of the warrant was estimated to be $56,000 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%; expected volatility of 119.8%; risk free interest rate of 5.0%; and an expected life of five years. Two placement agents received warrants to purchase up to a total of 112 shares of our common stock at an exercise price of $11.25 per share. The fair value of these warrants was estimated to be $784 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%; expected volatility of 119.8%; risk free interest rate of 5.0%; and an expected life of five years. Offering costs including cash commissions paid to placement agents of this transaction were approximately $16,800.

         On June 7, 2002 we sold approximately 237,000 shares of our common stock under our shelf registration statement at a negotiated purchase price of $5.8125 per share for gross cash proceeds of approximately $1.4 million. The investors also received warrants to purchase up to 23,742 shares of our common stock at an exercise price of $6.875 per share. The fair value of the warrant was estimated to be $130,581 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%; expected volatility of 119.8%; risk free interest rate of 5.0%; and an expected life of five years. Two placement agents received

14

NEOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements
(continued)

September 30, 2002
(Unaudited)

warrants to purchase up to a total of 180 shares of our common stock at an exercise price of $6.875 per share. The fair value of the warrant was estimated to be $990 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%; expected volatility of 119.8%; risk free interest rate of 5.0%; and an expected life of five years. Offering costs including cash commissions paid to placement agents of this transaction were approximately $27,000. In order to comply with Nasdaq rules, we partially rescinded the June 7 transaction, repurchasing 16,000 shares of common stock at $5.8125 per share on July 25, 2002, and warrants to purchase 16,000 shares of common stock at $3.125 per share on July 31, 2002, for a total cost to us of $143,000. In addition, the remaining warrants have been amended so that they may not be exercised before December 8, 2002.

         On July 8, 2002, we sold 258,824 shares of our common stock under our shelf registration statement at a negotiated purchase price of $4.25 per share for gross cash proceeds of approximately $1.1 million. The placement agents received warrants to purchase up to a total of 120 shares of our common stock at an exercise price of $7.50 per share. The fair value of the warrants was estimated to be $360 using the Black-Scholes option pricing model with the following assumptions: dividend yield of 0%; expected volatility of 119.8%; risk free interest rate of 5.0%; and an expected life of five years. Offering costs including cash commissions paid to placement agents of this transaction were approximately $84,000.

         On September 5, 2002, our stockholders approved an amendment to our certificate of incorporation to effect a 25-for-1 reverse split of our outstanding common stock. The reverse split became effective on September 6, 2002. All share and per share amounts have been adjusted to affect for the 25-for-1 reverse stock split.

Comprehensive Loss

         During the three months ended September 30, 2002 and 2001, comprehensive loss was $2,358,000 and $5,792,000, respectively. During the nine-month periods ended September 30, 2002 and 2001, comprehensive loss was $13,885,000 and $18,014,000, respectively. At September 30, 2002 and 2001, accumulated other comprehensive income of $1,117 and $102,058, respectively, consisted of unrealized losses and gains on our marketable securities and short-term investments that are held as available-for-sale.

10. Equity Compensation

         Below is a summary of NeoTherapeutics, Inc. stock option activity during the nine-month period ended September 30, 2002:

					Weighted Average
		Shares			Exercise Price
Outstanding at December 31, 2001			116,679		$	168.50
	Granted		500,390		$	9.48
	Forfeited		(11,574	)	$	144.51
Outstanding at September 30, 2002			605,495		$	37.53
Exercisable at September 30, 2002			169,948		$	107.02

         Included in the granted options are options to purchase an aggregate of 314,000 shares at an exercise price of $1.0555 per share granted to employees on September 25, 2002 and options to purchase an aggregate of 60,000 shares at an exercise price of $1.00 per share granted to consultants on September 27, 2002. These grants were made subject to stockholder approval of an increase in the number of shares subject to our 1997 Stock Incentive Plan. Upon stockholder approval, the options will be considered granted for accounting purposes and therefore may result in the recognition of deferred compensation, which would be amortized over the term of the options. Also included in granted options are options to purchase an aggregate of 59,400 shares at an exercise price of $4.75 per share granted to members of our Board of Directors, options to purchase an aggregate of 3,200 shares at an exercise price of $4.00 per share granted to a key employee, options to purchase an aggregate of 11,150 shares at an exercise price of $9.75 per share granted to certain key employees and options to purchase an aggregate of 52,640 shares at an exercise price of $75.00 per share to certain key employees, which were awarded in 2001 subject to stockholder approval, but considered granted in 2002 upon approval of an increase in the size of the plan at our June 2002 stockholder meeting. We determined the exercise prices of these options based on the fair market value on the date of grant, except for the grant of 52,640 options, which we based on a 15% discount from the fair market value on the date of grant. An increase in the number of shares subject to our 1997 Stock Incentive Plan was approved on June 17,

15

NEOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements
(continued)

September 30, 2002
(Unaudited)

2002, by a vote of our stockholders. An additional increase in the number of shares subject to our 1997 Stock Incentive Plan will be proposed at the next stockholder meeting in June of 2003.

         We granted 54,080 stock options to employees in 2000 with exercise prices less than the fair market value of our common stock at the measurement date. The intrinsic value of the option grants amounting to $959,850 was recorded as deferred compensation and is being amortized to expense over the vesting period, in accordance with APB Opinion No. 25. During the nine-month periods ended September 30, 2002 and 2001, we recorded compensation expense of $111,441 and $484,581 respectively, as a result of such amortization.

NeoGene

         Below is a summary of NeoGene stock option activity during the nine-month period ended September 30, 2002:

					Weighted Average
		Shares			Exercise Price
Outstanding at December 31, 2001			137,654		$	1.25
	Forfeited		(76,000	)	$	1.00
Outstanding at September 30, 2002			61,654		$	1.55
Exercisable at September 30, 2002			15,415		$	1.55

         We issued 140,654 stock options of our majority owned subsidiary NeoGene to our employees in 2001 with exercise prices less than the fair market value of NeoGene’s common stock at the measurement date. The intrinsic value of the option grants amounting to $2,391,118 was recorded as deferred compensation and is being amortized to expense over the vesting period, in accordance with APB Opinion No. 25. During the three-month period ended June 30, 2002, our executive officers Alvin J. Glasky, Ph.D., Rajesh Shrotriya, M.D., and Samuel Gulko held NeoGene stock options to purchase up to 40,000, 10,000 and 20,000 shares of NeoGene common stock, respectively, at an exercise price of $1.00 per share. On May 3, 2002, each of these officers, voluntarily and without any consideration, agreed to cancel their NeoGene stock options. Our condensed consolidated balance sheet as of December 31, 2001 includes deferred compensation resulting from the grant of all NeoGene stock options of $2,391,118, of which $1,190,000 is attributed to NeoGene stock options formerly held by these executive officers. The accounting effect of the option cancellation is reflected in our September 30, 2002 condensed consolidated financial statements as a reduction in deferred compensation of approximately $818,000 and resulted in reduced amortization expense beginning on the date of cancellation. During November 2002, the remaining two employees holding NeoGene options voluntarily and without any consideration, agreed to cancel their NeoGene stock options and therefore the remaining deferred compensation for NeoGene will be eliminated in the fourth quarter of 2002.

         During the nine-month periods ended September 30, 2002 and 2001, we recorded compensation expense of $264,000 and $671,000, respectively, as a result of amortization prior to the cancellation of these options.

11. Notes Receivable from Directors and Officers

         On June 6, 2002, the Board of Directors approved an amendment and restatement of all of the note receivables from officers and directors. The original interest rates that were between 7% and 9% were all changed to 4.5% and the maturity dates were extended to June 6, 2004. The notes remain secured by a pledge of the common stock purchased with the loan proceeds. These notes are classified in our balance sheet as an offset to stockholders’ equity.

         In connection with the retirement of Dr. Alvin J. Glasky and Samuel Gulko, the Company relieved Dr. Glasky of his obligation to repay a loan in the amount of approximately $390,000 in principal and accrued interest in lieu of the payment of additional contractually obligated severance benefits and Mr. Gulko repaid a loan from the Company in the amount of $75,000 of principal and accrued interest.

16

NEOTHERAPEUTICS, INC.

Notes to Condensed Consolidated Financial Statements
(continued)

September 30, 2002
(Unaudited)

12. Segment Information

         During the nine-month period ended September 30, 2002, we shifted our strategic focus from discovery and development of neurology drugs to the in-licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates and the discovery of neurology drugs and out-licensing these drug candidates and the functional genomics technology to strategic partners. As a result of these strategic changes, the Company began to operate as one reporting segment in the third quarter of 2002.

13. Loss Per Share

         Basic and diluted loss per share for the three-month period ended September 30, 2002 and 2001 are computed using the weighted average common shares outstanding during the period, respectively.

14. Litigation

         We are not aware of any litigation matters pending or threatened as of September 30, 2002 that will materially affect our condensed consolidated financial statements. We are sometimes involved in matters of litigation that we consider ordinary routine litigation incidental to our business. Our policy is to accrue during a period, as a charge to operations, amounts related to legal matters if it is probable that a liability has been incurred and the amount of loss can be reasonably estimated, as required by SFAS No. 5, Accounting for Contingencies.

15. Income Taxes

         We did not provide any current or deferred federal or state income tax provision or benefit for the period presented because we have experienced operating losses since our inception. A valuation allowance has been recognized to fully offset the net deferred tax assets as of September 30, 2002 and December 31, 2001 as realization of such assets is uncertain.

16. Subsequent Events

         Our common stock was transferred from the Nasdaq National Market to the Nasdaq SmallCap Market where it began trading on October 16, 2002 under the ticker symbol NEOT. To remain listed on this market, we must meet Nasdaq’s continued listing requirements. Among other requirements, Nasdaq rules require that a SmallCap Market company maintain a minimum stockholders equity of $2.5 million or a minimum market value of listed securities of $35 million or a net income from continuing operations (in latest fiscal year or 2 of the last 3 fiscal years) of at least $500,000. We are currently not in compliance with this standard. There is no assurance that we will be able to regain compliance with this standard or maintain compliance with any of the other continued listing requirements. If we fail to do so, our common stock could be delisted from the Nasdaq SmallCap Market. Please see “Risk Factors” under “Item 2 – Management’s Discussion and Results of Operations and Financial Condition” for alternatives should our common stock be delisted.

17

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note Regarding Forward-Looking Statements

         This Quarterly Report on Form 10-Q contains certain words, not limited to, “believes,” “may,” “will,” “expects,” “intends,” “estimates,” “anticipates,” “plans,” “seeks,” or “continues,” that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to the Company’s management. Readers should not put undue reliance on these forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Our actual results may differ materially from the results projected in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed below under “Subsequent Events Affecting Future Results,” “Financial Market Risks,” and “Risk Factors.”

         You should read the following discussion of the financial condition and results of our operations in conjunction with the financial statements and the notes to those statements included elsewhere in this report.

Related Party Transactions

         During 1987 and 1988, Alvin J. Glasky, Ph.D., a former Chief Executive Officer who is also a major stockholder of ours, loaned a total of $270,650 to us for working capital purposes, of which $250,000 plus $2,000 of accrued interest was canceled in December 1988 in exchange for the issuance of 28 Revenue Participation Units (or RPU’s). The RPU’s were converted into 4,480 shares of our common stock.

         From 1989 through 1993, we borrowed an additional $757,900 from Dr. Glasky, which, together with accrued interest of $300,404, aggregated $1,058,304 on December 31, 1993, at which time we issued 8,000 shares of common stock to Dr. Glasky in exchange for cancellation of $500,000 of loans made to us. The remaining $257,900 in principal and $300,404 of accrued interest were converted to a $558,304 promissory note. Interest was paid monthly at the annual rate of 9%. The note was partially repaid in 2000 when we advanced cash to Dr. Glasky to pay payroll taxes arising from his exercise of a warrant for 3,527 shares of common stock at $93.75 per share in August 2000. We made a further partial repayment of the note in 2001. The outstanding balance was repaid on August 16, 2002, in connection with Dr. Glasky’s retirement as our Chairman, Chief Executive Officer and Chief Science Officer.

Assignment of Patents by Dr. Glasky

         Dr. Glasky assigned us all of his rights in ten patents. In connection with the assignment of these patents to us, we entered into royalty agreements with Dr. Glasky (or the “Glasky Agreements”), which expire concurrently with the expiration of the underlying patents and any additional patents derived from the underlying patents. Under each of the Glasky Agreements, as amended, we are obligated to pay Dr. Glasky a royalty of two percent (2%) of all revenues derived by us from the use and sale by us of any products or methods included in the patents. In the event of Dr. Glasky’s death, the family or estate is entitled to continue to receive, under each Glasky Agreement, royalties at a rate of two percent (2%) for the duration of the respective Glasky Agreement. Under the terms of the Glasky Agreements, Dr. Glasky may terminate the Glasky Agreements and receive a reassignment of the patents if we file a petition under any bankruptcy or insolvency laws or otherwise commence liquidation or winding up of our business.

McMaster University Agreement

         On July 10, 1996, we entered into a license agreement with McMaster University (or McMaster) that allows us the use of certain technologies developed by McMaster covered in the patents filed jointly by us and McMaster (US Patent Nos. 5,447,939, 5,801,184, 6,027,936, 6,338,963, and 6,350,752), all of which are also subject to the Glasky Agreements. Under the agreement, we paid a one time licensing fee of $15,000 and are obligated to pay to McMaster an annual royalty of five percent (5%) on net sales of products containing compounds developed by McMaster. In July 1997, we began to make, and have continued making, annual minimum royalty payments of $25,000.

18

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Director and Officer Notes for the Exercise of Equity Instruments

         We made loans to certain of our directors and officers for the exercise of stock options or for the purchase of stock. We loaned $286,560 in 1998, and $435,649 in 2000. During 2000, one individual paid $61,560 back to us and during 2001, in connection with the settlement of a litigation matter, we forgave a $45,000 note to one individual. During the three months ended September 30, 2002, loans made to Dr. Glasky totaling approximately $390,000 were repaid by the offset of certain liabilities incurred in connection with Dr. Glasky’s retirement and Sam Gulko repaid his loan in connection with his retirement. At September 30, 2002, $225,000 plus accrued interest remained due to us from directors and officers for the exercise of stock options or for the purchase of shares of common stock. In June 2002, the original interest rates that were between 7% and 9% were all changed to 4.5% and the maturity dates were extended to June 6, 2004. The notes remain secured by a pledge of the common stock purchased with the loan proceeds. The principal balance of these notes are classified in our balance sheet as an offset to stockholders’ equity. Accrued interest related to these notes are classified in our balance sheet as an other asset. The loans to directors and offices are permitted under Section 13 of the Securities and Exchange Act of 1934, as amended by Section 402 of the Sarbanes-Oxley Act on July 30, 2002, because they were outstanding on that date, however, their terms may not be renewed or materially modified in the future.

Critical Accounting Polices and Estimates

         Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including cash requirements resulting from estimating: planned research and development activities and general and administrative requirements, the retention of key personnel, certain clinical trial results, maintained market need for our product candidates and other major business assumptions.

         We believe that our most significant accounting policies that affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements are as follows:

Basis of Presentation

         Our independent auditors issued a report on our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2001, that included an explanatory paragraph regarding our ability to continue as a going concern. We have prepared the accompanying unaudited condensed consolidated financial statements under the assumption that we are a going concern. Accordingly, they do not include adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that would be required if we were not able to continue as a going concern. Additionally, the accompanying unaudited condensed consolidated financial statements are prepared on a consistent basis in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instruction to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and consolidation and elimination entries) considered necessary for a fair presentation have been included. Operating results for the three-month and nine-month periods ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2001.

         Certain quarterly amounts have been reclassified to conform to the current period presentation. All share and per share information has been restated to affect for the 25-for-1 reverse split of our common stock executed on September 6, 2002.

Liquidity and Going Concern

         On August 20, 2002, we announced a shift in our strategic focus from discovery and development of neurology drugs to the in-licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates and the discovery of neurology drugs and out-licensing these drug candidates to strategic partners. As a result of these changes and the completion of a large Alzheimer’s disease clinical trial, our burn rate fell from approximately $7 million per quarter

19

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

to approximately $5 million during the three-month period ended June 30, 2002 to approximately $3 million (excluding the restructuring charge and the GPC Biotech AG license fee revenue) during the three-month period ended September 30, 2002 and we expect it to continue to fall to approximately $1.5 million, or lower, per quarter beginning in the fourth quarter of 2002. The recent and the prospective reduction in the burn rate is principally due to reductions in clinical, research and administrative personnel representing an approximate 77% reduction in personnel since December 2001, the termination of a facility lease for office space used to administer the Alzheimer’s disease clinical trial, the reduction of expenses for the manufacturing of Neotrofin supplies, a reduction in our research and fellowship grant commitments, and the elimination of the research operations of our functional genomics business.

         During the three-month period ended September 30, 2002, we sold 258,824 shares of our common stock for net cash proceeds of approximately $1.0 million and issued warrants to purchase 120 shares of our common stock at an exercise price of $7.50 per share.

         On September 5, 2002, our stockholders approved an amendment to our certificate of incorporation to effect a 25-for-1 reverse split of our outstanding common stock at a Special Meeting of our stockholders.

         As of the filing of this quarterly report on Form 10-Q, approximately 2.3 million shares of our 50 million shares of authorized common stock are outstanding or subject to warrants or reserved under stock option plans.

         On September 30, 2002, we entered into a co-development and license agreement with GPC Biotech AG for the development and commercialization of our lead drug candidate, satraplatin. Under the co-development and licensing agreement, NeoTherapeutics may receive up to $22 million in license fees and milestone payments. The license fee consists of a total of $4 million; $2 million upon signing (which was received in October of 2002) and $1 million in cash and a $1 million equity investment within 30 days after the first dosing of a patient in a registrational study. GPC Biotech has agreed to make additional payments totaling up to $18 million upon achieving agreed upon milestones. However, there can be no assurance that this or any milestone will be achieved. Furthermore, GPC Biotech has agreed to fully fund development and commercialization expenses for satraplatin. Upon commercial sale of satraplatin, if any, NeoTherapeutics will be entitled to receive royalty payments based upon net sales.

         At September 30, 2002 our cash and investment balance was approximately $296,000. Subsequent to September 30, 2002 we received net cash proceeds from a licensing agreement with GPC Biotech AG of $2 million. We will not be able to continue as a going concern after December 2002 unless we succeed in raising additional funds through public or private financings, including equity financings, or through other arrangements, merge with another company that has sufficient resources for us to continue our planned operations, or successfully out-license some or all of our technology. We may not be successful in raising additional funds, selling the company, or out-licensing our technology, or we may not be able to do so at terms that are favorable to us. We do not know whether we will be able to secure sufficient new funds to continue our businesses. If we are not able to obtain sufficient funding within the time frame estimated by us, we will have to take other actions that we otherwise would not take, such as selling some or all of our intellectual property rights or further restructuring our operations or a combination of these activities including the possibility of a restructuring or liquidation provided for by one of the sections of the United States Bankruptcy Code.

         Our common stock was transferred from the Nasdaq National Market to the Nasdaq SmallCap Market where it began trading on October 16, 2002 under the ticker symbol NEOT. To remain listed on this market, we must meet Nasdaq’s continued listing requirements. Among other requirements, Nasdaq rules require that a SmallCap Market company maintain a minimum stockholders' equity of $2.5 million or a minimum market value of listed securities of $35 million or a net income from continuing operations (in latest fiscal year or 2 of the last 3 fiscal years) of at least $500,000. We are currently not in compliance. There is no assurance that we will be able to regain compliance with this standard or maintain compliance with any of the other continued listing requirements. If we fail to do so, our common stock could be delisted from the Nasdaq SmallCap Market. Please see “Risk Factors” under “Item 2 – Management’s Discussion and Results of Operations and Financial Condition” for alternatives should our common stock be delisted.

         In June 2002, we retained an investment banker and financial advisor to assist us in searching out strategic alternatives, including the sale or merger of the Company or any of our businesses. In September 2002, we terminated the services of the investment banker, however, we continue to discuss strategic alternatives with several pharmaceutical companies including the out-licensing of some of our neurology technology platforms or oncology drug products or a sale of the Company.

         As shown in the accompanying condensed consolidated financial statements, we continue to incur significant losses and negative cash flow from operations. During the nine-month period ended September 30, 2002, we incurred a loss of approximately $13.8

20

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

million. Our burn rate during the three-month period ended September 30, 2002 was approximately $3.0 million, excluding the charges related to the restructuring and the revenue related to the GPC Biotech AG licensing agreement. We anticipate that our burn rate will be reduced to approximately $1.5 million, or lower, per quarter starting with the fourth quarter.

Use of Estimates

         The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including, but not limited to, estimated cash requirements resulting from anticipated research and development activities and general and administrative requirements, the retention of key personnel, certain clinical trial results, maintained market need for our product candidates and other major business assumptions. Based on these and other estimates, we have estimated that our current working capital plus funds we are seeking to raise subsequent to the nine-month period ended September 30, 2002 will be sufficient for us to continue as a going concern and therefore have prepared the financial statements on that basis. Actual results could differ from our estimates. If these estimates prove to be wrong, we may not be able to continue as a going concern.

Cash and Cash Equivalents

         Cash and cash equivalents consist of cash and highly liquid investments of commercial paper and demand notes with original maturities of 90 days or less.

Marketable Securities and Short-Term Investments

         We classify investments in debt and equity securities among three categories: held-to-maturity, trading, and available-for-sale. As of September 30, 2002, all of our debt and equity securities holdings were categorized as available-for-sale. We carry available-for-sale securities at fair value, with unrealized gains and losses included as a component of accumulated other comprehensive income in stockholders’ equity. We use quoted market prices to determine the fair value of these investments.

Property and Equipment Purchased or Leased

         We carry property and equipment at historical cost, less accumulated depreciation and amortization. When property and equipment are disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in income. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives:

Equipment	5 to 7 years
Leasehold Improvements	The shorter of the estimated useful life or lease term

         We assess the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If impairment is indicated, we reduce the carrying value of the asset to fair value. While our current and historical operating and cash flow losses are potential indicators of impairment, we are in the process of determining whether the future cash flows to be received from the long-lived assets subsequent to our restructuring will exceed the assets’ carrying value. We expect to complete this analysis in the fourth quarter of 2002.

Research and Development

         Since our inception, virtually all of our activities have consisted of research and development efforts related to developing our technologies. Accordingly, the large majority of our transactions to date have related to research and development spending. We expense all such expenditures in the period incurred.

Stock-Based Compensation

         We account for stock-based awards to employees in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and have adopted the disclosure-only alternative of SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS 123”). Options granted to non-employees, as defined, have been accounted for at fair market value in accordance with SFAS 123.

21

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Revenue Recognition

         we have adopted a strategy of co-developing or licensing our drug product candidates. Accordingly, we have entered into collaborative research and development agreements and have received funding for pre-clinical research and clinical trials. Payments under these agreements, which are non-refundable, are recorded as revenue as the related research expenditures are incurred pursuant to the terms of the agreement and provided collectibility is reasonably assured. If no further commitments are required of us, the revenue is recognized when the license fee is payable.

         License fees comprise initial fees and milestone payments derived from collaborative licensing arrangements. Non-refundable milestone payments continue to be recognized upon (i) the achievement of specified milestones when we have earned the milestone payment, (ii) the milestone payment is substantive in nature and the achievement of the milestone was not reasonably assured at the inception of the agreement. We defer payments for milestone events which are reasonably assured and recognize them ratably over the minimum remaining period of our performance obligations. Payments for milestones which are not reasonably assured are treated as the culmination of a separate earnings process and are recognized as revenue when the milestones are achieved.

Results of Operations

         For the nine months ended September 30, 2002, we incurred a net loss of approximately $13.8 million. We expect that our operating expenses will decrease in the immediate future as compared to the same period last year due to the shift in our strategic focus and the reduction of the operations during the three months ended September 30, 2002. If we are able to raise sufficient additional funds, further development of our in-licensed anti-cancer drug candidates will likely cause our operational expenses to increase over the next several years. We expect to incur significant additional operating losses for AG the next several years unless such operating losses are offset, if at all, by licensing revenues under our agreement with GPC Biotech and strategic alliances with larger pharmaceutical companies that we are currently seeking. During the quarter, our functional genomics operations was reduced, restructured and merged with the pharmaceutical business, and we currently operate as one segment. The following is unaudited financial information for the three and nine-months ended September 30, 2002:

	Three-Months Ended				Nine-Months Ended
	September 30,				September 30,
	2002		2001		2002		2001
Revenues		2,008,334		8,334		2,219,307		16,668
Research and development		2,685,555		4,710,184		11,437,910		13,267,689
General and administrative		461,201		1,508,790		3,349,012		5,304,251
Restructuring expenses		1,381,088		—		1,381,088		—
Other Income, net		166,378		85,077		150,011		504,209

Results of Operations for the Three-Month Period Ended September 30, 2002 Compared to the Three-Month Period Ended September 30, 2001

         Revenue for the three-month period ended September 30, 2002 resulted from the recognition of the first licensing fee of $2 million from the co-development and licensing agreement with GPC Biotech AG and the technology out-licensing agreements with Pfizer entered into during the second and fourth quarter of 2001. In 2001, we entered into strategic alliances with Pfizer for investigating potential drug targets. We are obligated to pay to UCI 25% of all payments received under these agreements. In accordance with our revenue recognition policy the initial payments, less amounts owed to UCI, will be recognized as revenue over a three-year period from the date of inception of the respective agreement as we have outstanding commitments under the agreement, whereas substantive milestone payments will be recognized as revenue upon receipt, less amounts owed to UCI. The two Pfizer agreements will remain in effect, if we are successful in our negotiations with UCI to extend the rights to the receptors underlying the two Pfizer agreements, following the reduction of operations at our NeoGene subsidiary.

         Research and development expenses for the three-month period ended September 30, 2002 compared to the same period in 2001 decreased due primarily to the reduction of costs related to our clinical trial for Neotrofin in the treatment of patients with Alzheimer’s disease that ended in April 2002, causing a decrease in outside clinical research site costs, a decrease in product manufacturing costs, a decrease in salary and related benefit costs due to a reduction in research and development personnel, and a decrease in research grant expense due to a decrease in the commitments maintained by us. In addition, as a result of a restructuring, all research activities

22

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

related to Neotrofin and functional genomics were eliminated and our neurology pre-clinical research was reduced. During 2002, we incurred lower compensation charges associated with stock and stock options granted to employees and officers below fair market value compared to 2001 as a result of the reduction in the work force and the cancellation of certain options by three senior executives during the second quarter of 2002. These decreases were partially offset by increases in cost related to our clinical trial for Neotrofin in the treatment of patients with neuropathy, general business expenses related to the development of our oncology related drug candidates and increases in occupancy and facility costs due to the building sub-lease entered into in November 2001.

         General and administrative expenses for the three-month period ended September 30, 2002 compared to the same period in 2001 decreased due primarily to a general decrease in personnel during the three-month period ended September 30, 2002, an early termination fee paid in 2001, a license fee paid for the in-license of one of our oncology drug candidates in 2001, decreases in consulting expenses, travel and lodging expenses, officer relocation expenses, a decrease in business activities in our functional genomics business and a decrease in deferred compensation related to stock options in NeoGene granted to employees and officers below fair market value at an exercise price of $1.00 per share. The decrease was offset by an increase in depreciation expense due to the acquisition of property and equipment during the last quarter of 2001 and the first six months of 2002.

         Restructuring expenses were incurred during the three-month period ended September 30, 2002 as a result of a shift in our strategic focus from discovery and development of neurology drugs to the in-licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates, the discovery of neurology drugs and out-licensing of these drug candidates to strategic partners. As a result of these changes, we laid off 21 employees, two senior executives retired and we incurred significant administrative and legal expenses. The restructuring charge includes legal fees related to the restructuring in the amount of $231,000, a loss on the exchange of assets for certain payables to the University of California, Irvine in the amount of $312,000, retirement benefits offset against a loan to Dr. Glasky, the Company’s former CEO and current board member, in the amount of $390,000, $114,000 in severance benefits to Dr. Glasky, $200,000 in severance benefits to Samuel Gulko, the Company’s former Chief Financial Officer, Board of Directors fees of $71,000 for special meetings related to the restructuring and personnel severance related expenses of $59,000.

         Other income for the three-month period ended September 30, 2002 compared to the same period in 2001 increased due primarily to the receipt of a $250,000 exclusivity payment from a party negotiating a potential corporate transaction with the Company. During the quarter, the exclusivity period expired and we are no longer in discussions with the party. The increase was offset by a decrease in interest income resulting from lower average marketable securities balances and lower interest rates.

Results of Operations for the Nine-Month Period Ended September 30, 2002 Compared to the Nine-Month Period Ended September 30, 2001

         Revenue for the nine-month period ended September 30, 2002 resulted from the recognition of the first licensing fee of $2 million from the co-development and licensing agreement with GPC Biotech AG and the technology out-licensing agreements with Pfizer entered into during the second and fourth quarter of 2001. We received initial payments of $300,000 aggregate cash proceeds from entering into these agreements. Additionally, during the three-month period ended June 30, 2002, we received the first milestone payment of $250,000 from Pfizer under our March 15, 2001 technology out-license agreement with them. This milestone payment became due at the time Pfizer formally approved the funding and implementation of a research program with respect to a pharmaceutical lead based on our technology that we licensed to Pfizer. Under these agreements, we entered into strategic alliances with Pfizer for investigating potential drug targets. We are obligated to pay UCI 25% of all payments received under these agreements. In accordance with our revenue recognition policy the initial payments, less amounts owed to UCI, will be recognized as revenue over a three-year period from the date of inception of the respective agreement, whereas substantive milestone payments will be recognized as revenue upon receipt, less amounts owed to UCI.

         Research and development expenses for the nine-month period ended September 30, 2002 compared to the same period in 2001 decreased primarily to the reduction of costs related to our clinical trial for Neotrofin in the treatment of patients with Alzheimer’s disease that ended in April 2002, causing a decrease in outside clinical research site costs, a decrease in product manufacturing costs, a decrease in salary and related benefit costs due to a decrease in research and development personnel following the completion of the trial. In addition, as a result of a restructuring, all research activities related to Neotrofin and functional genomics were eliminated and our neurology pre-clinical research was reduced during the three months ended September 30, 2002. The decrease was also a result of lower compensation charges associated with stock and stock options granted to employees and officers below fair market value during 2002 as a result of the reduction in force and the cancellation of certain options by three senior executives during the second quarter of

23

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

2002.     The decrease was partially offset by an increase in salaries and related benefit costs due to additions of research and development personnel in 2002 compared to the same period in 2001, an increase in depreciation related to acquisitions of equipment and leasehold improvements, an increase in lab supplies and outside contract research due to increased business activities in the first half of 2002 compared to 2001, an increase in general business expenses related to the development of our oncology related drug candidates, increases in occupancy and facility costs due to the building sub-lease entered into in November 2001, a charge of $102,997 for personnel severance related expenses in the six month period ended June 30, 2002, and a license fee paid for the in-license of one of our oncology drug candidates in 2001. The decrease was also offset by costs related to our clinical trials for Neotrofin in the treatment of patients with Parkinson’s disease, spinal cord injuries and neuropathy. The clinical trials for the treatment of Parkinson’s disease and spinal cord injuries were completed in June and August of 2002, respectively. The clinical trial for the treatment of neuropathy should be completed during the fourth quarter of 2002.

         General and administrative expenses for the nine-month period ended September 30, 2002 compared to the same period in 2001 decreased primarily to a general decrease in personnel during the nine-month period ended September 30, 2002, an early termination fee paid in 2001, decreases in consulting, travel and lodging expenses, officer relocation expenses, and a decrease in deferred compensation related to stock options in NeoGene granted to employees and officers below fair market value at an exercise price of $1.00 per share. These decreases were partially offset by an increase in depreciation expense due to the acquisition of equipment during the fourth quarter of 2001 and the first six months of 2002, a charge of $76,763 related to personnel severance related expenses and an increase in corporate business expenses related to the development of our oncology related drug candidates.

         Restructuring expenses were incurred during the three-month period ended September 30, 2002 as a result of a shift in our strategic focus from discovery and development of neurology drugs to the in-licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates, the discovery of neurology drugs and out-licensing of these drug candidates to strategic partners. As a result of these changes, we laid off 21 employees, two senior executives retired and we incurred significant administrative and legal expenses. The restructuring charge includes legal fees in the amount of $231,000, a loss on the exchange of assets for certain payables to the University of California, Irvine in the amount of $312,000, retirement benefits offset against a loan to Dr. Glasky, the Company’s former CEO and current board member, in the amount of $390,000, $114,000 in severance benefits to Dr. Glasky, $200,000 in severance benefits to Samuel Gulko, the Company’s former Chief Financial Officer, board of directors fees of $71,000 for special meetings related to the restructuring and personnel severance related expenses of $59,000.

         Other income for the nine-month period ended September 30, 2002 compared to the same period in 2001 decreased due primarily to a decrease in the fair market value of a marketable security investment that we determined to be other than temporary of approximately $51,000 and a decrease in interest income resulting from lower average marketable securities balances and lower interest rates. These decreases were offset by a receipt of a $250,000 exclusivity payment from a party negotiating a potential corporate transaction with the Company. During the quarter, the exclusivity period expired and the Company is no longer in discussions with the party.

Subsequent Events Affecting Future Results

         On October 9, 2002, we received payment on our receivable of $2 million for the first licensing fee due on our licensing agreement with GPC Biotech AG for satraplatin.

         Our common stock was transferred from the Nasdaq National Market to the Nasdaq SmallCap Market where it began trading on October 16, 2002 under the ticker symbol NEOT. To remain listed on this market, we must meet Nasdaq’s continued listing requirements. Among other requirements, Nasdaq rules require that a SmallCap Market company maintain a minimum stockholders equity of $2.5 million or a minimum market value of listed securities of $35 million or a net income from continuing operations (in latest fiscal year or 2 of the last 3 fiscal years) of at least $500,000. We are currently not in compliance with this standard. There is no assurance that we will be able to regain compliance with this standard or maintain compliance with any of the other continued listing requirements. If we fail to do so, our common stock could be delisted from the Nasdaq SmallCap Market. Please see “Risk Factors” under “Item 2 – Management’s Discussion and Results of Operations and Financial Condition” for alternatives should our common stock be delisted.

Financial Condition

         From inception through September 30, 2002, we financed our operations primarily through sales of securities, borrowings, grants, deferred payment of salaries and other expenses from related parties and payments received from technology out-license agreements.

24

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

         On September 30, 2002, the Company settled its outstanding obligations with its primary manufacturer of Neotrofin for a cash payment of $332,000 and the transfer of our rights in a patent to the manufacturer resulting in a reduction formulation expense of $409,000.

         At September 30, 2002, we had a net working capital deficiency of approximately $1.1 million. Our working capital included cash and cash equivalents of approximately $41,000 and marketable securities and short-term investments of approximately $255,000. In comparison, at December 31, 2001, we had positive net working capital of approximately $2.8 million, which included cash and cash equivalents of approximately $0.75 million and short-term investments of approximately $6.4 million. The $3.9 million decrease in net working capital during the nine-month period ended September 30, 2002 is attributable primarily to the loss of approximately $13.8 million, less non-cash compensation, the receivable from GPC Biotech and other items of approximately $2.2 million. Additionally, we used $0.6 million to pay capital lease obligations and other items. These uses of working capital were offset by net cash proceeds of approximately $8.3 million from the sale of shares of our common stock.

         We devote substantially all of our efforts to research and development. We incurred net losses of approximately $13.8 million through September 30, 2002, and expect to incur substantial losses over the next several years. We have historically funded our operations with funds from public offerings and private placement equity offerings. We will require substantial additional funds by December 2002, or sooner, in order to continue and complete the research and development activities currently contemplated and to commercialize our proposed products. Our future capital requirements and availability of capital will depend upon many factors, including continued scientific progress in research and development programs, the scope and results of pre-clinical studies and clinical trials, the time and costs involved in obtaining regulatory approvals, the cost involved in filing, prosecuting and enforcing patent claims, the effect of competing technological developments, the cost of manufacturing scale-up, the cost of commercialization activities, and other factors which may not be within our control.

Contractual and Commercial Obligations

Debt and Capital Leases

         Future installments of debt principal on capital lease obligations are as follows:

Year Ending
December 31:	Amount
2002	$	89,000
2003		313,000
2004		152,000
	$	554,000

Facility, Property and Equipment Operating Leases

         Minimum lease requirements for the remainder of the year ending December 31, 2002 and for the years ending December 31, 2003 through 2006 under the property and equipment leases are as follows:

Year Ending
December 31:	Amount
2002	$	453,000
2003		944,000
2004		682,000
2005		406,000
2006		172,000
	$	2,657,000

Research and Fellowship Grants

         We periodically make non-binding commitments to various universities and not-for-profit research organizations to fund scientific research and fellowship grants that may further our research programs. During the three-month period ended September 30, 2002, several grants were terminated. At September 30, 2002, we had no non-binding commitments to pay research or fellowship grants.

25

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Joint Ventures

         In September 1999, we entered into a three-year joint venture agreement with the University of California, Irvine (or UCI) to assist in the marketing and commercialization of discoveries made by certain members of its functional genomics science department. We were obligated under the agreement to fund the joint venture for three years with minimum payments of $2.0 million over the life of the agreement, all of which has been paid. During the three months ended September 30, 2002, we shifted our focus from the marketing and commercialization of discoveries made by the functional genomics team to the out-licensing of these discoveries and the administration of the two Pfizer collaboration agreements that will remain in effect, if we are successful in our negotiations with UCI to extend the rights to the receptors underlying the two Pfizer agreements. We have canceled the joint venture agreement.

         On April 17, 2002, we formed a joint venture with J.B. Chemicals & Pharmaceuticals, Ltd. of Mumbai, India (“JBCPL”) and created a new entity, NeoJB, LLC, a Delaware limited liability company (“NeoJB”). We will own 80% of NeoJB and a JBCPL subsidiary will own 20% of NeoJB. The business operations of NeoJB will initially be to seek U.S. regulatory approval on JBCPL pharmaceutical products and to subsequently market these products in the U.S. and possibly other countries. We will initially fund 100% of NeoJB’s operating expenses. Minimal activity has occurred under this joint venture because we have not had sufficient funds available. Following the change in management on August 19, 2002, we have continued to develop the joint venture but have not entered into any commitments at this time.

         We are also reviewing other possible joint ventures to promote our strategic focus.

Financial Market Risks

         We are exposed to certain market risks associated with interest rate fluctuations and credit risk on our marketable securities and borrowing arrangements. All investments in marketable securities and borrowing arrangements are entered into for purposes other than trading. The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. We do not utilize hedging contracts or similar instruments.

         Our investments during the nine-month period ended September 30, 2002 and as of September 30, 2002 are fixed rate, short-term corporate and government notes and bonds, which are available for sale. Because the interest rates are fixed, changes in interest rates affect the fair market value of these investments but do not affect the interest earnings. Because these financial instruments are considered “available for sale,” we record all changes in fair market value in stockholders’ equity as “Accumulated other comprehensive income” until the investment is either sold or matures, at which time the gain or loss, if any, is recognized as a realized gain or loss in the statement of operations. If a 10% change in interest rates were to have occurred on September 30, 2002, any decline in the fair value of our investments would not be material. In addition, we are exposed to certain market risks associated with the credit ratings of corporations whose bonds we have purchased. If these companies were to experience a significant detrimental change in their credit ratings, the fair market value of these corporate bonds may significantly decrease. If these companies were to default on their corporate bonds, we may lose part or all of the principal amount of our investment. We believe that we effectively manage this market risk by diversifying our corporate bond investments by purchasing a few bonds of many large, well-known, companies in a variety of industries.

         As of September 30, 2002, we had one investment of approximately $61,000 in WorldCom, Inc. corporate bonds that matures on May 15, 2003. The fair market value of these corporate bonds at September 30, 2002 was approximately $7,000, based on a market quotation. In July 2002, WorldCom, Inc. and its subsidiaries filed a voluntary jointly administered petition under the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. We believe that it is probable that we will be unable to collect all amounts due to us according to the contractual terms of the corporate bonds, therefore, we consider the impairment as other than temporary and have recorded a loss for approximately $51,000 in other expense during the three-month period ended June 30, 2002.

         Our primary market risk exposures relate to (1) interest rate risk on borrowings, (2) our ability to pay or refinance our borrowings at maturity at market rates, (3) interest rate risk on our investment portfolio, and (4) credit risk of the companies’ bonds in which we invest. We manage interest rate risk on our investment portfolio by matching scheduled investment maturities with our cash requirements. We manage interest rate risk on our outstanding borrowings by using fixed rate debt. While we cannot predict or manage our ability to refinance existing borrowings and our interest rate risk on our investment portfolio, we evaluate our financial position on an ongoing basis.

26

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

         Our borrowings bear interest at fixed rates. Changes in interest rates affect the fair value of our borrowings, but do not have an impact on interest expense. Because of the relatively short-term nature of our borrowings, fluctuations in fair value are not deemed to be material.

Business Outlook

         Our future operating results are highly uncertain, and the following factors should be carefully reviewed in addition to the other information and references contained in this quarterly report on Form 10-Q:

         The results of a completed pivotal clinical trial of Neotrofin in patients with mild to moderate Alzheimer’s disease indicated that there was no statistical difference in the performance of patients taking Neotrofin when compared to patients taking placebo. Preliminary results from our studies of Neotrofin in patients with Parkinson’s disease and spinal cord injury indicated that there was no meaningful improvement in the performance of patients taking Neotrofin. No further resources will be used for the development of Neotrofin.

         On August 20, 2002, we announced a shift in our strategic focus from discovery and development of neurology drugs to the in-licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates and the discovery of neurology drugs and out-licensing these drug candidates to strategic partners. As a result of these changes and the completion of a large Alzheimer’s disease clinical trial, our burn rate fell from approximately $7 million per quarter to approximately $5 million during the three-month period ended June 30, 2002 to approximately $3 million (excluding the restructuring charge and the GPC Biotech AG license fee revenue) during the three-month period ended September 30, 2002 and we expect it to continue to fall to approximately $1.5 million, or lower, per quarter beginning in the fourth quarter of 2002. The recent and the prospective reduction in the burn rate is principally due to reductions in clinical, research and administrative personnel representing an approximate 77% reduction in personnel since December 2001, the termination of a facility lease for office space used to administer the Alzheimer’s disease clinical trial, the reduction of expenses for the manufacturing of Neotrofin supplies, a reduction in our research and fellowship grant commitments, and the elimination of the research operations of our functional genomics business.

27

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

ONCOLOGY

         Our oncology program’s drug candidates, target indications and phase of development based on our shift in strategic focus is summarized in the following table:

ANTI-CANCER PLATFORM
Drug Candidate	Target Indication	Phase of Development/Status
Satraplatin	Prostate cancer	Phase 3:	Study expected to begin in 2003
Neoquin	Bladder cancer	Phase 2:	Study in progress
	Radiation sensitization	Phase 1/2:	Study expected to begin in 2003*
Elsamitrucin	Non-Hodgkin’s lymphoma	Phase 2:	Study expected to begin in 2003*

* - Assumes availability of financial resources.

         On September 30, 2002, we entered into a co-development and license agreement with GPC Biotech AG for the development and commercialization of our lead drug candidate, satraplatin. Under the co-development and licensing agreement, NeoTherapeutics may receive up to $22 million in license fees and milestone payments. The license fee consists of a total of $4 million; $2 million upon signing (which was received in October of 2002) and $1 million in cash and a $1 million equity investment within 30 days after the first dosing of a patient in a registrational study. GPC Biotech has agreed to make additional payments totaling up to $18 million upon achieving agreed upon milestones. However, there can be no assurance that any milestone will be achieved. Furthermore, GPC Biotech has agreed to fully fund development and commercialization expenses for satraplatin. Upon commercial sale of satraplatin, if any, NeoTherapeutics will be entitled to receive royalty payments based upon net sales.

         We do not intend to initiate new clinical trials on our other oncology drug candidates unless financial resources become available. All of these drugs are in the late stage of development.

         We are working towards developing additional strategic alliances with other pharmaceutical companies to further develop our other anti-cancer compounds and are currently in negotiations with several potential strategic alliance partners. We believe that if we are successful in our negotiations and are able to establish a strategic alliance for one or more of our other anti-cancer compounds, we may receive initial and milestone payments related to further product candidate development and rights to royalty payments on product sales if the compounds are ever approved for marketing and are sold. However, we cannot be certain that we will be able to establish any additional strategic alliances, or if so, on what terms.

         Our nervous system drug platforms’ drug candidates, target indications and phase of development based on our shift in strategic focus are summarized in the following tables:

28

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

NERVOUS SYSTEM

ATTENTION/COGNITION PLATFORM
Drug Candidate	Target Indication	Phase of Development/Status
AIT-034	Dementia	Pre-clinical
NEO-339	Attention deficit Hyperactivity disorder and mild cognitive impairment	Pre-clinical
Additional compounds	Cognitive and Attentional disorders	Pre-clinical

ANTIPSYCHOTIC PLATFORM
Drug Candidate	Target Indication	Phase of Development/Status
NEO-376 and NEO-392	Psychosis and schizophrenia	Pre-clinical
Additional compounds	Psychosis, schizophrenia, depression, anxiety, pain	Pre-clinical

NEUROREGENERATION PLATFORM
Drug Candidate	Target Indication	Phase of Development/Status
Neotrofin	Peripheral neuropathy	Phase 2: Study in progress for the treatment of chemotherapy induced peripheral neuropathy
Additional compounds	Neurodegenerative diseases	Pre-clinical

         We are completing the ongoing clinical trial for Neotrofin in the treatment of chemotherapy-induced neuropathy. Depending upon the results of these clinical trials, we will determine whether to support any more clinical studies or await strategic alliances with other pharmaceutical companies. We do not intend to conduct any other clinical trials for Neotrofin or our other neurology drug candidates.

         We are working towards developing strategic alliances with other pharmaceutical companies to further develop our neurology compounds and are currently in negotiations with several potential partners. We believe that if we are successful in our negotiations and are able to establish a strategic alliance for one or more of our neurology compounds, we may receive payments related to further product candidate development and on product sales if the compounds are ever approved for marketing and are sold. However, no such strategic alliances have been established and we cannot be certain that we will be able to establish any, or if so, on what terms.

FUNCTIONAL GENOMICS

         We have two agreements with Pfizer, Inc. for out-licensing two of our G-protein-coupled receptor, or GPCR, system discoveries.

         We are working towards developing strategic alliances with other pharmaceutical companies to further out-license the technology discovered in connection with the terminated joint venture with the University of California, Irvine and are currently in negotiations with several potential partners. We believe that if we are successful in our negotiations and are able to establish a strategic alliance for one or more of our GPCR system discoveries, we may receive payments related to further product candidate development and on product sales if the compounds derived from the technology are ever approved for marketing and are sold. However, we cannot be certain that we will be able to establish any additional strategic alliances, or if so, on what terms.

29

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

         On May 10, 2002 we received the first milestone payment of $250,000 from Pfizer Inc. under our technology out-license agreement dated March 15, 2001 with Pfizer Inc. (the “Agreement”). This milestone payment became due at the time Pfizer formally approved the funding and implementation of a research program with respect to a pharmaceutical lead based on the technology that we licensed to Pfizer, and as described in the Agreement.

         On July 19, 2002, we adopted a formal plan to discontinue the operations of our functional genomics business. However, as part of a change in management and reassessment of the Company’s strategy in August 2002, we altered our plans to discontinue the operations and changed the focus of the business to out-licensing the genomics technology and the administration of two Pfizer collaboration agreements. We have eliminated all further functional genomics research operations and the associated commitments to the University of California, Irvine. The two Pfizer agreements will remain in effect, if we are successful in our negotiations with UCI to extend the rights to the receptors underlying the two Pfizer agreements, following the reduction of operations at our NeoGene subsidiary.

Risk Factors

         The risk factors described below are not intended to be complete. A more comprehensive list of factors that could affect our future operating results can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2001, in “Item 1. Description of Business” under the subheading “Risk Factors” and in our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2002 and June 30, 2002 in “Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition”, under the subheading “Risk Factors.” Failure to satisfactorily achieve any of our objectives or avoid any of the below or other risks would likely have a material adverse effect on our business and results of operations.

         As shown in the accompanying condensed consolidated financial statements, we continue to incur significant losses and negative cash flow from operations. During the nine-month period ended September 30, 2002, we incurred a loss of approximately $13.8 million. Our burn rate during the three-month period ended September 30, 2002 was approximately $3.0 million, excluding the charges related to the restructuring and the revenue related to the GPC Biotech AG licensing agreement. We anticipate that our burn rate will be reduced to approximately $1.5 million, or lower, per quarter starting with the fourth quarter. At September 30, 2002 we had cash, cash equivalents, marketable securities and short-term investments of approximately $296,000. Subsequent to September 30, 2002 we received net cash proceeds from a licensing agreement with GPC Biotech AG of $2 million. Therefore, we will need to raise additional funds by December 2002, or sooner, through public or private financings, including equity financings or through other arrangements, to continue operating our businesses, including out-licensing our technology, to meet our short-term and long-term cash needs. We continue to seek additional sources of financing at the most favorable terms available to us, however, we do not know whether we will be able to secure sufficient new funds to continue our businesses. If we are not able to obtain sufficient funding within the time frame estimated by us, we will have to take other actions that we otherwise would not take, such as selling some or all of our intellectual property rights or further restructuring our operations, or a combination of these activities, including the possibility of a restructuring or liquidation provided for by one of the sections of the United States Bankruptcy Code.

         Our need for additional funding is substantial and will be determined by the progress and cost of the development and commercialization of our products and other activities. We will require substantial additional funds in order to continue the research and development activities currently contemplated and to commercialize our proposed products. The source, availability, and terms of such funds have not been determined and there is no assurance that we will be able to obtain any funding on acceptable terms or at all.

         We have incurred losses in every year of our existence and expect to continue to incur significant operating losses for the next several years. We have never generated revenues from product sales and there is no assurance that revenue from product sales will ever be achieved. There is no assurance that any of our proposed products will ever be successfully developed, receive and maintain required governmental regulatory approvals, become commercially viable or achieve market acceptance.

         Our business strategy requires that we establish and maintain good strategic alliances. Currently we are seeking strategic alliances but have limited experience in obtaining such alliances. We cannot give any assurance that we will be successful in establishing additional alliances or that we will be able to maintain existing and new alliances in a manner that is beneficial to us.

         We have no experience in manufacturing, procuring products in commercial quantities or marketing, and only limited experience in negotiating, setting up or maintaining strategic relationships and conducting clinical trials or other late stage phases of the regulatory approval process, and there is no assurance that we will successfully engage in any of these activities.

30

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

         We shifted our strategic focus from discovery and development of neurology drugs to the in-licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates and the discovery of neurology drugs and out-licensing these drug candidates to strategic partners. As a result of these changes we made reductions in clinical, administrative and research personnel. We believe that we retained the correct, and a level of, personnel that are key to our success in executing our strategic focus. We may be wrong and later require additional personnel or personnel with skills different than those that we retained.

         On September 30, 2002, we entered into a co-development and license agreement with GPC Biotech AG for the development and commercialization of our lead drug candidate, satraplatin. GPC Biotech has agreed to fully fund development and commercialization expenses for satraplatin. We will not have complete control over the drug development process and therefore, the success of our lead drug candidate will be depend upon the efforts of a third party. There is no assurance that GPC Biotech will be successful in the clinical development of the drug, the achievement of any milestones such as the acceptance of the NDA (New Drug Application) filing by the U.S. Food and Drug Administration or the eventual commercialization of satraplatin.

         Our common stock was transferred from the Nasdaq National Market to the Nasdaq SmallCap Market where it began trading on October 16, 2002 under the ticker symbol NEOT. To remain listed on this market, we must meet Nasdaq’s continued listing requirements. Among other requirements, Nasdaq rules require that a SmallCap Market company maintain a minimum stockholders equity of $2.5 million or a minimum market value of listed securities of $35 million or a net income from continuing operations (in latest fiscal year or 2 of the last 3 fiscal years) of at least $500,000. We are currently not in compliance with this standard. There is no assurance that we will be able to regain compliance with this standard or maintain compliance with any of the other continued listing requirements. If we fail to do so, our common stock could be delisted from the Nasdaq SmallCap Market.

         If our stock is delisted from the Nasdaq SmallCap Market, we would likely seek quotation on the American Stock Exchange or a regional stock exchange, if available. However, quotation on such a market or exchange could reduce the market liquidity for our common stock. If our common stock is not quoted on another market or exchange, trading of our common stock could be conducted in the over-the-counter market on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. As a result, an investor would find it more difficult to dispose of, or obtain accurate quotations for the price of, our common stock.

         If our common stock is delisted from the Nasdaq SmallCap Market, we fail to obtain quotation on another market or exchange, and the trading price remains below $5.00 per share, trading in our common stock might also become subject to the requirements of certain rules promulgated under the Securities Exchange Act of 1934, which require additional disclosure by broker-dealers in connection with any trades involving a stock defined as a “penny stock” (generally, any equity security not listed on a national securities exchange or quoted on Nasdaq that has a market price of less than $5.00 per share, subject to certain exceptions). Many

31

NEOTHERAPEUTICS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

brokerage firms are reluctant to recommend low-priced stocks to their clients. Moreover, various regulations and policies restrict the ability of stockholders to borrow against or “margin” low-priced stocks and declines in the stock price below certain levels may trigger unexpected margin calls. Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher priced stocks, the current share price of the common stock can result in an individual stockholder paying transaction costs that represent a higher percentage of total share value than would be the case if our share price were higher. This factor may also limit the willingness of institutions to purchase our common stock. Finally, the additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers from facilitating trades in our common stock, which could severely limit the market liquidity of the stock and the ability of investors to trade our common stock.

         Nasdaq corporate governance rules prohibit an issuer of listed securities from issuing 20% or more of its outstanding voting stock in one transaction or a series of related transactions other than a public offering at less than the greater of book value or the then current market value, without obtaining prior stockholder consent (the “20% Share Limitation”). We obtained stockholder approval on September 5, 2002 for the raising, as necessary, of up to $10,000,000 in private financings, pursuant to a registration statement filed with the Securities and Exchange Commission or otherwise, through the issuance of our common stock and/or warrants exercisable for the purchase of common stock, up to an aggregate maximum of 10,000,000 shares of common stock, potentially at discounts of up to (but not more than) 25% below the then current market price as determined in the discretion of our Board of Directors. However, the approval of stockholders applies only to financings to be completed, if at all, prior to December 5, 2002.

         We do not generate sufficient revenues to fund its operations, and we do not currently have sufficient cash on hand to fund our operations beyond December 2002. While we are exploring all financing and strategic alternatives, we will need to raise additional funds through the sale of securities by December 2002, or sooner, to continue operating our business. Based on our recent experience and our current financial position, we believe that we might need to offer our securities at a discount to market price in order to attract investors to provide these funds. Therefore this 20% Share Limitation rule may hinder or prevent financing transactions from occurring.

         Nasdaq corporate governance standards also requires us to notify Nasdaq no later than fifteen (15) days prior to entering into a transaction that may result in the potential issuance of common stock greater than ten percent (10%) of the total shares of common stock outstanding. Therefore this 15 day notification rule may hinder or prevent financing transactions from occurring.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

         See “ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”, subheading “Financial Market Risks,” above.

ITEM 4. Controls and Procedures

(a)  We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Vice President, Strategic Planning and Finance (our senior financial officer), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

         Within 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Vice President, Strategic Planning and Finance, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and our Vice President, Strategic Planning and Finance concluded that our disclosure controls and procedures were effective.

(b)  There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation.

32

NEOTHERAPEUTICS, INC.

PART II — OTHER INFORMATION

ITEM 1. Legal Proceedings

None

ITEM 2. Changes in Securities and Use of Proceeds

         The following is a summary of transactions involving sales of our securities that were not registered under the Securities Act of 1933, as amended (the “Securities Act”), and have not been previously included in a quarterly report on Form 10-Q.

         On October 21, 2002, we issued 25,000 shares of our common stock to Threshold Pharmaceuticals, Inc. (“Threshold”) as consideration for Threshold’s assistance in development of a clinical development plan for one of the Company’s oncology drug candidates. Exemption from registration was relied upon under Section 4(2) of the Securities Act. We made no solicitation in connection with the agreement, other than communications with Threshold; we obtained representations from Threshold regarding Threshold’s investment intent, experience and sophistication; and the shares were not issued as part of a plan of financing.

ITEM 3. Defaults Upon Senior Securities

See the information under the subheading Debt and Capital Leases provided in Note 8 to the Financial Statements in Item 1. Part 1 of this Form 10-Q, which is hereby incorporated by reference.

ITEM 4. Submission of Matters to a Vote of Security Holders

         The following matters were voted upon at our Special Meeting of Stockholders held on September 5, 2002:

1. A proposal to approve the amendment of the Company’s Certificate of Incorporation, as amended, to effect a twenty-five-for-one reverse stock split of the Company’s outstanding Common Stock, was approved by the following vote:

	Votes Cast
							Broker Non-
	For		Against		Abstain		Votes
Number of Shares		34,920,559		1,905,097		86,471		0

2. A proposal to approve new financings of up to $10 million involving the potential issuance of the Company’s Common Stock and/or warrants to purchase Common Stock equal to 20% or more of the Company’s Common Stock outstanding prior to the financings, up to an aggregate maximum of 10 million shares of Common Stock, potentially at discounts of up to (but not more than) 25% below market price as determined in the discretion of the Board of Directors, was approved by the following vote:

	Votes Cast
							Broker Non-
	For		Against		Abstain		Votes
Number of Shares		8,292,942		1,161,594		92,427		27,365,164

33

NEOTHERAPEUTICS, INC.

PART II — OTHER INFORMATION (continued)

ITEM 5. Other Information (not previously reported in a Form 8-K)

None

ITEM 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit No.	Description
4.1+	Certificate of Amendment of Certificate of Incorporation filed on September 5, 2002
4.2+	Form of Amended and Restated Bylaws
10.1	Form of Stock Purchase Agreement dated as of July 8, 2002. (Filed as Exhibit 10.1 to Form 8-K, as filed with the Securities and Exchange Commission on July 8, 2002, and incorporated herein by this reference.)
10.2+	Mutual Rescission Agreement dated as of July 25, 2002 by and between the Company and Stonestreet Limited Partnership
10.3+	Warrant Repurchase Agreement dated as of July 31, 2002 by and between the Company and BNC Bach International, Ltd.
10.4	Retirement Agreement and General Release, dated as of August 16, 2002, by and between the Company and Dr. Alvin J. Glasky (Filed as Exhibit 10.4 to Form 10-Q, as filed with the Securities and Exchange Commission on August 19, 2002, and incorporated herein by this reference.)
10.5	Retirement Agreement and General Release, dated as of August 20, 2002, by and between the Company and Samuel Gulko (Filed as Exhibit 10.1 to Form 8-K, as filed with the Securities and Exchange Commission on August 23, 2002, and incorporated herein by this reference.)
10.6+	Additional Collateral Rider between NeoTherapeutics, Inc. and General Electric Capital Corporation dated September 22, 2002
10.7+	Settlement Agreement between NeoTherapeutics, Inc. and Merck Eprova AG dated September 30, 2002
10.8+ †	First Amendment to License Agreement Dated August 28, 2001 between Johnson Matthey PLC and NeoTherapeutics, Inc. dated September 30, 2002
10.9+ †	Co-Development and License Agreement between NeoTherapeutics, Inc. and GPC Biotech AG dated September 30, 2002
10.10+	Retirement Agreement and General Release, dated as of November 6, 2002, by and between the Company and Michelle S. Glasky, Ph.D.

+	Filed herewith
†	Confidential portions omitted and filed separately with the U.S. Securities and Exchange Commission pursuant to Rule 24b-2 promulgated under the Securities and Exchange Act of 1934, as amended.

(b) Reports on Form 8-K

1.	The Company filed a Report on Form 8-K on July 12, 2002 to report a press release issued on July 12, 2002, which announced the completion of an offering of 258,824 shares of its common stock at a negotiated purchase price per share of $4.25 to four institutional investors for aggregate consideration of approximately $1,100,000.00. The shares were issued pursuant to an effective Registration Statement on Form S-3.
2.	The Company furnished a Report on Form 8-K on August 19, 2002 providing to the Securities and Exchange Commission the certifications of its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002 as required by 18 U.S.C. ss. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.
3.	The Company filed a Report on Form 8-K on August 23, 2002 to report a press release issued on August 21, 2002, which announced the retirement of Samuel Gulko as Director, Senior Vice President Finance, Chief Financial Officer, Secretary and Treasurer of the Company. The Report on Form 8-K also reported a press release issued on August 22, 2002 which announced an additional restructuring intended to reduce the Company’s expected monthly expenses to less than $500,000, including the elimination of 23 of the Company’s approximately 44 full-time equivalent positions.

34

NEOTHERAPEUTICS, INC.

PART II — OTHER INFORMATION (continued)

4.	The Company furnished a Report on Form 8-K on August 27, 2002 to report on a conference call on August 22, 2002, to discuss and answer questions regarding its recently announced strategic and organizational changes. The Report on Form 8-K includes an unofficial transcript of the conference call.
5.	The Company filed a Report on Form 8-K on September 6, 2002 to report a press release issued on September 5, 2002 which announced that its stockholders have approved an amendment to the Company’s certificate of incorporation to effect a 25-for-1 reverse split of the Company’s common stock. The stockholders of the Company also approved the raising, as necessary, of up to $10,000,000, through the issuance of the Company’s common stock and/or warrants exercisable for the purchase of common stock, up to a maximum of 10,000,000 shares of common stock, potentially at discounts to the then current market price.
6.	The Company filed a Report on Form 8-K on October 1, 2002 to report a press release issued on October 1, 2002 which announced that it has signed an agreement with GPC Biotech AG to co-develop one of its anti-cancer drugs, satraplatin.

ITEM 7. SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NEOTHERAPEUTICS, INC.
Date: November 12, 2002	By:	/s/ John L. McManus
		John L. McManus, Vice President Strategic Planning & Finance (Principal Accounting and Financial Officer)

35

NEOTHERAPEUTICS, INC.

PART II — OTHER INFORMATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Rajesh C. Shrotriya, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of NeoTherapeutics, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002
	/s/ Rajesh C. Shrotriya
	Rajesh C. Shrotriya, M.D. Chairman, Chief Executive Officer and President

36

NEOTHERAPEUTICS, INC.

PART II — OTHER INFORMATION (continued)

CERTIFICATION OF VICE PRESIDENT, STRATEGIC PLANNING AND FINANCE

I, John McManus, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of NeoTherapeutics, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002
	/s/ John L. McManus
	John L. McManus Vice President, Strategic Planning and Finance

37

NEOTHERAPEUTICS, INC.

PART II — OTHER INFORMATION (continued)

Exhibits

Exhibit No.	Description
4.1+	Certificate of Amendment of Certificate of Incorporation filed on September 5, 2002
4.2+	Form of Amended and Restated Bylaws
10.1	Form of Stock Purchase Agreement dated as of July 8, 2002. (Filed as Exhibit 10.1 to Form 8-K, as filed with the Securities and Exchange Commission on July 8, 2002, and incorporated herein by this reference.)
10.2+	Mutual Rescission Agreement dated as of July 25, 2002 by and between the Company and Stonestreet Limited Partnership
10.3+	Warrant Repurchase Agreement dated as of July 31, 2002 by and between the Company and BNC Bach International, Ltd.
10.4	Retirement Agreement and General Release, dated as of August 16, 2002, by and between the Company and Dr. Alvin J. Glasky (Filed as Exhibit 10.4 to Form 10-Q, as filed with the Securities and Exchange Commission on August 19, 2002, and incorporated herein by this reference.)
10.5	Retirement Agreement and General Release, dated as of August 20, 2002, by and between the Company and Samuel Gulko (Filed as Exhibit 10.1 to Form 8-K, as filed with the Securities and Exchange Commission on August 23, 2002, and incorporated herein by this reference.)
10.6+	Additional Collateral Rider between NeoTherapeutics, Inc. and General Electric Capital Corporation dated September 22, 2002
10.7+	Settlement Agreement between NeoTherapeutics, Inc. and Merck Eprova AG dated September 30, 2002
10.8+ †	First Amendment to License Agreement Dated August 28, 2001 between Johnson Matthey PLC and NeoTherapeutics, Inc. dated September 30, 2002
10.9+ †	Co-Development and License Agreement between NeoTherapeutics, Inc. and GPC Biotech AG dated September 30, 2002
10.10+	Retirement Agreement and General Release, dated as of November 6, 2002, by and between the Company and Michelle S. Glasky, Ph.D.

+	Filed herewith
†	Confidential portions omitted and filed separately with the U.S. Securities and Exchange Commission pursuant to Rule 24b-2 promulgated under the Securities and Exchange Act of 1934, as amended.

38 EX-4.1 3 a84976exv4w1.txt EXHIBIT 4.1 EXHIBIT 4.1 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF NEOTHERAPEUTICS, INC. NeoTherapeutics, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify that: 1. Article 4 of the Corporation's Certificate of Incorporation is hereby amended by adding the following three paragraphs at the end of said Article 4: "Effective as of 11:59 p.m. Eastern Time on the date of the filing of the Certificate of Amendment that adds this paragraph to this Article 4 (the time of such filing, the "Effective Time"), all issued and outstanding shares of Common Stock ("Existing Common Stock") shall be and hereby are automatically combined and reclassified as follows: each twenty-five (25) shares of Existing Common Stock shall be combined and reclassified as one (1) share of issued and outstanding Common Stock ("New Common Stock"), provided, that there shall be no fractional shares of New Common Stock. In the case of any holder of any number of shares of Existing Common Stock which, when divided by twenty-five (25), does not result in a whole number, the holder shall receive cash in lieu of any fractional share of New Common Stock at a price per share equal to the product of (a) the number of shares of Existing Common Stock held by such holder immediately prior to the Effective Time which have not been classified into a whole share of New Common Stock, multiplied by (b) the closing price of the Existing Common stock as reported on the Nasdaq National Market on the date of the filing of the Certificate of Amendment. The Corporation shall, through its transfer agent, provide certificates representing shares of New Common Stock to holders of Existing Common Stock in exchange for certificates representing shares of Existing Common stock. From and after the Effective Time, certificates representing shares of Existing Common Stock are hereby cancelled and shall represent only the right of the holders thereof to receive shares of New Common Stock. From and after the Effective Time, the term "New Common Stock" as used in this Article 4 shall mean Common Stock as provided in this Certificate of Incorporation. The par value of the Common Stock shall remain $0.001 per share." 2. The amendment of the certificate of incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment of Certificate of Incorporation on September 5, 2002. NEOTHERAPEUTICS, INC. a Delaware corporation By: \s\ Rajesh C. Shrotriya, M.D. ------------------------------------ Rajesh C. Shrotriya, M.D. Chairman of the Board, Chief Executive Officer and President 2 EX-4.2 4 a84976exv4w2.txt EXHIBIT 4.2 EXHIBIT 4.2 BYLAWS OF NEOTHERAPEUTICS, INC. A DELAWARE CORPORATION ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE. The registered office of the Corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle. SECTION 2. OTHER OFFICES. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. SECTION 3. BOOKS. The books of the Corporation may be kept within or without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall be held at such place either within or without the State of Delaware as may be designated from time to time by the Board of Directors. SECTION 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be held at a time and date designated by the Board of Directors for the purpose of electing directors and transacting such other business as may properly be brought before the meeting. SECTION 3. SPECIAL MEETINGS. Special meetings of stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the Board of Directors, the Chairman of the Board, or by the Chief Executive Officer. SECTION 4. NOTIFICATION OF BUSINESS TO BE TRANSACTED AT MEETING. At any meeting of the stockholders, only such business shall be conducted as shall have been properly brought before such meeting. To be brought properly before an annual meeting of stockholders, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors or the chairman of the meeting, or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be received no less than sixty days nor more than ninety days prior to the first anniversary of the preceding year's annual meeting of stockholders; provided, however, that in the event that the 1 date of the annual meeting is advanced by more than thirty days or delayed by more than sixty days from such anniversary, notice by the stockholder, to be timely, must be received not earlier than the ninetieth day prior to such annual meeting of stockholders and not later than the close of business on the later of (a) the sixtieth day prior to such annual meeting or (b) the tenth day following the date on which notice of the date of the annual meeting was mailed or public disclosure thereof was made, whichever first occurs. Each such notice shall set forth as to each matter the stockholder proposes to bring before the annual meeting of stockholders: (a) a brief description of the business desired to be brought before the annual meeting of stockholders and the reasons for conducting such business at such meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the class, series, and number of shares of the Corporation that are beneficially owned by the stockholder, and (d) any material interest of the stockholder or any Affiliate of the stockholder in such business. The stockholder also shall comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 4. To be properly brought before a special meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors or the chairman of the meeting. No other business may be brought before a special meeting by stockholders. No business shall be conducted at any meeting of the stockholders except in accordance with the procedures set forth in this Section 4. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 4, and if he or she should so determine, any such business not properly brought before the meeting shall not be transacted. Nothing herein shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or any successor provision. SECTION 5. NOTICE; WAIVER OF NOTICE. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by law, such notice shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. A written waiver of any such notice signed by the person entitled thereto, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. SECTION 6. QUORUM; ADJOURNMENT. Except as otherwise required by law, or provided by the Certificate of Incorporation or these Bylaws, the holders of a majority of the capital stock 2 issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of enough votes to leave less than a quorum, if any action taken is approved by at least a majority of the required quorum to conduct that meeting. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the majority of the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. SECTION 7. VOTING; PROXIES. At all meetings of stockholders at which a quorum is present for the election of directors a plurality of the votes cast shall be sufficient to elect. All other questions brought before a meeting of stockholders at which a quorum is present shall, unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, be decided by the vote of the holders of the majority of stock represented and entitled to vote thereat. Unless otherwise provided in the Certificate of Incorporation, each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by delivering a proxy in accordance with applicable law bearing a later date to the Secretary of the Corporation. Elections of directors need not be by ballot unless the Chairman of the meeting so directs or unless a stockholder demands election by ballot at the meeting and before the voting begins. SECTION 8. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Except as otherwise provided in the Certificate of Incorporation, any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, is signed by the holders of all of the outstanding shares entitled to vote thereon. All such consents shall be filed with the Secretary of the Corporation and shall be maintained in the corporate records. SECTION 9. RECORD DATE. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of such 3 meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Stockholders on the record date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date, except as otherwise provided by agreement or by applicable law. SECTION 10. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present. SECTION 11. STOCK LEDGER. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 10 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. SECTION 12. INSPECTORS OF ELECTION. In advance of any meeting of stockholders, the Board of Directors may appoint one or more persons (who shall not be candidates for office) as inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not so appointed, or if an appointed inspector fails to appear or fails or refuses to act at a meeting, the Chairman of any meeting of stockholders may, and on the request of any stockholder or his proxy shall, appoint an inspector or inspectors of election at the meeting. The duties of such inspector(s) shall include: determining the number of shares outstanding and the voting power of each; the shares represented at the meeting; the existence of a quorum; the authenticity, validity and effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all stockholders. In the event of any dispute between or among the inspectors, the determination of the majority of the inspectors shall be binding. SECTION 13. ORGANIZATION. At each meeting of stockholders the Chairman of the Board of Directors, if one shall have been elected, (or in his absence or if one shall not have been elected, the Chief Executive Officer) shall act as Chairman of the meeting. The Secretary (or in his or her absence or inability to act, the person whom the Chairman of the meeting shall appoint Secretary of the meeting) shall act as Secretary of the meeting and keep the minutes thereof. 4 SECTION 14. ORDER OF BUSINESS. The order and manner of transacting business at all meetings of stockholders shall be determined by the Chairman of the meeting. SECTION 15. NOMINATION AND ELECTION OF DIRECTORS. Subject to the rights of holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, dissolution or winding up of the Corporation, nominations for the election of directors shall be made by a nominating committee of the Board of Directors if then constituted pursuant to these Bylaws, or if no nominating committee has been constituted, by the Board of Directors. In addition, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at an annual meeting of stockholders, but only if written notice of such stockholder's intent to make such nomination or nominations has been received by the Secretary of the Corporation not less than sixty nor more than ninety days prior to the first anniversary of the preceding year's annual meeting of stockholders. In the event that the date of the annual meeting of stockholders is advanced by more than thirty days or delayed by more than sixty days from such anniversary, notice by the stockholder to be timely must be received by the Secretary of the Corporation not earlier than the ninetieth day prior to such annual meeting and not later than the close of business on the later of (a) the sixtieth day prior to such annual meeting or (b) the tenth day following the day on which notice of the date of the annual meeting was mailed or public disclosure thereof was made by the Corporation, whichever first occurs. Each such notice by a stockholder shall set forth: (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at a meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the stockholder or any person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such stockholder (an "Affiliate" of such stockholder) and each nominee and any other person or persons (naming such person or persons) relating to the nomination or nominations; (d) the class and number of shares of the Corporation that are beneficially owned by such stockholder and the person to be nominated as of the date of such stockholder's notice and by any other stockholders known by such stockholder to be supporting such nominees as of the date of such stockholder's notice; (e) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission; and (f) the written consent of each nominee to serve as a director of the Corporation if so elected. The stockholder also shall comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations thereunder, with respect to the matters set forth in this Section 15. In addition, in the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a special meeting only if written notice of such stockholder's intent to make such nomination or nominations, setting forth the information and complying with the form described in the immediately preceding paragraph, has been received by the Secretary of the Corporation not earlier than the ninetieth day prior to such special meeting and not later than the close of business on the later of (i) the sixtieth day prior to such special meeting or (ii) the tenth day following the 5 day on which notice of the date of the special meeting was mailed or public disclosure thereof was made by the Corporation, whichever comes first. The stockholder also shall comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 15. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 15. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by this Section 15, and if he or she should so determine, the defective nomination shall be disregarded. ARTICLE III DIRECTORS SECTION 1. POWERS. Except as otherwise required by law or provided by the Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. SECTION 2. NUMBER AND ELECTION OF DIRECTORS. Subject to any limitations in the Certificate of Incorporation, the authorized number of directors of the Corporation shall be fixed from time to time by the Board of Directors pursuant to a resolution duly adopted by a majority of the entire Board of Directors, but no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Until changed in the foregoing manner, the number of directors shall be nine (9). Directors shall be elected at each annual meeting of the stockholders to replace directors whose terms then expire, and, subject to the provisions of Section 3 of this Article III, each director elected shall hold office for a term of three (3) years or until his or her successor is duly elected and qualified, or until his or her earlier death, resignation or removal. Any director may resign at any time effective upon giving written notice to the Board of Directors, unless the notice specifies a later time for such resignation to become effective. If the resignation of a director is effective at a future time, the Board of Directors may elect a successor prior to such effective time to take office when such resignation becomes effective. Directors need not be stockholders. SECTION 3. CLASSIFIED BOARD OF DIRECTORS. The Board of Directors shall be divided into three (3) classes, as nearly equal in number as possible, designated Class I, Class II and Class III. The number of directors constituting each Class shall be fixed from time to time by a resolution duly adopted by a majority of the entire Board of Directors. Class I directors shall hold office for a full term expiring at the 2003 annual meeting of stockholders. Class II directors shall hold office for a continuing term expiring at the 2001 annual meeting of stockholders. Class III directors shall hold office for an initial term expiring at the 2002 annual meeting of stockholders. At each annual meeting of stockholders held thereafter, directors shall be elected for a full term of office to succeed the directors of the Class whose terms then expire. SECTION 4. VACANCIES. Subject to the limitations in the Certificate of Incorporation, vacancies in the Board of Directors resulting from death, resignation, removal or otherwise and newly created directorships resulting from any increase in the authorized number of directors 6 may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Each director so selected shall hold office for the remainder of the full term of office of the former director which such director replaces and until his successor is duly elected and qualified, or until his earlier death, resignation or removal. No decrease in the authorized number of directors constituting the Board of Directors shall shorten the term of any incumbent directors. SECTION 5. TIME AND PLACE OF MEETINGS. The Board of Directors shall hold its meetings at such place, either within or without the State of Delaware, and at such time as may be determined from time to time by the Board of Directors. SECTION 6. ANNUAL MEETING. The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such place, either within or without the State of Delaware, on such date and at such time as shall be specified in a notice thereof given as hereinafter provided in Section 8 of this Article III or in a waiver of notice thereof. SECTION 7. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware at such date and time as the Board of Directors may from time to time determine and, if so determined by the Board of Directors, notices thereof need not be given. SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer, or by any two (2) directors. Notice of the date, time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail or telegram, charges prepaid, addressed to each director at the director's address as it is shown on the records of the Corporation. In case the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. In case the notice is delivered personally or by telephone or telegram, it shall be delivered personally or by telephone or to the telegraph company at least forty-eight (48) hours before the time of the holding of the meeting. The notice need not specify the purpose of the meeting. A written waiver of any such notice signed by the person entitled thereto, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. SECTION 9. QUORUM; VOTE REQUIRED FOR ACTION; ADJOURNMENT. Except as otherwise required by law, or provided in the Certificate of Incorporation or these Bylaws, a majority of the directors shall constitute a quorum for the transaction of business at all meetings of the Board of Directors and the affirmative vote of not less than a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting, from time to time, without notice other than announcement at the meeting, until a 7 quorum shall be present. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum to conduct that meeting. When a meeting is adjourned to another time or place (whether or not a quorum is present), notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Board of Directors may transact any business which might have been transacted at the original meeting. SECTION 10. ACTION BY ELECTRONIC MAIL AND/OR WRITTEN CONSENT. Unless otherwise restricted by the certificate of incorporation or bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the board, or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. SECTION 11. TELEPHONE MEETINGS. Unless otherwise restricted by the Certificate of Incorporation, members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee, as the case may be, by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this Section 11 shall constitute presence in person at such meeting. SECTION 12. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the entire Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any such committee, who may replace any absent or disqualified member at any meeting of the committee. In the event of absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the committee member or members present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. Any committee, to the extent allowed by law and as provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it, but no such committee shall have the power or authority in reference to the following matter: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the Delaware General Corporation Law to be submitted to stockholders for approval or (ii) adopting, amending or repealing any Bylaw of the Corporation. Each committee shall keep regular minutes of its meetings and report to the Board of Directors when required." 8 SECTION 13. COMPENSATION. The directors may be paid such compensation for their services as the Board of Directors shall from time to time determine. SECTION 14. INTERESTED DIRECTORS. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or the committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if: (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof, or the stockholders. Interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. ARTICLE IV OFFICERS SECTION 1. OFFICERS. The officers of the Corporation shall be a President, a Secretary and a Chief Financial Officer. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive Officer, one or more Vice Presidents, one or more Assistant Financial Officers and Treasurers, one or more Assistant Secretaries and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article IV. SECTION 2. APPOINTMENT OF OFFICERS. The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article IV, shall be appointed by the Board of Directors, and each shall serve at the pleasure of the Board, subject to the rights, if any, of an officer under any contract of employment. SECTION 3. SUBORDINATE OFFICERS. The Board of Directors may appoint, and may empower the Chief Executive Officer or President to appoint, such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws or as the Board of Directors may from time to time determine. SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights of an officer under any contract, any officer may be removed at any time, with or without cause, by the Board of Directors or, except in case of an officer chosen by the Board of Directors, by any officer 9 upon whom such power of removal may be conferred by the Board of Directors. Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights of the Corporation under any contract to which the officer is a party. SECTION 5. VACANCIES IN OFFICES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to that office. SECTION 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an officer is elected, shall, if present, preside at meetings of the stockholders and of the Board of Directors. He shall, in addition, perform such other functions (if any) as may be prescribed by the Bylaws or the Board of Directors. SECTION 7. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Corporation shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and the officers of the Corporation. He shall exercise the duties usually vested in the chief executive officer of a corporation and perform such other powers and duties as may be assigned to him from time to time by the Board of Directors or prescribed by the Bylaws. In the absence of the Chairman of the Board and any Vice Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the stockholders and of the Board of Directors. SECTION 8. PRESIDENT. The President of the Corporation shall, subject to the control of the Board of Directors and the Chief Executive Officer of the Corporation, if there be such an officer, have general powers and duties of management usually vested in the office of president of a corporation and shall have such other powers and duties as may be prescribed by the Board of Directors or the Bylaws or the Chief Executive Officer of the Corporation. In the absence of the Chairman of the Board, Vice Chairman of the Board and Chief Executive Officer, the President shall preside at all meetings of the Board of Directors and stockholders. SECTION 9. VICE PRESIDENT. In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, a Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and subject to all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the Bylaws, and the President, or the Chairman of the Board. SECTION 10. SECRETARY. The Secretary shall keep or cause to be kept, at the principal executive office or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of Directors, committees of Directors, and stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice given, the names of those present at Directors' meetings or committee meetings, the number of shares present or represented at stockholders' meetings, and a summary of the proceedings. 10 The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the Corporation's transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors required by the Bylaws or by law to be given, and he shall keep or cause to be kept the seal of the Corporation if one be adopted, in safe custody, and shall have such powers and perform such other duties as may be prescribed by the Board of Directors or by the Bylaws. SECTION 11. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation. The Chief Financial Officer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors. He shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all of his transactions as Chief Financial Officer and of the financial condition of the Corporation. The Chief Financial Officer shall also have such other powers and perform such other duties as may be prescribed by the Board of Directors or the Bylaws. ARTICLE V STOCK SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the Corporation shall be entitled to have a certificate signed in the name of the Corporation by the Chairman or Vice Chairman of the Board of Directors, or the President or a Vice President and by the Treasurer or an Assistant Treasurer, or by the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by such stockholder in the Corporation. SECTION 2. SIGNATURES. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. SECTION 3. LOST CERTIFICATES. The Corporation may issue a new certificate to be issued in place of any certificate theretofore issued by the Corporation, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. The Board of Directors may in its discretion require a bond in such form and amount and with such surety as it may determine, before issuing a new certificate. 11 SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws or in any agreement with the stockholder making the transfer. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by his attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be canceled before a new certificate shall be issued. SECTION 5. RECORD HOLDERS. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the record holder of shares to receive dividends, and to vote as such record holder, and to hold liable for calls and assessments a person registered on its books as the record holder of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law. SECTION 6. TRANSFER AGENT. The Board of Directors may at its discretion appoint one or more transfer agents, registrars and agents for making payment upon any class of stock, bond, debenture or other security of the Corporation. Such agents shall be located either within or outside of Delaware. They shall be entitled to such compensation as may be agreed. ARTICLE VI INDEMNIFICATION SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director or officer of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (hereinafter an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to the benefit of the indemnitee's heirs, executors and administrators; provided, however, that, except as provided in Section 2 of this Article VI with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter an "advancement of expenses"); provided, however, 12 that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Article VI or otherwise (hereinafter an "undertaking"). SECTION 2. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section 1 of this Article VI is not paid in full by the Corporation within forty-five (45) days after a written claim has been received by the Corporation, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or part in any such suit or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified or to such advancement of expenses under this Article VI or otherwise shall be on the Corporation. SECTION 3. NON-EXCLUSIVITY OF RIGHTS. The rights of indemnification and to the advancement of expenses conferred in this Article VI shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise. SECTION 4. INSURANCE. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. SECTION 5. INDEMNIFICATION OF EMPLOYEES OR AGENTS OF THE CORPORATION. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant 13 rights to indemnification and to the advancement of expenses, to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VI with respect to the indemnification and advancement of expenses of directors or officers of the Corporation. SECTION 6. INDEMNIFICATION CONTRACTS. The Board of Directors is authorized to enter into a contract with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing for indemnification rights equivalent to or, if the Board of Directors so determines, greater than, those provided for in this Article VI. SECTION 7. EFFECT OF TERMINATION OF ACTION. The termination of any action, suit or proceeding by judgment, order, settlement, or conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person seeking indemnification did not act in good faith and in the best interests of the Corporation and, with respect to any criminal action or proceeding, had a reasonable cause to believe that his conduct was unlawful. Entry of a judgment by a consent as part of a settlement shall not be deemed a final adjudication of liability for negligence or misconduct in the performance of duty, nor of any other issue or matter. SECTION 8. EFFECT OF AMENDMENT. Any amendment, repeal or modification of any provision of this Article VI by the stockholders or the directors of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such amendment, repeal or modification. ARTICLE VII GENERAL PROVISIONS SECTION 1. DIVIDENDS. Subject to limitations contained in the General Corporation Law of the State of Delaware and the Certificate of Incorporation, the Board of Directors may declare and pay dividends upon the shares of capital stock of the Corporation, which dividends may be paid either in cash, securities of the Corporation or other property. SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. SECTION 4. CORPORATE SEAL. The Corporation shall have a corporate seal in such form as shall be prescribed by the Board of Directors. SECTION 5. VOTING OF STOCK OWNED BY THE CORPORATION. The Chairman of the Board, the Chief Executive Officer, the President and any other officer of the Corporation authorized by the Board of Directors shall have power, on behalf of the Corporation, to attend, vote and grant 14 proxies to be used at any meeting of stockholders of any corporation (except this Corporation) in which the Corporation may hold stock. SECTION 6. CONSTRUCTION AND DEFINITIONS. Unless the context requires otherwise, the general provisions, rules of construction and definitions in the General Corporation Law of the State of Delaware shall govern the construction of these Bylaws. SECTION 7. AMENDMENTS. Subject to the General Corporation Law of the State of Delaware, the Certificate of Incorporation and these Bylaws, the Board of Directors may by the affirmative vote of a majority of the entire Board of Directors amend or repeal these Bylaws, or adopt other Bylaws as in their judgment may be advisable for the regulation of the conduct of the affairs of the Corporation. Unless otherwise restricted by the Certificate of Incorporation, these Bylaws may be altered, amended or repealed, and new Bylaws may be adopted, at any annual meeting of the stockholders (or at any special meeting thereof duly called for that purpose) by a majority of the combined voting power of the then outstanding shares of capital stock of all classes and series of the Corporation entitled to vote generally in the election of directors, voting as a single class, provided that, in the notice of any such special meeting, notice of such purpose shall be given. 15 EX-10.2 5 a84976exv10w2.txt EXHIBIT 10.2 EXHIBIT 10.2 MUTUAL RESCISSION AGREEMENT NeoTherapeutics, Inc., 157 Technology Drive, Irvine, California, 92618, hereinafter referred to as the "Company," and Stonestreet Limited Partnership, c/o Canaccord Capital Corporation, 320 Bay Street, Suite 1300, Toronto, Ontario M5H 4A6, Canada, hereinafter referred to as "Investor" (collectively, the "Parties") agree as follows: CONSENT TO PARTIAL RESCISSION 1. The Parties hereby consent and agree to rescind the purchase of 400,000 shares (the "Shares") of the Company's common stock, par value $.001 per share (the "Common Stock"), pursuant to that certain Securities Purchase Agreement between them, dated as of June 7, 2002 (the "Securities Purchase Agreement"), which Securities Purchase Agreement provided for the purchase of (i) 1,935,483 shares of Common Stock and (ii) a warrant to purchase up to 193,548 shares of Common Stock (the "Warrant") at an exercise price of $0.275 per share, for a total purchase price of $450,000. A copy of the Securities Purchase Agreement is attached hereto and incorporated herein by reference. RETURN OF CONSIDERATION 2. On the date hereof, Investor shall return to the Shares to the Company by electronic transfer to the account set forth below through the Deposit Withdrawal Agent Commission System: DTC No.: ------------------------------------ Account No.: n/a -------------------------------- Reference: U.S. Stock Transfer Corporation -------------------------------- 3. On the date hereof, the Company shall return Investor's payment of $0.2325 per Share for a total of $93,000 by wire transfer to pursuant to the following wire transfer instructions: ------------------------- ------------------------- ------------------------- 4. As additional consideration for the payment by the Company set forth in Section 3 above, effective upon the execution hereof, the Warrant is hereby amended so that the Warrant may not be exercised before December 8, 2002. Promptly after the date hereof, the Investor shall return the Warrant to the Company and the Company shall issue to the Investor a new warrant reflecting this amendment. MISCELLANEOUS 5. Except as set forth above, the rights and obligations of the Parties under the Securities Purchase Agreement and the Warrant shall remain in full force and effect. Delivery of an executed copy of a signature page to this Mutual Rescission Agreement by facsimile transmission shall be effective as delivery of a manually executed copy of this Mutual Rescission Agreement and shall be effective and enforceable as the original. This Mutual Rescission Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Mutual Rescission Agreement shall be governed and construed in accordance with the internal laws of the State of California without giving effect to the conflicts of law principles thereunder. Executed on July 25, 2002. NEOTHERAPEUTICS, INC. By: /s/Samuel Gulko -------------------------------------- Name: Samuel Gulko ------------------------------------ Title: Senior V.P. Finance and CFO ----------------------------------- STONESTREET LIMITED PARTNERSHIP By: /s/M. Finkelstein -------------------------------------- Name: Michael Finkelstein ----------------------------------- Title: President ----------------------------------- EX-10.3 6 a84976exv10w3.txt EXHIBIT 10.3 EXHIBIT 10.3 WARRANT REPURCHASE AGREEMENT NeoTherapeutics, Inc., 157 Technology Drive, Irvine, California, 92618 (the "Company"), and BNC Bach International, Ltd., c/o Rhino Advisors, 130 West 29th Street, 5th Floor, New York, NY 10001 (the "Investor"), (collectively, the "Parties") agree as follows: 1. The Investor hereby agrees to return to the Company for cancellation Warrant number NEOT063, dated June 7, 2002 (the "Warrant"), for the purchase of up to 400,000 shares of the Company's common stock, par value $.001 per share, at an exercise price of $0.275 per share, issued to the Investor pursuant to that certain Securities Purchase Agreement between the Parties, dated as of June 7, 2002 (the "Securities Purchase Agreement"), in return for a cash payment from the Company to the Investor of $50,000. 2. On the date hereof, Investor shall return the Warrant to the Company at the address set forth above (attention Samuel Gulko) by overnight courier service for delivery on the next business day. 3. Upon receipt of the Warrant from the Investor, as consideration for the cancellation of the Warrant, the Company shall pay the Investor $50,000 by wire transfer pursuant to the following wire transfer instructions: ----------------------------- ----------------------------- ----------------------------- ----------------------------- 4. Delivery of an executed copy of a signature page to this Warrant Repurchase Agreement by facsimile transmission shall be effective as delivery of a manually executed copy of this Warrant Repurchase Agreement and shall be effective and enforceable as the original. This Warrant Repurchase Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Warrant Repurchase Agreement shall be governed and construed in accordance with the internal laws of the State of California without giving effect to the conflicts of law principles thereunder. Executed on July 31, 2002. NEOTHERAPEUTICS, INC. By: /s/Samuel Gulko ------------------------------------- Name: Samuel Gulko ----------------------------------- Title: Senior V.P. Finance, CFO ---------------------------------- BNC BACH INTERNATIONAL, LTD. By: /s/ H. U. Bachofen ------------------------------------ Name: H. U. Bachofen ----------------------------------- Title: Director ---------------------------------- EX-10.6 7 a84976exv10w6.txt EXHIBIT 10.6 EXHIBIT 10.6 ADDITIONAL COLLATERAL RIDER This Additional Collateral Rider (this "Rider") is part of that certain Master Lease Agreement dated as of September 22, 2000, as amended by Amendment No. 1 dated as of September 28, 2000, and all Equipment Schedules and Summary Schedules thereto (collectively, the "Contract") by and between Comdisco, Inc. and NEOTHERAPEUTICS, INC. (the "Lessee") which Contract was assigned to GENERAL ELECTRIC CAPITAL CORPORATION (the "Lessor") on or about May 31, 2002. Unless otherwise defined herein, all capitalized terms used in this Rider have the meanings set forth in the Contract. Under the Contract, the Lessee must maintain cash or equivalents of not less than $5,000,000.00. The Lessee is in default of this covenant as of June 30, 2002. Therefore, after negotiations between the Lessor and Lessee, it is agreed that Lessor shall waive its right to any remedies or actions that Lessor is or may be entitled to under the Contract due to this default, and no Event of Default shall be deemed to have occurred as a result of such default, in consideration of Lessee's granting of a lien on corporate assets as provided for herein. 1. As security for the full and faithful performance by Lessee of all of the obligations of Lessee to Lessor now or hereafter in existence, Lessee does hereby grant to Lessor a security interest in all of Lessee's right, title and interest in and to the following (all hereinafter collectively called, the "Additional Collateral"): - - All Equipment (as defined in the Uniform Commercial Code) now or hereafter owned and wherever located, including but not limited to all laboratory, scientific, computer, test and production equipment, all molds and tooling, all office furniture and office equipment and all proceeds thereof, including insurance proceeds. - - All Accounts (as defined in the Uniform Commercial Code) now or hereafter owned and wherever located, including but not limited to all accounts receivable, and all proceeds thereof and therefrom. Additional Collateral does not include any Intellectual Property owned or licensed by Lessee, including but not limited to all patents, trademarks, service marks, tradenames, copyrights, trade secrets, licenses, information and proprietary rights and processes. 2. In the event of a default by Lessee under the Contract or under any other obligation to Lessor, Lessor shall have all of the rights and remedies of a Lessor under the Uniform Commercial Code with respect to the Additional Collateral in addition to any other rights which it may have under the Contract. Lessee shall have the same obligations with respect to the portion of the Additional Collateral constituting Equipment as it has under the Contract with respect to the Equipment, as defined in the Contract, financed under the Contract, including but not limited to the restrictions on moving, transferring, encumbering or giving up possession of, and the obligation to insure, such Additional Collateral constituting Equipment. 3. Lessor agrees to release its security interest in the Additional Collateral upon Lessee maintaining an Unrestricted Cash position equal to the greater of 1) $5,000,000.00 or 2) the sum of the last three months net income (loss) plus non-cash charges multiplied by three, for three consecutive quarters, or upon full payment of Lessee's obligations under the Contract. Unrestricted Cash shall be defined for purposes of this Rider as cash on hand, including marketable securities with maturities of less than fourteen (14) months, less cash pledged to other parties. It shall be an additional Event of Default under the Contract if Lessee fails to maintain the above minimum Unrestricted Cash position. 4. Lessor is not withholding the Lessee's right to sell Equipment that is part of the Additional Collateral. 5. The Lessee may make early payment, partial or in full, of its obligation under the Contract. All payments will be calculated and paid pursuant to the terms and conditions of the Contract. 6. This Rider shall run to the benefit of Lessor's successors and assigns. Except as expressly modified hereby, all of the terms and provisions of the Contract shall remain in full force and effect. 7. This Rider may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute the same instrument. IN WITNESS WHEREOF, the parties have executed this Rider this 13th day of September, 2002. GENERAL ELECTRIC CAPITAL CORPORATION NEOTHERAPEUTICS, INC. BY: /s/Diane Hernandez BY: /s/Rajesh C. Shrotriya ----------------------------------- ----------------------------------- TITLE: Vice President TITLE: Chairman and Chief Executive ------------------------------- Officer ------------------------------- EX-10.7 8 a84976exv10w7.txt EXHIBIT 10.7 EXHIBIT 10.7 Settlement Agreement between NeoTherapeutics, Inc. 157 Technology Drive Irvine; California 92618 - in the following called "NEOT" and Merck Eprova AG Im Laternenacker 5 8200 Schaffhausen Switzerland - in the following called "EPRO" - Whereas NEOT develops new drugs for e.g. neurological diseases; Whereas EPRO changed recently its company name from Eprova AG into Merck Eprova AG out of corporate identity reasons and manufactures intermediates of drug substances or the drug substances itself (e.g. Neotrofin and AIT-034); Whereas NEOT has asked EPRO to manufacture certain substances (SUBSTANCES) as listed in attachment 1; Whereas EPRO has fulfilled its obligations, NEOT has indicated that it has presently no use for these SUBSTANCES and asks for a settlement of the payables in a reasonable manner; Whereas EPRO is willing to help NEOT to restore financial stability and to find other possible uses for the SUBSTANCES; Therefore the parties agree as follows: 1) EPRO will remain the owner of all SUBSTANCES as mentioned in the four invoices as listed in attachment 2. 2) NEOT grants to EPRO the right of first refusal for the production of any further needs of the SUBSTANCES as well as the related drug substances Neotrofin and AIT-034 for a duration of five (5) years after execution of this agreement. EPRO agrees to negotiate the terms of the production of the SUBSTANCES in good faith. 3) EPRO will examine carefully all recommendations of NEOT to sell the SUBSTANCES to third parties. EPRO will also try to find third parties interested in the SUBSTANCES. 4) NEOT will pay CHF 485'470 within ten (10) days after the execution of this agreement to the account of EPRO as stated in attachment 3 for full and final payment of the invoices listed in attachment 2. The above-mentioned sum has been combined from the following amounts:

INVOICE COMPOUND AMOUNT 1) D22094 Aminopropylpyrrolidinone CHF 102'700 - -------------------------------------------------------------------------------- 2) D22095 ACA CHF 175'500 - -------------------------------------------------------------------------------- 3) D22049 ACA CHF 66'625 - -------------------------------------------------------------------------------- 4) D22162 Ala-benzonate CHF 140'645 - --------------------------------------------------------------------------------

5) EPRO will not charge costs for the storage and possible disposal of the SUBSTANCES, V.A.T. as well as for not-realized interests. 6) a) After the last signature under this agreement, the patent application PCT WO 02/00659 and all corresponding patent applications or patent rights based on US Appl No. 09/602,048 (PATENTS), owned by NEOT will become the property of EPRO according to the ten (10) provisions of attachment 4. b) For the case, NEOT would be interested to get back the rights on these PATENTS, EPRO herewith grants to NEOT an exclusive option to buy these PATENTS within twelve (12) months after execution of this agreement for a purchase price of CHF 527'676 plus all costs which has been incurred to maintain the PATENTS during this time. During the term of the exclusive option, EPRO agrees to not enter into any agreement related to the PATENTS in regard to Neotrofin and AIT-034 without the prior consent of NEOT. EPRO also agrees it will use commercially reasonable efforts to maintain the PATENTS. c) In case, NEOT repurchases the PATENTS, EPRO will be granted a non-exclusive, royalty-free, world-wide license to these PATENTS excluding the manufacturing of Neotrofin and AIT-034. Any assignment of the PATENTS by NEOT to a third party will be subject to the non-exclusive license to EPRO. d) In case, NEOT desires to contract for the production of Neotrofin or AIT-034 after the time-frame of item 2 above and does not exercise its option to repurchase the PATENTS under item 2, EPRO will grant NEOT a non-exclusive, world-wide license with a license fee that will not exceed CHF 527'676 over the life of the license. Moreover, in addition to the aforementioned license fee, NEOT agrees to EPRO all costs which will have been incurred by EPRO to maintain the PATENTS to date and during the time of the licensing agreement. 7) In case NEOT is in default with the agreed payment, EPRO may claim interests of 20% above LIBOR per year for the unpaid sum. In case NEOT indicates not to pay any amount of the agreed sums, EPRO may claim to be paid according to attachment 2 for the unpaid rest as well as an interest rate of 5% above LIBOR per year since the date of the invoices and all costs and damages caused by the non-payment and the storage and/or the disposal of the SUBSTANCES. 8) This agreement states the entire understanding of the parties. No change, modification, alteration, or addition to any provision hereof shall be binding unless in writing and signed by authorized representatives of both parties. 9) This agreement shall be governed by, and construed and enforced in accordance with Swiss law. 10) Except for the right of either party to apply to a court of competent jurisdiction for a temporary restraining order, a preliminary injunction, or other equitable relief to preserve the status quo or prevent irreparable harm, any and all claims, disputes or controversies arising under, out of, of in connection with this agreement, which the parties shall be unable to resolve within sixty (60) days shall be mediated in good faith. The party raising such dispute shall promptly advise the other party of such claim, dispute or controversy in a writing which describes in reasonable detail the nature of such dispute. By not later than five (5) business days after the recipient has received such notice of dispute, each party shall have selected for itself a representative who shall have the authority to bind such party, and shall additionally have advised the other party in writing of the name and title of such representative. By not later than ten (10) business days after the date of such notice of dispute, the party against whom the dispute shall be raised shall select a mediation specialist in the area of the defendant and such representatives shall schedule a date with such mediation hearing. The parties shall enter into good faith mediation and shall share the costs equally. If the representatives of the parties have not been able to resolve the dispute within fifteen (15) business days after such mediation hearing, the parties shall have the right to pursue this case by arbitration. 11) All disputes arising in connection with the present contract shall be then finally settled under the rules of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with said rules. The language of correspondence and the language used by the court in the settlement of disputes shall be English. The place of settlement of disputes shall be in Schaffhausen. The costs of court of arbitration shall be born equally by both parties, and each party shall be for its own part of all other costs arising. Both parties agree to accept the decision of the Court of Arbitration as final binding of them both to the exclusion of all remedies. 12) In the event that any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein. IN WITNESS WHEREOF, each party has caused this Agreement to be signed by its duly authorized representatives. Irvine, Schaffhausen, 26 September 2002 NeoTherapeutics, Inc. Merck Eprova AG /s/Rajesh C. Shrotriya, M.D. /s/M. Ulmann - ------------------------------- ----------------------------------------- M. Ulmann General Manager /s/T. Suter ----------------------------------------- T. Suter Head Business Support Attachment 1 Compound - ------------------------------ Aminopropylpyrrolidinone - ------------------------------ ACA - ------------------------------ ACA - ------------------------------ Ala-benzonate - ------------------------------ Attachment 2

Invoice Compound Amount - -------------------------------------------------------------------------------- 1) D22094 Aminopropylpyrrolidinone CHF 102'700 - -------------------------------------------------------------------------------- 2) D22095 ACA CHF 351'000 - -------------------------------------------------------------------------------- 3) D22049 ACA CHF 133'250 - -------------------------------------------------------------------------------- 4) D22162 Ala-benzonate CHF 426`196 - --------------------------------------------------------------------------------

Attachment 3 Account of EPRO No. 230-M0141740.0 at UBS AG, Zurich, Swift-Code UBSWCCHZZ Attachment 4 (1) NEOT herewith transmits all rights to EPRO on the PCT WO 02/00659 (US Appl No. 09/602,048) with all rights connected thereto. (2) Therefore, after the last signature under this agreement, the PATENTS become the property of EPRO. NEOT will agree to the recording of the assignment of the PATENTS in the register of the US -- as well as the PCT Patent Office and NEOT promises to provide the required documents and to make all necessary signatures. (3) NEOT promises to submit to EPRO all written research documents, tabulations, experimental reports, correspondences, which relate to the subject matter invention. The transfer will be made at the latest thirty (30) days after the execution of this agreement. (4) NEOT will advise EPRO about the status of the PATENTS and their plans for a optimal protection of the invention in the different countries. (5) If required by EPRO, NEOT promises to provide its full assistance to EPRO after the transfer of the documents and materials for an introduction of the employees of EPRO. (6) EPRO is aware of the technical features of the invention. NEOT is not liable for the technical utility and completeness of the technical documents under this agreement. (7) NEOT declares that legal defects in the PATENTS and technical defects in the invention are not known to him. A liability for freedom of defects, particularly dependency of the invention is not undertaken. All rights of warranty or rescission by EPRO are excluded. (8) NEOT promises to keep knowledge relating to the patented invention confidential after the complete signature of the agreement until it has bought back the rights on the PATENTS as agreed in this agreement. (9) NEOT promises not to attack the PATENTS and/or all derived patents and not to assist third parties in attacks on the PATENTS and/or all derived patents. (10) The costs and fees for the assignment and recording will be borne by EPRO. EPRO will also pay all the fees and costs for maintenance of the PATENTS after the execution of this agreement. EX-10.8 9 a84976exv10w8.txt EXHIBIT 10.8 Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [Intentionally Redacted]. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission. EXHIBIT 10.8 FIRST AMENDMENT TO LICENCE AGREEMENT DATED AUGUST 28, 2001 BETWEEN JOHNSON MATTHEY PLC AND NEOTHERAPEUTICS, INC. This First Amendment to License Agreement ("FIRST AMENDMENT") is entered into and effective this 30th day of September 2002 by and between Johnson Matthey PLC, a company organised under the laws of England and Wales whose registered office is at 2-4 Cockspur Street, Trafalgar Square, London, SW1Y 5BQ, England, acting for itself and for its AFFILIATES including particularly Johnson Matthey, Inc (collectively, "LICENSOR"), and NeoTherapeutics, Inc., a corporation organized under the laws of the State of California, United States of America whose principal place of business is at 157 Technology Drive, Irvine, California 92618, United States of America with reference to the following facts and on the following terms and conditions. RECITALS (A) Effective August 28, 2001, LICENSOR and LICENSEE entered into the License Agreement (the "LICENSE") pursuant to which LICENSOR granted a license for the use of technical information relating to the use of platinum complex JM216 in the treatment of tumor cells as well as for the use of the PATENT RIGHTS (as defined in the LICENSE). All defined terms in this FIRST AMENDMENT (as set forth in capital letters) shall have the same meaning as set forth in the LICENSE. (B) The parties now wish to amend and modify the LICENSE on the terms and conditions as set forth in this FIRST AMENDMENT. Now therefore, for good and valuable consideration, the parties agree as follows: 1 (1) ARTICLE I Paragraph 16 of Article I of the LICENSE shall be amended to read as follows: TERM: the term commencing on the EFFECTIVE DATE and terminating on a country-by-country basis upon the expiry of the last to expire of the patents granted in each such country which have expiration dates specified on Schedule A. The date of expiration of a patent described in this Section shall include any extension granted to LICENSOR by virtue of any continuation, continuations-in-part and divisional applications, including reissues and reexamination applications and patents and reexamination certificates issuing to LICENSOR. (2) ARTICLE II Paragraph 1 of Article II of the LICENSE shall be amended to read as follows: 1. Subject to Article II.3 below, the LICENSOR agrees to grant and hereby grants to the LICENSEE an exclusive worldwide royalty-bearing revocable right and licence, with rights to sublicence, under the PATENT RIGHTS to use PLATINUM COMPLEXES, the LICENSOR'S INFORMATION and the LICENSOR'S ONGOING INFORMATION to make, have made, use, offer to sell, and have sold PRODUCTS for use within the FIELD. Paragraph 2 of Article II of the LICENSE shall be amended to read as follows: 2. The LICENSEE shall be entitled to sub-license any THIRD PARTY under rights granted under Article II.1 hereof provided that the LICENSEE shall remain responsible for all acts and omissions of such sub-licensee as though they were by the LICENSEE. In particular, the LICENSEE shall be responsible to the LICENSOR for payments due in respect of sales by sub-licensees as though they were sales by LICENSEE. The terms of any sub-license agreement shall provide that upon termination of this Agreement, any 2 sub-licensee shall attorn to and accept the LICENSOR in place of the LICENSEE such that any sub-license shall be deemed an agreement between the LICENSOR and sub-licensee. (3) ARTICLE III Paragraph 1 of Article III of the LICENSE shall be amended to read as follows: 1. The LICENSEE, its AFFILIATES and sub-licensees shall diligently perform research and development on the use of JM 216 and other PLATINUM COMPLEXES within the FIELD and on the formulation of PRODUCTS. The LICENSEE, its AFFILIATE and sub-licensees shall exercise in the performance of such research technical skill and competence of a high calibre. (4) ARTICLE IV Article IV of the LICENSE shall be amended to read as follows: 1. The LICENSEE, its AFFILIATES and sub-licensees shall use its best efforts to test, evaluate and develop PRODUCTS so as to meet the objectives detailed hereunder: Objective 1 Submission of NDA to US FDA (hereinafter called the 'First MILESTONE') 2 Acceptance of NDA by US FDA (hereinafter called the 'Second MILESTONE') 3 Receipt of US FDA approval of NDA (hereinafter called the 'Third MILESTONE') 4 Approval in the first European Union state of a new drug application (hereinafter called the 'Fourth MILESTONE') 3 5 Approval by US FDA of JM216 for the first indication other than the indication approved in Objective 2. (hereinafter called the 'Fifth MILESTONE') 6 Approval in the first European Union state of JM216 for the first indication other than the indication approved in Objective 3. (hereinafter called the `Sixth MILESTONE') (5) ARTICLE V Paragraphs 1 through 5, inclusive of Article V of the LICENSE shall be amended to read as follows: 1. The LICENSOR acknowledges receipt of US$100,000 which was paid by LICENSOR on the EFFECTIVE DATE; 2. The LICENSOR acknowledges receipt of US$150,000 as required by Article V.2 of the LICENSE. 3. Within 30 (thirty) days of the date of the attainment of each MILESTONE by the LICENSEE, an AFFILIATE or sub-licensee, the LICENSEE shall pay to the LICENSOR the following sums: (i) the First MILESTONE: [Intentionally Redacted] (ii) the Second MILESTONE:[Intentionally Redacted] (iii) the Third MILESTONE: [Intentionally Redacted] (iv) the Fourth MILESTONE:[Intentionally Redacted] (v) the Fifth MILESTONE: [Intentionally Redacted] (vi) the Sixth MILESTONE: [Intentionally Redacted] In no event will LICENSEE be liable for more than one payment upon the occurrence of each MILESTONE. 4 [Intentionally Redacted] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 4. The LICENSEE shall during the TERM of this Agreement pay to the LICENSOR a royalty calculated at the rate set forth below of the NET SALES VALUE of all PRODUCTS sold or otherwise supplied for use whether within the FIELD or outside the FIELD for money or money's worth by LICENSEE or any AFFILIATE or sublicensee thereof; provided, however, that in any country in the TERRITORY where a GENERIC PRODUCT is sold in competition with the PRODUCT, the royalty payable to LICENSOR with respect to NET SALES of such PRODUCTS in such country shall be reduced to 0%, commencing with the calendar quarter during which any such GENERIC PRODUCT first becomes available in competition with the PRODUCT in such country. Royalty Rate NET SALES during calendar year ------------ ------------------------------ [Intentionally Redacted] 5. Payments due under Article V.4 shall be made within 45 days of the end of each calendar quarter in respect of royalties accruing on PRODUCTS invoiced in that calendar quarter. Paragraphs 7 and 8 of Article V of the LICENSE shall be amended to read as follows: 7. The LICENSEE agrees during for a period of three (3) years following the accrual of any royalty it will keep and maintain accurate records and books of account containing all data necessary for determination of royalties payable under this Agreement, including records and books of account relating to sales of PRODUCTS by sub-licensees, which records and books of account of LICENSEE shall upon reasonable notice by LICENSOR be open at all reasonable times during reasonable business hours for inspection by an independent accountant appointed by LICENSOR for the purpose of verifying the accuracy of the LICENSEE's reports hereunder. Such accountant shall be entitled to take copies solely of LICENSEE's records pertaining to such reports as LICENSOR's 5 [Intentionally Redacted] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. expense. The LICENSEE shall ensure that its sub-licensees (if any) also keep true and accurate records and books of account containing all data necessary for the determination of royalties payable in respect of their activities and shall ensure that such records and books of account shall upon reasonable notice by the LICENSOR be open for inspection at all reasonable times during business hours for inspection by such independent accountant no less than once per year for purposes of verifying the accuracy of the LICENSEE'S reports hereunder. 8. The LICENSEE shall submit to the LICENSOR within 45 days of the end of each calendar quarter a statement setting forth with respect to the operations of the LICENSEE hereunder, as well as with regard to each sub-licensee during that period, the quantity of PRODUCTS made and sold and the NET SALES VALUE of all PRODUCTS sold together with payments due. (6) ARTICLE VII Paragraph 6 of Article VII of the LICENSE shall be amended by inserting the following after the first sentence: LICENSOR further represents and warrants that it is not aware of any patents, whether granted to LICENSOR, an AFFILIATE, or any THIRD PARTY, which would be infringed by: (i) the making, using and selling of any PRODUCT; (ii) or utilization of any PLATINUM COMPLEX by LICENSEE in accordance with the license granted by this AGREEMENT; or (iii) the metabolites of JM216. To the best of LICENSOR's knowledge and belief, the practice of the PATENT RIGHTS and the exercise of the rights granted LICENSEE under Article II.1 do not infringe upon or conflict with any patent, copyright or other proprietary right of any THIRD PARTY. 6 (7) ARTICLE IX The first sentence of Paragraph 1 of Article IX of the LICENSE shall be amended by to read as follows: 1. During the continuance of this Agreement the LICENSEE, its AFFILIATES, and its sub-licensees shall: (8) ARTICLE XI. Paragraph 3 of Article XI shall be amended to read as follows 3. Intentionally deleted. Subparagraph 8.3 of Article XI shall be amended to read as follows: 8.3 Upon any termination of this Agreement, sublicenses granted by the LICENSEE shall be automatically assigned to the LICENSOR which shall thereafter receive all benefits and have all obligations under the sublicenses as in place and stead of the LICENSEE. (9) [Intentionally Redacted] (10) GENERAL PROVISIONS (a) This FIRST AMENDMENT may be executed in two or more counterparts, including facsimile signatures, each of which will be deemed an original, but all of which together will constitute one and the same instrument. (b) This FIRST AMENDMENT and the AGREEMENT constitute the complete and integrated agreement of the parties with respect to the subject matter hereof and 7 [Intentionally Redacted] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. thereof. Except as provided in this FIRST AMENDMENT, the AGREEMENT will remain in full force and effect and unchanged in all other respects. (c) LICENSOR represents that it is not aware of any default by LICENSEE under the Agreement, or aware of any event or omission which with the passage of time might be reasonable foreseen to lead to a default under the Agreement. The parties have caused this FIRST AMENDMENT to be executed by their respective authorized representatives effective as of the date first set forth above. LICENSOR LICENSEE Johnson Matthey PLC NeoTherapeutics, Inc. By: /s/ Ian Wishart By: /s/ Rajesh Shrotriya ------------------------------ ------------------------------ Its: Group Patents and Its: Chairman, CEO and Licensing Controller President ------------------------------ ------------------------------ 8 EX-10.9 10 a84976exv10w9.txt EXHIBIT 10.9 Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as {redacted}. A complete version of the exhibit has been filed separately with the Securities and Exchange Commission. EXHIBIT 10.9 FINAL CO-DEVELOPMENT AND LICENSE AGREEMENT between NEOTHERAPEUTICS, INC. and GPC BIOTECH AG Dated as of September 30, 2002 CO-DEVELOPMENT AND LICENSE AGREEMENT This CO-DEVELOPMENT AND LICENSE AGREEMENT (this "Agreement"), dated as of September 30, 2002, is between Neotherapeutics, Inc., a company duly organized and existing under the laws of Delaware and having offices at 157 Technology Drive, Irvine, California, USA for and on behalf of itself and its Affiliates ("NEOTHERAPEUTICS"), and GPC Biotech AG, a company duly organized and existing under the laws of the Federal Republic of Germany and having offices at Fraunhoferstrasse 20, D-82152 Martinsried/Munich Germany, for and on behalf of itself and its Affiliates (together with its Affiliates, "GPC"). PRELIMINARY STATEMENTS A. NEOTHERAPEUTICS has entered into that certain License Agreement with Johnson Matthey PLC ("J-M") dated August 28, 2001, pursuant to which NEOTHERAPEUTICS has been granted a license, with the right to sublicense, to certain patent rights and other know-how and technology owned by J-M. B. NEOTHERAPEUTICS wishes to grant a sublicense to GPC, and GPC wishes to take a sublicense from NEOTHERAPEUTICS, under certain rights granted to NEOTHERAPEUTICS under the J-M License Agreement and under other relevant patent rights and know-how controlled by NEOTHERAPEUTICS, upon the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the foregoing preliminary statements and the mutual covenants and agreements of the Parties contained in this Agreement, the Parties hereby agree as follows: 1. DEFINITIONS As used in this Agreement, the following terms shall have those meanings set forth in this Section 1 unless the context dictates otherwise. 1.1. "Affiliate" with respect to either Party, shall mean any Person controlling, controlled by, or under common control with, such Party. For the purpose of this Section 1.1, "control" shall refer to (i) the possession, directly or indirectly, of the power to direct the management or policies of such Party, whether through the ownership of voting securities, by contract or otherwise, or (ii) the beneficial ownership (as such term is defined in the 1934 Act) of at least fifty percent (50%) of the voting securities or other ownership interest of such Party. 1.2. "Confidential Information" shall have the meaning assigned to such term in Section 12.1. 1.3. "Covered Product" shall mean any Platinum Complexes formulated for administration to humans, the research, development, manufacture, sale or use of which in any country in the Territory is covered by a Valid Claim of any Patent included in the J-M Licensed Technology or the NEOTHERAPEUTICS Licensed Technology. 1.4. "Effective Date" shall mean the date first set forth above. 1.5. "EMEA" shall mean the European Agency for the Evaluation of Medicinal Products and any successor thereto. 1.6. "FDA" shall mean the United States Food and Drug Administration, or any successor thereto. 1.7. "Field" shall mean the FIELD, as such term is defined in the J-M License Agreement, as amended from time to time. 1.8. "First Commercial Sale" shall mean, with respect to any Covered Product, the first sale for use or consumption by the general public of such Covered Product in a country in the Territory after all required marketing and pricing approvals have been granted, or otherwise permitted, by the governing health authority of such country. "First Commercial Sale" shall not include the sale of any Covered Product for use in clinical trials or for compassionate use prior to the approval of an NDA. 1.9. "GPC Development Technology" shall mean all Inventions and Know-How first developed, reduced to practice or shown to have utility by one or more employees of GPC without the involvement of one or more employees of NEOTHERAPEUTICS in connection with the development of Covered Products, as well as any and all Patents covering the same. 1.10. "Invention" shall mean any new or useful method, process, manufacture, compound or composition of matter, whether or not patentable or copyrightable, or any improvement thereof. 1.11. "J-M License Agreement" shall mean that certain License Agreement dated August 28, 2001, by and between NEOTHERAPEUTICS and J-M, as amended from time to time. A copy of such Agreement, including all amendments executed prior to the execution of this Agreement, is attached hereto as Exhibit A. 1.12. "J-M Licensed Technology" shall mean the J-M Patent Rights, the LICENSOR'S INFORMATION and the LICENSOR'S ONGOING INFORMATION to which NEOTHERAPEUTICS has been granted a license under the J-M License Agreement, as such capitalized terms are defined in the J-M License Agreement, as amended from time to time. 1.13. "J-M Patent Rights" shall mean the PATENT RIGHTS, as such term is defined in the J-M Licensed Agreement. A list of all such J-M Patent Rights in existence on the Effective Date is included in Exhibit B attached hereto. 1.14. "J-M Royalty Term" shall mean the period beginning on the Effective Date and ending on the earlier of (i) the expiration of the TERM, as such term is defined in the J-M License Agreement, as amended from time to time, or (ii) the date on which NEOTHERAPEUTICS is no longer required to make royalty payments to J-M pursuant to the J-M License Agreement. 1.15. "Joint Development Committee" shall mean the entity organized and acting pursuant to Section 4. 1.16. "Joint Development Technology" shall mean all Inventions and Know-How first developed, reduced to practice or shown to have utility by one or more employees of GPC and one or more employees of NEOTHERAPEUTICS in connection with the development of Covered Products, as well as any and all Patents covering the same. 1.17. "Know-How" shall mean unpatented technical and other information which is not in the public domain including information comprising or relating to discoveries, inventions, data, designs, formulae, methods, models, assays, research plans, procedures, designs for experiments and tests and results of experimentation and testing (including results of research or development), processes (including manufacturing processes, specifications and techniques), laboratory records, chemical, pharmacological, toxicological, clinical, analytical and quality control data, trial data, case report forms, data analyses, reports or summaries and information contained in submissions to and information from ethical committees and regulatory authorities. Know-How includes rights protecting Know-How. The fact that an item is known to the public shall not be taken to exclude the possibility that a compilation including the item, and/or a development relating to the item, is (and remains) not known to the public. 1.18. "MAA" shall mean a Marketing Authorization Application or similar application filed with the EMEA after completion of human clinical trials to obtain marketing approval for a Covered Product in the European Union. 1.19. "MHW" shall mean the Ministry of Health and Welfare in Japan and any successor agency. 1.20. "NDA" shall mean a New Drug Application to be filed with the FDA, or the equivalent thereof in other countries or regulatory jurisdictions. 1.21. "NEOTHERAPEUTICS Development Technology" shall mean all Inventions and Know-How first developed, reduced to practice or shown to have utility by one or more employees of NEOTHERAPEUTICS without the involvement of one or more employees of GPC in connection with the development of Covered Products, as well as any and all Patents covering the same. 1.22. "NEOTHERAPEUTICS Licensed Technology" shall mean the LICENSEE'S ONGOING INFORMATION, as such term is defined in the J-M License Agreement, as amended from time to time, as well as all Patents owned or controlled by, or licensed to, NEOTHERAPEUTICS, and all Know-How and Inventions developed, owned or controlled by, or licensed to, NEOTHERAPEUTICS, on or after the Effective Date, other than the J-M Licensed Technology, which, by objective standards, is necessary for or may be useful in the development, manufacture, use or sale of Licensed Products in the Field in the Territory, all to the extent that NEOTHERAPEUTICS has the right to license or otherwise make available such Patents, Know-How and Inventions to GPC hereunder. A list of all such Patents in existence on the Effective Date is included in Exhibit B attached hereto. 1.23. "Net Sales" shall have the meaning ascribed to the term "Net Sales Value" in the J-M License Agreement, as amended from time to time. Notwithstanding the foregoing, in the event a Covered Product is sold in conjunction with another proprietary component so as to be a combination product (whether packaged together or in the same therapeutic formulation), Net Sales shall be calculated by multiplying the Net Sales of such combination product by a fraction, the numerator of which shall be the fair market value of the Covered Product as if sold separately (determined in accordance with generally accepted accounting principles), and the denominator of which shall be the aggregate fair market value of all the proprietary active components of such combination product, including the Covered Product, as if sold separately. In the event no such separate sales are made by GPC or its Affiliates, Net Sales of the combination product shall be calculated in a manner to be negotiated and agreed upon by the Parties, reasonably and in good faith, prior to any sale of such combination product, which shall be based upon the respective estimated commercial values of the proprietary active components of such combination product. GPC's or any of its Affiliate's transfer of Covered Product to another Affiliate or a Sublicensee shall not result in any Net Sales, unless such Covered Product is consumed by such Affiliate or Sublicensee in the course of its commercial activities. 1.24. "1934 Act" shall mean the U.S. Securities Exchange Act of 1934, as amended, and all regulations promulgated pursuant thereto from time to time. 1.25. "Party" shall mean NEOTHERAPEUTICS or GPC and, when used in the plural, shall mean NEOTHERAPEUTICS and GPC. 1.26. "Patents" shall mean all letters patent and patent applications throughout the Territory, as well as any and all substitutions, extensions, renewals, continuations, continuations-in-part, divisions, patents-of-addition and/or reissues thereof. 1.27. "Person" shall mean any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any government or any agency or political subdivision thereof. 1.28. "Platinum Complexes" shall mean the platinum co-ordination compounds that are the subject of the J-M Patent Rights. 1.29. "Royalty Term" shall mean the period beginning on the Effective Date and ending on the date of the expiration of the last to expire Valid Claim, if any, included in the Joint Development Technology or NEOTHERAPEUTICS Development Technology that covers the manufacture or sale of Covered Products. If, at the time of expiration of the J-M Royalty Term, there are no Valid Claims included in the Joint Development Technology or NEOTHERAPEUTICS Development Technology covering the manufacture or sale of a Covered Product, then the Royalty Term with respect to such Covered Product shall expire on the expiration of the J-M Royalty Term. 1.30. "Satraplatin" shall mean the platinum complex bis(acetato)amminedichloro(cyclohexylamine)platinum(IV). 1.31. "Sublicensee" shall mean a Third Party to which GPC has sublicensed rights under the NEOTHERAPEUTICS Licensed Technology or J-M Licensed Technology for the commercialization of Covered Products. 1.32. "Sublicense Fees" shall mean all payments made to GPC from a Sublicensee that relate specifically to the sublicense of rights granted to GPC hereunder, excluding (i) payments made in consideration of research and development efforts undertaken by GPC, (ii) payments made to reimburse GPC for expenses previously incurred by GPC in connection with the development of Covered Products, (iii) payments made in consideration of the purchase of equity of GPC by a Sublicensee to the extent that such payments do not exceed the fair market value of such equity, (iv) payments made in consideration of the manufacture or supply of Covered Products by GPC to the extent that such payments do not exceed GPC's costs of such manufacture and supply, (v) loans made to GPC or (vi) Sublicense Royalties. 1.33. "Sublicense Royalties" shall mean royalty payments made to GPC based on sales of Covered Products by a Sublicensee. 1.34. "Territory" shall mean the entire world. 1.35. "Third Party" shall mean any Person who or which is neither a Party nor an Affiliate of a Party. 1.36. "Valid Claim" shall mean (i) a pending claim in any patent application that has not been pending for more than five (5) years, which shall be treated as if such pending claim were issued in then-current form, or (ii) a claim of any issued letters patent that, in each case, has not been held invalid or unenforceable by final decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and that is not admitted to be invalid or unenforceable through reissue, disclaimer or otherwise. 2. REPRESENTATIONS AND WARRANTIES 2.1. REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES. Each Party represents and warrants to the other Party that, as of the Effective Date: (a) Such Party is duly organized and validly existing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof; (b) Such Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement; and (c) This Agreement is a legal and valid obligation of such Party, binding upon such Party and enforceable against such Party in accordance with the terms of this Agreement, except as such enforceability may be affected by laws affecting creditors' rights generally and general equitable principles. The execution, delivery and performance of this Agreement by such Party do not conflict with any agreement, instrument or understanding, oral or written, to which such Party is a party or by which such Party may be bound, or violate any law or regulation of any court, governmental body or administrative or other agency having authority over such Party. All consents, approvals and authorizations from all governmental authorities or other Third Parties required to be obtained by such Party in connection with the execution, delivery and performance of this Agreement have been obtained. 2.2. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF NEOTHERAPEUTICS. NEOTHERAPEUTICS represents and warrants to GPC that, as of the Effective Date: (a) NEOTHERAPEUTICS and/or its Affiliates are the owner of, or have exclusive rights to, all of the Patents included in the J-M Licensed Technology (except as expressly provided in the copy of the J-M License Agreement attached as Exhibit A) and the NEOTHERAPEUTICS Licensed Technology in existence on the Effective Date, and have the exclusive right to grant the licenses or sublicenses, as the case may be, therefor granted under this Agreement; (b) All such Patents consist of either patent applications that have been filed and are pending and actively being prosecuted as of the Effective Date, or issued letters patent that are in full force and effect and have been maintained through the Effective Date; (c) NEOTHERAPEUTICS is not aware of any asserted or unasserted claim or demand which it believes can be enforced by a Third Party against any such Patents; (d) To the best of NEOTHERAPEUTICS's knowledge and belief, the practice of such Patents and the exercise of the rights granted to GPC in Section 7 do not infringe upon or conflict with any patent, copyright or other proprietary right of any Third Party; (e) NEOTHERAPEUTICS and/or its Affiliates have the right to grant the licenses or sublicenses, as the case may be, granted under this Agreement for all of the Know-How and Inventions included in the J-M Licensed Technology and NEOTHERAPEUTICS Licensed Technology in existence on the Effective Date; (f) Such Know-How and Inventions were not obtained by NEOTHERAPEUTICS, and to the best of NEOTHERAPEUTICS's knowledge and belief were not obtained by J-M, in violation of any contractual or fiduciary obligation to which NEOTHERAPEUTICS, J-M or any of their respective employees or staff members are or were bound, or by the misappropriation of the trade secrets of any Third Party; (g) NEOTHERAPEUTICS has not entered into any agreement with any Third Party which is in conflict with the rights granted to GPC under to this Agreement, and the execution and performance of this Agreement by NEOTHERAPEUTICS do not and shall not violate any agreement or undertaking to which NEOTHERAPEUTICS is a party; and (h) To the best of NEOTHERAPEUTICS's knowledge and belief, all of the data and information that NEOTHERAPEUTICS has provided to GPC prior to the Effective Date relating to such Patents, Know-How and Inventions, and to Covered Products in general, are reasonably accurate, and NEOTHERAPEUTICS has not omitted therefrom any material data or information in NEOTHERAPEUTICS's possession or control reasonably in advance of the Effective Date concerning the same. 2.3. REPRESENTATIONS AND WARRANTIES OF GPC. GPC represents and warrants to NEOTHERAPEUTICS that, as of the Effective Date: (a) Experience. GPC acknowledges that it can bear the economic risk of its investment in the NEOTHERAPEUTICS Shares. GPC has by reason of its business or financial experience or the business or financial experience of its professional advisors who are unaffiliated with and who are not compensated by NEOTHERAPEUTICS or any affiliate or selling agent of NEOTHERAPEUTICS , directly or indirectly, has the capacity to protect its own interests in connection with its purchase of the NEOTHERAPEUTICS Shares. GPC has the financial capacity to bear the risk of this investment. (c) Purchase Entirely for Own Account. The NEOTHERAPEUTICS Shares will be acquired by GPC for investment for GPC's own account not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and GPC has no present intention of selling, granting any participation in, or otherwise distributing the same. GPC does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the NEOTHERAPEUTICS Shares. GPC has not been formed for the specific purpose of acquiring solely the NEOTHERAPEUTICS Shares. (e) Disclosure of Information. GPC has received and reviewed information about NEOTHERAPEUTICS, and in particular about the Patents, Know-How, Inventions and Covered Products, and has had an opportunity to discuss NEOTHERAPEUTICS's business, management and financial affairs with its management and to review NEOTHERAPEUTICS's facilities. GPC understands and acknowledges that such discussions, as well as any written information issued by NEOTHERAPEUTICS (i) were intended to describe the aspects of NEOTHERAPEUTICS's business and prospects which NEOTHERAPEUTICS believes to be material, but were not necessarily an exhaustive description (except to the extent described in Section 2.2(h)), and (ii) may have contained forward-looking statements involving known and unknown risks and uncertainties which may cause NEOTHERAPEUTICS's actual results in future periods or plans for future periods to differ materially from what was anticipated and that no representations or warranties were or are being made with respect to any such forward-looking statements or the probability of achieving any of the results projected in any of such forward-looking statements. Nothing contained in this Section 2.3 shall limit in any respect NEOTHERAPEUTICS's representations and warranties contained in this Agreement. (g) Restricted Securities. GPC understands that the NEOTHERAPEUTICS Shares have not been, and will not, prior to issuance under Section 9.1(c), be, registered under the Securities Act of 1933, as amended (the "Securities Act"), by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of GPC's representations as expressed herein. GPC understands that the NEOTHERAPEUTICS Shares are "restricted securities" under applicable U.S. federal and state securities laws and that, pursuant to these laws, GPC must hold the NEOTHERAPEUTICS Shares indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. GPC acknowledges that NEOTHERAPEUTICS has no obligation to register or qualify the NEOTHERAPEUTICS Shares for resale except as set forth in the Registration Rights Agreement to be entered into as provided in Section 9.1(c). GPC further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the NEOTHERAPEUTICS Shares, and on requirements relating to NEOTHERAPEUTICS which are outside of GPC's control, and which NEOTHERAPEUTICS is under no obligation and may not be able to satisfy. GPC acknowledges that NEOTHERAPEUTICS will make a notation on its stock books regarding the restrictions on transfers set forth in this Section 2.3 and will transfer securities on the books of NEOTHERAPEUTICS only to the extent not inconsistent therewith. (i) Residence. The office or offices of GPC in which its investment decision was made is located at the address or addresses of GPC set forth in the preamble. (k) Further Restrictions on Disposition. GPC agrees not to make any disposition of all or any portion of the NEOTHERAPEUTICS Shares unless and until: (a) there is then in effect a registration statement under the Securities Act covering such proposed disposition and the disposition is made in accordance with such registration statement; or (b) (i) GPC shall have notified NEOTHERAPEUTICS of the proposed disposition and shall have furnished NEOTHERAPEUTICS with a statement of the circumstances surrounding the proposed disposition and (ii) if reasonably requested by NEOTHERAPEUTICS , GPC shall have furnished NEOTHERAPEUTICS with an opinion of counsel, reasonably acceptable to NEOTHERAPEUTICS , that such disposition will not require registration under the Securities Act. (m) Legends. GPC understands that the NEOTHERAPEUTICS Shares, and any securities issued in respect of or exchange for the NEOTHERAPEUTICS Shares, may bear one or all of the following legends until they are no longer required by law or the provisions of this Agreement: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") PURSUANT TO AN EXEMPTION FROM REGISTRATION CONTAINED IN REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO A REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. NO HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY BE CONDUCTED EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT." Any legend required by the Blue Sky laws of any state to the extent such laws are applicable to the shares represented by the certificate so legended. The legend set forth above shall be removed by NEOTHERAPEUTICS from any certificate evidencing NEOTHERAPEUTICS Shares upon transfer of such NEOTHERAPEUTICS Shares in compliance with Rule 144(k) under the Securities Act or upon delivery to NEOTHERAPEUTICS of an opinion, in form and substance and by counsel reasonably satisfactory to NEOTHERAPEUTICS , that a registration statement under the Securities Act is at that time in effect with respect to the legended security or that such security can be freely transferred without such a registration statement being in effect and that such transfer will not jeopardize the exemption or exemptions from registration pursuant to which the securities were issued. (o) Foreign Investors. GPC hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the NEOTHERAPEUTICS Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the NEOTHERAPEUTICS Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the NEOTHERAPEUTICS Shares. GPC's subscription and payment for and continued beneficial ownership of the NEOTHERAPEUTICS Shares, will not violate any applicable securities or other laws of GPC's jurisdiction and will not require NEOTHERAPEUTICS to obtain any permit, make any filing or take any other action in such jurisdiction. (q) Offshore Transaction. (i) GPC is not organized under the laws of or is not a citizen or resident of the United States and was not formed for the purpose of investing in Regulation S securities, does not have any of its securities registered under the Exchange Act, and is not owned by U.S. Persons as defined in Regulation S and herein. (ii) At the time the buy order to purchase the NEOTHERAPEUTICS Shares was originated, GPC was outside the United States. (iii) All subsequent offers and sales of the NEOTHERAPEUTICS Shares shall be made in compliance with Regulation S, pursuant to registration of the securities under the Securities Act or pursuant to an exemption from such registration. (iv) GPC agrees that from the date hereof until after one year after the issuance of the NEOTHERAPEUTICS Shares hereunder (the "Restrictive Period"), GPC agrees, upon any offer, sale, or transfer of the NEOTHERAPEUTICS Shares (including any interests therein), GPC, or any successor, or any Professional under its direction (as defined below) (except for sales of any NEOTHERAPEUTICS Shares registered under the Securities Act or otherwise exempt from such registration) (i) will not sell to a U.S. Person or to an account of or for the benefit of a U.S. Person or to anyone believed to be a U.S. Person; (ii) will not engage in any efforts to sell the NEOTHERAPEUTICS Shares in the United States; (iii) will, at the time the buy order or transfer is originated, believe the buyer or transferee is outside the United States; (iv) will send to any transferee who is a Professional, whether acting as agent or principal, a confirmation or other notice stating that the Professional is subject to the same restrictions on transfer to U.S. Persons or for the account of or benefit of U.S. Persons during the Restrictive Period as provided herein; and (v) will not in connection with the common stock of NEOTHERAPEUTICS engage in the United States in any short selling, option writing, equity swaps, or other types of hedging transactions or derivative transactions. NEOTHERAPEUTICS will not honor or register and will not be obligated to honor or register any transfer in violation of these provisions. (v) For purpose hereof, in general, a "U.S. Person;" means any natural person, resident of the United States; any partnership or corporation organized or incorporated under the laws of the United States or any state or territory thereof; any estate of which any executor or administrator is a U.S. Person; any trust of which any trustee is a U.S. Person; any agency or branch of a foreign entity located in the United States; any nondiscretionary account or similar account, other than estate or trust, held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident of the United States; and any partnership or corporation if organized or incorporated under the laws of any foreign jurisdiction and formed by a U.S. Person principally for the purpose of investing in securities and not registered under the Securities Act unless it is organized and incorporated and owned by "accredited investors," as defined under Rule 501(a) under the Securities Act, who are not natural persons, estates or trusts. "U.S. Person" is further defined in Rule 902(o) under the Securities Act. (vi) A "Professional" is a "distributor" as defined in Rule 902(c) under the Securities Act (generally any underwriter, or other person, who participates, pursuant to a contractual arrangement, in the distribution of the Shares); a dealer as defined in Section 2(12) of the Exchange Act (encompassing those who engage in the business of trading or dealing in securities as agent, broker, or principal); or a person receiving a selling concession, fee, or other remuneration in respect of the sale of the Shares sold. 2.4. DEFINITION OF "KNOWLEDGE." As used in this Section 2, the phrases "to the best of" a Party's "knowledge and belief," "known to" or similar phrases are intended to indicate that no information has come to the attention of senior management of the Party making the particular representation which would give such person actual knowledge of the existence or absence of such facts. 3. J-M LICENSE AGREEMENT 3.1. REPRESENTATIONS AND WARRANTIES OF NEOTHERAPEUTICS. NEOTHERAPEUTICS represents and warrants to GPC that, as of the Effective Date: (a) The J-M License Agreement is in full force and effect and has not been modified or amended, except that no representation or warranty is made with respect to J-M or matters solely within the control or direction of J-M that are not known to NEOTHERAPEUTICS; (b) To the best of NEOTHERAPEUTICS's knowledge and belief, neither J-M nor NEOTHERAPEUTICS is in default with respect to a material obligation under, and neither such party has claimed or has grounds upon which to claim that the other party is in default with respect to a material obligation under, the J-M License Agreement; (c) To the best of NEOTHERAPEUTICS's knowledge and belief, the rights that J-M has licensed to NEOTHERAPEUTICS pursuant to the J-M License Agreement were not and are not subject to any restrictions or limitations except as set forth in the copy of the J-M License Agreement attached as Exhibit A; and (d) NEOTHERAPEUTICS has not waived or allowed to lapse any of its rights under the J-M License Agreement, and no such rights have lapsed or otherwise expired or been terminated. 3.2. NEOTHERAPEUTICS OBLIGATIONS. NEOTHERAPEUTICS agrees that during the term of this Agreement: (a) NEOTHERAPEUTICS will use commercially reasonable efforts to fulfill its obligations under the J-M License Agreement to the extent such obligations have not been delegated to GPC and to the extent that failure to do so would adversely affect GPC or its rights hereunder; (b) NEOTHERAPEUTICS shall not enter into any subsequent agreement with J-M that modifies or amends the J-M License Agreement in any way that could potentially adversely affect GPC's rights or economic interest under this Agreement without GPC's prior written consent, and shall provide GPC with a copy of all modifications to or amendments of the J-M License Agreement, regardless of whether GPC's consent was required with respect thereto; provided that, NEOTHERAPEUTICS may redact confidential portions of any such modifications and amendments, but only to the extent that any such redactions do not impair GPC's ability to take full advantage of its rights and benefits under this Agreement; (c) NEOTHERAPEUTICS shall not terminate the J-M License Agreement in whole or in part, directly or indirectly, without GPC's prior written consent; (d) NEOTHERAPEUTICS shall promptly furnish GPC with copies of all reports and other communications NEOTHERAPEUTICS receives from J-M that relate to the subject matter of this Agreement; (e) NEOTHERAPEUTICS shall promptly furnish GPC with copies of all reports and other communications that NEOTHERAPEUTICS furnishes to J-M that relate to the subject of this Agreement, and to the extent any such reports or communications relate to the efforts of GPC under this Agreement, NEOTHERAPEUTICS shall give GPC a reasonable opportunity to review and comment upon such reports or communications before they are transmitted to J-M; (f) NEOTHERAPEUTICS shall furnish GPC with copies of all notices received by NEOTHERAPEUTICS relating to any alleged breach or default by NEOTHERAPEUTICS under the J-M License Agreement within three (3) business days after NEOTHERAPEUTICS's receipt thereof and, if NEOTHERAPEUTICS cannot or chooses not to cure or otherwise resolve any such alleged breach or default, NEOTHERAPEUTICS shall so notify GPC within five (5) days thereafter and allow GPC, in GPC's sole discretion, to cure or otherwise resolve any such alleged breach or default; and (g) NEOTHERAPEUTICS, acting as an intermediary between J-M and GPC, shall allow GPC to enjoy the direct benefit of all of NEOTHERAPEUTICS's affirmative rights, to the extent they relate to the J-M Licensed Technology. 4. JOINT DEVELOPMENT COMMITTEE 4.1. MEMBERS. The Parties shall establish a Joint Development Committee (the "Joint Development Committee"), which shall comprise three (3) representatives designated by each Party (or such other number as the Parties may agree in writing). The initial members of the Joint Development Committee are set forth on Exhibit C. Any Member of the Joint Development Committee may be represented at any meeting by a designee who is appointed by such member for such meeting and who has authority to act on behalf of such member, as evidenced by written notice from such Member to the chairperson of the Joint Development Committee. The chairperson of the Joint Development Committee shall be one of the representatives designated by GPC. The initial chairperson is designated on Exhibit C. Each Party shall be free to replace its representative members with new appointees who have authority to act on behalf of such Party on the Joint Development Committee, on written notice to the other Party. 4.2. RESPONSIBILITIES. The Joint Development Committee shall be responsible for planning, overseeing and directing the development and commercialization of, and regulatory filings relating to, Covered Products. 4.3. MEETINGS. The Joint Development Committee shall meet quarterly until the achievement of the first milestone described in Section 9.2 and, thereafter, as frequently as the Parties deem appropriate, on such dates and at such times as the Parties shall agree, on ten (10) days' written notice to the other Party unless such notice is waived by the other Party. The Joint Development Committee may convene or be polled or consulted from time to time by means of telecommunications, video conferences or correspondence, as deemed necessary or appropriate by the Parties. To the extent that meetings are held in person, they shall alternate between the offices of the Parties unless the Parties otherwise agree. The chairperson shall be responsible for sending notices of meetings to all members. 4.4. DECISIONS. (a) A quorum for a meeting of the Joint Development Committee shall require the presence of at least one NEOTHERAPEUTICS member (or designee) and at least one GPC member (or designee) in person or by telephone. All decisions made or actions taken by the Joint Development Committee shall be made unanimously by its members, with the NEOTHERAPEUTICS members cumulatively having one vote and the GPC members cumulatively having one vote. (b) In the event that unanimity cannot be reached by the Joint Development Committee with respect to a matter that is a subject of its decision-making authority within thirty (30) days after the matter is first brought before the Joint Development Committee, then the matter shall be decided by the chairperson of the Joint Development Committee in good faith. 4.5. MINUTES. Within fifteen (15) days after each Joint Development Committee meeting, GPC shall prepare and distribute minutes of the meeting, which shall provide a description in reasonable detail of the discussions had at the meeting and a list of any actions, decisions or determinations approved by the Joint Development Committee at such meeting. GPC shall be responsible for circulation of all draft and final minutes. Draft minutes shall be circulated to all members of the Joint Development Committee sufficiently in advance of the next meeting to allow review and comment prior to the meeting. Minutes shall be approved or disapproved, and revised as necessary, at the next meeting. Final minutes shall be distributed to the members of the Joint Development Committee. 4.6. TERM. The Joint Development Committee shall exist until the expiration of the Royalty Term for all Covered Products. 4.7. EXPENSES. Each Party shall be responsible for all travel and related costs for its representatives to attend meetings of, and otherwise participate on, the Joint Development Committee. 4.8. ADDITIONAL STUDIES. NEOTHERAPEUTICS reserves the right, subject to the approval and oversight of the Joint Development Committee, which approval will not be unreasonably withheld, to propose additional studies of Satraplatin at its own expense. 5. CO-PROMOTION. In the event GPC determines to directly market Covered Products in the United States itself rather than licensing such Covered Products to a Third Party for commercialization, GPC shall notify NEOTHERAPEUTICS in writing reasonably in advance of the commencement of commercialization of any such Covered Product. If, within ten (10) days after receipt of such notice from GPC, NEOTHERAPEUTICS indicates in writing to GPC that it desires to co-promote such Covered Product with GPC, the Parties shall negotiate in good faith the terms of such co-promotion of such Covered Product. If GPC proposes to enter into an agreement with a Third Party that includes a grant of rights to such Third Party to market a Covered Product in the United States, GPC shall use commercially reasonable efforts to obtain co-promotion rights in the United States with such Third Party that include NEOTHERAPEUTICS. 6. OWNERSHIP; PATENT PROTECTION 6.1. OWNERSHIP OF GPC DEVELOPMENT TECHNOLOGY. Except as otherwise provided in this Agreement, the entire right, title and interest in and to all GPC Development Technology shall be owned solely by GPC, and all decisions regarding the protection of GPC Development Technology shall remain with GPC. 6.2. OWNERSHIP OF J-M LICENSED TECHNOLOGY, NEOTHERAPEUTICS LICENSED TECHNOLOGY, NEOTHERAPEUTICS DEVELOPMENT TECHNOLOGY. Except as otherwise provided in this Agreement, the entire right, title and interest in and to all NEOTHERAPEUTICS Licensed Technology and NEOTHERAPEUTICS Development Technology and, as between the Parties, J-M Licensed Technology shall be owned solely by NEOTHERAPEUTICS, and, except as otherwise set forth in this Agreement or the J-M License Agreement, all decisions regarding the protection of J-M Licensed Technology, NEOTHERAPEUTICS Licensed Technology and NEOTHERAPEUTICS Development Technology shall remain with NEOTHERAPEUTICS. 6.3. OWNERSHIP OF JOINT DEVELOPMENT TECHNOLOGY. GPC and NEOTHERAPEUTICS shall jointly own all rights, title and interests in Joint Development Technology. 6.4. PATENT FILING, PROSECUTION AND MAINTENANCE. (a) Reasonably promptly after the Effective Date the Joint Development Committee, in consultation with the Parties' respective patent counsel, shall agree upon a patent filing policy with respect to the NEOTHERAPEUTICS Licensed Technology, the Joint Development Technology and the NEOTHERAPEUTICS Development Technology. In addition, from time to time, the Joint Development Committee shall determine, in accordance with such policy, whether and in what jurisdictions patent applications should be filed with respect to any Know-How or Inventions included in the NEOTHERAPEUTICS Licensed Technology, the Joint Development Technology and the NEOTHERAPEUTICS Development Technology. (b) Following a determination by the Joint Development Committee that a patent application should be filed with respect to any Know-How or Inventions included in the NEOTHERAPEUTICS Licensed Technology, NEOTHERAPEUTICS, through outside patent counsel (including, without limitation, foreign patent counsel and agents) reasonably acceptable to GPC, shall promptly file a patent application with respect thereto in the jurisdiction(s) selected by the Joint Development Committee, and thereafter NEOTHERAPEUTICS shall prosecute such application and maintain any letters patent issuing therefrom. NEOTHERAPEUTICS shall take all such actions in consultation with GPC and its patent counsel and shall keep GPC apprised as to the status of all pending patent applications. The out-of-pocket costs of filing, prosecuting and maintaining any Patents actually incurred by NEOTHERAPEUTICS under this Section 6.3(b) shall be reimbursed by GPC. NEOTHERAPEUTICS shall invoice GPC for such costs on a quarterly basis. Such invoices shall be payable forty-five (45) days after receipt thereof. If the Joint Development Committee determines to not have a patent application filed with respect to any Know-How or Inventions included in the NEOTHERAPEUTICS Licensed Technology, NEOTHERAPEUTICS may, notwithstanding anything else contained herein, file, prosecute and maintain a patent application and any letters patent issuing therefrom at its own expense. (c) The preparation, filing, prosecuting and maintenance of Patents included in the J-M Licensed Technology shall be accomplished as provided in the J-M License Agreement, subject to the provisions of this Agreement. Furthermore, the Parties' respective rights and obligations under this Section shall be subject, in all events, to any superior rights of J-M under the J-M License Agreement regarding the J-M Licensed Technology. (d) If J-M elects to abandon the prosecution or maintenance of any J-M Patent Right in any country pursuant to Section 1 of Article VII of the J-M License Agreement and NEOTHERAPEUTICS elects not to assume the prosecution or maintenance of such J-M Patent Right, NEOTHERAPEUTICS shall so notify GPC. If GPC notifies NEOTHERAPEUTICS that GPC wishes to assume the prosecution or maintenance of such J-M Patent Right, NEOTHERAPEUTICS shall exercise its right to assume such prosecution or maintenance on behalf of GPC, and NEOTHERAPEUTICS shall assign its rights to such J-M Patent Right in such country to GPC. 6.5. TERMINATION OF SUPPORT BY GPC. GPC shall have the right to terminate its obligations, if any, under this Agreement in any country with respect to any Patent included in the NEOTHERAPEUTICS Licensed Technology, from time to time, upon notice to NEOTHERAPEUTICS; provided, however, that no such notice shall be effective with respect to any such Patent if it is given fewer than sixty (60) days prior to a deadline for taking any action that must be taken in order to preserve the owner's rights in such Patent. Upon the delivery of any such effective notice, GPC's rights, licenses and obligations under this Agreement with respect to such Patent shall terminate in any such country, except those obligations that shall have accrued prior to the delivery of such notice. 7. GRANT OF LICENSES 7.1. EXCLUSIVE SUBLICENSE GRANT. NEOTHERAPEUTICS hereby grants GPC an exclusive royalty-bearing right and sublicense in the Field throughout the Territory, with the right to grant further sublicenses in accordance with the terms of this Agreement, under the J-M Licensed Technology to research, develop, make, have made, use, sell, offer for sale, have sold, import and export Covered Products. 7.2. EXCLUSIVE LICENSE GRANT. NEOTHERAPEUTICS hereby grants to GPC an exclusive royalty-bearing right and license in the Field throughout the Territory, with the right to grant sublicenses in accordance with the terms of this Agreement, under the NEOTHERAPEUTICS Licensed Technology, the NEOTHERAPEUTICS Development Technology and NEOTHERAPEUTICS's interest in the Joint Development Technology to research, develop, make, have made, use, sell, offer for sale, have sold, import and export Covered Products. 7.3. SCOPE OF EXCLUSIVITY. The licenses granted to GPC pursuant to Sections 7.1 and 7.2 shall be exclusive even as to NEOTHERAPEUTICS, except to the extent necessary for NEOTHERAPEUTICS to perform its obligations under this Agreement. 7.4. PROVISIONS REGARDING SUBLICENSES. Any sublicense by GPC of the rights granted to GPC hereunder shall be consistent with the terms of this Agreement and shall include an obligation for the Sublicensee to comply with the applicable obligations of GPC set forth in this Agreement. GPC shall provide to NEOTHERAPEUTICS a copy of any sublicense agreement of the rights granted herein with any Third Party promptly after entering into such sublicense; provided that, GPC may redact confidential portions of any such sublicense agreement, but only to the extent that any such redactions do not impair NEOTHERAPEUTICS' ability to ensure compliance with the provisions of this Agreement. 7.5. TRANSFER OF INFORMATION. Promptly following the Effective Date, NEOTHERAPEUTICS shall coordinate with the Joint Development Committee and provide copies of and access to all of LICENSOR'S INFORMATION, LICENSOR'S ONGOING INFORMATION and all other information relating to the J-M Patent Rights in its possession. Thereafter, NEOTHERAPEUTICS will continue to provide such information, as well as NEOTHERAPEUTICS Development Technology, to GPC as it becomes available to or is conceived by NEOTHERAPEUTICS as soon as practicable after it becomes available to or is conceived by NEOTHERAPEUTICS. 8. DEVELOPMENT AND COMMERCIALIZATION 8.1. DEVELOPMENT EFFORTS BY GPC. GPC shall, either itself or through its Affiliates or Sublicensees: (a) at its own expense, or at the expense of its Affiliates or Sublicensees, diligently conduct the development of Covered Products within the Field using Platinum Complexes. GPC shall exercise in the performance of such development commercially reasonable technical skill and competence; (b) use its commercially reasonable endeavors to obtain appropriate regulatory approvals for Covered Products in the United States or any of the countries currently comprising the European Union and Japan and to promote the distribution and sale of Covered Products in the Field in such countries where such regulatory approval is obtained; (c) ensure that all literature prepared by GPC and relating to Covered Products bears an acknowledgement to the effect that they are subject to a license from J-M and NEOTHERAPEUTICS, and all protocols prepared by GPC and relating to Covered Products bears an acknowledgement to the effect that they are subject to a license from NEOTHERAPEUTICS and attach to all Covered Products a label quoting relevant patent numbers and stating that such Covered Products are made under license under J-M and NEOTHERAPEUTICS; and (d) advise NEOTHERAPEUTICS promptly of all approvals granted with respect to Covered Product. 8.2. DELEGATION OF IND AUTHORITY; RIGHT TO REFERENCE. NEOTHERAPEUTICS acknowledges that a Phase II clinical trial of Satraplatin has been conducted pursuant to an Investigational New Drug Application Number 44,615 filed with the FDA (the "Filed IND"). Promptly after the Effective Date, NEOTHERAPEUTICS shall prepare for filing with the FDA all documents necessary to designate and delegate to GPC all exclusive (even as to NEOTHERAPEUTICS) authority to take actions and receive all communications from the FDA with respect to the Filed IND and shall file such documents with the FDA following GPC's review and approval of such documents. NEOTHERAPEUTICS shall not take any action to revoke or limit the delegation described in the preceding sentence. In addition, in the event that the FDA, for any reason, fails to recognize and give full effect to the delegation described in this Section, NEOTHERAPEUTICS shall not take any action with respect to the Filed IND or the clinical trials conducted pursuant to the Filed IND without the prior approval of the Joint Development Committee. In addition to the foregoing, NEOTHERAPEUTICS hereby grants to GPC an irrevocable right to reference the Filed IND and all other regulatory submissions, approvals, clearances, data and other documents and information related to the Filed IND that NEOTHERAPEUTICS has filed or referenced with the FDA. Promptly after the Effective Date, the Parties shall begin planning and coordinating the transfer to the Joint Development Committee of all responsibilities regarding clinical trials conducted pursuant to the Filed IND. GPC shall promptly provide to NEOTHERAPEUTICS copies of all correspondence related to Covered Products delivered to or received from the FDA. 8.3. OWNERSHIP OF REGULATORY FILINGS. Except for the Filed IND, all INDs, NDAs and other regulatory filings made or filed by GPC with respect to any Covered Products shall be in the name of, and be owned solely by, GPC. 8.4. REPORTING. (a) GPC shall promptly notify NEOTHERAPEUTICS concerning any happening or circumstance that GPC understands will result in NEOTHERAPEUTICS's loss of any of its rights under the J-M License Agreement, and GPC shall reasonably cooperate with NEOTHERAPEUTICS to prevent any such loss. (b) Following any acquisition of or by NEOTHERAPEUTICS (whether through merger, consolidation, acquisition (directly or indirectly) of stock representing thirty percent (30%) or more of the outstanding voting stock or other of its equity securities, sale of all or substantially all of its assets, or otherwise) by or of any Third Party that is a substantial competitor of GPC, as determined by objective standards (which shall include, but not be limited to, a determination as to whether such Third Party is developing or marketing a drug of the same chemical class as the Covered Product or whether such Third Party is developing or marketing a drug targeted to the same tumor type as a any product under development or being marketing by GPC) , GPC shall not be required to include in any report furnished by GPC pursuant to this Agreement, or provide to any representative of NEOTHERAPEUTICS (or any successor thereto), any information that GPC, acting in good faith, determines to be competitively sensitive or enabling information, unless such information is required for compliance with the obligations to J-M under the J-M License Agreement, in which event NEOTHERAPEUTICS or its successor, as the case may be, and J-M (if it shall receive such information) shall execute a nondisclosure agreement, satisfactory to GPC in form and substance, concerning all such information. 8.5. TRADEMARKS. GPC shall market the Covered Products throughout the Territory under trademarks (collectively, the "Trademarks") selected by GPC. GPC shall own all right, title and interest in and to such Trademarks and shall bear all costs and expenses of registering, and maintaining the registration of, same. 9. MONETARY OBLIGATIONS 9.1. LICENSE FEE. In partial consideration of the rights and licenses granted to GPC under this Agreement, GPC shall pay to NEOTHERAPEUTICS the following license fees at the times indicated below: (a) Within ten (10) days after the execution of this Agreement, or such later date as the First Amendment to the J-M License Agreement shall have been amended to (x) delete all references in the J-M License Agreement to the form sub-license agreement attached as Exhibit 1 to the J-M License Agreement and (y) change the references in Section (7) of the First Amendment to Paragraph 1 of Article IX in lieu of the references to Paragraph 6 of Article VII, GPC shall pay NEOTHERAPEUTICS a non-refundable, non-creditable, one-time license fee in the amount of US$2,000,000 in cash. (b) Within thirty (30) days of the first dosing of the first patient in the first Phase III or registrational clinical trial of Satraplatin after the Effective Date (such date of dosing, the "Dosing Date"), GPC shall pay NEOTHERAPEUTICS a non-refundable, non-creditable, one time license fee in the amount of $2,000,000, $1,000,000 of which fee shall be payable in cash and $1,000,000 of which fee shall be payable through the purchase by GPC, for an aggregate payment of $1,000,000, of a number of shares of common stock, par value $.001 per share, of NEOTHERAPEUTICS equal to the lesser of (i) the quotient obtained by dividing (x) $1,000,000 by (y) one hundred and fifty percent (150%) of the average closing sale price of the NEOTHERAPEUTICS common stock, as reported by the Nasdaq quotation system for the twenty (20) consecutive trading days ending on the third trading day before the Dosing Date, or (ii) 19.9% of the number of shares of NEOTHERAPEUTICS common stock outstanding as of the Dosing Date, or such other number of shares as Nasdaq may specify as the highest number of shares of common stock that NEOTHERAPEUTICS may issue hereunder without first obtaining stockholder approval (the "NEOTHERAPEUTICS Shares"); provided that, if the number of NEOTHERAPEUTIC Shares to be issued pursuant to this Section is determined pursuant to clause (ii) above, then, until GPC has purchased the number of shares of NEOTHERAPEUTICS common stock determined pursuant to clause (i) above and subject to NEOTHERAPEUTICS ability to issue additional shares without first obtaining stockholder approval pursuant to Nasdaq regulations, all milestone payments owed by GPC to NEOTHERAPEUTICS pursuant to Section 9.2 below shall be used to purchase additional shares of NEOTHERAPEUTICS common stock at the price determined as of the date of the achievement of the applicable milestone in accordance with the formula set in clause (i)(y) above, and such additional shares shall be considered to be NEOTHERAPEUTICS Shares hereunder. Concurrently with the first issuance of the NEOTHERAPEUTICS Shares, the Parties shall execute a Registration Rights Agreement in the form attached hereto as Exhibit D. GPC agrees that it shall be a condition of the issuance of the NEOTHERAPEUTICS Shares that GPC make the representations set forth in Section 2.3 as of the date of issuance of the NEOTHERAPEUTICS Shares. GPC represents that it has not engaged in any short selling, option writing, equity swaps, or other types of hedging transactions or derivative transactions with respect to the common stock of NEOTHERAPEUTICS, and GPC further agrees that it will not engage in any such transaction with respect to the common stock of NEOTHERAPEUTICS at any time during the period commencing on the Effective Date and ending one year after the issuance of the NEOTHERAPEUTICS Shares. 9.2. DEVELOPMENT MILESTONE PAYMENTS BY GPC. (a) In partial consideration of the rights and licenses granted to GPC by NEOTHERAPEUTICS under this Agreement, GPC shall pay NEOTHERAPEUTICS the following milestone payments upon the first occurrence of each event set forth below achieved by GPC or its Affiliates: (i) {redacted} upon acceptance by the FDA of an NDA covering Satraplatin (ii) {redacted} (iii) {redacted} {redacted} Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. (iv) {redacted} (v) {redacted} (vi) {redacted} (vii) {redacted} Each of the foregoing payments shall be made within thirty (30) days after achievement of such milestone. For the avoidance of doubt, after GPC has made any of the foregoing payments with respect to any one Covered Product, GPC shall have no further obligation to make such payment with respect to any other Covered Product. As used in this Section 9.2, "approval" shall mean approval by the FDA, the EMEA or the MHW of a NDA, MAA or other application for regulatory approval to market and sell a Covered Product in the United States, the European Union or Japan, and with respect to the European Union shall also include any government pricing or reimbursement approval necessary to market or sell such Covered Product in the European Union. 9.3. ROYALTIES. (a) Subject to Section 9.3(b), in partial consideration of the rights and licenses granted to GPC under this Agreement, GPC shall pay NEOTHERAPEUTICS a royalty on Net Sales of each Covered Product, commencing on the First Commercial Sale of each Covered Product by GPC or its Affiliates in each country in the Territory, in an amount equal to the applicable percentage of the world-wide Net Sales of such Covered Product by GPC and its Affiliates throughout the Territory during each calendar year (or portion thereof) during the term of this Agreement: (i) {redacted} (ii) {redacted} (iii) {redacted} {redacted} (b) Notwithstanding the foregoing, GPC's obligation to make payments with respect to each Covered Product in each country in the Territory under Sections 9.3 and 9.4 shall expire upon the expiration of the Royalty Term with respect to such Covered Product in such country. (c) The obligation to pay royalties to NEOTHERAPEUTICS under this Section 9.3 is imposed only once with respect to the same unit of a Covered Product, regardless of the number of Patents pertaining thereto. 9.4. SUBLICENSE INCOME. (a) {redacted} (b) {redacted} {redacted} Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. 9.5. THIRD PARTY PAYMENTS. (a) GPC, at its sole expense, shall pay all amounts owing to any Third Party to obtain rights to any Valid Claims of any issued patent or patent application issued to Third Parties determined by the Joint Development Committee to be necessary for GPC's exercise of its rights hereunder to research, develop, make, have made, use, sell, offer for sale, have sold, import or export any Covered Product (collectively, "Third Party Payments"). Except as provided in Section 9.5(b), GPC shall not be entitled to any credit under this Agreement on account of any Third Party Payments paid by GPC. (b) {redacted} 9.6. PAYMENTS UNDER J-M LICENSE. Notwithstanding anything else contained herein, NEOTHERAPEUTICS shall remain solely responsible to J-M for all payments due to J-M under the J-M License. 9.7. REIMBURSEMENT OF NEOTHERAPEUTICS DEVELOPMENT EXPENSES. Within thirty (30) days of receipt of invoices from NEOTHERAPEUTICS, which invoices shall be delivered by NEOTHERAPEUTICS no more frequently than quarterly, GPC shall reimburse NEOTHERAPEUTICS for all costs and expenses (including full reimbursement for NEOTHERAPEUTICS personnel) incurred by NEOTHERAPEUTICS in the development of Covered Products as approved in advance by the Joint Development Committee. 10. PAYMENTS AND REPORTS 10.1. PAYMENT. Except as otherwise provided in this Agreement, all royalty and other payments due hereunder shall be paid quarterly within thirty (30) days after the end of each calendar quarter. Each such payment shall be accompanied by a statement, Covered Product-by-Covered Product and country-by-country, of the amount of Net Sales during such quarter, the amount of royalties due on such Net Sales, the amount of Sublicense Fees and Sublicense Royalties during such quarter and the amount owed to NEOTHERAPEUTICS on account of such Sublicense Fees and Sublicense Royalties. 10.2. MODE OF PAYMENT. GPC shall make all payments required under this Agreement as directed by NEOTHERAPEUTICS from time to time, in U.S. Dollars (except as provided in Section 10.6). All royalties due hereunder shall first be determined in the currency of the country in which the Covered Products in question were sold and then converted into equivalent U.S. funds. The exchange rate for such conversion shall be that rate quoted in The Wall Street Journal on the last business day of the applicable reporting period. 10.3. RECORDS RETENTION. GPC and its Affiliates shall keep complete and accurate records pertaining to the sale of Covered Products in the Territory in accordance with the obligations therefor set forth in the J-M License Agreement. 10.4. AUDIT REQUEST. At the request and expense (except as provided below) of NEOTHERAPEUTICS, GPC and its Affiliates shall permit an independent, certified {redacted} Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. public accountant appointed by NEOTHERAPEUTICS and reasonably acceptable to GPC, at reasonable times and upon reasonable notice, to examine no more than once per year those records and all other material documents relating to or relevant to Net Sales in the possession or control of GPC and its Affiliates, for a period of three years after such royalties have accrued. The results of any such examination shall be made available to both Parties. If, as a result of any inspection of the books and records of GPC or its Affiliates, it is shown that GPC's royalty payments under this Agreement were less than the amount which should have been paid, then GPC shall make all payments required to eliminate any discrepancy revealed by said inspection within forty-five (45) days after NEOTHERAPEUTICS's demand therefor. Furthermore, if the aggregate royalty payments GPC made were less than ninety five (95%) of the amount which should have been paid made during the period in question, GPC shall also reimburse NEOTHERAPEUTICS for the reasonable out-of-pocket cost of such inspection and shall pay interest on the deficiency pursuant to Section 10.7. 10.5. TAXES. In the event that GPC is required to withhold any tax to the tax or revenue authorities in any country in the Territory in connection with any payment to NEOTHERAPEUTICS due to the laws of such country which payment is credited to NEOTHERAPEUTICS's tax liability, such amount shall be deducted from the royalty or other payment to be made by GPC, and GPC shall notify NEOTHERAPEUTICS and promptly furnish NEOTHERAPEUTICS with copies of any tax certificate or other documentation evidencing such withholding. Each Party agrees to cooperate with the other Party in claiming exemptions from such deductions or withholdings under any agreement or treaty from time to time in effect. 10.6. BLOCKED CURRENCY. If at any time legal restrictions prevent GPC's prompt remittance of part or all of the royalties due with respect to any country where a Covered Product is sold, GPC shall convert the amount owed to NEOTHERAPEUTICS into U.S. funds and shall pay NEOTHERAPEUTICS directly from GPC's U.S. source of funds for the amount impounded. GPC shall then pay all future royalties due to NEOTHERAPEUTICS from GPC's U.S. source of funds so long as the legal restrictions of this Section 10.6 still apply. 10.7. LATE PAYMENTS. In the event that any payment GPC is required to make hereunder is not made within thirty (30) days after such payment was originally due, GPC shall pay interest on the past due amount as follows: (a) If GPC's late payment pertains to a payment NEOTHERAPEUTICS is required to make under the J-M License Agreement and causes NEOTHERAPEUTICS to become liable to pay interest with respect to such payment under the J-M License Agreement, then GPC shall pay interest on the past due amount as provided under the applicable provision(s) of the J-M License Agreement. (b) In all other events, GPC shall pay interest on the past due amount at the rate of twelve percent (12%) per annum, until payment in full is made. 11. MANUFACTURING. Promptly following the Effective Date, GPC and NEOTHERAPEUTICS shall negotiate in good faith the terms of a Supply Agreement regarding the supply of PLATINUM COMPLEXES (as defined in the J-M License Agreement) to GPC. {redacted} 12. CONFIDENTIALITY 12.1. CONFIDENTIALITY; EXCEPTIONS. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that, during the term of this Agreement and for five years thereafter, each Party, its Affiliates and its Sublicensees, if any (collectively, a "receiving Party"), shall use their best efforts to keep completely confidential, shall not publish or otherwise disclose to any Third Party and shall not use for any purpose other than the performance of this Agreement both the financial terms of this Agreement and any information furnished to it by the other Party, its Affiliates or its Sublicensees, if any (collectively, a "disclosing Party") (and shall ensure that its and its Affiliates' and its Sublicensees' respective directors, officers, employees or agents do likewise), except to the extent that it can be established by the receiving Party by competent proof that such information: (i) is, or hereafter becomes, generally available to the public other than by reason of any default by the receiving Party with respect to its confidentiality obligations hereunder; (ii) was already known to the receiving Party at the time of disclosure by the disclosing Party; (iii) was lawfully disclosed to the receiving Party by a Third Party who was not in default of any confidentiality obligation to the disclosing Party; or (iv) is independently developed by or for the receiving Party without reference to or reliance upon the information furnished by the disclosing Party (all such information to which none of the foregoing exceptions applies, "Confidential Information"). The NEOTHERAPEUTICS Licensed Technology and NEOTHERAPEUTICS Development Technology shall be the Confidential Information of NEOTHERAPEUTICS and the GPC Development Technology shall be the Confidential Information of GPC. The Joint Development Technology shall be the Confidential Information of both Parties. 12.2. EXCLUSIONS TO CONFIDENTIALITY. The restrictions contained in Section 12.1 shall not apply to any Confidential Information in the hands of a receiving Party that (i) is submitted by the receiving Party to governmental authorities to facilitate the issuance of marketing approvals for a Covered Product, provided that reasonable measures shall be taken to assure confidential treatment of such information, if practicable; (ii) is provided by GPC to any Third Party under appropriate terms and conditions, including confidentiality provisions equivalent to those in this Agreement, for consulting, manufacturing development, manufacturing, external testing, marketing trials and sublicensing or potential sublicensing; or (iii) is otherwise required to be disclosed in compliance with applicable laws or regulations (including, without limitation, to comply with any governmental or stock exchange disclosure requirements) or an order by a court or other regulatory body having competent jurisdiction; provided, however, that if a receiving Party is required to make any such disclosure of the disclosing Party's Confidential Information such receiving Party shall, except where impracticable for necessary disclosures (for example to physicians conducting studies or to health authorities), give reasonable advance notice to the other Party of such disclosure {redacted} Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. requirement and, except to the extent inappropriate in the case of patent applications or otherwise, will use its best efforts to secure confidential treatment of such Confidential Information required to be disclosed. In addition, any press release or other public announcement permitted by the terms of Section 17.7 hereof shall be excluded from the provisions of Section 12.1. 12.3. INJUNCTIVE RELIEF. The Parties acknowledge that monetary damages alone would not adequately compensate the disclosing Party in the event of a material breach by the receiving Party of this Section 12, and that, in addition to all other remedies available to the disclosing Party under this Agreement, at law or in equity, it shall be entitled to injunctive relief for the enforcement of its rights under this Section 12, without the posting of a bond or other security. 13. INTELLECTUAL PROPERTY 13.1. PATENT ENFORCEMENT. (a) Each Party shall notify the other promptly after such Party becomes aware of any alleged infringement of any Patent licensed to GPC under this Agreement in any country in the Territory. Except as provided in Section 13.3, GPC shall have the first right, but not the duty, to institute patent infringement actions against Third Parties with respect to any such alleged infringement. GPC shall take all such actions under this Section 13.1(a) (other than with respect to a Patent included solely in the GPC Development Technology) in reasonable consultation with NEOTHERAPEUTICS and shall keep NEOTHERAPEUTICS apprised as to the status of any such infringement action GPC institutes. NEOTHERAPEUTICS shall execute all reasonable, necessary and proper documents and take such actions as shall be appropriate to allow GPC to institute and prosecute infringement actions under this Section 13.1(a). (b) The costs and expenses of bringing and maintaining any infringement action under Section 13.1(a) shall be borne solely by GPC. (c) Any award or compensation (including the fair market value of non-monetary compensation) paid by Third Parties as a result of any infringement action brought by GPC under Section 13.1(a) (whether by way of settlement or otherwise) shall be allocated first to reimbursement of GPC for all expenses incurred by it in connection with such action. Any remaining award or compensation shall be used to pay NEOTHERAPEUTICS the royalty it would have been entitled to receive had the balance of such recovery or damages, to the extent attributable to sales of such infringing products, been attributable to sales of Covered Products by GPC hereunder. (d) Except as provided in Section 13.3, in the event GPC elects not to, or fails to, exercise its rights under Section 13.1(a) with respect to any alleged infringement of a Patent licensed to GPC under this Agreement (excluding any Patent included solely in the GPC Development Technology) within one hundred twenty (120) days after receiving notice thereof, NEOTHERAPEUTICS shall have the right, but not the duty, to institute patent infringement actions against Third Parties with respect to any such alleged infringement. NEOTHERAPEUTICS shall take all such actions under this Section 13.1(d) in reasonable consultation with GPC and shall keep GPC apprised as to the status of any such infringement action NEOTHERAPEUTICS institutes. GPC shall execute all reasonable, necessary and proper documents and take such actions as shall be appropriate to allow NEOTHERAPEUTICS to institute and prosecute infringement actions under this Section 13.1(d). Any award or compensation (including the fair market value of non-monetary compensation) paid by Third Parties as a result of any infringement action brought by NEOTHERAPEUTICS under this Section 13.1(d) (whether by way of settlement or otherwise) shall be allocated first to reimbursement of NEOTHERAPEUTICS for all expenses incurred by it in connection with such action. Any remaining award or compensation shall be allocated equally between the Parties. 13.2. INFRINGEMENT ACTIONS BY THIRD PARTIES. (a) Each Party shall notify the other Party promptly in writing of any claim of, or action for, infringement of any Patents owned or licensed by Third Parties which is threatened, made or brought against either Party by reason of either Party's performance of its obligations under this Agreement or manufacture, use or sale of any Covered Products in the Territory in the Field. (b) Except as provided in Section 13.3, in the event that such an action for infringement is commenced solely against a Party or both Parties jointly and/or any of their respective Affiliates or Sublicensees, as the case may be, with respect to any Covered Product developed and commercialized by GPC, its Affiliates and/or Sublicensees, GPC shall defend such action at its own expense, and NEOTHERAPEUTICS hereby agrees to assist and cooperate with GPC to the extent necessary in the defense of such suit, in accordance with Section 13.2(c). GPC shall have the right to settle any such action or consent to an adverse judgment thereto, and NEOTHERAPEUTICS's consent shall not be required unless such settlement or consent: (i) imposes any material obligation on NEOTHERAPEUTICS (including under Section 13.2(d)), or (ii) materially impairs NEOTHERAPEUTICS's rights in or to any J-M Licensed Technology, NEOTHERAPEUTICS Licensed Technology, NEOTHERAPEUTICS Development Technology and/or Joint Development Technology, in which event NEOTHERAPEUTICS's consent shall not be unreasonably withheld or delayed. (c) The costs of defending any infringement action with respect to a Covered Product developed and commercialized by GPC, its Affiliates and/or Sublicensees shall be borne solely by GPC. (d) During the pendency of any such action, GPC shall continue to pay all royalties due hereunder. Subject to Section 9.5(b), GPC shall be fully liable for the payment of any award for damages, or any amount due pursuant to any settlement entered into by GPC, to the extent that any such action pertains to a Covered Product developed and commercialized by GPC and/or its Affiliates or Sublicensees. (e) Except to the extent that the provisions of Section 13.1 shall apply to any portion thereof, GPC shall retain any award or compensation (including the fair market value of non-monetary compensation) received by GPC as a result of any such action (i.e., as a result of a counterclaim). 13.3. SUPERIOR RIGHTS OF J-M. Notwithstanding any other provision of this Agreement, the Parties' respective rights and obligations under this Section 13 shall be subject, in all events, to any superior rights of J-M under the J-M License Agreement regarding the J-M Licensed Technology. 14. INDEMNIFICATION 14.1. BY GPC. GPC shall indemnify and hold NEOTHERAPEUTICS and its Affiliates and their respective directors, officers, employees and agents, harmless from and against any and all liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals and other reasonable litigation expenses) arising out of or resulting from: (i) the negligence, recklessness or intentional misconduct of GPC, its Affiliates or its Sublicensees and their respective directors, officers, employees and agents, in connection with the work performed by GPC in connection with the development of Covered Products or pursuant to Section 8 or in connection with GPC's exercise of any of its rights hereunder; (ii) any and all product liability claims resulting from the development and/or commercialization of any Covered Product by GPC, its Affiliates or its Sublicensees; (iii) any warranty claims, Covered Product recalls or any tort claims of personal injury (including death) or property damage relating to or arising out of the manufacture, use, distribution or sale of any Covered Product by GPC, its Affiliates or its Sublicensees due to any negligence, recklessness or intentional misconduct by, or strict liability of, GPC, its Affiliates or its Sublicensees, and their respective directors, officers, employees and agents, except, in each case, to the comparative extent such claim arose out of or resulted from the negligence, recklessness or intentional misconduct of NEOTHERAPEUTICS or its Affiliates and their respective directors, officers, employees and agents; or (iv) any breach of any representation or warranty made by GPC in Section 2.1. 14.2. BY NEOTHERAPEUTICS. NEOTHERAPEUTICS shall indemnify and hold GPC, its Affiliates and its Sublicensees and their respective directors, officers, employees and agents, harmless from and against any and all liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals and other reasonable litigation expenses) arising out of or resulting from: (i) the negligence, recklessness or intentional misconduct of NEOTHERAPEUTICS or its Affiliates and their respective directors, officers, employees and agents, in connection with the work performed by NEOTHERAPEUTICS under the development of Covered Products or pursuant to Section 5 or in connection with NEOTHERAPEUTICS's exercise of any of its rights hereunder; or (ii) any breach of any representation or warranty made by NEOTHERAPEUTICS pursuant to Section 2 or 3.1. 14.3. NOTICE. In the event that any Person entitled thereto (an "Indemnitee") is seeking indemnification under Section 14.1 or 14.2, such Indemnitee shall inform the indemnifying Party of a claim as soon as reasonably practicable after the indemnitee receives notice of the claim, shall permit the indemnifying Party to assume direction and control of the defense of the claim (including the sole right to settle it at the sole discretion of the indemnifying Party, provided that such settlement does not impose any material obligation on the indemnitee or the other Party) and shall cooperate as requested (at the expense of the indemnifying Party) in the defense of the claim (including, without limitation, granting the indemnifying Party limited access to pertinent records and making persons under such Indemnitee's control available for interview and testimony). 14.4. COMPLETE INDEMNIFICATION. As the Parties intend complete indemnification, all costs and expenses incurred by any Indemnitee to enforce this Section 14 shall be reimbursed by the indemnifying Party. 15. TERM; TERMINATION 15.1. TERM. This Agreement shall commence as of the Effective Date and, unless sooner terminated as provided hereunder, shall expire as follows: (a) As to each Covered Product in each country in the Territory, this Agreement shall expire upon the expiration of the Royalty Term with respect to such Covered Product in such country. (b) This Agreement shall expire in its entirety upon the termination of the respective Royalty Terms with respect to all Covered Products in all countries in the Territory. 15.2. EFFECT OF EXPIRATION. Following the expiration of this Agreement with respect to a Covered Product in a country in the Territory pursuant to Section 15.1(a), GPC shall have the royalty-free, perpetual right to continue to make, have made, use, sell, offer for sale, have sold and export such Covered Product in such country. Following the expiration of the term of this Agreement in its entirety pursuant to Section 15.1(b), GPC shall have the royalty-free, perpetual right to continue to make, have made, use, sell, offer for sale, have sold and export all Covered Products in all countries in the Territory. 15.3. TERMINATION BY EITHER PARTY. Each Party shall have the right to terminate this Agreement, upon notice to the other Party, in the event that: (i) Such other Party materially defaults with respect to any of its material obligations under this Agreement and does not cure such default within sixty (60) days after the receipt of a notice from the non-breaching Party specifying the nature of, and requiring the remedy of, such default (or, if such default cannot be cured within such sixty (60)-day period, if the breaching Party does not commence and diligently continue actions to cure same during such sixty (60)-day period); provided that, (x) if NEOTHERAPEUTICS is the Party claiming a default by GPC, GPC shall promptly following receipt of such notice of default notify NEOTHERAPEUTICS if it intends to seek to cure such default, (y) if the default relates to the payment of any amounts owed under this Agreement, the cure period described above shall be fifteen (15) days from receipt of notice of such default, and (z) if any such default is limited to the breaching Party's obligations with respect to a particular Covered Product and/or a particular country in the Territory, then any termination of this Agreement under this clause (i) due to such default shall be limited to the breaching Party's rights under this Agreement with respect to such Covered Product and/or country. Any termination pursuant to this clause (i) shall be without prejudice to any of the non-breaching Party's other rights under this Agreement, and in addition to any other remedies available to it by law or in equity; (ii) The other Party shall have: (i) voluntarily commenced any proceeding or filed any petition seeking relief under the bankruptcy, insolvency or other similar laws of any jurisdiction, (ii) applied for, or consented to, the appointment of a receiver, trustee, custodian, sequestrator, conciliator, administrator or similar official for it or for all or substantially all of its property, (iii) filed an answer admitting the material allegations of a petition filed against or in respect of it in any such proceeding, (iv) made a general assignment for the benefit of creditors of all or substantially all of its assets, (v) admitted in writing its inability to pay all or substantially all of its debts as they become due, or (vi) taken corporate action for the purpose of effecting any of the foregoing; or (iii) An involuntary proceeding shall have been commenced, or any involuntary petition shall have been filed, in a court of competent jurisdiction seeking: (i) relief in respect of the other Party, or of its property, under the bankruptcy, insolvency or similar laws of any jurisdiction, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conciliator, administrator or similar official for such other Party or for all or substantially all of its property, or (iii) the winding-up or liquidation of such other Party; and, in each case, such proceeding or petition shall have continued undismissed for sixty (60) days, or an order or decree approving or ordering any of the foregoing shall have continued unstayed, unappealed and in effect for thirty (30) days. 15.4. TERMINATION BY GPC. Notwithstanding any other provision of this Agreement, GPC shall have the right to terminate this Agreement, in its entirety or with respect to any particular Covered Product and/or country in the Territory, at any time upon six (6) months' notice (or less, at NEOTHERAPEUTICS discretion) to NEOTHERAPEUTICS. 15.5. EFFECT OF EXPIRATION OR TERMINATION. (a) Subject to Section 15.5(b), upon any termination of this Agreement by NEOTHERAPEUTICS pursuant to Section 15.3 or by GPC pursuant to Section 15.4, GPC shall (i) transfer and assign to NEOTHERAPEUTICS all of GPC's right, title and interest in and to any GPC Development Technology and all data, reports, records, materials and other intellectual property owned or controlled by GPC that relates exclusively to the Covered Products; (ii) grant NEOTHERAPEUTICS a non-exclusive license, solely for the purpose of NEOTHERAPEUTICS's developing, making, having made, using, marketing and selling Covered Products, under GPC's interest in any Joint Development Technology that does not exclusively relate to the Covered Products; and (iii) transfer and assign to NEOTHERAPEUTICS ownership of all INDs, NDAs and other regulatory filings made or filed with respect to any Covered Product (or, if such transfer and assignment is not permitted under the laws of any applicable jurisdiction, GPC shall take such other permitted actions with respect to such filings as may be reasonably requested by NEOTHERAPEUTICS), all upon commercially reasonable, arms length financial terms and conditions that the Parties shall negotiate in good faith and agree upon as soon as practicable after such termination of this Agreement; provided that, if this Agreement is terminated by GPC pursuant to Section 15.4, then NEOTHERAPEUTICS shall not be obligated to pay any amount for the licenses and transfers described in this sentence. In the event the Parties, despite the mutual use of good faith efforts, are unable to agree upon such terms and conditions, the Parties shall appoint an independent valuation expert who shall determine such terms and conditions, which determination shall be binding upon the Parties. If the Parties are unable to agree upon the appointment of such an expert, then each Party shall nominate an expert (the cost of whom shall be borne by such Party), and both experts appointed by the Parties shall jointly appoint the expert who shall make such determination. Any expert appointed pursuant to this Section 15.5(a) shall have at least fifteen (15) years' experience in the business of pharmaceutical development and commercialization. Except as provided above, the costs and expenses of any expert acting under this Section 15.5(a) shall be borne equally by the Parties. (b) Notwithstanding the foregoing: (i) In the event of any termination of this Agreement by NEOTHERAPEUTICS pursuant to Section 15.3 or by GPC pursuant to Section 15.4 with respect to fewer than all of the Covered Products and/or fewer than all of the countries in the Territory, the rights, licenses and other benefits to be transferred, granted and otherwise assigned to NEOTHERAPEUTICS under Section 15.5(a) shall be expressly limited to those pertaining to the Covered Products and/or the countries in the Territory to which such termination applies; and (ii) At any time prior to any transfer, granting and assignment of rights, licenses and benefits to NEOTHERAPEUTICS pursuant to Section 15.5(a), NEOTHERAPEUTICS may elect, upon notice to GPC, to waive the application of Section 15.5(a) with respect to such rights, licenses and benefits. Following any such waiver neither Party shall have any obligation or liability to the other with respect to such rights, licenses and benefits. 15.6. RIGHT TO SELL STOCK ON HAND. Provided that GPC is not in material breach of any obligation under this Agreement at the time of any termination of this Agreement, in whole or in part, GPC shall have the right for one year thereafter to dispose of all Covered Product then in its inventory and to complete manufacture of and dispose of any work-in-progress then being manufactured, as though this Agreement had not terminated. GPC shall pay royalties thereon, in accordance with the provisions of this Agreement, as though this Agreement had not terminated. 15.7. SURVIVAL OF SUBLICENSES. Upon any termination of this Agreement, all sublicenses granted by GPC under this Agreement shall be automatically assigned to NEOTHERAPEUTICS, which shall thereafter receive all benefits and have all obligations under the sublicenses as in the place and stead of GPC. 15.8. EFFECT OF TERMINATION OF J-M LICENSE AGREEMENT. Upon any termination of the J-M License Agreement, GPC shall attorn to and accept J-M in place of NEOTHERAPEUTICS such that this Agreement shall be deemed to be an agreement between J-M and GPC. 15.9. ACCRUED RIGHTS, SURVIVING OBLIGATIONS. (a) Termination, relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination, relinquishment or expiration. Such termination, relinquishment or expiration shall not relieve either Party from obligations which are expressly indicated to survive termination or expiration of this Agreement. The rights of the Parties upon termination described in this Agreement shall not be exclusive of any other rights or claims at law or in equity that either Party may have against the other arising out of this Agreement. (b) Termination, relinquishment or expiration of this Agreement shall not terminate each Party's obligation to pay all royalties, milestone payments and other monetary obligations that may have accrued hereunder prior to such termination. All of the Parties' rights and obligations under Sections 6.1, 6.2, 8.5, 10, 12, 13 (solely with respect to actions pending at such time), 14, 15.2, 15.5, 15.6, 15.7, 15.8, 15.9, 17.1 (if in effect at such time), 17.3, 17.5, 17.12, 17.13 and 17.14 shall survive termination, relinquishment or expiration hereof. 16. FORCE MAJEURE Neither Party shall be held liable or responsible to the other Party nor be deemed to be in default under or in breach of any provision of this Agreement for failure or delay in fulfilling or performing any obligation under this Agreement when such failure or delay is due to force majeure, and without the fault or negligence of the Party so failing or delaying. For purposes of this Agreement, force majeure shall be defined as causes beyond the control of the Party, including, without limitation, acts of God; acts, regulations, or laws of any government; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers. In such event NEOTHERAPEUTICS or GPC, as the case may be, shall immediately notify the other Party of such inability and of the period for which such inability is expected to continue. The Party giving such notice shall thereupon be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled and for thirty (30) days thereafter. To the extent possible, each Party shall use reasonable efforts to minimize the duration of any force majeure. 17. MISCELLANEOUS 17.1. RELATIONSHIP OF PARTIES. Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employment or joint venture relationship between the Parties. Neither Party shall be entitled to, or shall, incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein. 17.2. ASSIGNMENT. (a) Each Party shall be entitled to assign this Agreement to any of its Affiliates upon sixty (60) days' prior written notice to the other Party; provided, however, that in the event of any such assignment, the assigning Party shall remain jointly and severally liable with respect to all of its obligations hereunder, and in the event of any default relating to any such obligations, the other Party shall be entitled to proceed against either such Affiliate or directly against the assigning Party, as such other Party may determine in its sole discretion, to enforce this Agreement. (b) Except as provided in Section 17.5(a), neither Party shall be entitled to assign its rights hereunder without the express written consent of the other Party, except that each Party may assign this Agreement to any assignee of all or substantially all of such Party's business (or that portion thereof to which this Agreement relates) or in the event of such Party's merger, consolidation or similar transaction. (c) No assignment contemplated by this Section 17.3 shall be valid or effective unless and until the assignee/transferee shall agree in writing to be bound by the provisions of this Agreement. 17.3. DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS 2 AND 3.1, THE PARTIES EXPRESSLY DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE PRACTICE. 17.4. FURTHER ACTIONS. Each Party shall execute, acknowledge and deliver such further instruments, and take all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement. 17.5. NOTICE. Any notice or request required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below: (i) In the case of GPC, to: GPC BIOTECH AG Fraunhoferstrasse 20 D-82152 Martinsried/Munich Germany Attention: Chief Executive Officer Facsimile No.: 011-49-89-8565-2610 With a copy to: Ropes & Gray One International Place Boston, Massachusetts USA Attention: Marc A. Rubenstein, Esq. Facsimile No.: 617-951-7050 (ii) In the case of NEOTHERAPEUTICS, to: 157 Technology Drive Irvine, California 92618 USA Attention: Facsimile No.: 949-788-6706 or to such other address for such Party as it shall have specified by like notice to the other Party, provided that notices of a change of address shall be effective only upon actual receipt thereof. If delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight express courier service, the date of delivery shall be deemed to be the next business day after such notice or request was deposited with such service. If sent by certified mail, the date of delivery shall be deemed to be the fifth (5th) business day after such notice or request was deposited with the postal service in the country of mailing. 17.6. USE OF NAME. Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name or trademark of the other Party (including, without limitation, any Trademark) for any purpose in connection with the performance of this Agreement. 17.7. PUBLIC ANNOUNCEMENTS. (a) Except as required by law (including, without limitation, the applicable disclosure requirements of any relevant regulatory authority or stock exchange) and as permitted by Section 12.2, neither Party shall make any public announcement concerning this Agreement, any Covered Product or any other subject matter hereof without the prior written consent of the other Party, which shall not be unreasonably withheld or delayed. It shall not be unreasonable for a Party to withhold consent with respect to any public announcement containing any of such Party's Confidential Information. In the event of any required or proposed public announcement, (i) the Parties shall consult with each other in good faith as to the timing thereof, and (ii) the Party making such announcement shall provide the other Party with a copy of the proposed text prior to such announcement sufficiently in advance of the scheduled release of such announcement to afford such other Party a reasonable opportunity to review and comment upon the proposed text. Notwithstanding the foregoing, the Parties agree to prepare a mutually agreeable press release that may be used by either Party in connection with this Agreement, and any further announcement containing substantially the same information may be used without the need to seek the consent of the other Party. (b) Each Party acknowledges and agrees that the other Party needs to communicate with its investors regularly and keep them apprised of the development status of the products in which such Party has an interest. In order to facilitate this communication, promptly after the Effective Date each Party shall designate, from time to time, one employee who shall have primary responsibility for reviewing and approving all proposed investor communications of the other Party, to the extent that they pertain to this Agreement, any Covered Product or any other subject matter hereof. Each Party shall instruct such employee to review the content of such draft communications as expeditiously as possible and otherwise to cooperate with and assist the other Party in connection therewith, so long as the number of such communications and the timing thereof are reasonable. (c) Following a Party's consent to or approval of the public announcement of any information pursuant to this Section 17.7, both Parties shall be entitled to make subsequent public announcements of such information without renewed compliance with this Section 17.7, unless the scope and/or duration of such consent or approval is expressly limited. 17.8. WAIVER. A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative, and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party. 17.9. COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to permit a Party to export, re-export or otherwise transfer any Covered Product sold under this Agreement without compliance with applicable laws. 17.10. SEVERABILITY. When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. 17.11. AMENDMENT. No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party. 17.12. GOVERNING LAW; ENGLISH ORIGINAL; JURISDICTION. (a) This Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts without regard to its choice of law principles. The English original of this Agreement shall prevail over any translation hereof. (b) Without prejudice to the rights and obligations of the Parties under Section 17.13, each Party hereby consents to the in personam jurisdiction of any state or federal court sitting in the Commonwealth of Massachusetts with respect to any matter arising in connection with this Agreement and further consents to the service of any process, notice of motion or other application to any such court or a judge thereof outside the Commonwealth of Massachusetts by registered or certified mail or personal service, provided that reasonable time is allowed for appearance. Each Party hereby waives, to the greatest extent it may do so, any defense it may have on the grounds of inconvenient forum with respect to any action or proceeding maintained in any state or federal court in Massachusetts. 17.13. ARBITRATION. (a) Any dispute arising out of or relating to any provisions of this Agreement shall be finally settled by arbitration to be held in Boston, Massachusetts, under the auspices and then current commercial arbitration rules of the American Arbitration Association (the "AAA"). Such arbitration shall be conducted by three (3) arbitrators. Within thirty (30) days after the commencement of any arbitration, each Party shall appoint one arbitrator, and these two arbitrators shall jointly appoint the third arbitrator, who shall have significant experience in pharmaceutical drug development and commercialization; provided, however, that if the two arbitrators appointed by the Parties are unable to agree upon the third arbitrator within thirty (30) days after their appointment, then the third arbitrator shall be appointed by the AAA. The Parties shall instruct such arbitrators to render a determination of any such dispute within four (4) months after their appointment. All arbitration proceedings shall be conducted in English. Judgment upon any award rendered may be entered in any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. (b) Section 17.14(a) shall not prohibit a Party from seeking injunctive relief from a court of competent jurisdiction in the event of a breach or prospective breach of this Agreement by the other Party which would cause irreparable harm to the first Party. 17.14. NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS RESPECTIVE AFFILIATES OR SUBLICENSEES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES OR SUBLICENSEES FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH OR OTHER DAMAGES. 17.15. ENTIRE AGREEMENT. This Agreement (together with the Exhibits hereto) sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and merges all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or as duly set forth on or subsequent to the Effective Date in writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby. Without limiting the generality of the foregoing, the terms and conditions of this Agreement shall supersede the terms and conditions of any confidentiality, non-disclosure or similar such agreement that the Parties may have executed prior to the Effective Date. 17.16. PARTIES IN INTEREST. All the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns. 17.17. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement. 17.18. COUNTERPARTS. This Agreement may be executed simultaneously in two counterparts, any one of which need not contain the signature of more than one Party, but both such counterparts taken together shall constitute one and the same agreement. IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly authorized officer as of the day and year first above written. NEOTHERAPEUTICS, INC. By: /s/ Rajesh Shrotriya -------------------------------------- Name: Rajesh C. Shrotriya, M.D. Title: Chairman, CEO & President GPC BIOTECH AG By: /s/ Bernd R. Seizinger -------------------------------------- Name: Bernd R. Seizinger Title: Chief Executive Officer By: /s/ S. Meier-Ewert -------------------------------------- Name: S. Meier-Ewert Title: Chief Scientific Officer EXHIBIT A J-M License Agreement The Johnson Matthey PLC License Agreement was filed as Exhibit 10.5 to Form 10-Q, as filed with the Securities and Exchange Commission on November 14, 2001, and incorporated herein by this reference. The First Amendment to the License Agreement dated August 28, 2001 between Johnson Matthey PLC and NeoTherapeutics, Inc. dated September 30, 2002, is filed as Exhibit 10.8 to this Form 10-Q and incorporated herein by this reference. EXHIBIT B Patent Rights Filed as Schedule A of Exhibit 10.5 to Form 10-Q, as filed with the Securities and Exchange Commission on November 14, 2001, and incorporated herein by this reference. EXHIBIT C Initial Members of Joint Development Committee GPC Designees: Marcel Rozencweig, Chairman Michael Petrone Ed McNiff NEOTHERAPEUTICS Designees: Gino Lenaz Ashok Gore Shanta Chawla EXHIBIT D Registration Rights Agreement NEOTHERAPEUTICS, INC. REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made as of _______ __, 2002, between NeoTherapeutics, Inc., a Delaware corporation (the "Company"), and GPC Biotech AG, a company organized under the laws of the Federal Republic of Germany (the "GPC"). RECITALS The Company and GPC are parties to a Co-Development and License Agreement (the "License Agreement") dated as of September __, 2002, pursuant to which the Company has agreed to sell to GPC and GPC has agreed to purchase from the Company shares of the Company's Common Stock, upon the attainment of certain milestones under the License Agreement. As a condition to GPC's obligation to purchase shares of Common Stock under the License Agreement, the Company and GPC are required to enter into this Agreement in order to provide GPC with certain rights to register for resale the shares of the Company's Common Stock purchased under the License Agreement. AGREEMENT The parties agree as follows: 1. DEFINITIONS; REGISTRATION RIGHTS. 1.1 DEFINITIONS. For purposes of this Agreement: (a) "Common Stock" means the common stock, par value $0.001 per share, of the Company. (b) "Exempt Registration" means a registration statement relating to the sale of securities by the Company pursuant to a stock option, stock purchase or similar benefit plan or an SEC Rule 145 transaction or any other registration statement that would not customarily provide for the secondary sale of equity shares for cash. (c) "Holder" means (i) GPC and (ii) any person owning Registrable Securities to whom the rights under this Section 1 have been transferred in accordance with Section 1.9 of this Agreement. (d) "person" means any individual, corporation, partnership, limited liability company, trust, business, association or government or political subdivision thereof, governmental agency or other entity. (e) "register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act and the declaration or ordering of effectiveness of such registration statement or document. (f) The term "Registrable Securities" means (i) the shares of Common Stock issued under the License Agreement, and (ii) any other shares of Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares listed in clause (i) and this clause (ii); provided, however, that the foregoing definition shall exclude in all cases any Registrable Securities sold or transferred by a Holder in a transaction in which such Holder's rights under this Agreement are not assigned. Notwithstanding the foregoing, securities shall only be treated as Registrable Securities if and so long as they have not been (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (B) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions, and restrictive legends with respect thereto, if any, are removed upon the consummation of such sale. (g) "SEC" means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. (h) "Securities Act" means the Securities Act of 1933, as amended. 1.2 COMPANY REGISTRATION. (a) Initiation. If (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock in connection with the public offering of such securities solely for cash (other than an Exempt Registration), the Company shall, at such time, promptly give each Holder notice of such proposed registration. Upon the written request of each Holder given within 20 days after receipt by such Holder of the Company's notice, the Company shall, subject to the provisions of Section 1.2(b), cause to be registered all of the Registrable Securities that each such Holder has requested to be registered. (b) Underwritten Offering. In connection with any offering involving an underwriting of shares of the Company's capital stock, the Company shall not be required under Section 1.2(a) to include any of the Holders' securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata (to the nearest 100 shares) among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders). For purposes of the preceding apportionment, for any participating Holder that is a partnership, limited liability company or corporation, the partners, retired partners, members, 2 retired members and stockholders of such Holder, or the estates and family members of any such partners, members, retired partners or members and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "selling stockholder," and any pro-rata reduction with respect to such "selling stockholder" shall be based upon the aggregate amount of shares carrying registration rights owned by all Persons included in such "selling stockholder," as defined in this sentence. (c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.2 prior to the effectiveness of such registration whether or not any Holder has elected to include Registrable Securities in such registration. 1.3 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective. (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act. (c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of such Registrable Securities. (d) Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement with the managing underwriter of such offering in usual and customary form and consistent with the other provisions of this Agreement. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement. (f) Promptly notify each Holder covered by the registration statement at any time when the Company becomes aware of the happening of any event as a result of which the registration statement or the prospectus included in such registration statement or any supplement to the prospectus (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements there in (in the case of the prospectus, in light of the circumstances under which they were made) not misleading or, if for any other reason it shall be necessary during such time period to amend or supplement the 3 registration statement or the prospectus in order to comply with the Securities Act, whereupon, in either case, each Holder shall immediately cease to use such registration statement or prospectus for any purpose and, as promptly as practicable thereafter, the Company shall prepare and file with the SEC, and furnish without charge to the appropriate Holders and managing underwriters, if any, a supplement or amendment to such registration statement or prospectus which will correct such statement or omission or effect such compliance and such copies thereof as the Holders and any underwriters may reasonably request. (g) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange or market on which similar securities issued by the Company are then listed or traded, if applicable. (h) Use its reasonable best efforts to furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 1, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 1, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities (to the extent the then applicable standards of professional conduct permit said letter to be addressed to the Holders). 1.4 FURNISH INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. 1.5 EXPENSES OF REGISTRATION. All expenses other than underwriting discounts and commissions incurred in connection with registrations initiated pursuant to Section 1.2, including without limitation all registration, filing and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one counsel for the Holders, shall be borne by the Company. 1.6 DELAY OF REGISTRATION. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1. 1.7 INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under this Section 1: 4 (a) Indemnification by the Company. To the extent permitted by law, the Company will indemnify and hold harmless each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law; and the Company will pay to each such Holder, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Section 1.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable to any Holder, underwriter or controlling person for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation (x) which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person or (y) which occurs in any preliminary prospectus if a final, amended or supplemental prospectus which corrects such Violation is delivered by the Company to such person at or prior to the written confirmation of the sale giving rise to such loss, claim, damage, liability, or action. (b) Indemnification by the Holders. To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration statement; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this Section 1.7(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Section 1.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, that in no event shall any indemnification by a Holder under this Section 1.7(b) exceed the net 5 proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder. (c) Procedures. Promptly after receipt by an indemnified party under this Section 1.7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.7. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. The indemnity agreements contained in this Section 1.7 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the indemnifying party, such consent not to be unreasonably withheld. (d) Contribution. If the indemnification provided for in this Section 1.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided, that in no event shall any contribution by a Holder under this Section 1.7(d) exceed the net proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. 6 (e) Underwriting Agreement. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. (f) Survival. The obligations of the Company and Holders under this Section 1.7 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise. 1.8 REPORTS UNDER EXCHANGE ACT. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration, the Company agrees to: (a) make and keep public information available, in accordance with SEC Rule 144, at all times after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act; (b) file with the SEC in a timely manner all reports and other documents as may be required of the Company under the Securities Act and the Exchange Act; and (c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form. 1.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to register securities granted Holders under Section 1.2 may not be assigned to a transferee or assignee of Registrable Shares without the prior written consent of the Company, except that such rights may be freely transferred to any party controlling, controlled by or under common control with a Holder without such consent; provided, that the Company is provided with prompt notice of the name and address of such transferee and such transferee agrees in writing to be bound by the provisions of this Agreement. 1.10 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled to exercise any registration right provided for in this Section 1 after such time as Rule 144(k) or another similar exemption under the Securities Act is available for the sale of all of such Holder's shares without limitation as to volume or manner of sale. 2. MISCELLANEOUS. 2.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof, and any and all other written or oral 7 agreements relating to the subject matter hereof existing among any of the parties hereto are expressly canceled. 2.2 RECAPITALIZATIONS, ETC. The provisions of this Agreement (including any calculation of share ownership) shall apply, to the full extent set forth herein with respect to the Registrable Securities and to the Common Stock, to any and all shares of capital stock of the Company or any capital stock, partnership or member units or any other security evidencing ownership interests in any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for, or in substitution of the Registrable Securities by reason of any stock dividend, split, combination, recapitalization, liquidation, reclassification, merger, consolidation or otherwise. 2.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this Agreement, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 2.4 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended or waived only with the written consent of the Company and the holders of at least a majority of the Registrable Securities then outstanding. GPC and its successors and assigns acknowledge that by operation of this Section 2.4, the holders of at least a majority of the then outstanding Registrable Securities, when acting together with the Company, will have the right and power to diminish or eliminate any rights or increase any or all obligations under this Agreement. 2.5 NOTICES. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by electronic mail or fax, or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, addressed (a) if to the Company or NeoTherapeutics, to 157 Technology Drive, Irvine, California 92618, Attention: Chief Executive Officer or via facsimile to (949) 788-6706, with a copy to Latham & Watkins, 650 Town Center Drive, Suite 2000, Costa Mesa, California 92626-1925, Attention: Alan W. Pettis, or via facsimile to (714) 755-8290, or (b) if to GPC, to Fraunhoferstrasse 20, D-82152 Martinsried/Munich, Germany, Attention: Chief Executive Officer or via facsimile to 49-89-8565-2610, with a copy to Ropes & Gray, One International Place, Boston, Massachusetts 02110, Attention: Marc A. Rubenstein, or via facsimile to (617) 951-7050. 2.6 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. Until the parties have agreed upon an enforceable replacement for such provision, (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms. 2.7 DELAYS OR OMISSIONS; REMEDIES CUMULATIVE. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or 8 default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative. 2.8 ATTORNEY'S FEES. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of any this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 2.9 GOVERNING LAW. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof. The Company and GPC hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts sitting in Orange County, California, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, or that such suit, action or proceeding is improper. Each of the Company and GPC hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by receiving a copy thereof sent to the Company at the address in effect for notices to it under this instrument and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. 2.10 COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 2.11 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 2.12 AGGREGATION OF STOCK. All shares of Company stock held or acquired by affiliated Persons (including former and current partners, former and current members and former and current stockholders) shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 2.13 CONFIDENTIALITY. Each Holder agrees that, except with the prior written permission of the applicable party, it shall at all times keep confidential and not divulge, furnish or make accessible to anyone any confidential information, knowledge or data concerning or relating to the business or financial affairs of the Company or any other party to which such 9 Holder has been or shall become privy by reason of this Agreement. The provisions of this Section 2.13 shall be in addition to, and not in substitution for, the provisions of any separate nondisclosure agreement executed by the parties hereto with respect to the transactions contemplated hereby. [Signature Page Follows] 10 The parties have executed this Registration Rights Agreement as of the date first above written. NEOTHERAPEUTICS, INC. GPC BIOTECH AG By: By: --------------------------------- ----------------------------------- Name: Name: ------------------------------- --------------------------------- Title: Title: ------------------------------ -------------------------------- 11 EX-10.10 11 a84976exv10w10.txt EXHIBIT 10.10 EXHIBIT 10.10 CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE THIS CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE (this "Agreement") is entered into as of November 6, 2002 (the "Effective Date"), by and between NeoTherapeutics, Inc., a Delaware corporation (the "Company") and Michelle S. Glasky, Ph.D., an individual ("Executive"). RECITALS WHEREAS, Executive is employed by the Company pursuant to that certain executive employment agreement dated as of December 1, 2002 (the "Employment Agreement"); WHEREAS, Executive and the Company (collectively, the "Parties") have agreed that Executive's employment as an officer and employee of the Company shall terminate as of the Effective Date; WHEREAS, the Parties wish to specify the terms of the termination and resolve any outstanding issues between them. AGREEMENT NOW THEREFORE, in consideration of the representations and agreements contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be bound hereby, the Company and Executive hereby agree to terminate their employment relationship on the following basis: 1. Termination of the Employment Agreement. The Employment Agreement and each Party's rights thereunder are hereby terminated, including, without limitation, Executive's right to receive any "Base Salary" (as defined in the Employment Agreement), bonus or other compensation, or any entitlement to severance or other payments upon termination of employment under the Employment Agreement. 2. Separation. Executive and Company hereby agree that Executive's employment as Vice President, Scientific Affairs and an employee of the Company shall terminate as of the Effective Date. Executive understands and agrees that she is giving up any right or claim to future employment with the Company and any compensation or benefit of such employment, including any compensation and/or benefits owed to the Executive pursuant to the Employment Agreement, except for compensation and/or benefits provided for in this Agreement. Executive acknowledges that she has received all compensation and benefits due to her through the Effective Date. 3. Compensation. In consideration of the termination of Executive's employment pursuant to the terms of this Agreement: (a) As of the Effective Date, Executive shall be paid the following: (i) $ 43,269.30 in lieu of severance, (ii) $ 13,411.30 in full payment of Executive's accrued and unpaid vacation pay, and (iii) $ 2812.50 as full payment of all deferred salary owed to Executive. (b) All stock options previously granted to Executive shall become fully vested as of the Effective Date, and Executive shall be entitled to exercise such options in whole or in part from time to time during the one year period commencing on the Effective Date. Executive agrees that, notwithstanding any other provision in the Company's stock option plan or the stock option agreements between the Company and Executive, nothing in this Agreement or the terms of the consulting agreement set forth in Section 5 hereof shall entitle Executive to exercise any stock options beyond the one year period following the Effective Date. (c) As of the Effective Date, the Company hereby transfers to Executive ownership of (i) the laptop computer and accessories (docking station, monitor, keyboard, mouse, stand, speakers and printer) provided to her by the Company in consideration of the payment by Executive to the Company of $150 and (ii) the cellular telephone provided to her by the Company. After the Effective Date, Executive agrees to assume and pay all costs of the laptop computer and cellular telephone or their use. 4. Options. Executive and the Company are parties to certain written agreements pursuant to which Executive has been granted options to purchase stock in the Company. Executive acknowledges that although such options might be identified as incentive stock options, such options may not be qualified for treatment as incentive stock options, either now or in the future. Executive is advised to consult with her personal tax advisor to determine whether the options are qualified for treatment as incentive stock options. Except as set forth in Section 3(b) and this Section 4, Executive's rights under her existing option agreements are not intended to be modified by this Agreement in any way. 5. Future Consulting. Executive shall provide consulting services to the Company as may be reasonably requested by the Company from time to time up to and through December 31, 2003, such requests to be made on reasonable notice to Executive and such services to be performed solely during ordinary business hours. It is the express intent of the parties that Executive shall provide consulting services to the Company as an independent contractor pursuant to this Agreement. Executive will not be an employee of the Company after the Effective Date, and Executive shall not hold herself out to be an employee of the Company, and shall not have the authority to enter into or bind the Company to any contract, promise, or obligation under any circumstances. The Company is interested only in the results to be achieved by Executive under this Agreement, and the manner and method of performing all services of Executive under this Agreement, and achieving the desired results, shall be under the exclusive control of Executive. The Company shall have no right or authority to direct or control Executive with respect to the performance of Executive's services under this Agreement, except as otherwise provided by this Agreement. The Company shall compensate Executive for consulting services actually rendered hereunder at the rate of $150 per hour and reimburse her for other amounts actually expended by Executive in the course of performing her duties as a consultant to the Company, if such amounts are approved in writing by the Company beforehand and Executive tenders 2 receipts or other documentation reasonably substantiating the amounts as required by the Company. 6. Return of Company Property. Except as expressly provided for herein, at the Company's request, the Executive will return to the Company all files, records, credit cards, keys, equipment, and any other property of the Company or documents maintained by her for the Company's use or benefit, on or before the Effective Date. 7. Confidentiality. The Parties acknowledge that this Agreement and all matters relating to or leading up to the negotiation and effectuation of this Agreement are confidential and shall not be disclosed to any third party except as follows: the Company may disclose the terms of this Agreement to the public as required by law, including without limitation, the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended; the Company may disclose the terms of this Agreement to Company employees with a business purpose for receiving such information; the Parties may disclose the terms of the Agreement to their respective legal, accounting and tax advisors to the extent necessary for them to perform services; and the Parties may disclose the terms of this Agreement to the Internal Revenue Service and the California Franchise Tax Board as required by law, rule or regulation, or as otherwise required by law or necessary to enforce the terms of this Agreement. If any disclosure is made as permitted by this paragraph other than to governmental authorities as required by law, then such persons or entities shall be cautioned about the confidentiality obligations imposed by this Agreement. 8. Non-Disclosure, Non-Competition and Non-Solicitation. (a) Executive agrees that she will not disclose at any time, other than to an authorized employee, officer, director or agent of the Company, any information relating to the Company's business, trade, practices, trade secrets or know-how or proprietary information without the Company's prior express written consent. Following the Effective Date, Executive shall be permitted to continue in her usual occupation and shall not be prohibited from competing with the Company. Executive agrees that until December 31, 2003, Executive shall not directly or indirectly solicit, induce, recruit or encourage any of the Company's employees to leave their employment or take away such employees to leave their employment or take away such employees or attempts to solicit, induce, recruit, encourage or take away employees of the Company. (b) Executive understands and agrees that future payments under this Agreement may be terminated by the Company if she violates this provision in addition to any other remedies available under applicable law. In the event the Company terminates payments pursuant to this Section, Executive may challenge such termination in accordance with Section 15 below. In the event of any other breach or violation of this Agreement, the party asserting a breach or violation of the Agreement may seek remedies otherwise available under applicable law or another provision of this Agreement in accordance with Section 15 below. 9. General Release by Executive. 3 (a) Release of Claims. Executive does hereby for herself and her respective heirs, successors and assigns, release, acquit and forever discharge the Company, its parents, subsidiaries and affiliates and any of their officers, directors, managers, employees, representatives, related entities, successors and assigns, and all persons acting by, through or in concert with them (the "Company Releasees") of and from any and all claims, actions, charges, complaints, causes of action, rights, demands, debts, damages, or accountings of whatever nature, known or unknown which Executive may have against the Company Releasees, or any of them, based on any actions or events which occurred prior to the effective date of this Agreement, including, but not limited to, those related to, or arising from, Executive's employment with the Company or the termination thereof, including, without limitation, any claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act and the California Fair Employment and Housing Act (collectively, the "Claims" or individually, "Claim"); provided, however, that the release set forth in this Section 10(a) shall not be effective with respect to any Company Releasee, other than the Company, who commences any claim, action or proceeding against Executive based on any actions or events which occurred prior to the effective date of this Agreement. (b) Release of Unknown Claims. In addition, Executive expressly waives all rights under Section 1542 of the Civil Code of the State of California, which reads as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HER MUST HAVE MATERIALLY AFFECTED HER SETTLEMENT WITH THE DEBTOR. (c) No Assignment of Claims. Executive represents and warrants to the Company Releasees that there has been no assignment or other transfer of any interest in any Claim which Executive may have against the Company Releasees, or any of them, and Executive agrees to indemnify and hold the Company Releasees harmless from any liability, claims, demands, damages, costs, expenses and attorneys' fees incurred as a result of any person asserting any such assignment or transfer of any rights or Claims if Executive has made such assignment or transfer from such party. (d) No Suits or Actions. Executive represents and warrants to the Company that there have been no claims, suits, actions, complaints, or charges filed by her against the Company Releasees, or any of them. Executive agrees that if she hereafter commences, joins in, or in any manner seeks relief through any suit arising out of, based upon, or relating to any of the Claims released hereunder, or in any manner asserts against the Company Releasees, or any of them, any of the Claims released hereunder, then she will pay to the Company Releasees against whom such claim(s) is asserted, in addition to any other damages caused thereby, all attorneys' fees incurred by such Company Releasees in defending or otherwise responding to said suit or Claim. (e) No Admission. Executive further understands and agrees that neither the payment of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever by the Company Releasees. 4 10. General Release by the Company. (a) Release of Claims. The Company does hereby for itself and its respective successors and assigns, release, acquit and forever discharge Executive and her heirs, estates, successors and assigns, and all persons acting by, through or in concert with them (the "Executive Releasees") of and from any and all claims, actions, charges, complaints, causes of action, rights, demands, debts, damages, or accountings of whatever nature, known or unknown which the Company may have against the Executive Releasees, or any of them, based on any actions or events which occurred prior to the effective date of this Agreement, including, but not limited to, those related to, or arising from, Executive's employment with the Company or the termination thereof (collectively, the "Claims" or individually, "Claim"). (b) Release of Unknown Claims. In addition, the Company expressly waives all rights under Section 1542 of the Civil Code of the State of California, which reads as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HER MUST HAVE MATERIALLY AFFECTED HER SETTLEMENT WITH THE DEBTOR. (c) No Assignment of Claims. The Company represents and warrants to the Executive Releasees that there has been no assignment or other transfer of any interest in any Claim which the Company may have against the Executive Releasees, or any of them, and the Company agrees to indemnify and hold the Executive Releasees harmless from any liability, claims, demands, damages, costs, expenses and attorneys' fees incurred as a result of any person asserting any such assignment or transfer of any rights or Claims if the Company has made such assignment or transfer from such party. (d) No Suits or Actions. The Company agrees that if it hereafter commences, joins in, or in any manner seeks relief through any suit arising out of, based upon, or relating to any of the Claims released hereunder, or in any manner asserts against the Executive Releasees, or any of them, any of the Claims released hereunder, then it will pay to the Executive Releasees against whom such claim(s) is asserted, in addition to any other damages caused thereby, all attorneys' fees incurred by such Executive Releasees in defending or otherwise responding to said suit or Claim. (e) No Admission. The Company further understands and agrees that neither the payment of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever by the Executive Releasees. 11. Nondisparagement. The Parties shall not make any disparaging or derogatory comments, public or otherwise, concerning each other, and Executive shall refrain from making any disparaging comments, public or otherwise, concerning any employees, officers or directors of the Company. 12. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. 5 Notwithstanding the foregoing, neither this Agreement nor any rights hereunder may be assigned to any party by the Company or Executive without the prior written consent of the other party hereto. 13. Entire Agreement/No Oral Modification. This Agreement contains all of the terms, promises, representations, and understandings, oral or written, made between the Company and Executive with respect to the subject matter hereof and supersedes all prior representations, understandings, or agreements, oral or written, between the Company and Executive, with respect to such matters, which the Parties acknowledge have been merged into this Agreement. This Agreement may not be modified other than with a writing executed by both parties and stating an intent to modify this agreement. 14. Governing Law. This Agreement shall be governed by the laws of the State of California, without regard for conflict of law principles. 15. Arbitration; Waiver of Jury Trial. Except for claims for equitable or injunctive relief which cannot be timely addressed through arbitration (which claims may be brought in any state or federal court in Orange County, California), the parties hereby agree to submit any claim or dispute arising out of the terms of this Agreement, including, without limitation, claims regarding confidentiality under Section 8 of this Agreement and/or any dispute arising out of or relating to Executive's employment or consulting relationship with the Company in any way, to private and confidential arbitration by a single neutral arbitrator through JAMS. All arbitration proceedings shall be governed by the then current JAMS rules governing employment disputes, and shall take place in Orange County, California. The decision of the arbitrator shall be rendered in writing and shall be final and binding on all parties to this Agreement. Judgment thereon may be entered in any court having jurisdiction. The Company shall advance the arbitrator's fee and all costs of services provided by the arbitrator and arbitration organization; however, all costs of the arbitration proceeding or litigation to enforce this Agreement, including attorneys' fees and witness expenses, may be awarded to the prevailing party in addition to such other relief as the arbitrator may determine. Except for claims for equitable or injunctive relief which cannot be timely addressed through arbitration (which claims may be brought in any state or federal court in Orange County, California), this arbitration procedure is intended to be the exclusive method of resolving any claim relating to the obligations set forth in this Agreement. Executive hereby waives any right to a jury trial on any dispute or claim covered by this paragraph. 16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute the same instrument. 6 IN WITNESS WHEREOF, this Agreement is executed by the parties set forth below as of the date first indicated above. THE COMPANY EXECUTIVE NEOTHERAPEUTICS, INC. MICHELLE S. GLASKY, PH.D., a Delaware corporation an individual By: /s/ John L. McManus /s/ Michelle S. Glasky --------------------------------- ---------------------------------- Title: V.P. Strategic Planning & Finance ------------------------------ 7 -----END PRIVACY-ENHANCED MESSAGE-----

EX-4.1

                                                                     EXHIBIT 4.1



                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                              NEOTHERAPEUTICS, INC.


        NeoTherapeutics, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that:

               1. Article 4 of the Corporation's Certificate of Incorporation is
hereby amended by adding the following three paragraphs at the end of said
Article 4:

               "Effective as of 11:59 p.m. Eastern Time on the date of the
        filing of the Certificate of Amendment that adds this paragraph to this
        Article 4 (the time of such filing, the "Effective Time"), all issued
        and outstanding shares of Common Stock ("Existing Common Stock") shall
        be and hereby are automatically combined and reclassified as follows:
        each twenty-five (25) shares of Existing Common Stock shall be combined
        and reclassified as one (1) share of issued and outstanding Common Stock
        ("New Common Stock"), provided, that there shall be no fractional shares
        of New Common Stock. In the case of any holder of any number of shares
        of Existing Common Stock which, when divided by twenty-five (25), does
        not result in a whole number, the holder shall receive cash in lieu of
        any fractional share of New Common Stock at a price per share equal to
        the product of (a) the number of shares of Existing Common Stock held by
        such holder immediately prior to the Effective Time which have not been
        classified into a whole share of New Common Stock, multiplied by (b) the
        closing price of the Existing Common stock as reported on the Nasdaq
        National Market on the date of the filing of the Certificate of
        Amendment.

               The Corporation shall, through its transfer agent, provide
        certificates representing shares of New Common Stock to holders of
        Existing Common Stock in exchange for certificates representing shares
        of Existing Common stock. From and after the Effective Time,
        certificates representing shares of Existing Common Stock are hereby
        cancelled and shall represent only the right of the holders thereof to
        receive shares of New Common Stock.

               From and after the Effective Time, the term "New Common Stock" as
        used in this Article 4 shall mean Common Stock as provided in this
        Certificate of Incorporation. The par value of the Common Stock shall
        remain $0.001 per share."

               2. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.




        IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment of Certificate of Incorporation on September 5, 2002.


                                        NEOTHERAPEUTICS, INC.
                                        a Delaware corporation


                                        By: \s\ Rajesh C. Shrotriya, M.D.
                                            ------------------------------------
                                            Rajesh C. Shrotriya, M.D.
                                            Chairman of the Board, Chief
                                            Executive Officer and President



                                       2

EX-4.2

                                                                     EXHIBIT 4.2


                                     BYLAWS
                                       OF
                              NEOTHERAPEUTICS, INC.
                             A DELAWARE CORPORATION


                                    ARTICLE I
                                     OFFICES

        SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
in the State of Delaware shall be in the City of Wilmington, County of New
Castle.

        SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.

        SECTION 3. BOOKS. The books of the Corporation may be kept within or
without the State of Delaware as the Board of Directors may from time to time
determine or the business of the Corporation may require.


                                   ARTICLE II
                            MEETINGS OF STOCKHOLDERS

        SECTION 1. PLACE OF MEETINGS. All meetings of stockholders shall be held
at such place either within or without the State of Delaware as may be
designated from time to time by the Board of Directors.

        SECTION 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be
held at a time and date designated by the Board of Directors for the purpose of
electing directors and transacting such other business as may properly be
brought before the meeting.

        SECTION 3. SPECIAL MEETINGS. Special meetings of stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the Board of Directors, the
Chairman of the Board, or by the Chief Executive Officer.

        SECTION 4. NOTIFICATION OF BUSINESS TO BE TRANSACTED AT MEETING. At any
meeting of the stockholders, only such business shall be conducted as shall have
been properly brought before such meeting. To be brought properly before an
annual meeting of stockholders, business must be (a) specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, (b) otherwise properly brought before the meeting by or at the
direction of the Board of Directors or the chairman of the meeting, or (c)
otherwise properly brought before the meeting by a stockholder. For business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be received no less than
sixty days nor more than ninety days prior to the first anniversary of the
preceding year's annual meeting of stockholders; provided, however, that in the
event that the



                                       1


date of the annual meeting is advanced by more than thirty days or delayed by
more than sixty days from such anniversary, notice by the stockholder, to be
timely, must be received not earlier than the ninetieth day prior to such annual
meeting of stockholders and not later than the close of business on the later of
(a) the sixtieth day prior to such annual meeting or (b) the tenth day following
the date on which notice of the date of the annual meeting was mailed or public
disclosure thereof was made, whichever first occurs. Each such notice shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting of stockholders: (a) a brief description of the business desired to be
brought before the annual meeting of stockholders and the reasons for conducting
such business at such meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (c) the class,
series, and number of shares of the Corporation that are beneficially owned by
the stockholder, and (d) any material interest of the stockholder or any
Affiliate of the stockholder in such business. The stockholder also shall comply
with all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth in this Section 4.

        To be properly brought before a special meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors or (b) otherwise properly brought before
the meeting by or at the direction of the Board of Directors or the chairman of
the meeting. No other business may be brought before a special meeting by
stockholders.

        No business shall be conducted at any meeting of the stockholders except
in accordance with the procedures set forth in this Section 4. The chairman of
the meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting and in accordance with
the provisions of this Section 4, and if he or she should so determine, any such
business not properly brought before the meeting shall not be transacted.
Nothing herein shall be deemed to affect any rights of stockholders to request
inclusion of proposals in the Corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act or any successor provision.

        SECTION 5. NOTICE; WAIVER OF NOTICE. Whenever stockholders are required
or permitted to take any action at a meeting, a written notice of the meeting
shall be given which shall state the place, date and hour of the meeting, and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise required by law, such notice shall be given not less
than ten (10) nor more than sixty (60) days before the date of the meeting to
each stockholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
postage prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation. A written waiver of any such notice signed by the
person entitled thereto, whether before or after the time stated therein, shall
be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends
the meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.

        SECTION 6. QUORUM; ADJOURNMENT. Except as otherwise required by law, or
provided by the Certificate of Incorporation or these Bylaws, the holders of a
majority of the capital stock



                                       2

issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at all meetings of the stockholders. A meeting at which a quorum is initially
present may continue to transact business, notwithstanding the withdrawal of
enough votes to leave less than a quorum, if any action taken is approved by at
least a majority of the required quorum to conduct that meeting. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the majority of the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting of the time
and place of the adjourned meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder entitled to vote at the meeting.

        SECTION 7. VOTING; PROXIES. At all meetings of stockholders at which a
quorum is present for the election of directors a plurality of the votes cast
shall be sufficient to elect. All other questions brought before a meeting of
stockholders at which a quorum is present shall, unless otherwise provided by
law, the Certificate of Incorporation or these Bylaws, be decided by the vote of
the holders of the majority of stock represented and entitled to vote thereat.
Unless otherwise provided in the Certificate of Incorporation, each stockholder
represented at a meeting of stockholders shall be entitled to cast one vote for
each share of the capital stock entitled to vote thereat held by such
stockholder. Each stockholder entitled to vote at a meeting of stockholders or
to express consent or dissent to corporate action in writing without a meeting
may authorize another person or persons to act for him by proxy, but no such
proxy shall be voted or acted upon after three years from its date, unless the
proxy provides for a longer period. A proxy shall be irrevocable if it states
that it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A stockholder may
revoke any proxy which is not irrevocable by attending the meeting and voting in
person or by filing an instrument in writing revoking the proxy or by delivering
a proxy in accordance with applicable law bearing a later date to the Secretary
of the Corporation. Elections of directors need not be by ballot unless the
Chairman of the meeting so directs or unless a stockholder demands election by
ballot at the meeting and before the voting begins.

        SECTION 8. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Except as otherwise provided in the Certificate of Incorporation, any action
which may be taken at any annual or special meeting of stockholders, may be
taken without a meeting and without prior notice, if a consent in writing,
setting forth the action so taken, is signed by the holders of all of the
outstanding shares entitled to vote thereon. All such consents shall be filed
with the Secretary of the Corporation and shall be maintained in the corporate
records.

        SECTION 9. RECORD DATE. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix, in advance, a record
date, which shall not be more than sixty (60) days nor less than ten (10) days
before the date of such


                                       3

meeting, nor more than sixty (60) days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting. Stockholders on the record date are entitled to notice and to vote or
to receive the dividend, distribution or allotment of rights or to exercise the
rights, as the case may be, notwithstanding any transfer of any shares on the
books of the Corporation after the record date, except as otherwise provided by
agreement or by applicable law.

        SECTION 10. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer who has
charge of the stock ledger of the Corporation shall prepare and make, at least
ten (10) days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder of the Corporation who is present.

        SECTION 11. STOCK LEDGER. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 10 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.

        SECTION 12. INSPECTORS OF ELECTION. In advance of any meeting of
stockholders, the Board of Directors may appoint one or more persons (who shall
not be candidates for office) as inspectors of election to act at the meeting or
any adjournment thereof. If an inspector or inspectors are not so appointed, or
if an appointed inspector fails to appear or fails or refuses to act at a
meeting, the Chairman of any meeting of stockholders may, and on the request of
any stockholder or his proxy shall, appoint an inspector or inspectors of
election at the meeting. The duties of such inspector(s) shall include:
determining the number of shares outstanding and the voting power of each; the
shares represented at the meeting; the existence of a quorum; the authenticity,
validity and effect of proxies; receiving votes, ballots or consents; hearing
and determining all challenges and questions in any way arising in connection
with the right to vote; counting and tabulating all votes or consents;
determining the result; and such acts as may be proper to conduct the election
or vote with fairness to all stockholders. In the event of any dispute between
or among the inspectors, the determination of the majority of the inspectors
shall be binding.

        SECTION 13. ORGANIZATION. At each meeting of stockholders the Chairman
of the Board of Directors, if one shall have been elected, (or in his absence or
if one shall not have been elected, the Chief Executive Officer) shall act as
Chairman of the meeting. The Secretary (or in his or her absence or inability to
act, the person whom the Chairman of the meeting shall appoint Secretary of the
meeting) shall act as Secretary of the meeting and keep the minutes thereof.



                                       4

        SECTION 14. ORDER OF BUSINESS. The order and manner of transacting
business at all meetings of stockholders shall be determined by the Chairman of
the meeting.

        SECTION 15. NOMINATION AND ELECTION OF DIRECTORS. Subject to the rights
of holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, dissolution or winding up of the
Corporation, nominations for the election of directors shall be made by a
nominating committee of the Board of Directors if then constituted pursuant to
these Bylaws, or if no nominating committee has been constituted, by the Board
of Directors. In addition, any stockholder entitled to vote in the election of
directors generally may nominate one or more persons for election as directors
at an annual meeting of stockholders, but only if written notice of such
stockholder's intent to make such nomination or nominations has been received by
the Secretary of the Corporation not less than sixty nor more than ninety days
prior to the first anniversary of the preceding year's annual meeting of
stockholders. In the event that the date of the annual meeting of stockholders
is advanced by more than thirty days or delayed by more than sixty days from
such anniversary, notice by the stockholder to be timely must be received by the
Secretary of the Corporation not earlier than the ninetieth day prior to such
annual meeting and not later than the close of business on the later of (a) the
sixtieth day prior to such annual meeting or (b) the tenth day following the day
on which notice of the date of the annual meeting was mailed or public
disclosure thereof was made by the Corporation, whichever first occurs. Each
such notice by a stockholder shall set forth: (a) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at a meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the stockholder or any person that directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
such stockholder (an "Affiliate" of such stockholder) and each nominee and any
other person or persons (naming such person or persons) relating to the
nomination or nominations; (d) the class and number of shares of the Corporation
that are beneficially owned by such stockholder and the person to be nominated
as of the date of such stockholder's notice and by any other stockholders known
by such stockholder to be supporting such nominees as of the date of such
stockholder's notice; (e) such other information regarding each nominee proposed
by such stockholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission; and
(f) the written consent of each nominee to serve as a director of the
Corporation if so elected. The stockholder also shall comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder, with respect to the matters set
forth in this Section 15.

        In addition, in the event the Corporation calls a special meeting of
stockholders for the purpose of electing one or more directors, any stockholder
entitled to vote in the election of directors generally may nominate one or more
persons for election as directors at a special meeting only if written notice of
such stockholder's intent to make such nomination or nominations, setting forth
the information and complying with the form described in the immediately
preceding paragraph, has been received by the Secretary of the Corporation not
earlier than the ninetieth day prior to such special meeting and not later than
the close of business on the later of (i) the sixtieth day prior to such special
meeting or (ii) the tenth day following the


                                       5

day on which notice of the date of the special meeting was mailed or public
disclosure thereof was made by the Corporation, whichever comes first. The
stockholder also shall comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 15.

        No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 15. The chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this Section 15, and if he or she should so determine,
the defective nomination shall be disregarded.


                                   ARTICLE III
                                    DIRECTORS

        SECTION 1. POWERS. Except as otherwise required by law or provided by
the Certificate of Incorporation, the business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors.

        SECTION 2. NUMBER AND ELECTION OF DIRECTORS. Subject to any limitations
in the Certificate of Incorporation, the authorized number of directors of the
Corporation shall be fixed from time to time by the Board of Directors pursuant
to a resolution duly adopted by a majority of the entire Board of Directors, but
no decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director. Until changed in the foregoing
manner, the number of directors shall be nine (9). Directors shall be elected at
each annual meeting of the stockholders to replace directors whose terms then
expire, and, subject to the provisions of Section 3 of this Article III, each
director elected shall hold office for a term of three (3) years or until his or
her successor is duly elected and qualified, or until his or her earlier death,
resignation or removal. Any director may resign at any time effective upon
giving written notice to the Board of Directors, unless the notice specifies a
later time for such resignation to become effective. If the resignation of a
director is effective at a future time, the Board of Directors may elect a
successor prior to such effective time to take office when such resignation
becomes effective. Directors need not be stockholders.

        SECTION 3. CLASSIFIED BOARD OF DIRECTORS. The Board of Directors shall
be divided into three (3) classes, as nearly equal in number as possible,
designated Class I, Class II and Class III. The number of directors constituting
each Class shall be fixed from time to time by a resolution duly adopted by a
majority of the entire Board of Directors. Class I directors shall hold office
for a full term expiring at the 2003 annual meeting of stockholders. Class II
directors shall hold office for a continuing term expiring at the 2001 annual
meeting of stockholders. Class III directors shall hold office for an initial
term expiring at the 2002 annual meeting of stockholders. At each annual meeting
of stockholders held thereafter, directors shall be elected for a full term of
office to succeed the directors of the Class whose terms then expire.

        SECTION 4. VACANCIES. Subject to the limitations in the Certificate of
Incorporation, vacancies in the Board of Directors resulting from death,
resignation, removal or otherwise and newly created directorships resulting from
any increase in the authorized number of directors


                                       6

may be filled by a majority of the directors then in office, although less than
a quorum, or by a sole remaining director. Each director so selected shall hold
office for the remainder of the full term of office of the former director which
such director replaces and until his successor is duly elected and qualified, or
until his earlier death, resignation or removal. No decrease in the authorized
number of directors constituting the Board of Directors shall shorten the term
of any incumbent directors.

        SECTION 5. TIME AND PLACE OF MEETINGS. The Board of Directors shall hold
its meetings at such place, either within or without the State of Delaware, and
at such time as may be determined from time to time by the Board of Directors.

        SECTION 6. ANNUAL MEETING. The Board of Directors shall meet for the
purpose of organization, the election of officers and the transaction of other
business, as soon as practicable after each annual meeting of stockholders, on
the same day and at the same place where such annual meeting shall be held.
Notice of such meeting need not be given. In the event such annual meeting is
not so held, the annual meeting of the Board of Directors may be held at such
place, either within or without the State of Delaware, on such date and at such
time as shall be specified in a notice thereof given as hereinafter provided in
Section 8 of this Article III or in a waiver of notice thereof.

        SECTION 7. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held at such places within or without the State of Delaware at such date
and time as the Board of Directors may from time to time determine and, if so
determined by the Board of Directors, notices thereof need not be given.

        SECTION 8. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board, the Chief Executive Officer, or by
any two (2) directors. Notice of the date, time and place of special meetings
shall be delivered personally or by telephone to each director or sent by
first-class mail or telegram, charges prepaid, addressed to each director at the
director's address as it is shown on the records of the Corporation. In case the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. In case the notice is
delivered personally or by telephone or telegram, it shall be delivered
personally or by telephone or to the telegraph company at least forty-eight (48)
hours before the time of the holding of the meeting. The notice need not specify
the purpose of the meeting. A written waiver of any such notice signed by the
person entitled thereto, whether before or after the time stated therein, shall
be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends
the meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.

        SECTION 9. QUORUM; VOTE REQUIRED FOR ACTION; ADJOURNMENT. Except as
otherwise required by law, or provided in the Certificate of Incorporation or
these Bylaws, a majority of the directors shall constitute a quorum for the
transaction of business at all meetings of the Board of Directors and the
affirmative vote of not less than a majority of the directors present at any
meeting at which there is a quorum shall be the act of the Board of Directors.
If a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting, from time to time, without
notice other than announcement at the meeting, until a


                                       7

quorum shall be present. A meeting at which a quorum is initially present may
continue to transact business, notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum to
conduct that meeting. When a meeting is adjourned to another time or place
(whether or not a quorum is present), notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the Board of Directors may
transact any business which might have been transacted at the original meeting.

        SECTION 10. ACTION BY ELECTRONIC MAIL AND/OR WRITTEN CONSENT. Unless
otherwise restricted by the certificate of incorporation or bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the board
or committee, as the case may be, consent thereto in writing or by electronic
transmission, and the writing or writings or electronic transmission or
transmissions are filed with the minutes of proceedings of the board, or
committee. Such filing shall be in paper form if the minutes are maintained in
paper form and shall be in electronic form if the minutes are maintained in
electronic form.

        SECTION 11. TELEPHONE MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, members of the Board of Directors of the
Corporation, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors or such committee, as the
case may be, by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section 11 shall constitute presence
in person at such meeting.

        SECTION 12. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the entire Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
Board of Directors may designate one or more directors as alternate members of
any such committee, who may replace any absent or disqualified member at any
meeting of the committee. In the event of absence or disqualification of a
member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the committee member or members present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
the absent or disqualified member. Any committee, to the extent allowed by law
and as provided in the resolution of the Board of Directors, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize the
seal of the Corporation to be affixed to all papers which may require it, but no
such committee shall have the power or authority in reference to the following
matter: (i) approving or adopting, or recommending to the stockholders, any
action or matter expressly required by the Delaware General Corporation Law to
be submitted to stockholders for approval or (ii) adopting, amending or
repealing any Bylaw of the Corporation. Each committee shall keep regular
minutes of its meetings and report to the Board of Directors when required."



                                       8

        SECTION 13. COMPENSATION. The directors may be paid such compensation
for their services as the Board of Directors shall from time to time determine.

        SECTION 14. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or the committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose if: (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the stockholders. Interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.


                                   ARTICLE IV
                                    OFFICERS

        SECTION 1. OFFICERS. The officers of the Corporation shall be a
President, a Secretary and a Chief Financial Officer. The Corporation may also
have, at the discretion of the Board of Directors, a Chairman of the Board, a
Vice Chairman of the Board, a Chief Executive Officer, one or more Vice
Presidents, one or more Assistant Financial Officers and Treasurers, one or more
Assistant Secretaries and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article IV.

        SECTION 2. APPOINTMENT OF OFFICERS. The officers of the Corporation,
except such officers as may be appointed in accordance with the provisions of
Section 3 or Section 5 of this Article IV, shall be appointed by the Board of
Directors, and each shall serve at the pleasure of the Board, subject to the
rights, if any, of an officer under any contract of employment.

        SECTION 3. SUBORDINATE OFFICERS. The Board of Directors may appoint, and
may empower the Chief Executive Officer or President to appoint, such other
officers as the business of the Corporation may require, each of whom shall hold
office for such period, have such authority and perform such duties as are
provided in the Bylaws or as the Board of Directors may from time to time
determine.

        SECTION 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights of
an officer under any contract, any officer may be removed at any time, with or
without cause, by the Board of Directors or, except in case of an officer chosen
by the Board of Directors, by any officer


                                       9

upon whom such power of removal may be conferred by the Board of Directors. Any
officer may resign at any time by giving written notice to the Corporation. Any
resignation shall take effect at the date of the receipt of that notice or at
any later time specified in that notice; and, unless otherwise specified in that
notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation shall be without prejudice to the rights of the
Corporation under any contract to which the officer is a party.

        SECTION 5. VACANCIES IN OFFICES. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be filled
in the manner prescribed in these Bylaws for regular appointments to that
office.

        SECTION 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
officer is elected, shall, if present, preside at meetings of the stockholders
and of the Board of Directors. He shall, in addition, perform such other
functions (if any) as may be prescribed by the Bylaws or the Board of Directors.

        SECTION 7. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the
Corporation shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and the officers of
the Corporation. He shall exercise the duties usually vested in the chief
executive officer of a corporation and perform such other powers and duties as
may be assigned to him from time to time by the Board of Directors or prescribed
by the Bylaws. In the absence of the Chairman of the Board and any Vice Chairman
of the Board, the Chief Executive Officer shall preside at all meetings of the
stockholders and of the Board of Directors.

        SECTION 8. PRESIDENT. The President of the Corporation shall, subject to
the control of the Board of Directors and the Chief Executive Officer of the
Corporation, if there be such an officer, have general powers and duties of
management usually vested in the office of president of a corporation and shall
have such other powers and duties as may be prescribed by the Board of Directors
or the Bylaws or the Chief Executive Officer of the Corporation. In the absence
of the Chairman of the Board, Vice Chairman of the Board and Chief Executive
Officer, the President shall preside at all meetings of the Board of Directors
and stockholders.

        SECTION 9. VICE PRESIDENT. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank as fixed by the
Board of Directors or, if not ranked, a Vice President designated by the Board
of Directors, shall perform all the duties of the President, and when so acting
shall have all the powers of, and subject to all the restrictions upon, the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or the Bylaws, and the President, or the Chairman of the
Board.

        SECTION 10. SECRETARY. The Secretary shall keep or cause to be kept, at
the principal executive office or such other place as the Board of Directors may
direct, a book of minutes of all meetings and actions of Directors, committees
of Directors, and stockholders, with the time and place of holding, whether
regular or special, and, if special, how authorized, the notice given, the names
of those present at Directors' meetings or committee meetings, the number of
shares present or represented at stockholders' meetings, and a summary of the
proceedings.



                                       10

        The Secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the Corporation's transfer agent or
registrar, as determined by resolution of the Board of Directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.

        The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the Board of Directors required by the Bylaws or by
law to be given, and he shall keep or cause to be kept the seal of the
Corporation if one be adopted, in safe custody, and shall have such powers and
perform such other duties as may be prescribed by the Board of Directors or by
the Bylaws.

        SECTION 11. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
keep and maintain, or cause to be kept and maintained, adequate and correct
books and records of accounts of the properties and business transactions of the
Corporation. The Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board of Directors. He shall make such
disbursements of the funds of the Corporation as are authorized and shall render
from time to time an account of all of his transactions as Chief Financial
Officer and of the financial condition of the Corporation. The Chief Financial
Officer shall also have such other powers and perform such other duties as may
be prescribed by the Board of Directors or the Bylaws.


                                    ARTICLE V
                                      STOCK

        SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation by the Chairman or Vice Chairman of the Board of Directors, or the
President or a Vice President and by the Treasurer or an Assistant Treasurer, or
by the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by such stockholder in the Corporation.

        SECTION 2. SIGNATURES. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.

        SECTION 3. LOST CERTIFICATES. The Corporation may issue a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation, alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate to be lost,
stolen or destroyed. The Board of Directors may in its discretion require a bond
in such form and amount and with such surety as it may determine, before issuing
a new certificate.



                                       11

        SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these Bylaws or in any agreement with the
stockholder making the transfer. Transfers of stock shall be made on the books
of the Corporation only by the person named in the certificate or by his
attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be canceled before a new certificate shall be
issued.

        SECTION 5. RECORD HOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the record
holder of shares to receive dividends, and to vote as such record holder, and to
hold liable for calls and assessments a person registered on its books as the
record holder of shares, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise required by law.

        SECTION 6. TRANSFER AGENT. The Board of Directors may at its discretion
appoint one or more transfer agents, registrars and agents for making payment
upon any class of stock, bond, debenture or other security of the Corporation.
Such agents shall be located either within or outside of Delaware. They shall be
entitled to such compensation as may be agreed.


                                   ARTICLE VI
                                 INDEMNIFICATION

        SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director or officer of another corporation or of
a partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans (hereinafter an "indemnitee"), whether the
basis of such proceeding is alleged action in an official capacity as a director
or officer or in any other capacity while serving as a director or officer,
shall be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than such law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an indemnitee who has
ceased to be a director or officer and shall inure to the benefit of the
indemnitee's heirs, executors and administrators; provided, however, that,
except as provided in Section 2 of this Article VI with respect to proceedings
to enforce rights to indemnification, the Corporation shall indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized by the Board
of Directors of the Corporation. The right to indemnification conferred in this
Section shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition (hereinafter an "advancement of expenses"); provided,
however,


                                       12

that, if the Delaware General Corporation Law requires, an advancement of
expenses incurred by an indemnitee in his capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
indemnitee, including without limitation, service to an employee benefit plan)
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that such indemnitee is not entitled to be indemnified
for such expenses under this Article VI or otherwise (hereinafter an
"undertaking").

        SECTION 2. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under Section 1
of this Article VI is not paid in full by the Corporation within forty-five (45)
days after a written claim has been received by the Corporation, the indemnitee
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim. If successful in whole or part in any such suit or
in a suit brought by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. In (i) any suit
brought by the indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by the indemnitee to enforce a right to an advancement of
expenses) it shall be a defense that, and (ii) any suit by the Corporation to
recover an advancement of expenses pursuant to the terms of an undertaking the
Corporation shall be entitled to recover such expenses upon a final adjudication
that, the indemnitee has not met the applicable standard of conduct set forth in
the Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right hereunder, or by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified or to such advancement of expenses
under this Article VI or otherwise shall be on the Corporation.

        SECTION 3. NON-EXCLUSIVITY OF RIGHTS. The rights of indemnification and
to the advancement of expenses conferred in this Article VI shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise.

        SECTION 4. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.

        SECTION 5. INDEMNIFICATION OF EMPLOYEES OR AGENTS OF THE CORPORATION.
The Corporation may, to the extent authorized from time to time by the Board of
Directors, grant


                                       13

rights to indemnification and to the advancement of expenses, to any employee or
agent of the Corporation to the fullest extent of the provisions of this Article
VI with respect to the indemnification and advancement of expenses of directors
or officers of the Corporation.

        SECTION 6. INDEMNIFICATION CONTRACTS. The Board of Directors is
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit plans, providing for indemnification rights equivalent to or, if the
Board of Directors so determines, greater than, those provided for in this
Article VI.

        SECTION 7. EFFECT OF TERMINATION OF ACTION. The termination of any
action, suit or proceeding by judgment, order, settlement, or conviction or upon
a plea of nolo contendere or its equivalent shall not of itself create a
presumption that the person seeking indemnification did not act in good faith
and in the best interests of the Corporation and, with respect to any criminal
action or proceeding, had a reasonable cause to believe that his conduct was
unlawful. Entry of a judgment by a consent as part of a settlement shall not be
deemed a final adjudication of liability for negligence or misconduct in the
performance of duty, nor of any other issue or matter.

        SECTION 8. EFFECT OF AMENDMENT. Any amendment, repeal or modification of
any provision of this Article VI by the stockholders or the directors of the
Corporation shall not adversely affect any right or protection of a director or
officer of the Corporation existing at the time of such amendment, repeal or
modification.


                                   ARTICLE VII
                               GENERAL PROVISIONS

        SECTION 1. DIVIDENDS. Subject to limitations contained in the General
Corporation Law of the State of Delaware and the Certificate of Incorporation,
the Board of Directors may declare and pay dividends upon the shares of capital
stock of the Corporation, which dividends may be paid either in cash, securities
of the Corporation or other property.

        SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.

        SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.

        SECTION 4. CORPORATE SEAL. The Corporation shall have a corporate seal
in such form as shall be prescribed by the Board of Directors.

        SECTION 5. VOTING OF STOCK OWNED BY THE CORPORATION. The Chairman of the
Board, the Chief Executive Officer, the President and any other officer of the
Corporation authorized by the Board of Directors shall have power, on behalf of
the Corporation, to attend, vote and grant



                                       14

proxies to be used at any meeting of stockholders of any corporation (except
this Corporation) in which the Corporation may hold stock.

        SECTION 6. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction and definitions in the
General Corporation Law of the State of Delaware shall govern the construction
of these Bylaws.

        SECTION 7. AMENDMENTS. Subject to the General Corporation Law of the
State of Delaware, the Certificate of Incorporation and these Bylaws, the Board
of Directors may by the affirmative vote of a majority of the entire Board of
Directors amend or repeal these Bylaws, or adopt other Bylaws as in their
judgment may be advisable for the regulation of the conduct of the affairs of
the Corporation. Unless otherwise restricted by the Certificate of
Incorporation, these Bylaws may be altered, amended or repealed, and new Bylaws
may be adopted, at any annual meeting of the stockholders (or at any special
meeting thereof duly called for that purpose) by a majority of the combined
voting power of the then outstanding shares of capital stock of all classes and
series of the Corporation entitled to vote generally in the election of
directors, voting as a single class, provided that, in the notice of any such
special meeting, notice of such purpose shall be given.



                                       15

EX-10.2

                                                                    EXHIBIT 10.2



                          MUTUAL RESCISSION AGREEMENT

               NeoTherapeutics, Inc., 157 Technology Drive, Irvine, California,
92618, hereinafter referred to as the "Company," and Stonestreet Limited
Partnership, c/o Canaccord Capital Corporation, 320 Bay Street, Suite 1300,
Toronto, Ontario M5H 4A6, Canada, hereinafter referred to as "Investor"
(collectively, the "Parties") agree as follows:

                          CONSENT TO PARTIAL RESCISSION

               1. The Parties hereby consent and agree to rescind the purchase
of 400,000 shares (the "Shares") of the Company's common stock, par value $.001
per share (the "Common Stock"), pursuant to that certain Securities Purchase
Agreement between them, dated as of June 7, 2002 (the "Securities Purchase
Agreement"), which Securities Purchase Agreement provided for the purchase of
(i) 1,935,483 shares of Common Stock and (ii) a warrant to purchase up to
193,548 shares of Common Stock (the "Warrant") at an exercise price of $0.275
per share, for a total purchase price of $450,000. A copy of the Securities
Purchase Agreement is attached hereto and incorporated herein by reference.

                             RETURN OF CONSIDERATION

               2. On the date hereof, Investor shall return to the Shares to the
Company by electronic transfer to the account set forth below through the
Deposit Withdrawal Agent Commission System:

                      DTC No.:
                               ------------------------------------
                      Account No.: n/a
                                   --------------------------------
                      Reference:   U.S. Stock Transfer Corporation
                                   --------------------------------

               3. On the date hereof, the Company shall return Investor's
payment of $0.2325 per Share for a total of $93,000 by wire transfer to pursuant
to the following wire transfer instructions:

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

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

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

               4. As additional consideration for the payment by the Company set
forth in Section 3 above, effective upon the execution hereof, the Warrant is
hereby amended so that the Warrant may not be exercised before December 8, 2002.
Promptly after the date hereof, the Investor shall return the Warrant to the
Company and the Company shall issue to the Investor a new warrant reflecting
this amendment.




                                  MISCELLANEOUS

               5. Except as set forth above, the rights and obligations of the
Parties under the Securities Purchase Agreement and the Warrant shall remain in
full force and effect. Delivery of an executed copy of a signature page to this
Mutual Rescission Agreement by facsimile transmission shall be effective as
delivery of a manually executed copy of this Mutual Rescission Agreement and
shall be effective and enforceable as the original. This Mutual Rescission
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Mutual Rescission Agreement shall be governed and construed in
accordance with the internal laws of the State of California without giving
effect to the conflicts of law principles thereunder.

               Executed on July 25, 2002.

                                      NEOTHERAPEUTICS, INC.


                                      By: /s/Samuel Gulko
                                          --------------------------------------
                                      Name: Samuel Gulko
                                            ------------------------------------
                                      Title: Senior V.P. Finance and CFO
                                             -----------------------------------

                                      STONESTREET LIMITED PARTNERSHIP


                                      By: /s/M. Finkelstein
                                          --------------------------------------
                                      Name:  Michael Finkelstein
                                             -----------------------------------
                                      Title: President
                                             -----------------------------------

EX-10.3

                                                                    EXHIBIT 10.3


                               WARRANT REPURCHASE AGREEMENT

               NeoTherapeutics, Inc., 157 Technology Drive, Irvine, California,
92618 (the "Company"), and BNC Bach International, Ltd., c/o Rhino Advisors, 130
West 29th Street, 5th Floor, New York, NY 10001 (the "Investor"), (collectively,
the "Parties") agree as follows:

               1. The Investor hereby agrees to return to the Company for
cancellation Warrant number NEOT063, dated June 7, 2002 (the "Warrant"), for the
purchase of up to 400,000 shares of the Company's common stock, par value $.001
per share, at an exercise price of $0.275 per share, issued to the Investor
pursuant to that certain Securities Purchase Agreement between the Parties,
dated as of June 7, 2002 (the "Securities Purchase Agreement"), in return for a
cash payment from the Company to the Investor of $50,000.

               2. On the date hereof, Investor shall return the Warrant to the
Company at the address set forth above (attention Samuel Gulko) by overnight
courier service for delivery on the next business day.

               3. Upon receipt of the Warrant from the Investor, as
consideration for the cancellation of the Warrant, the Company shall pay the
Investor $50,000 by wire transfer pursuant to the following wire transfer
instructions:

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

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

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

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

               4. Delivery of an executed copy of a signature page to this
Warrant Repurchase Agreement by facsimile transmission shall be effective as
delivery of a manually executed copy of this Warrant Repurchase Agreement and
shall be effective and enforceable as the original. This Warrant Repurchase
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. This Warrant Repurchase Agreement shall be governed and construed in
accordance with the internal laws of the State of California without giving
effect to the conflicts of law principles thereunder.

               Executed on July 31, 2002.

                                       NEOTHERAPEUTICS, INC.


                                       By: /s/Samuel Gulko
                                           -------------------------------------
                                       Name: Samuel Gulko
                                             -----------------------------------
                                       Title: Senior V.P. Finance, CFO
                                              ----------------------------------

                                       BNC BACH INTERNATIONAL, LTD.


                                       By:  /s/ H. U. Bachofen
                                            ------------------------------------
                                       Name: H. U. Bachofen
                                             -----------------------------------
                                       Title: Director
                                              ----------------------------------

EX-10.6

                                                                    EXHIBIT 10.6



                          ADDITIONAL COLLATERAL RIDER


This Additional Collateral Rider (this "Rider") is part of that certain Master
Lease Agreement dated as of September 22, 2000, as amended by Amendment No. 1
dated as of September 28, 2000, and all Equipment Schedules and Summary
Schedules thereto (collectively, the "Contract") by and between Comdisco, Inc.
and NEOTHERAPEUTICS, INC. (the "Lessee") which Contract was assigned to GENERAL
ELECTRIC CAPITAL CORPORATION (the "Lessor") on or about May 31, 2002. Unless
otherwise defined herein, all capitalized terms used in this Rider have the
meanings set forth in the Contract.

Under the Contract, the Lessee must maintain cash or equivalents of not less
than $5,000,000.00. The Lessee is in default of this covenant as of June 30,
2002. Therefore, after negotiations between the Lessor and Lessee, it is agreed
that Lessor shall waive its right to any remedies or actions that Lessor is or
may be entitled to under the Contract due to this default, and no Event of
Default shall be deemed to have occurred as a result of such default, in
consideration of Lessee's granting of a lien on corporate assets as provided for
herein.

1. As security for the full and faithful performance by Lessee of all of the
obligations of Lessee to Lessor now or hereafter in existence, Lessee does
hereby grant to Lessor a security interest in all of Lessee's right, title and
interest in and to the following (all hereinafter collectively called, the
"Additional Collateral"):

- -   All Equipment (as defined in the Uniform Commercial Code) now or hereafter
    owned and wherever located, including but not limited to all laboratory,
    scientific, computer, test and production equipment, all molds and tooling,
    all office furniture and office equipment and all proceeds thereof,
    including insurance proceeds.

- -   All Accounts (as defined in the Uniform Commercial Code) now or hereafter
    owned and wherever located, including but not limited to all accounts
    receivable, and all proceeds thereof and therefrom.

         Additional Collateral does not include any Intellectual Property owned
or licensed by Lessee, including but not limited to all patents, trademarks,
service marks, tradenames, copyrights, trade secrets, licenses, information and
proprietary rights and processes.

2. In the event of a default by Lessee under the Contract or under any other
obligation to Lessor, Lessor shall have all of the rights and remedies of a
Lessor under the Uniform Commercial Code with respect to the Additional
Collateral in addition to any other rights which it may have under the Contract.
Lessee shall have the same obligations with respect to the portion of the
Additional Collateral constituting Equipment as it has under the Contract with
respect to the Equipment, as defined in the Contract, financed under the
Contract, including but not limited to the restrictions on moving, transferring,
encumbering or giving up possession of, and the obligation to insure, such
Additional Collateral constituting Equipment.

3. Lessor agrees to release its security interest in the Additional Collateral
upon Lessee maintaining an Unrestricted Cash position equal to the greater of 1)
$5,000,000.00 or 2) the sum of the last three months net income (loss) plus
non-cash charges multiplied by three, for three consecutive quarters, or upon
full payment of Lessee's obligations under the Contract. Unrestricted Cash shall
be defined for purposes of this Rider as cash on hand, including marketable
securities with maturities of less than fourteen (14) months, less cash pledged
to other parties. It shall be an additional Event of Default under the Contract
if Lessee fails to maintain the above minimum Unrestricted Cash position.

4. Lessor is not withholding the Lessee's right to sell Equipment that is part
of the Additional Collateral.

5. The Lessee may make early payment, partial or in full, of its obligation
under the Contract. All payments will be calculated and paid pursuant to the
terms and conditions of the Contract.


6. This Rider shall run to the benefit of Lessor's successors and assigns.
Except as expressly modified hereby, all of the terms and provisions of the
Contract shall remain in full force and effect.

7. This Rider may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which shall constitute the same instrument.

IN WITNESS WHEREOF, the parties have executed this Rider this 13th day of
September, 2002.

GENERAL ELECTRIC CAPITAL
CORPORATION                              NEOTHERAPEUTICS, INC.

BY: /s/Diane Hernandez                   BY: /s/Rajesh C. Shrotriya
    -----------------------------------      -----------------------------------

TITLE:  Vice President                   TITLE:  Chairman and Chief Executive
        -------------------------------          Officer
                                                 -------------------------------

EX-10.7

                                                                    EXHIBIT 10.7



                              Settlement Agreement

                                     between

                              NeoTherapeutics, Inc.
                              157 Technology Drive
                            Irvine; California 92618


                       - in the following called "NEOT"

                                       and

                                 Merck Eprova AG

                               Im Laternenacker 5
                                8200 Schaffhausen
                                   Switzerland


                      - in the following called "EPRO" -

Whereas NEOT develops new drugs for e.g. neurological diseases;

Whereas EPRO changed recently its company name from Eprova AG into Merck Eprova
AG out of corporate identity reasons and manufactures intermediates of drug
substances or the drug substances itself (e.g. Neotrofin and AIT-034);

Whereas NEOT has asked EPRO to manufacture certain substances (SUBSTANCES) as
listed in attachment 1;

Whereas EPRO has fulfilled its obligations, NEOT has indicated that it has
presently no use for these SUBSTANCES and asks for a settlement of the payables
in a reasonable manner;

Whereas EPRO is willing to help NEOT to restore financial stability and to find
other possible uses for the SUBSTANCES;

Therefore the parties agree as follows:



1) EPRO will remain the owner of all SUBSTANCES as mentioned in the four
invoices as listed in attachment 2.

2) NEOT grants to EPRO the right of first refusal for the production of any
further needs of the SUBSTANCES as well as the related drug substances Neotrofin
and AIT-034 for a duration of five (5) years after execution of this agreement.
EPRO agrees to negotiate the terms of the production of the SUBSTANCES in good
faith.

3) EPRO will examine carefully all recommendations of NEOT to sell the
SUBSTANCES to third parties. EPRO will also try to find third parties interested
in the SUBSTANCES.

4) NEOT will pay CHF 485'470 within ten (10) days after the execution of this
agreement to the account of EPRO as stated in attachment 3 for full and final
payment of the invoices listed in attachment 2. The above-mentioned sum has been
combined from the following amounts:



INVOICE             COMPOUND                                     AMOUNT
                                                           
1) D22094           Aminopropylpyrrolidinone                     CHF  102'700
- --------------------------------------------------------------------------------
2) D22095           ACA                                          CHF  175'500
- --------------------------------------------------------------------------------
3) D22049           ACA                                          CHF    66'625
- --------------------------------------------------------------------------------
4) D22162           Ala-benzonate                                CHF  140'645
- --------------------------------------------------------------------------------


5) EPRO will not charge costs for the storage and possible disposal of the
SUBSTANCES, V.A.T. as well as for not-realized interests.

6) a) After the last signature under this agreement, the patent application PCT
WO 02/00659 and all corresponding patent applications or patent rights based on
US Appl No. 09/602,048 (PATENTS), owned by NEOT will become the property of EPRO
according to the ten (10) provisions of attachment 4.

b) For the case, NEOT would be interested to get back the rights on these
PATENTS, EPRO herewith grants to NEOT an exclusive option to buy these PATENTS
within twelve (12) months after execution of this agreement for a purchase price
of CHF 527'676 plus all costs which has been incurred to maintain the PATENTS
during this time. During the term of the exclusive option, EPRO agrees to not
enter into any agreement related to the PATENTS in regard to Neotrofin and
AIT-034 without the prior consent of NEOT. EPRO also agrees it will use
commercially reasonable efforts to maintain the PATENTS.

c) In case, NEOT repurchases the PATENTS, EPRO will be granted a non-exclusive,
royalty-free, world-wide license to these PATENTS excluding the manufacturing of
Neotrofin and AIT-034. Any assignment of the PATENTS by NEOT to a third party
will be subject to the non-exclusive license to EPRO.

d) In case, NEOT desires to contract for the production of Neotrofin or AIT-034
after the time-frame of item 2 above and does not exercise its option to
repurchase the PATENTS under item 2, EPRO will grant NEOT a non-exclusive,
world-wide license with a license fee that will not exceed CHF 527'676 over the
life of the license. Moreover, in addition to the aforementioned license fee,
NEOT agrees to EPRO all


costs which will have been incurred by EPRO to maintain the PATENTS to date and
during the time of the licensing agreement.

7) In case NEOT is in default with the agreed payment, EPRO may claim interests
of 20% above LIBOR per year for the unpaid sum. In case NEOT indicates not to
pay any amount of the agreed sums, EPRO may claim to be paid according to
attachment 2 for the unpaid rest as well as an interest rate of 5% above LIBOR
per year since the date of the invoices and all costs and damages caused by the
non-payment and the storage and/or the disposal of the SUBSTANCES.

8) This agreement states the entire understanding of the parties. No change,
modification, alteration, or addition to any provision hereof shall be binding
unless in writing and signed by authorized representatives of both parties.

9) This agreement shall be governed by, and construed and enforced in accordance
with Swiss law.

10) Except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction, or
other equitable relief to preserve the status quo or prevent irreparable harm,
any and all claims, disputes or controversies arising under, out of, of in
connection with this agreement, which the parties shall be unable to resolve
within sixty (60) days shall be mediated in good faith. The party raising such
dispute shall promptly advise the other party of such claim, dispute or
controversy in a writing which describes in reasonable detail the nature of such
dispute. By not later than five (5) business days after the recipient has
received such notice of dispute, each party shall have selected for itself a
representative who shall have the authority to bind such party, and shall
additionally have advised the other party in writing of the name and title of
such representative. By not later than ten (10) business days after the date of
such notice of dispute, the party against whom the dispute shall be raised shall
select a mediation specialist in the area of the defendant and such
representatives shall schedule a date with such mediation hearing. The parties
shall enter into good faith mediation and shall share the costs equally. If the
representatives of the parties have not been able to resolve the dispute within
fifteen (15) business days after such mediation hearing, the parties shall have
the right to pursue this case by arbitration.

11) All disputes arising in connection with the present contract shall be then
finally settled under the rules of Conciliation and Arbitration of the
International Chamber of Commerce by three arbitrators appointed in accordance
with said rules. The language of correspondence and the language used by the
court in the settlement of disputes shall be English. The place of settlement of
disputes shall be in Schaffhausen. The costs of court of arbitration shall be
born equally by both parties, and each party shall be for its own part of all
other costs arising. Both parties agree to accept the decision of the Court of
Arbitration as final binding of them both to the exclusion of all remedies.



12) In the event that any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision or provisions had never been
contained herein.

IN WITNESS WHEREOF, each party has caused this Agreement to be signed by its
duly authorized representatives.

Irvine,                                Schaffhausen, 26 September 2002


NeoTherapeutics, Inc.                  Merck Eprova AG


/s/Rajesh C. Shrotriya, M.D.           /s/M. Ulmann
- -------------------------------        -----------------------------------------
                                       M. Ulmann
                                       General Manager



                                       /s/T. Suter
                                       -----------------------------------------
                                       T. Suter
                                       Head Business Support

                                  Attachment 1



Compound
- ------------------------------
Aminopropylpyrrolidinone
- ------------------------------
ACA
- ------------------------------
ACA
- ------------------------------
Ala-benzonate
- ------------------------------

                                  Attachment 2



Invoice             Compound                                     Amount
- --------------------------------------------------------------------------------
                                                           
1) D22094           Aminopropylpyrrolidinone                     CHF  102'700
- --------------------------------------------------------------------------------
2) D22095           ACA                                          CHF  351'000
- --------------------------------------------------------------------------------
3) D22049           ACA                                          CHF  133'250
- --------------------------------------------------------------------------------
4) D22162           Ala-benzonate                                CHF  426`196
- --------------------------------------------------------------------------------



                                  Attachment 3

                                 Account of EPRO

                No. 230-M0141740.0 at UBS AG, Zurich, Swift-Code UBSWCCHZZ

                                  Attachment 4

(1) NEOT herewith transmits all rights to EPRO on the PCT WO 02/00659 (US Appl
No. 09/602,048) with all rights connected thereto.

(2) Therefore, after the last signature under this agreement, the PATENTS become
the property of EPRO. NEOT will agree to the recording of the assignment of the
PATENTS in the register of the US -- as well as the PCT Patent Office and NEOT
promises to provide the required documents and to make all necessary signatures.

(3) NEOT promises to submit to EPRO all written research documents, tabulations,
experimental reports, correspondences, which relate to the subject matter
invention. The transfer will be made at the latest thirty (30) days after the
execution of this agreement.

(4) NEOT will advise EPRO about the status of the PATENTS and their plans for a
optimal protection of the invention in the different countries.

(5) If required by EPRO, NEOT promises to provide its full assistance to EPRO
after the transfer of the documents and materials for an introduction of the
employees of EPRO.

(6) EPRO is aware of the technical features of the invention. NEOT is not liable
for the technical utility and completeness of the technical documents under this
agreement.

(7) NEOT declares that legal defects in the PATENTS and technical defects in the
invention are not known to him. A liability for freedom of defects, particularly
dependency of the invention is not undertaken. All rights of warranty or
rescission by EPRO are excluded.

(8) NEOT promises to keep knowledge relating to the patented invention
confidential after the complete signature of the agreement until it has bought
back the rights on the PATENTS as agreed in this agreement.

(9) NEOT promises not to attack the PATENTS and/or all derived patents and not
to assist third parties in attacks on the PATENTS and/or all derived patents.

(10) The costs and fees for the assignment and recording will be borne by EPRO.
EPRO will also pay all the fees and costs for maintenance of the PATENTS after
the execution of this agreement.

EX-10.8

Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as [Intentionally Redacted]. A complete version of the
exhibit has been filed separately with the Securities and Exchange Commission.


                                                                    EXHIBIT 10.8



                      FIRST AMENDMENT TO LICENCE AGREEMENT
                          DATED AUGUST 28, 2001 BETWEEN
                               JOHNSON MATTHEY PLC
                                       AND
                              NEOTHERAPEUTICS, INC.


        This First Amendment to License Agreement ("FIRST AMENDMENT") is entered
into and effective this 30th day of September 2002 by and between Johnson
Matthey PLC, a company organised under the laws of England and Wales whose
registered office is at 2-4 Cockspur Street, Trafalgar Square, London, SW1Y 5BQ,
England, acting for itself and for its AFFILIATES including particularly Johnson
Matthey, Inc (collectively, "LICENSOR"), and NeoTherapeutics, Inc., a
corporation organized under the laws of the State of California, United States
of America whose principal place of business is at 157 Technology Drive, Irvine,
California 92618, United States of America with reference to the following facts
and on the following terms and conditions.

                                    RECITALS

        (A) Effective August 28, 2001, LICENSOR and LICENSEE entered into the
License Agreement (the "LICENSE") pursuant to which LICENSOR granted a license
for the use of technical information relating to the use of platinum complex
JM216 in the treatment of tumor cells as well as for the use of the PATENT
RIGHTS (as defined in the LICENSE). All defined terms in this FIRST AMENDMENT
(as set forth in capital letters) shall have the same meaning as set forth in
the LICENSE.

        (B) The parties now wish to amend and modify the LICENSE on the terms
and conditions as set forth in this FIRST AMENDMENT.

        Now therefore, for good and valuable consideration, the parties agree as
follows:


                                       1

        (1) ARTICLE I

               Paragraph 16 of Article I of the LICENSE shall be amended to read
as follows:

        TERM: the term commencing on the EFFECTIVE DATE and terminating on a
        country-by-country basis upon the expiry of the last to expire of the
        patents granted in each such country which have expiration dates
        specified on Schedule A. The date of expiration of a patent described in
        this Section shall include any extension granted to LICENSOR by virtue
        of any continuation, continuations-in-part and divisional applications,
        including reissues and reexamination applications and patents and
        reexamination certificates issuing to LICENSOR.

        (2) ARTICLE II

               Paragraph 1 of Article II of the LICENSE shall be amended to read
as follows:



1.      Subject to Article II.3 below, the LICENSOR agrees to grant and hereby
        grants to the LICENSEE an exclusive worldwide royalty-bearing revocable
        right and licence, with rights to sublicence, under the PATENT RIGHTS to
        use PLATINUM COMPLEXES, the LICENSOR'S INFORMATION and the LICENSOR'S
        ONGOING INFORMATION to make, have made, use, offer to sell, and have
        sold PRODUCTS for use within the FIELD.

               Paragraph 2 of Article II of the LICENSE shall be amended to read
as follows:

2.      The LICENSEE shall be entitled to sub-license any THIRD PARTY under
        rights granted under Article II.1 hereof provided that the LICENSEE
        shall remain responsible for all acts and omissions of such sub-licensee
        as though they were by the LICENSEE. In particular, the LICENSEE shall
        be responsible to the LICENSOR for payments due in respect of sales by
        sub-licensees as though they were sales by LICENSEE. The terms of any
        sub-license agreement shall provide that upon termination of this
        Agreement, any



                                       2

        sub-licensee shall attorn to and accept the LICENSOR in place of the
        LICENSEE such that any sub-license shall be deemed an agreement between
        the LICENSOR and sub-licensee.

        (3) ARTICLE III

               Paragraph 1 of Article III of the LICENSE shall be amended to
read as follows:

1.      The LICENSEE, its AFFILIATES and sub-licensees shall diligently perform
        research and development on the use of JM 216 and other PLATINUM
        COMPLEXES within the FIELD and on the formulation of PRODUCTS. The
        LICENSEE, its AFFILIATE and sub-licensees shall exercise in the
        performance of such research technical skill and competence of a high
        calibre.

        (4) ARTICLE IV

               Article IV of the LICENSE shall be amended to read as follows:

1.      The LICENSEE, its AFFILIATES and sub-licensees shall use its best
        efforts to test, evaluate and develop PRODUCTS so as to meet the
        objectives detailed hereunder:

Objective

1       Submission of NDA to US FDA (hereinafter called the 'First MILESTONE')

2       Acceptance of NDA by US FDA (hereinafter called the 'Second MILESTONE')

3       Receipt of US FDA approval of NDA (hereinafter called the 'Third
        MILESTONE')

4       Approval in the first European Union state of a new drug application
        (hereinafter called the 'Fourth MILESTONE')



                                       3

5       Approval by US FDA of JM216 for the first indication other than the
        indication approved in Objective 2. (hereinafter called the 'Fifth
        MILESTONE')

6       Approval in the first European Union state of JM216 for the first
        indication other than the indication approved in Objective 3.
        (hereinafter called the `Sixth MILESTONE')

        (5) ARTICLE V

               Paragraphs 1 through 5, inclusive of Article V of the LICENSE
shall be amended to read as follows:

1.      The LICENSOR acknowledges receipt of US$100,000 which was paid by
        LICENSOR on the EFFECTIVE DATE;

2.      The LICENSOR acknowledges receipt of US$150,000 as required by Article
        V.2 of the LICENSE.

3.      Within 30 (thirty) days of the date of the attainment of each MILESTONE
        by the LICENSEE, an AFFILIATE or sub-licensee, the LICENSEE shall pay to
        the LICENSOR the following sums:

        (i)     the First MILESTONE: [Intentionally Redacted]

        (ii)    the Second MILESTONE:[Intentionally Redacted]

        (iii)   the Third MILESTONE: [Intentionally Redacted]

        (iv)    the Fourth MILESTONE:[Intentionally Redacted]

        (v)     the Fifth MILESTONE: [Intentionally Redacted]

        (vi)    the Sixth MILESTONE: [Intentionally Redacted]

        In no event will LICENSEE be liable for more than one payment upon the
        occurrence of each MILESTONE.



                                       4



[Intentionally Redacted] Certain information on this page has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.



4.      The LICENSEE shall during the TERM of this Agreement pay to the LICENSOR
        a royalty calculated at the rate set forth below of the NET SALES VALUE
        of all PRODUCTS sold or otherwise supplied for use whether within the
        FIELD or outside the FIELD for money or money's worth by LICENSEE or any
        AFFILIATE or sublicensee thereof; provided, however, that in any country
        in the TERRITORY where a GENERIC PRODUCT is sold in competition with the
        PRODUCT, the royalty payable to LICENSOR with respect to NET SALES of
        such PRODUCTS in such country shall be reduced to 0%, commencing with
        the calendar quarter during which any such GENERIC PRODUCT first becomes
        available in competition with the PRODUCT in such country.


                     Royalty Rate              NET SALES during calendar year
                     ------------              ------------------------------

                            [Intentionally Redacted]

5.      Payments due under Article V.4 shall be made within 45 days of the end
        of each calendar quarter in respect of royalties accruing on PRODUCTS
        invoiced in that calendar quarter. Paragraphs 7 and 8 of Article V of
        the LICENSE shall be amended to read as follows:


7.      The LICENSEE agrees during for a period of three (3) years following the
        accrual of any royalty it will keep and maintain accurate records and
        books of account containing all data necessary for determination of
        royalties payable under this Agreement, including records and books of
        account relating to sales of PRODUCTS by sub-licensees, which records
        and books of account of LICENSEE shall upon reasonable notice by
        LICENSOR be open at all reasonable times during reasonable business
        hours for inspection by an independent accountant appointed by LICENSOR
        for the purpose of verifying the accuracy of the LICENSEE's reports
        hereunder. Such accountant shall be entitled to take copies solely of
        LICENSEE's records pertaining to such reports as LICENSOR's



                                       5


[Intentionally Redacted] Certain information on this page has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.

        expense. The LICENSEE shall ensure that its sub-licensees (if any) also
        keep true and accurate records and books of account containing all data
        necessary for the determination of royalties payable in respect of their
        activities and shall ensure that such records and books of account shall
        upon reasonable notice by the LICENSOR be open for inspection at all
        reasonable times during business hours for inspection by such
        independent accountant no less than once per year for purposes of
        verifying the accuracy of the LICENSEE'S reports hereunder.

8.      The LICENSEE shall submit to the LICENSOR within 45 days of the end of
        each calendar quarter a statement setting forth with respect to the
        operations of the LICENSEE hereunder, as well as with regard to each
        sub-licensee during that period, the quantity of PRODUCTS made and sold
        and the NET SALES VALUE of all PRODUCTS sold together with payments due.

        (6) ARTICLE VII

               Paragraph 6 of Article VII of the LICENSE shall be amended by
inserting the following after the first sentence:

        LICENSOR further represents and warrants that it is not aware of any
        patents, whether granted to LICENSOR, an AFFILIATE, or any THIRD PARTY,
        which would be infringed by: (i) the making, using and selling of any
        PRODUCT; (ii) or utilization of any PLATINUM COMPLEX by LICENSEE in
        accordance with the license granted by this AGREEMENT; or (iii) the
        metabolites of JM216. To the best of LICENSOR's knowledge and belief,
        the practice of the PATENT RIGHTS and the exercise of the rights granted
        LICENSEE under Article II.1 do not infringe upon or conflict with any
        patent, copyright or other proprietary right of any THIRD PARTY.



                                       6

        (7) ARTICLE IX

               The first sentence of Paragraph 1 of Article IX of the LICENSE
shall be amended by to read as follows:

1.      During the continuance of this Agreement the LICENSEE, its AFFILIATES,
        and its sub-licensees shall:

        (8) ARTICLE XI.

               Paragraph 3 of Article XI shall be amended to read as follows

3.      Intentionally deleted.

               Subparagraph 8.3 of Article XI shall be amended to read as
follows:

                8.3     Upon any termination of this Agreement, sublicenses
                        granted by the LICENSEE shall be automatically assigned
                        to the LICENSOR which shall thereafter receive all
                        benefits and have all obligations under the sublicenses
                        as in place and stead of the LICENSEE.

        (9) [Intentionally Redacted]


        (10) GENERAL PROVISIONS

               (a) This FIRST AMENDMENT may be executed in two or more
counterparts, including facsimile signatures, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.

               (b) This FIRST AMENDMENT and the AGREEMENT constitute the
complete and integrated agreement of the parties with respect to the subject
matter hereof and



                                       7


[Intentionally Redacted] Certain information on this page has been omitted and
filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions.

thereof. Except as provided in this FIRST AMENDMENT, the AGREEMENT will remain
in full force and effect and unchanged in all other respects.

               (c) LICENSOR represents that it is not aware of any default by
LICENSEE under the Agreement, or aware of any event or omission which with the
passage of time might be reasonable foreseen to lead to a default under the
Agreement.

               The parties have caused this FIRST AMENDMENT to be executed by
their respective authorized representatives effective as of the date first set
forth above.


                   LICENSOR                                 LICENSEE
              Johnson Matthey PLC                    NeoTherapeutics, Inc.


     By: /s/ Ian Wishart                         By: /s/ Rajesh Shrotriya
        ------------------------------            ------------------------------
     Its: Group Patents and                       Its: Chairman, CEO and
          Licensing Controller                         President
        ------------------------------            ------------------------------



                                       8

EX-10.9

Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as {redacted}. A complete version of the
exhibit has been filed separately with the Securities and Exchange Commission.

                                                                    EXHIBIT 10.9



                                                                           FINAL


                               CO-DEVELOPMENT AND

                                LICENSE AGREEMENT



                                     between



                              NEOTHERAPEUTICS, INC.



                                       and



                                 GPC BIOTECH AG








                         Dated as of September 30, 2002


                               CO-DEVELOPMENT AND
                                LICENSE AGREEMENT

          This CO-DEVELOPMENT AND LICENSE AGREEMENT (this "Agreement"), dated as
of September 30, 2002, is between Neotherapeutics, Inc., a company duly
organized and existing under the laws of Delaware and having offices at 157
Technology Drive, Irvine, California, USA for and on behalf of itself and its
Affiliates ("NEOTHERAPEUTICS"), and GPC Biotech AG, a company duly organized and
existing under the laws of the Federal Republic of Germany and having offices at
Fraunhoferstrasse 20, D-82152 Martinsried/Munich Germany, for and on behalf of
itself and its Affiliates (together with its Affiliates, "GPC").

                             PRELIMINARY STATEMENTS

          A. NEOTHERAPEUTICS has entered into that certain License Agreement
with Johnson Matthey PLC ("J-M") dated August 28, 2001, pursuant to which
NEOTHERAPEUTICS has been granted a license, with the right to sublicense, to
certain patent rights and other know-how and technology owned by J-M.

          B. NEOTHERAPEUTICS wishes to grant a sublicense to GPC, and GPC wishes
to take a sublicense from NEOTHERAPEUTICS, under certain rights granted to
NEOTHERAPEUTICS under the J-M License Agreement and under other relevant patent
rights and know-how controlled by NEOTHERAPEUTICS, upon the terms and conditions
set forth in this Agreement.

          NOW, THEREFORE, in consideration of the foregoing preliminary
statements and the mutual covenants and agreements of the Parties contained in
this Agreement, the Parties hereby agree as follows:

1. DEFINITIONS

          As used in this Agreement, the following terms shall have those
meanings set forth in this Section 1 unless the context dictates otherwise.

         1.1. "Affiliate" with respect to either Party, shall mean any Person
controlling, controlled by, or under common control with, such Party. For the
purpose of this Section 1.1, "control" shall refer to (i) the possession,
directly or indirectly, of the power to direct the management or policies of
such Party, whether through the ownership of voting securities, by contract or
otherwise, or (ii) the beneficial ownership (as such term is defined in the 1934
Act) of at least fifty percent (50%) of the voting securities or other ownership
interest of such Party.

         1.2. "Confidential Information" shall have the meaning assigned to such
term in Section 12.1.

         1.3. "Covered Product" shall mean any Platinum Complexes formulated for
administration to humans, the research, development, manufacture, sale or use of
which


in any country in the Territory is covered by a Valid Claim of any Patent
included in the J-M Licensed Technology or the NEOTHERAPEUTICS Licensed
Technology.

         1.4. "Effective Date" shall mean the date first set forth above.

         1.5. "EMEA" shall mean the European Agency for the Evaluation of
Medicinal Products and any successor thereto.

         1.6. "FDA" shall mean the United States Food and Drug Administration,
or any successor thereto.

         1.7. "Field" shall mean the FIELD, as such term is defined in the J-M
License Agreement, as amended from time to time.

         1.8. "First Commercial Sale" shall mean, with respect to any Covered
Product, the first sale for use or consumption by the general public of such
Covered Product in a country in the Territory after all required marketing and
pricing approvals have been granted, or otherwise permitted, by the governing
health authority of such country. "First Commercial Sale" shall not include the
sale of any Covered Product for use in clinical trials or for compassionate use
prior to the approval of an NDA.

         1.9. "GPC Development Technology" shall mean all Inventions and
Know-How first developed, reduced to practice or shown to have utility by one or
more employees of GPC without the involvement of one or more employees of
NEOTHERAPEUTICS in connection with the development of Covered Products, as well
as any and all Patents covering the same.

         1.10. "Invention" shall mean any new or useful method, process,
manufacture, compound or composition of matter, whether or not patentable or
copyrightable, or any improvement thereof.

         1.11. "J-M License Agreement" shall mean that certain License Agreement
dated August 28, 2001, by and between NEOTHERAPEUTICS and J-M, as amended from
time to time. A copy of such Agreement, including all amendments executed prior
to the execution of this Agreement, is attached hereto as Exhibit A.

         1.12. "J-M Licensed Technology" shall mean the J-M Patent Rights, the
LICENSOR'S INFORMATION and the LICENSOR'S ONGOING INFORMATION to which
NEOTHERAPEUTICS has been granted a license under the J-M License Agreement, as
such capitalized terms are defined in the J-M License Agreement, as amended from
time to time.

         1.13. "J-M Patent Rights" shall mean the PATENT RIGHTS, as such term is
defined in the J-M Licensed Agreement. A list of all such J-M Patent Rights in
existence on the Effective Date is included in Exhibit B attached hereto.

         1.14. "J-M Royalty Term" shall mean the period beginning on the
Effective Date and ending on the earlier of (i) the expiration of the TERM, as
such term is defined


in the J-M License Agreement, as amended from time to time, or (ii) the date on
which NEOTHERAPEUTICS is no longer required to make royalty payments to J-M
pursuant to the J-M License Agreement.

         1.15. "Joint Development Committee" shall mean the entity organized and
acting pursuant to Section 4.

         1.16. "Joint Development Technology" shall mean all Inventions and
Know-How first developed, reduced to practice or shown to have utility by one or
more employees of GPC and one or more employees of NEOTHERAPEUTICS in connection
with the development of Covered Products, as well as any and all Patents
covering the same.

         1.17. "Know-How" shall mean unpatented technical and other information
which is not in the public domain including information comprising or relating
to discoveries, inventions, data, designs, formulae, methods, models, assays,
research plans, procedures, designs for experiments and tests and results of
experimentation and testing (including results of research or development),
processes (including manufacturing processes, specifications and techniques),
laboratory records, chemical, pharmacological, toxicological, clinical,
analytical and quality control data, trial data, case report forms, data
analyses, reports or summaries and information contained in submissions to and
information from ethical committees and regulatory authorities. Know-How
includes rights protecting Know-How. The fact that an item is known to the
public shall not be taken to exclude the possibility that a compilation
including the item, and/or a development relating to the item, is (and remains)
not known to the public.

         1.18. "MAA" shall mean a Marketing Authorization Application or similar
application filed with the EMEA after completion of human clinical trials to
obtain marketing approval for a Covered Product in the European Union.

         1.19. "MHW" shall mean the Ministry of Health and Welfare in Japan and
any successor agency.

         1.20. "NDA" shall mean a New Drug Application to be filed with the FDA,
or the equivalent thereof in other countries or regulatory jurisdictions.

         1.21. "NEOTHERAPEUTICS Development Technology" shall mean all
Inventions and Know-How first developed, reduced to practice or shown to have
utility by one or more employees of NEOTHERAPEUTICS without the involvement of
one or more employees of GPC in connection with the development of Covered
Products, as well as any and all Patents covering the same.

         1.22. "NEOTHERAPEUTICS Licensed Technology" shall mean the LICENSEE'S
ONGOING INFORMATION, as such term is defined in the J-M License Agreement, as
amended from time to time, as well as all Patents owned or controlled by, or
licensed to, NEOTHERAPEUTICS, and all Know-How and Inventions developed, owned
or controlled by, or licensed to, NEOTHERAPEUTICS, on or after the Effective
Date, other than the J-M Licensed Technology, which, by objective standards, is


necessary for or may be useful in the development, manufacture, use or sale of
Licensed Products in the Field in the Territory, all to the extent that
NEOTHERAPEUTICS has the right to license or otherwise make available such
Patents, Know-How and Inventions to GPC hereunder. A list of all such Patents in
existence on the Effective Date is included in Exhibit B attached hereto.

         1.23. "Net Sales" shall have the meaning ascribed to the term "Net
Sales Value" in the J-M License Agreement, as amended from time to time.

        Notwithstanding the foregoing, in the event a Covered Product is sold in
conjunction with another proprietary component so as to be a combination product
(whether packaged together or in the same therapeutic formulation), Net Sales
shall be calculated by multiplying the Net Sales of such combination product by
a fraction, the numerator of which shall be the fair market value of the Covered
Product as if sold separately (determined in accordance with generally accepted
accounting principles), and the denominator of which shall be the aggregate fair
market value of all the proprietary active components of such combination
product, including the Covered Product, as if sold separately. In the event no
such separate sales are made by GPC or its Affiliates, Net Sales of the
combination product shall be calculated in a manner to be negotiated and agreed
upon by the Parties, reasonably and in good faith, prior to any sale of such
combination product, which shall be based upon the respective estimated
commercial values of the proprietary active components of such combination
product.

          GPC's or any of its Affiliate's transfer of Covered Product to another
Affiliate or a Sublicensee shall not result in any Net Sales, unless such
Covered Product is consumed by such Affiliate or Sublicensee in the course of
its commercial activities.

         1.24. "1934 Act" shall mean the U.S. Securities Exchange Act of 1934,
as amended, and all regulations promulgated pursuant thereto from time to time.

         1.25. "Party" shall mean NEOTHERAPEUTICS or GPC and, when used in the
plural, shall mean NEOTHERAPEUTICS and GPC.

         1.26. "Patents" shall mean all letters patent and patent applications
throughout the Territory, as well as any and all substitutions, extensions,
renewals, continuations, continuations-in-part, divisions, patents-of-addition
and/or reissues thereof.

         1.27. "Person" shall mean any natural person, corporation, firm,
business trust, joint venture, association, organization, company, partnership
or other business entity, or any government or any agency or political
subdivision thereof.

         1.28. "Platinum Complexes" shall mean the platinum co-ordination
compounds that are the subject of the J-M Patent Rights.

         1.29. "Royalty Term" shall mean the period beginning on the Effective
Date and ending on the date of the expiration of the last to expire Valid Claim,
if any, included in the Joint Development Technology or NEOTHERAPEUTICS
Development Technology


that covers the manufacture or sale of Covered Products. If, at the time of
expiration of the J-M Royalty Term, there are no Valid Claims included in the
Joint Development Technology or NEOTHERAPEUTICS Development Technology covering
the manufacture or sale of a Covered Product, then the Royalty Term with respect
to such Covered Product shall expire on the expiration of the J-M Royalty Term.

         1.30. "Satraplatin" shall mean the platinum complex
bis(acetato)amminedichloro(cyclohexylamine)platinum(IV).

         1.31. "Sublicensee" shall mean a Third Party to which GPC has
sublicensed rights under the NEOTHERAPEUTICS Licensed Technology or J-M Licensed
Technology for the commercialization of Covered Products.

         1.32. "Sublicense Fees" shall mean all payments made to GPC from a
Sublicensee that relate specifically to the sublicense of rights granted to GPC
hereunder, excluding (i) payments made in consideration of research and
development efforts undertaken by GPC, (ii) payments made to reimburse GPC for
expenses previously incurred by GPC in connection with the development of
Covered Products, (iii) payments made in consideration of the purchase of equity
of GPC by a Sublicensee to the extent that such payments do not exceed the fair
market value of such equity, (iv) payments made in consideration of the
manufacture or supply of Covered Products by GPC to the extent that such
payments do not exceed GPC's costs of such manufacture and supply, (v) loans
made to GPC or (vi) Sublicense Royalties.

         1.33. "Sublicense Royalties" shall mean royalty payments made to GPC
based on sales of Covered Products by a Sublicensee.

         1.34. "Territory" shall mean the entire world.

         1.35. "Third Party" shall mean any Person who or which is neither a
Party nor an Affiliate of a Party.

         1.36. "Valid Claim" shall mean (i) a pending claim in any patent
application that has not been pending for more than five (5) years, which shall
be treated as if such pending claim were issued in then-current form, or (ii) a
claim of any issued letters patent that, in each case, has not been held invalid
or unenforceable by final decision of a court or other governmental agency of
competent jurisdiction, unappealable or unappealed within the time allowed for
appeal, and that is not admitted to be invalid or unenforceable through reissue,
disclaimer or otherwise.

2. REPRESENTATIONS AND WARRANTIES

         2.1. REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES. Each Party
represents and warrants to the other Party that, as of the Effective Date:

        (a) Such Party is duly organized and validly existing under the laws of
the jurisdiction of its incorporation and has full corporate power and authority
to enter into this Agreement and to carry out the provisions hereof;



        (b) Such Party has taken all corporate action necessary to authorize the
execution and delivery of this Agreement and the performance of its obligations
under this Agreement; and

        (c) This Agreement is a legal and valid obligation of such Party,
binding upon such Party and enforceable against such Party in accordance with
the terms of this Agreement, except as such enforceability may be affected by
laws affecting creditors' rights generally and general equitable principles. The
execution, delivery and performance of this Agreement by such Party do not
conflict with any agreement, instrument or understanding, oral or written, to
which such Party is a party or by which such Party may be bound, or violate any
law or regulation of any court, governmental body or administrative or other
agency having authority over such Party. All consents, approvals and
authorizations from all governmental authorities or other Third Parties required
to be obtained by such Party in connection with the execution, delivery and
performance of this Agreement have been obtained.

         2.2.  ADDITIONAL REPRESENTATIONS AND WARRANTIES OF NEOTHERAPEUTICS.
NEOTHERAPEUTICS represents and warrants to GPC that, as of the Effective Date:

        (a) NEOTHERAPEUTICS and/or its Affiliates are the owner of, or have
exclusive rights to, all of the Patents included in the J-M Licensed Technology
(except as expressly provided in the copy of the J-M License Agreement attached
as Exhibit A) and the NEOTHERAPEUTICS Licensed Technology in existence on the
Effective Date, and have the exclusive right to grant the licenses or
sublicenses, as the case may be, therefor granted under this Agreement;

        (b) All such Patents consist of either patent applications that have
been filed and are pending and actively being prosecuted as of the Effective
Date, or issued letters patent that are in full force and effect and have been
maintained through the Effective Date;

        (c) NEOTHERAPEUTICS is not aware of any asserted or unasserted claim or
demand which it believes can be enforced by a Third Party against any such
Patents;

        (d) To the best of NEOTHERAPEUTICS's knowledge and belief, the practice
of such Patents and the exercise of the rights granted to GPC in Section 7 do
not infringe upon or conflict with any patent, copyright or other proprietary
right of any Third Party;

        (e) NEOTHERAPEUTICS and/or its Affiliates have the right to grant the
licenses or sublicenses, as the case may be, granted under this Agreement for
all of the Know-How and Inventions included in the J-M Licensed Technology and
NEOTHERAPEUTICS Licensed Technology in existence on the Effective Date;

         (f) Such Know-How and Inventions were not obtained by NEOTHERAPEUTICS,
and to the best of NEOTHERAPEUTICS's knowledge and belief were not obtained by
J-M, in violation of any contractual or fiduciary obligation to which


NEOTHERAPEUTICS, J-M or any of their respective employees or staff members are
or were bound, or by the misappropriation of the trade secrets of any Third
Party;

        (g) NEOTHERAPEUTICS has not entered into any agreement with any Third
Party which is in conflict with the rights granted to GPC under to this
Agreement, and the execution and performance of this Agreement by
NEOTHERAPEUTICS do not and shall not violate any agreement or undertaking to
which NEOTHERAPEUTICS is a party; and

        (h) To the best of NEOTHERAPEUTICS's knowledge and belief, all of the
data and information that NEOTHERAPEUTICS has provided to GPC prior to the
Effective Date relating to such Patents, Know-How and Inventions, and to Covered
Products in general, are reasonably accurate, and NEOTHERAPEUTICS has not
omitted therefrom any material data or information in NEOTHERAPEUTICS's
possession or control reasonably in advance of the Effective Date concerning the
same.

         2.3. REPRESENTATIONS AND WARRANTIES OF GPC. GPC represents and warrants
to NEOTHERAPEUTICS that, as of the Effective Date:

        (a) Experience. GPC acknowledges that it can bear the economic risk
of its investment in the NEOTHERAPEUTICS Shares. GPC has by reason of its
business or financial experience or the business or financial experience of its
professional advisors who are unaffiliated with and who are not compensated by
NEOTHERAPEUTICS or any affiliate or selling agent of NEOTHERAPEUTICS , directly
or indirectly, has the capacity to protect its own interests in connection with
its purchase of the NEOTHERAPEUTICS Shares. GPC has the financial capacity to
bear the risk of this investment.

        (c) Purchase Entirely for Own Account. The NEOTHERAPEUTICS Shares
will be acquired by GPC for investment for GPC's own account not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and GPC has no present intention of selling, granting any participation in, or
otherwise distributing the same. GPC does not presently have any contract,
undertaking, agreement or arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect to any of the
NEOTHERAPEUTICS Shares. GPC has not been formed for the specific purpose of
acquiring solely the NEOTHERAPEUTICS Shares.

         (e) Disclosure of Information. GPC has received and reviewed
information about NEOTHERAPEUTICS, and in particular about the Patents,
Know-How, Inventions and Covered Products, and has had an opportunity to discuss
NEOTHERAPEUTICS's business, management and financial affairs with its management
and to review NEOTHERAPEUTICS's facilities. GPC understands and acknowledges
that such discussions, as well as any written information issued by
NEOTHERAPEUTICS (i) were intended to describe the aspects of NEOTHERAPEUTICS's
business and prospects which NEOTHERAPEUTICS believes to be material, but were
not necessarily an exhaustive description (except to the extent described in
Section 2.2(h)), and (ii) may have contained forward-looking statements
involving known and unknown risks and uncertainties which may cause
NEOTHERAPEUTICS's actual results in future periods


or plans for future periods to differ materially from what was anticipated and
that no representations or warranties were or are being made with respect to any
such forward-looking statements or the probability of achieving any of the
results projected in any of such forward-looking statements. Nothing contained
in this Section 2.3 shall limit in any respect NEOTHERAPEUTICS's representations
and warranties contained in this Agreement.

        (g) Restricted Securities. GPC understands that the NEOTHERAPEUTICS
Shares have not been, and will not, prior to issuance under Section 9.1(c), be,
registered under the Securities Act of 1933, as amended (the "Securities Act"),
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of GPC's representations as expressed
herein. GPC understands that the NEOTHERAPEUTICS Shares are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, GPC must hold the NEOTHERAPEUTICS Shares indefinitely
unless they are registered with the SEC and qualified by state authorities, or
an exemption from such registration and qualification requirements is available.
GPC acknowledges that NEOTHERAPEUTICS has no obligation to register or qualify
the NEOTHERAPEUTICS Shares for resale except as set forth in the Registration
Rights Agreement to be entered into as provided in Section 9.1(c). GPC further
acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the
NEOTHERAPEUTICS Shares, and on requirements relating to NEOTHERAPEUTICS which
are outside of GPC's control, and which NEOTHERAPEUTICS is under no obligation
and may not be able to satisfy. GPC acknowledges that NEOTHERAPEUTICS will make
a notation on its stock books regarding the restrictions on transfers set forth
in this Section 2.3 and will transfer securities on the books of NEOTHERAPEUTICS
only to the extent not inconsistent therewith.

        (i) Residence. The office or offices of GPC in which its investment
decision was made is located at the address or addresses of GPC set forth in the
preamble.

        (k) Further Restrictions on Disposition. GPC agrees not to make any
disposition of all or any portion of the NEOTHERAPEUTICS Shares unless and
until: (a) there is then in effect a registration statement under the Securities
Act covering such proposed disposition and the disposition is made in accordance
with such registration statement; or (b) (i) GPC shall have notified
NEOTHERAPEUTICS of the proposed disposition and shall have furnished
NEOTHERAPEUTICS with a statement of the circumstances surrounding the proposed
disposition and (ii) if reasonably requested by NEOTHERAPEUTICS , GPC shall have
furnished NEOTHERAPEUTICS with an opinion of counsel, reasonably acceptable to
NEOTHERAPEUTICS , that such disposition will not require registration under the
Securities Act.

         (m) Legends. GPC understands that the NEOTHERAPEUTICS Shares, and
any securities issued in respect of or exchange for the NEOTHERAPEUTICS Shares,


may bear one or all of the following legends until they are no longer required
by law or the provisions of this Agreement:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") PURSUANT TO AN
EXEMPTION FROM REGISTRATION CONTAINED IN REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, AND MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S, PURSUANT TO A REGISTRATION UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. NO HEDGING TRANSACTIONS
INVOLVING THESE SECURITIES MAY BE CONDUCTED EXCEPT IN COMPLIANCE WITH THE
SECURITIES ACT."

Any legend required by the Blue Sky laws of any state to the extent such laws
are applicable to the shares represented by the certificate so legended.

The legend set forth above shall be removed by NEOTHERAPEUTICS from any
certificate evidencing NEOTHERAPEUTICS Shares upon transfer of such
NEOTHERAPEUTICS Shares in compliance with Rule 144(k) under the Securities Act
or upon delivery to NEOTHERAPEUTICS of an opinion, in form and substance and by
counsel reasonably satisfactory to NEOTHERAPEUTICS , that a registration
statement under the Securities Act is at that time in effect with respect to the
legended security or that such security can be freely transferred without such a
registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
securities were issued.

        (o) Foreign Investors. GPC hereby represents that it has satisfied
itself as to the full observance of the laws of its jurisdiction in connection
with any invitation to subscribe for the NEOTHERAPEUTICS Shares or any use of
this Agreement, including (i) the legal requirements within its jurisdiction for
the purchase of the NEOTHERAPEUTICS Shares, (ii) any foreign exchange
restrictions applicable to such purchase, (iii) any governmental or other
consents that may need to be obtained, and (iv) the income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale, or transfer of the NEOTHERAPEUTICS Shares. GPC's subscription and payment
for and continued beneficial ownership of the NEOTHERAPEUTICS Shares, will not
violate any applicable securities or other laws of GPC's jurisdiction and will
not require NEOTHERAPEUTICS to obtain any permit, make any filing or take any
other action in such jurisdiction.

         (q) Offshore Transaction.

               (i) GPC is not organized under the laws of or is not a citizen or
        resident of the United States and was not formed for the purpose of
        investing in Regulation S securities, does not have any of its
        securities registered under the Exchange Act, and is not owned by U.S.
        Persons as defined in Regulation S and herein.


               (ii) At the time the buy order to purchase the NEOTHERAPEUTICS
        Shares was originated, GPC was outside the United States.

               (iii) All subsequent offers and sales of the NEOTHERAPEUTICS
        Shares shall be made in compliance with Regulation S, pursuant to
        registration of the securities under the Securities Act or pursuant to
        an exemption from such registration.

               (iv) GPC agrees that from the date hereof until after one year
        after the issuance of the NEOTHERAPEUTICS Shares hereunder (the
        "Restrictive Period"), GPC agrees, upon any offer, sale, or transfer of
        the NEOTHERAPEUTICS Shares (including any interests therein), GPC, or
        any successor, or any Professional under its direction (as defined
        below) (except for sales of any NEOTHERAPEUTICS Shares registered under
        the Securities Act or otherwise exempt from such registration) (i) will
        not sell to a U.S. Person or to an account of or for the benefit of a
        U.S. Person or to anyone believed to be a U.S. Person; (ii) will not
        engage in any efforts to sell the NEOTHERAPEUTICS Shares in the United
        States; (iii) will, at the time the buy order or transfer is originated,
        believe the buyer or transferee is outside the United States; (iv) will
        send to any transferee who is a Professional, whether acting as agent or
        principal, a confirmation or other notice stating that the Professional
        is subject to the same restrictions on transfer to U.S. Persons or for
        the account of or benefit of U.S. Persons during the Restrictive Period
        as provided herein; and (v) will not in connection with the common stock
        of NEOTHERAPEUTICS engage in the United States in any short selling,
        option writing, equity swaps, or other types of hedging transactions or
        derivative transactions. NEOTHERAPEUTICS will not honor or register and
        will not be obligated to honor or register any transfer in violation of
        these provisions.

               (v) For purpose hereof, in general, a "U.S. Person;" means any
        natural person, resident of the United States; any partnership or
        corporation organized or incorporated under the laws of the United
        States or any state or territory thereof; any estate of which any
        executor or administrator is a U.S. Person; any trust of which any
        trustee is a U.S. Person; any agency or branch of a foreign entity
        located in the United States; any nondiscretionary account or similar
        account, other than estate or trust, held by a dealer or other fiduciary
        organized, incorporated, or (if an individual) resident of the United
        States; and any partnership or corporation if organized or incorporated
        under the laws of any foreign jurisdiction and formed by a U.S. Person
        principally for the purpose of investing in securities and not
        registered under the Securities Act unless it is organized and
        incorporated and owned by "accredited investors," as defined under Rule
        501(a) under the Securities Act, who are not natural persons, estates or
        trusts. "U.S. Person" is further defined in Rule 902(o) under the
        Securities Act.

               (vi) A "Professional" is a "distributor" as defined in Rule
         902(c) under the Securities Act (generally any underwriter, or other
         person, who participates, pursuant to a contractual arrangement, in the
         distribution of the Shares); a dealer


         as defined in Section 2(12) of the Exchange Act (encompassing those who
         engage in the business of trading or dealing in securities as agent,
         broker, or principal); or a person receiving a selling concession, fee,
         or other remuneration in respect of the sale of the Shares sold.

         2.4. DEFINITION OF "KNOWLEDGE." As used in this Section 2, the phrases
"to the best of" a Party's "knowledge and belief," "known to" or similar phrases
are intended to indicate that no information has come to the attention of senior
management of the Party making the particular representation which would give
such person actual knowledge of the existence or absence of such facts.

3. J-M LICENSE AGREEMENT

         3.1. REPRESENTATIONS AND WARRANTIES OF NEOTHERAPEUTICS. NEOTHERAPEUTICS
represents and warrants to GPC that, as of the Effective Date:

        (a) The J-M License Agreement is in full force and effect and has not
been modified or amended, except that no representation or warranty is made with
respect to J-M or matters solely within the control or direction of J-M that are
not known to NEOTHERAPEUTICS;

        (b) To the best of NEOTHERAPEUTICS's knowledge and belief, neither J-M
nor NEOTHERAPEUTICS is in default with respect to a material obligation under,
and neither such party has claimed or has grounds upon which to claim that the
other party is in default with respect to a material obligation under, the J-M
License Agreement;

        (c) To the best of NEOTHERAPEUTICS's knowledge and belief, the rights
that J-M has licensed to NEOTHERAPEUTICS pursuant to the J-M License Agreement
were not and are not subject to any restrictions or limitations except as set
forth in the copy of the J-M License Agreement attached as Exhibit A; and

        (d) NEOTHERAPEUTICS has not waived or allowed to lapse any of its rights
under the J-M License Agreement, and no such rights have lapsed or otherwise
expired or been terminated.

         3.2. NEOTHERAPEUTICS OBLIGATIONS. NEOTHERAPEUTICS agrees that during
the term of this Agreement:

        (a) NEOTHERAPEUTICS will use commercially reasonable efforts to fulfill
its obligations under the J-M License Agreement to the extent such obligations
have not been delegated to GPC and to the extent that failure to do so would
adversely affect GPC or its rights hereunder;

        (b) NEOTHERAPEUTICS shall not enter into any subsequent agreement with
J-M that modifies or amends the J-M License Agreement in any way that could
potentially adversely affect GPC's rights or economic interest under this
Agreement without GPC's prior written consent, and shall provide GPC with a copy
of all modifications to or amendments of the J-M License Agreement, regardless
of whether



GPC's consent was required with respect thereto; provided that, NEOTHERAPEUTICS
may redact confidential portions of any such modifications and amendments, but
only to the extent that any such redactions do not impair GPC's ability to take
full advantage of its rights and benefits under this Agreement;

        (c) NEOTHERAPEUTICS shall not terminate the J-M License Agreement in
whole or in part, directly or indirectly, without GPC's prior written consent;

        (d) NEOTHERAPEUTICS shall promptly furnish GPC with copies of all
reports and other communications NEOTHERAPEUTICS receives from J-M that relate
to the subject matter of this Agreement;

        (e) NEOTHERAPEUTICS shall promptly furnish GPC with copies of all
reports and other communications that NEOTHERAPEUTICS furnishes to J-M that
relate to the subject of this Agreement, and to the extent any such reports or
communications relate to the efforts of GPC under this Agreement,
NEOTHERAPEUTICS shall give GPC a reasonable opportunity to review and comment
upon such reports or communications before they are transmitted to J-M;

        (f) NEOTHERAPEUTICS shall furnish GPC with copies of all notices
received by NEOTHERAPEUTICS relating to any alleged breach or default by
NEOTHERAPEUTICS under the J-M License Agreement within three (3) business days
after NEOTHERAPEUTICS's receipt thereof and, if NEOTHERAPEUTICS cannot or
chooses not to cure or otherwise resolve any such alleged breach or default,
NEOTHERAPEUTICS shall so notify GPC within five (5) days thereafter and allow
GPC, in GPC's sole discretion, to cure or otherwise resolve any such alleged
breach or default; and

        (g) NEOTHERAPEUTICS, acting as an intermediary between J-M and GPC,
shall allow GPC to enjoy the direct benefit of all of NEOTHERAPEUTICS's
affirmative rights, to the extent they relate to the J-M Licensed Technology.

4. JOINT DEVELOPMENT COMMITTEE

         4.1. MEMBERS. The Parties shall establish a Joint Development Committee
(the "Joint Development Committee"), which shall comprise three (3)
representatives designated by each Party (or such other number as the Parties
may agree in writing). The initial members of the Joint Development Committee
are set forth on Exhibit C. Any Member of the Joint Development Committee may be
represented at any meeting by a designee who is appointed by such member for
such meeting and who has authority to act on behalf of such member, as evidenced
by written notice from such Member to the chairperson of the Joint Development
Committee. The chairperson of the Joint Development Committee shall be one of
the representatives designated by GPC. The initial chairperson is designated on
Exhibit C. Each Party shall be free to replace its representative members with
new appointees who have authority to act on behalf of such Party on the Joint
Development Committee, on written notice to the other Party.


        4.2. RESPONSIBILITIES. The Joint Development Committee shall be
responsible for planning, overseeing and directing the development and
commercialization of, and regulatory filings relating to, Covered Products.

         4.3. MEETINGS. The Joint Development Committee shall meet quarterly
until the achievement of the first milestone described in Section 9.2 and,
thereafter, as frequently as the Parties deem appropriate, on such dates and at
such times as the Parties shall agree, on ten (10) days' written notice to the
other Party unless such notice is waived by the other Party. The Joint
Development Committee may convene or be polled or consulted from time to time by
means of telecommunications, video conferences or correspondence, as deemed
necessary or appropriate by the Parties. To the extent that meetings are held in
person, they shall alternate between the offices of the Parties unless the
Parties otherwise agree. The chairperson shall be responsible for sending
notices of meetings to all members.

        4.4. DECISIONS.

        (a) A quorum for a meeting of the Joint Development Committee shall
require the presence of at least one NEOTHERAPEUTICS member (or designee) and at
least one GPC member (or designee) in person or by telephone. All decisions made
or actions taken by the Joint Development Committee shall be made unanimously by
its members, with the NEOTHERAPEUTICS members cumulatively having one vote and
the GPC members cumulatively having one vote.

        (b) In the event that unanimity cannot be reached by the Joint
Development Committee with respect to a matter that is a subject of its
decision-making authority within thirty (30) days after the matter is first
brought before the Joint Development Committee, then the matter shall be decided
by the chairperson of the Joint Development Committee in good faith.

         4.5. MINUTES. Within fifteen (15) days after each Joint Development
Committee meeting, GPC shall prepare and distribute minutes of the meeting,
which shall provide a description in reasonable detail of the discussions had at
the meeting and a list of any actions, decisions or determinations approved by
the Joint Development Committee at such meeting. GPC shall be responsible for
circulation of all draft and final minutes. Draft minutes shall be circulated to
all members of the Joint Development Committee sufficiently in advance of the
next meeting to allow review and comment prior to the meeting. Minutes shall be
approved or disapproved, and revised as necessary, at the next meeting. Final
minutes shall be distributed to the members of the Joint Development Committee.

        4.6. TERM. The Joint Development Committee shall exist until the
expiration of the Royalty Term for all Covered Products.

        4.7. EXPENSES. Each Party shall be responsible for all travel and
related costs for its representatives to attend meetings of, and otherwise
participate on, the Joint Development Committee.


        4.8. ADDITIONAL STUDIES. NEOTHERAPEUTICS reserves the right, subject to
the approval and oversight of the Joint Development Committee, which approval
will not be unreasonably withheld, to propose additional studies of Satraplatin
at its own expense.


5. CO-PROMOTION. In the event GPC determines to directly market Covered Products
in the United States itself rather than licensing such Covered Products to a
Third Party for commercialization, GPC shall notify NEOTHERAPEUTICS in writing
reasonably in advance of the commencement of commercialization of any such
Covered Product. If, within ten (10) days after receipt of such notice from GPC,
NEOTHERAPEUTICS indicates in writing to GPC that it desires to co-promote such
Covered Product with GPC, the Parties shall negotiate in good faith the terms of
such co-promotion of such Covered Product. If GPC proposes to enter into an
agreement with a Third Party that includes a grant of rights to such Third Party
to market a Covered Product in the United States, GPC shall use commercially
reasonable efforts to obtain co-promotion rights in the United States with such
Third Party that include NEOTHERAPEUTICS.

6. OWNERSHIP; PATENT PROTECTION

         6.1. OWNERSHIP OF GPC DEVELOPMENT TECHNOLOGY. Except as otherwise
provided in this Agreement, the entire right, title and interest in and to all
GPC Development Technology shall be owned solely by GPC, and all decisions
regarding the protection of GPC Development Technology shall remain with GPC.

         6.2. OWNERSHIP OF J-M LICENSED TECHNOLOGY, NEOTHERAPEUTICS LICENSED
TECHNOLOGY, NEOTHERAPEUTICS DEVELOPMENT TECHNOLOGY. Except as otherwise provided
in this Agreement, the entire right, title and interest in and to all
NEOTHERAPEUTICS Licensed Technology and NEOTHERAPEUTICS Development Technology
and, as between the Parties, J-M Licensed Technology shall be owned solely by
NEOTHERAPEUTICS, and, except as otherwise set forth in this Agreement or the J-M
License Agreement, all decisions regarding the protection of J-M Licensed
Technology, NEOTHERAPEUTICS Licensed Technology and NEOTHERAPEUTICS Development
Technology shall remain with NEOTHERAPEUTICS.

        6.3. OWNERSHIP OF JOINT DEVELOPMENT TECHNOLOGY. GPC and NEOTHERAPEUTICS
shall jointly own all rights, title and interests in Joint Development
Technology.

        6.4. PATENT FILING, PROSECUTION AND MAINTENANCE.

        (a) Reasonably promptly after the Effective Date the Joint Development
Committee, in consultation with the Parties' respective patent counsel, shall
agree upon a patent filing policy with respect to the NEOTHERAPEUTICS Licensed
Technology, the Joint Development Technology and the NEOTHERAPEUTICS Development
Technology. In addition, from time to time, the Joint Development Committee
shall determine, in accordance with such policy, whether and in what
jurisdictions patent applications should be filed with respect to any Know-How
or Inventions included in the


NEOTHERAPEUTICS Licensed Technology, the Joint Development Technology and the
NEOTHERAPEUTICS Development Technology.

        (b) Following a determination by the Joint Development Committee that a
patent application should be filed with respect to any Know-How or Inventions
included in the NEOTHERAPEUTICS Licensed Technology, NEOTHERAPEUTICS, through
outside patent counsel (including, without limitation, foreign patent counsel
and agents) reasonably acceptable to GPC, shall promptly file a patent
application with respect thereto in the jurisdiction(s) selected by the Joint
Development Committee, and thereafter NEOTHERAPEUTICS shall prosecute such
application and maintain any letters patent issuing therefrom. NEOTHERAPEUTICS
shall take all such actions in consultation with GPC and its patent counsel and
shall keep GPC apprised as to the status of all pending patent applications. The
out-of-pocket costs of filing, prosecuting and maintaining any Patents actually
incurred by NEOTHERAPEUTICS under this Section 6.3(b) shall be reimbursed by
GPC. NEOTHERAPEUTICS shall invoice GPC for such costs on a quarterly basis. Such
invoices shall be payable forty-five (45) days after receipt thereof. If the
Joint Development Committee determines to not have a patent application filed
with respect to any Know-How or Inventions included in the NEOTHERAPEUTICS
Licensed Technology, NEOTHERAPEUTICS may, notwithstanding anything else
contained herein, file, prosecute and maintain a patent application and any
letters patent issuing therefrom at its own expense.

        (c) The preparation, filing, prosecuting and maintenance of Patents
included in the J-M Licensed Technology shall be accomplished as provided in the
J-M License Agreement, subject to the provisions of this Agreement. Furthermore,
the Parties' respective rights and obligations under this Section shall be
subject, in all events, to any superior rights of J-M under the J-M License
Agreement regarding the J-M Licensed Technology.

        (d) If J-M elects to abandon the prosecution or maintenance of any J-M
Patent Right in any country pursuant to Section 1 of Article VII of the J-M
License Agreement and NEOTHERAPEUTICS elects not to assume the prosecution or
maintenance of such J-M Patent Right, NEOTHERAPEUTICS shall so notify GPC. If
GPC notifies NEOTHERAPEUTICS that GPC wishes to assume the prosecution or
maintenance of such J-M Patent Right, NEOTHERAPEUTICS shall exercise its right
to assume such prosecution or maintenance on behalf of GPC, and NEOTHERAPEUTICS
shall assign its rights to such J-M Patent Right in such country to GPC.

        6.5. TERMINATION OF SUPPORT BY GPC. GPC shall have the right to
terminate its obligations, if any, under this Agreement in any country with
respect to any Patent included in the NEOTHERAPEUTICS Licensed Technology, from
time to time, upon notice to NEOTHERAPEUTICS; provided, however, that no such
notice shall be effective with respect to any such Patent if it is given fewer
than sixty (60) days prior to a deadline for taking any action that must be
taken in order to preserve the owner's rights in such Patent. Upon the delivery
of any such effective notice, GPC's rights, licenses and obligations under this
Agreement with respect to such Patent shall terminate in any such


country, except those obligations that shall have accrued prior to the delivery
of such notice.

7. GRANT OF LICENSES

         7.1. EXCLUSIVE SUBLICENSE GRANT. NEOTHERAPEUTICS hereby grants GPC an
exclusive royalty-bearing right and sublicense in the Field throughout the
Territory, with the right to grant further sublicenses in accordance with the
terms of this Agreement, under the J-M Licensed Technology to research, develop,
make, have made, use, sell, offer for sale, have sold, import and export Covered
Products.

         7.2. EXCLUSIVE LICENSE GRANT. NEOTHERAPEUTICS hereby grants to GPC an
exclusive royalty-bearing right and license in the Field throughout the
Territory, with the right to grant sublicenses in accordance with the terms of
this Agreement, under the NEOTHERAPEUTICS Licensed Technology, the
NEOTHERAPEUTICS Development Technology and NEOTHERAPEUTICS's interest in the
Joint Development Technology to research, develop, make, have made, use, sell,
offer for sale, have sold, import and export Covered Products.

        7.3. SCOPE OF EXCLUSIVITY. The licenses granted to GPC pursuant to
Sections 7.1 and 7.2 shall be exclusive even as to NEOTHERAPEUTICS, except to
the extent necessary for NEOTHERAPEUTICS to perform its obligations under this
Agreement.

         7.4. PROVISIONS REGARDING SUBLICENSES. Any sublicense by GPC of the
rights granted to GPC hereunder shall be consistent with the terms of this
Agreement and shall include an obligation for the Sublicensee to comply with the
applicable obligations of GPC set forth in this Agreement. GPC shall provide to
NEOTHERAPEUTICS a copy of any sublicense agreement of the rights granted herein
with any Third Party promptly after entering into such sublicense; provided
that, GPC may redact confidential portions of any such sublicense agreement, but
only to the extent that any such redactions do not impair NEOTHERAPEUTICS'
ability to ensure compliance with the provisions of this Agreement.

         7.5. TRANSFER OF INFORMATION. Promptly following the Effective Date,
NEOTHERAPEUTICS shall coordinate with the Joint Development Committee and
provide copies of and access to all of LICENSOR'S INFORMATION, LICENSOR'S
ONGOING INFORMATION and all other information relating to the J-M Patent Rights
in its possession. Thereafter, NEOTHERAPEUTICS will continue to provide such
information, as well as NEOTHERAPEUTICS Development Technology, to GPC as it
becomes available to or is conceived by NEOTHERAPEUTICS as soon as practicable
after it becomes available to or is conceived by NEOTHERAPEUTICS.

8. DEVELOPMENT AND COMMERCIALIZATION

        8.1. DEVELOPMENT EFFORTS BY GPC. GPC shall, either itself or through its
Affiliates or Sublicensees:


        (a) at its own expense, or at the expense of its Affiliates or
Sublicensees, diligently conduct the development of Covered Products within the
Field using Platinum Complexes. GPC shall exercise in the performance of such
development commercially reasonable technical skill and competence;

        (b) use its commercially reasonable endeavors to obtain appropriate
regulatory approvals for Covered Products in the United States or any of the
countries currently comprising the European Union and Japan and to promote the
distribution and sale of Covered Products in the Field in such countries where
such regulatory approval is obtained;

        (c) ensure that all literature prepared by GPC and relating to Covered
Products bears an acknowledgement to the effect that they are subject to a
license from J-M and NEOTHERAPEUTICS, and all protocols prepared by GPC and
relating to Covered Products bears an acknowledgement to the effect that they
are subject to a license from NEOTHERAPEUTICS and attach to all Covered Products
a label quoting relevant patent numbers and stating that such Covered Products
are made under license under J-M and NEOTHERAPEUTICS; and

        (d) advise NEOTHERAPEUTICS promptly of all approvals granted with
respect to Covered Product.

         8.2. DELEGATION OF IND AUTHORITY; RIGHT TO REFERENCE. NEOTHERAPEUTICS
acknowledges that a Phase II clinical trial of Satraplatin has been conducted
pursuant to an Investigational New Drug Application Number 44,615 filed with the
FDA (the "Filed IND"). Promptly after the Effective Date, NEOTHERAPEUTICS shall
prepare for filing with the FDA all documents necessary to designate and
delegate to GPC all exclusive (even as to NEOTHERAPEUTICS) authority to take
actions and receive all communications from the FDA with respect to the Filed
IND and shall file such documents with the FDA following GPC's review and
approval of such documents. NEOTHERAPEUTICS shall not take any action to revoke
or limit the delegation described in the preceding sentence. In addition, in the
event that the FDA, for any reason, fails to recognize and give full effect to
the delegation described in this Section, NEOTHERAPEUTICS shall not take any
action with respect to the Filed IND or the clinical trials conducted pursuant
to the Filed IND without the prior approval of the Joint Development Committee.
In addition to the foregoing, NEOTHERAPEUTICS hereby grants to GPC an
irrevocable right to reference the Filed IND and all other regulatory
submissions, approvals, clearances, data and other documents and information
related to the Filed IND that NEOTHERAPEUTICS has filed or referenced with the
FDA. Promptly after the Effective Date, the Parties shall begin planning and
coordinating the transfer to the Joint Development Committee of all
responsibilities regarding clinical trials conducted pursuant to the Filed IND.
GPC shall promptly provide to NEOTHERAPEUTICS copies of all correspondence
related to Covered Products delivered to or received from the FDA.


        8.3. OWNERSHIP OF REGULATORY FILINGS. Except for the Filed IND, all
INDs, NDAs and other regulatory filings made or filed by GPC with respect to any
Covered Products shall be in the name of, and be owned solely by, GPC.

        8.4. REPORTING. (a) GPC shall promptly notify NEOTHERAPEUTICS concerning
any happening or circumstance that GPC understands will result in
NEOTHERAPEUTICS's loss of any of its rights under the J-M License Agreement, and
GPC shall reasonably cooperate with NEOTHERAPEUTICS to prevent any such loss.

        (b) Following any acquisition of or by NEOTHERAPEUTICS (whether through
merger, consolidation, acquisition (directly or indirectly) of stock
representing thirty percent (30%) or more of the outstanding voting stock or
other of its equity securities, sale of all or substantially all of its assets,
or otherwise) by or of any Third Party that is a substantial competitor of GPC,
as determined by objective standards (which shall include, but not be limited
to, a determination as to whether such Third Party is developing or marketing a
drug of the same chemical class as the Covered Product or whether such Third
Party is developing or marketing a drug targeted to the same tumor type as a any
product under development or being marketing by GPC) , GPC shall not be required
to include in any report furnished by GPC pursuant to this Agreement, or provide
to any representative of NEOTHERAPEUTICS (or any successor thereto), any
information that GPC, acting in good faith, determines to be competitively
sensitive or enabling information, unless such information is required for
compliance with the obligations to J-M under the J-M License Agreement, in which
event NEOTHERAPEUTICS or its successor, as the case may be, and J-M (if it shall
receive such information) shall execute a nondisclosure agreement, satisfactory
to GPC in form and substance, concerning all such information.

        8.5. TRADEMARKS. GPC shall market the Covered Products throughout the
Territory under trademarks (collectively, the "Trademarks") selected by GPC. GPC
shall own all right, title and interest in and to such Trademarks and shall bear
all costs and expenses of registering, and maintaining the registration of,
same.

9. MONETARY OBLIGATIONS

        9.1. LICENSE FEE. In partial consideration of the rights and licenses
granted to GPC under this Agreement, GPC shall pay to NEOTHERAPEUTICS the
following license fees at the times indicated below:

        (a) Within ten (10) days after the execution of this Agreement, or such
later date as the First Amendment to the J-M License Agreement shall have been
amended to (x) delete all references in the J-M License Agreement to the form
sub-license agreement attached as Exhibit 1 to the J-M License Agreement and (y)
change the references in Section (7) of the First Amendment to Paragraph 1 of
Article IX in lieu of the references to Paragraph 6 of Article VII, GPC shall
pay NEOTHERAPEUTICS a non-refundable, non-creditable, one-time license fee in
the amount of US$2,000,000 in cash.


        (b) Within thirty (30) days of the first dosing of the first patient in
the first Phase III or registrational clinical trial of Satraplatin after the
Effective Date (such date of dosing, the "Dosing Date"), GPC shall pay
NEOTHERAPEUTICS a non-refundable, non-creditable, one time license fee in the
amount of $2,000,000, $1,000,000 of which fee shall be payable in cash and
$1,000,000 of which fee shall be payable through the purchase by GPC, for an
aggregate payment of $1,000,000, of a number of shares of common stock, par
value $.001 per share, of NEOTHERAPEUTICS equal to the lesser of (i) the
quotient obtained by dividing (x) $1,000,000 by (y) one hundred and fifty
percent (150%) of the average closing sale price of the NEOTHERAPEUTICS common
stock, as reported by the Nasdaq quotation system for the twenty (20)
consecutive trading days ending on the third trading day before the Dosing Date,
or (ii) 19.9% of the number of shares of NEOTHERAPEUTICS common stock
outstanding as of the Dosing Date, or such other number of shares as Nasdaq may
specify as the highest number of shares of common stock that NEOTHERAPEUTICS may
issue hereunder without first obtaining stockholder approval (the
"NEOTHERAPEUTICS Shares"); provided that, if the number of NEOTHERAPEUTIC Shares
to be issued pursuant to this Section is determined pursuant to clause (ii)
above, then, until GPC has purchased the number of shares of NEOTHERAPEUTICS
common stock determined pursuant to clause (i) above and subject to
NEOTHERAPEUTICS ability to issue additional shares without first obtaining
stockholder approval pursuant to Nasdaq regulations, all milestone payments owed
by GPC to NEOTHERAPEUTICS pursuant to Section 9.2 below shall be used to
purchase additional shares of NEOTHERAPEUTICS common stock at the price
determined as of the date of the achievement of the applicable milestone in
accordance with the formula set in clause (i)(y) above, and such additional
shares shall be considered to be NEOTHERAPEUTICS Shares hereunder. Concurrently
with the first issuance of the NEOTHERAPEUTICS Shares, the Parties shall execute
a Registration Rights Agreement in the form attached hereto as Exhibit D. GPC
agrees that it shall be a condition of the issuance of the NEOTHERAPEUTICS
Shares that GPC make the representations set forth in Section 2.3 as of the date
of issuance of the NEOTHERAPEUTICS Shares. GPC represents that it has not
engaged in any short selling, option writing, equity swaps, or other types of
hedging transactions or derivative transactions with respect to the common stock
of NEOTHERAPEUTICS, and GPC further agrees that it will not engage in any such
transaction with respect to the common stock of NEOTHERAPEUTICS at any time
during the period commencing on the Effective Date and ending one year after the
issuance of the NEOTHERAPEUTICS Shares.

         9.2. DEVELOPMENT MILESTONE PAYMENTS BY GPC. (a) In partial
consideration of the rights and licenses granted to GPC by NEOTHERAPEUTICS under
this Agreement, GPC shall pay NEOTHERAPEUTICS the following milestone payments
upon the first occurrence of each event set forth below achieved by GPC or its
Affiliates:

        (i) {redacted} upon acceptance by the FDA of an NDA covering Satraplatin

        (ii) {redacted}

        (iii) {redacted}




{redacted} Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

                (iv) {redacted}

                (v) {redacted}

                (vi) {redacted}

                (vii) {redacted}

Each of the foregoing payments shall be made within thirty (30) days after
achievement of such milestone. For the avoidance of doubt, after GPC has made
any of the foregoing payments with respect to any one Covered Product, GPC shall
have no further obligation to make such payment with respect to any other
Covered Product. As used in this Section 9.2, "approval" shall mean approval by
the FDA, the EMEA or the MHW of a NDA, MAA or other application for regulatory
approval to market and sell a Covered Product in the United States, the European
Union or Japan, and with respect to the European Union shall also include any
government pricing or reimbursement approval necessary to market or sell such
Covered Product in the European Union.

         9.3. ROYALTIES. (a) Subject to Section 9.3(b), in partial consideration
of the rights and licenses granted to GPC under this Agreement, GPC shall pay
NEOTHERAPEUTICS a royalty on Net Sales of each Covered Product, commencing on
the First Commercial Sale of each Covered Product by GPC or its Affiliates in
each country in the Territory, in an amount equal to the applicable percentage
of the world-wide Net Sales of such Covered Product by GPC and its Affiliates
throughout the Territory during each calendar year (or portion thereof) during
the term of this Agreement:

                (i) {redacted}

                (ii) {redacted}

                (iii) {redacted}

{redacted}

        (b) Notwithstanding the foregoing, GPC's obligation to make payments
with respect to each Covered Product in each country in the Territory under
Sections 9.3 and 9.4 shall expire upon the expiration of the Royalty Term with
respect to such Covered Product in such country.

        (c) The obligation to pay royalties to NEOTHERAPEUTICS under this
Section 9.3 is imposed only once with respect to the same unit of a Covered
Product, regardless of the number of Patents pertaining thereto.

        9.4. SUBLICENSE INCOME.

        (a) {redacted}

        (b) {redacted}


{redacted} Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.





         9.5. THIRD PARTY PAYMENTS. (a) GPC, at its sole expense, shall pay all
amounts owing to any Third Party to obtain rights to any Valid Claims of any
issued patent or patent application issued to Third Parties determined by the
Joint Development Committee to be necessary for GPC's exercise of its rights
hereunder to research, develop, make, have made, use, sell, offer for sale, have
sold, import or export any Covered Product (collectively, "Third Party
Payments"). Except as provided in Section 9.5(b), GPC shall not be entitled to
any credit under this Agreement on account of any Third Party Payments paid by
GPC.

          (b) {redacted}

         9.6. PAYMENTS UNDER J-M LICENSE. Notwithstanding anything else
contained herein, NEOTHERAPEUTICS shall remain solely responsible to J-M for all
payments due to J-M under the J-M License.

         9.7. REIMBURSEMENT OF NEOTHERAPEUTICS DEVELOPMENT EXPENSES. Within
thirty (30) days of receipt of invoices from NEOTHERAPEUTICS, which invoices
shall be delivered by NEOTHERAPEUTICS no more frequently than quarterly, GPC
shall reimburse NEOTHERAPEUTICS for all costs and expenses (including full
reimbursement for NEOTHERAPEUTICS personnel) incurred by NEOTHERAPEUTICS in the
development of Covered Products as approved in advance by the Joint Development
Committee.

10. PAYMENTS AND REPORTS

        10.1. PAYMENT. Except as otherwise provided in this Agreement, all
royalty and other payments due hereunder shall be paid quarterly within thirty
(30) days after the end of each calendar quarter. Each such payment shall be
accompanied by a statement, Covered Product-by-Covered Product and
country-by-country, of the amount of Net Sales during such quarter, the amount
of royalties due on such Net Sales, the amount of Sublicense Fees and Sublicense
Royalties during such quarter and the amount owed to NEOTHERAPEUTICS on account
of such Sublicense Fees and Sublicense Royalties.

         10.2. MODE OF PAYMENT. GPC shall make all payments required under this
Agreement as directed by NEOTHERAPEUTICS from time to time, in U.S. Dollars
(except as provided in Section 10.6). All royalties due hereunder shall first be
determined in the currency of the country in which the Covered Products in
question were sold and then converted into equivalent U.S. funds. The exchange
rate for such conversion shall be that rate quoted in The Wall Street Journal on
the last business day of the applicable reporting period.

        10.3. RECORDS RETENTION. GPC and its Affiliates shall keep complete and
accurate records pertaining to the sale of Covered Products in the Territory in
accordance with the obligations therefor set forth in the J-M License Agreement.

        10.4. AUDIT REQUEST. At the request and expense (except as provided
below) of NEOTHERAPEUTICS, GPC and its Affiliates shall permit an independent,
certified


{redacted} Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.



public accountant appointed by NEOTHERAPEUTICS and reasonably acceptable to GPC,
at reasonable times and upon reasonable notice, to examine no more than once per
year those records and all other material documents relating to or relevant to
Net Sales in the possession or control of GPC and its Affiliates, for a period
of three years after such royalties have accrued. The results of any such
examination shall be made available to both Parties. If, as a result of any
inspection of the books and records of GPC or its Affiliates, it is shown that
GPC's royalty payments under this Agreement were less than the amount which
should have been paid, then GPC shall make all payments required to eliminate
any discrepancy revealed by said inspection within forty-five (45) days after
NEOTHERAPEUTICS's demand therefor. Furthermore, if the aggregate royalty
payments GPC made were less than ninety five (95%) of the amount which should
have been paid made during the period in question, GPC shall also reimburse
NEOTHERAPEUTICS for the reasonable out-of-pocket cost of such inspection and
shall pay interest on the deficiency pursuant to Section 10.7.

        10.5. TAXES. In the event that GPC is required to withhold any tax to
the tax or revenue authorities in any country in the Territory in connection
with any payment to NEOTHERAPEUTICS due to the laws of such country which
payment is credited to NEOTHERAPEUTICS's tax liability, such amount shall be
deducted from the royalty or other payment to be made by GPC, and GPC shall
notify NEOTHERAPEUTICS and promptly furnish NEOTHERAPEUTICS with copies of any
tax certificate or other documentation evidencing such withholding. Each Party
agrees to cooperate with the other Party in claiming exemptions from such
deductions or withholdings under any agreement or treaty from time to time in
effect.

        10.6. BLOCKED CURRENCY. If at any time legal restrictions prevent GPC's
prompt remittance of part or all of the royalties due with respect to any
country where a Covered Product is sold, GPC shall convert the amount owed to
NEOTHERAPEUTICS into U.S. funds and shall pay NEOTHERAPEUTICS directly from
GPC's U.S. source of funds for the amount impounded. GPC shall then pay all
future royalties due to NEOTHERAPEUTICS from GPC's U.S. source of funds so long
as the legal restrictions of this Section 10.6 still apply.

        10.7. LATE PAYMENTS. In the event that any payment GPC is required to
make hereunder is not made within thirty (30) days after such payment was
originally due, GPC shall pay interest on the past due amount as follows:

        (a) If GPC's late payment pertains to a payment NEOTHERAPEUTICS is
required to make under the J-M License Agreement and causes NEOTHERAPEUTICS to
become liable to pay interest with respect to such payment under the J-M License
Agreement, then GPC shall pay interest on the past due amount as provided under
the applicable provision(s) of the J-M License Agreement.

        (b) In all other events, GPC shall pay interest on the past due amount
at the rate of twelve percent (12%) per annum, until payment in full is made.

11. MANUFACTURING. Promptly following the Effective Date, GPC and
NEOTHERAPEUTICS shall negotiate in good faith the terms of a Supply Agreement
regarding the supply of PLATINUM COMPLEXES (as defined in the J-M License
Agreement) to GPC. {redacted}

12. CONFIDENTIALITY

        12.1. CONFIDENTIALITY; EXCEPTIONS. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing, the Parties agree
that, during the term of this Agreement and for five years thereafter, each
Party, its Affiliates and its Sublicensees, if any (collectively, a "receiving
Party"), shall use their best efforts to keep completely confidential, shall not
publish or otherwise disclose to any Third Party and shall not use for any
purpose other than the performance of this Agreement both the financial terms of
this Agreement and any information furnished to it by the other Party, its
Affiliates or its Sublicensees, if any (collectively, a "disclosing Party") (and
shall ensure that its and its Affiliates' and its Sublicensees' respective
directors, officers, employees or agents do likewise), except to the extent that
it can be established by the receiving Party by competent proof that such
information: (i) is, or hereafter becomes, generally available to the public
other than by reason of any default by the receiving Party with respect to its
confidentiality obligations hereunder; (ii) was already known to the receiving
Party at the time of disclosure by the disclosing Party; (iii) was lawfully
disclosed to the receiving Party by a Third Party who was not in default of any
confidentiality obligation to the disclosing Party; or (iv) is independently
developed by or for the receiving Party without reference to or reliance upon
the information furnished by the disclosing Party (all such information to which
none of the foregoing exceptions applies, "Confidential Information"). The
NEOTHERAPEUTICS Licensed Technology and NEOTHERAPEUTICS Development Technology
shall be the Confidential Information of NEOTHERAPEUTICS and the GPC Development
Technology shall be the Confidential Information of GPC. The Joint Development
Technology shall be the Confidential Information of both Parties.

        12.2. EXCLUSIONS TO CONFIDENTIALITY. The restrictions contained in
Section 12.1 shall not apply to any Confidential Information in the hands of a
receiving Party that (i) is submitted by the receiving Party to governmental
authorities to facilitate the issuance of marketing approvals for a Covered
Product, provided that reasonable measures shall be taken to assure confidential
treatment of such information, if practicable; (ii) is provided by GPC to any
Third Party under appropriate terms and conditions, including confidentiality
provisions equivalent to those in this Agreement, for consulting, manufacturing
development, manufacturing, external testing, marketing trials and sublicensing
or potential sublicensing; or (iii) is otherwise required to be disclosed in
compliance with applicable laws or regulations (including, without limitation,
to comply with any governmental or stock exchange disclosure requirements) or an
order by a court or other regulatory body having competent jurisdiction;
provided, however, that if a receiving Party is required to make any such
disclosure of the disclosing Party's Confidential Information such receiving
Party shall, except where impracticable for necessary disclosures (for example
to physicians conducting studies or to health authorities), give reasonable
advance notice to the other Party of such disclosure

{redacted} Certain information on this page has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.



requirement and, except to the extent inappropriate in the case of patent
applications or otherwise, will use its best efforts to secure confidential
treatment of such Confidential Information required to be disclosed. In
addition, any press release or other public announcement permitted by the terms
of Section 17.7 hereof shall be excluded from the provisions of Section 12.1.

        12.3. INJUNCTIVE RELIEF. The Parties acknowledge that monetary damages
alone would not adequately compensate the disclosing Party in the event of a
material breach by the receiving Party of this Section 12, and that, in addition
to all other remedies available to the disclosing Party under this Agreement, at
law or in equity, it shall be entitled to injunctive relief for the enforcement
of its rights under this Section 12, without the posting of a bond or other
security.

13. INTELLECTUAL PROPERTY

        13.1. PATENT ENFORCEMENT. (a) Each Party shall notify the other promptly
after such Party becomes aware of any alleged infringement of any Patent
licensed to GPC under this Agreement in any country in the Territory. Except as
provided in Section 13.3, GPC shall have the first right, but not the duty, to
institute patent infringement actions against Third Parties with respect to any
such alleged infringement. GPC shall take all such actions under this Section
13.1(a) (other than with respect to a Patent included solely in the GPC
Development Technology) in reasonable consultation with NEOTHERAPEUTICS and
shall keep NEOTHERAPEUTICS apprised as to the status of any such infringement
action GPC institutes. NEOTHERAPEUTICS shall execute all reasonable, necessary
and proper documents and take such actions as shall be appropriate to allow GPC
to institute and prosecute infringement actions under this Section 13.1(a).

        (b) The costs and expenses of bringing and maintaining any infringement
action under Section 13.1(a) shall be borne solely by GPC.

        (c) Any award or compensation (including the fair market value of
non-monetary compensation) paid by Third Parties as a result of any infringement
action brought by GPC under Section 13.1(a) (whether by way of settlement or
otherwise) shall be allocated first to reimbursement of GPC for all expenses
incurred by it in connection with such action. Any remaining award or
compensation shall be used to pay NEOTHERAPEUTICS the royalty it would have been
entitled to receive had the balance of such recovery or damages, to the extent
attributable to sales of such infringing products, been attributable to sales of
Covered Products by GPC hereunder.

        (d) Except as provided in Section 13.3, in the event GPC elects not to,
or fails to, exercise its rights under Section 13.1(a) with respect to any
alleged infringement of a Patent licensed to GPC under this Agreement (excluding
any Patent included solely in the GPC Development Technology) within one hundred
twenty (120) days after receiving notice thereof, NEOTHERAPEUTICS shall have the
right, but not the duty, to institute patent infringement actions against Third
Parties with respect to any such alleged infringement. NEOTHERAPEUTICS shall
take all such actions under this Section 13.1(d) in reasonable consultation with
GPC and shall keep GPC apprised as to


the status of any such infringement action NEOTHERAPEUTICS institutes. GPC shall
execute all reasonable, necessary and proper documents and take such actions as
shall be appropriate to allow NEOTHERAPEUTICS to institute and prosecute
infringement actions under this Section 13.1(d). Any award or compensation
(including the fair market value of non-monetary compensation) paid by Third
Parties as a result of any infringement action brought by NEOTHERAPEUTICS under
this Section 13.1(d) (whether by way of settlement or otherwise) shall be
allocated first to reimbursement of NEOTHERAPEUTICS for all expenses incurred by
it in connection with such action. Any remaining award or compensation shall be
allocated equally between the Parties.

        13.2. INFRINGEMENT ACTIONS BY THIRD PARTIES. (a) Each Party shall notify
the other Party promptly in writing of any claim of, or action for, infringement
of any Patents owned or licensed by Third Parties which is threatened, made or
brought against either Party by reason of either Party's performance of its
obligations under this Agreement or manufacture, use or sale of any Covered
Products in the Territory in the Field.

        (b) Except as provided in Section 13.3, in the event that such an action
for infringement is commenced solely against a Party or both Parties jointly
and/or any of their respective Affiliates or Sublicensees, as the case may be,
with respect to any Covered Product developed and commercialized by GPC, its
Affiliates and/or Sublicensees, GPC shall defend such action at its own expense,
and NEOTHERAPEUTICS hereby agrees to assist and cooperate with GPC to the extent
necessary in the defense of such suit, in accordance with Section 13.2(c). GPC
shall have the right to settle any such action or consent to an adverse judgment
thereto, and NEOTHERAPEUTICS's consent shall not be required unless such
settlement or consent: (i) imposes any material obligation on NEOTHERAPEUTICS
(including under Section 13.2(d)), or (ii) materially impairs NEOTHERAPEUTICS's
rights in or to any J-M Licensed Technology, NEOTHERAPEUTICS Licensed
Technology, NEOTHERAPEUTICS Development Technology and/or Joint Development
Technology, in which event NEOTHERAPEUTICS's consent shall not be unreasonably
withheld or delayed.

        (c) The costs of defending any infringement action with respect to a
Covered Product developed and commercialized by GPC, its Affiliates and/or
Sublicensees shall be borne solely by GPC.

        (d) During the pendency of any such action, GPC shall continue to pay
all royalties due hereunder. Subject to Section 9.5(b), GPC shall be fully
liable for the payment of any award for damages, or any amount due pursuant to
any settlement entered into by GPC, to the extent that any such action pertains
to a Covered Product developed and commercialized by GPC and/or its Affiliates
or Sublicensees.

        (e) Except to the extent that the provisions of Section 13.1 shall apply
to any portion thereof, GPC shall retain any award or compensation (including
the fair market value of non-monetary compensation) received by GPC as a result
of any such action (i.e., as a result of a counterclaim).

        13.3. SUPERIOR RIGHTS OF J-M. Notwithstanding any other provision of
this Agreement, the Parties' respective rights and obligations under this
Section 13 shall be subject, in all events, to any superior rights of J-M under
the J-M License Agreement regarding the J-M Licensed Technology.

14. INDEMNIFICATION

        14.1. BY GPC. GPC shall indemnify and hold NEOTHERAPEUTICS and its
Affiliates and their respective directors, officers, employees and agents,
harmless from and against any and all liabilities, damages, losses, costs and
expenses (including the reasonable fees of attorneys and other professionals and
other reasonable litigation expenses) arising out of or resulting from:

               (i) the negligence, recklessness or intentional misconduct of
        GPC, its Affiliates or its Sublicensees and their respective directors,
        officers, employees and agents, in connection with the work performed by
        GPC in connection with the development of Covered Products or pursuant
        to Section 8 or in connection with GPC's exercise of any of its rights
        hereunder;

               (ii) any and all product liability claims resulting from the
        development and/or commercialization of any Covered Product by GPC, its
        Affiliates or its Sublicensees;

               (iii) any warranty claims, Covered Product recalls or any tort
        claims of personal injury (including death) or property damage relating
        to or arising out of the manufacture, use, distribution or sale of any
        Covered Product by GPC, its Affiliates or its Sublicensees due to any
        negligence, recklessness or intentional misconduct by, or strict
        liability of, GPC, its Affiliates or its Sublicensees, and their
        respective directors, officers, employees and agents, except, in each
        case, to the comparative extent such claim arose out of or resulted from
        the negligence, recklessness or intentional misconduct of
        NEOTHERAPEUTICS or its Affiliates and their respective directors,
        officers, employees and agents; or

               (iv) any breach of any representation or warranty made by GPC in
        Section 2.1.

        14.2. BY NEOTHERAPEUTICS. NEOTHERAPEUTICS shall indemnify and hold GPC,
its Affiliates and its Sublicensees and their respective directors, officers,
employees and agents, harmless from and against any and all liabilities,
damages, losses, costs and expenses (including the reasonable fees of attorneys
and other professionals and other reasonable litigation expenses) arising out of
or resulting from:

               (i) the negligence, recklessness or intentional misconduct of
        NEOTHERAPEUTICS or its Affiliates and their respective directors,
        officers, employees and agents, in connection with the work performed by
        NEOTHERAPEUTICS under the development of Covered Products or pursuant to
        Section 5 or in connection with NEOTHERAPEUTICS's exercise of any of its
        rights hereunder; or

               (ii) any breach of any representation or warranty made by
        NEOTHERAPEUTICS pursuant to Section 2 or 3.1.

        14.3. NOTICE. In the event that any Person entitled thereto (an
"Indemnitee") is seeking indemnification under Section 14.1 or 14.2, such
Indemnitee shall inform the indemnifying Party of a claim as soon as reasonably
practicable after the indemnitee receives notice of the claim, shall permit the
indemnifying Party to assume direction and control of the defense of the claim
(including the sole right to settle it at the sole discretion of the
indemnifying Party, provided that such settlement does not impose any material
obligation on the indemnitee or the other Party) and shall cooperate as
requested (at the expense of the indemnifying Party) in the defense of the claim
(including, without limitation, granting the indemnifying Party limited access
to pertinent records and making persons under such Indemnitee's control
available for interview and testimony).

        14.4. COMPLETE INDEMNIFICATION. As the Parties intend complete
indemnification, all costs and expenses incurred by any Indemnitee to enforce
this Section 14 shall be reimbursed by the indemnifying Party.

15. TERM; TERMINATION

        15.1. TERM. This Agreement shall commence as of the Effective Date and,
unless sooner terminated as provided hereunder, shall expire as follows:

        (a) As to each Covered Product in each country in the Territory, this
Agreement shall expire upon the expiration of the Royalty Term with respect to
such Covered Product in such country.

        (b) This Agreement shall expire in its entirety upon the termination of
the respective Royalty Terms with respect to all Covered Products in all
countries in the Territory.

        15.2. EFFECT OF EXPIRATION. Following the expiration of this Agreement
with respect to a Covered Product in a country in the Territory pursuant to
Section 15.1(a), GPC shall have the royalty-free, perpetual right to continue to
make, have made, use, sell, offer for sale, have sold and export such Covered
Product in such country. Following the expiration of the term of this Agreement
in its entirety pursuant to Section 15.1(b), GPC shall have the royalty-free,
perpetual right to continue to make, have made, use, sell, offer for sale, have
sold and export all Covered Products in all countries in the Territory.

        15.3. TERMINATION BY EITHER PARTY. Each Party shall have the right to
terminate this Agreement, upon notice to the other Party, in the event that:

               (i) Such other Party materially defaults with respect to any of
        its material obligations under this Agreement and does not cure such
        default within sixty (60) days after the receipt of a notice from the
        non-breaching Party specifying the nature of, and requiring the remedy
        of, such default (or, if such default cannot be cured within such sixty
        (60)-day period, if the breaching Party does not commence and diligently
        continue actions to cure same during such sixty


        (60)-day period); provided that, (x) if NEOTHERAPEUTICS is the Party
        claiming a default by GPC, GPC shall promptly following receipt of such
        notice of default notify NEOTHERAPEUTICS if it intends to seek to cure
        such default, (y) if the default relates to the payment of any amounts
        owed under this Agreement, the cure period described above shall be
        fifteen (15) days from receipt of notice of such default, and (z) if any
        such default is limited to the breaching Party's obligations with
        respect to a particular Covered Product and/or a particular country in
        the Territory, then any termination of this Agreement under this clause
        (i) due to such default shall be limited to the breaching Party's rights
        under this Agreement with respect to such Covered Product and/or
        country. Any termination pursuant to this clause (i) shall be without
        prejudice to any of the non-breaching Party's other rights under this
        Agreement, and in addition to any other remedies available to it by law
        or in equity;

               (ii) The other Party shall have: (i) voluntarily commenced any
        proceeding or filed any petition seeking relief under the bankruptcy,
        insolvency or other similar laws of any jurisdiction, (ii) applied for,
        or consented to, the appointment of a receiver, trustee, custodian,
        sequestrator, conciliator, administrator or similar official for it or
        for all or substantially all of its property, (iii) filed an answer
        admitting the material allegations of a petition filed against or in
        respect of it in any such proceeding, (iv) made a general assignment for
        the benefit of creditors of all or substantially all of its assets, (v)
        admitted in writing its inability to pay all or substantially all of its
        debts as they become due, or (vi) taken corporate action for the purpose
        of effecting any of the foregoing; or

               (iii) An involuntary proceeding shall have been commenced, or any
        involuntary petition shall have been filed, in a court of competent
        jurisdiction seeking: (i) relief in respect of the other Party, or of
        its property, under the bankruptcy, insolvency or similar laws of any
        jurisdiction, (ii) the appointment of a receiver, trustee, custodian,
        sequestrator, conciliator, administrator or similar official for such
        other Party or for all or substantially all of its property, or (iii)
        the winding-up or liquidation of such other Party; and, in each case,
        such proceeding or petition shall have continued undismissed for sixty
        (60) days, or an order or decree approving or ordering any of the
        foregoing shall have continued unstayed, unappealed and in effect for
        thirty (30) days.

        15.4. TERMINATION BY GPC. Notwithstanding any other provision of this
Agreement, GPC shall have the right to terminate this Agreement, in its entirety
or with respect to any particular Covered Product and/or country in the
Territory, at any time upon six (6) months' notice (or less, at NEOTHERAPEUTICS
discretion) to NEOTHERAPEUTICS.

        15.5. EFFECT OF EXPIRATION OR TERMINATION. (a) Subject to Section
15.5(b), upon any termination of this Agreement by NEOTHERAPEUTICS pursuant to
Section 15.3 or by GPC pursuant to Section 15.4, GPC shall (i) transfer and
assign to NEOTHERAPEUTICS all of GPC's right, title and interest in and to any
GPC Development Technology and all data, reports, records, materials and other
intellectual


property owned or controlled by GPC that relates exclusively to the Covered
Products; (ii) grant NEOTHERAPEUTICS a non-exclusive license, solely for the
purpose of NEOTHERAPEUTICS's developing, making, having made, using, marketing
and selling Covered Products, under GPC's interest in any Joint Development
Technology that does not exclusively relate to the Covered Products; and (iii)
transfer and assign to NEOTHERAPEUTICS ownership of all INDs, NDAs and other
regulatory filings made or filed with respect to any Covered Product (or, if
such transfer and assignment is not permitted under the laws of any applicable
jurisdiction, GPC shall take such other permitted actions with respect to such
filings as may be reasonably requested by NEOTHERAPEUTICS), all upon
commercially reasonable, arms length financial terms and conditions that the
Parties shall negotiate in good faith and agree upon as soon as practicable
after such termination of this Agreement; provided that, if this Agreement is
terminated by GPC pursuant to Section 15.4, then NEOTHERAPEUTICS shall not be
obligated to pay any amount for the licenses and transfers described in this
sentence. In the event the Parties, despite the mutual use of good faith
efforts, are unable to agree upon such terms and conditions, the Parties shall
appoint an independent valuation expert who shall determine such terms and
conditions, which determination shall be binding upon the Parties. If the
Parties are unable to agree upon the appointment of such an expert, then each
Party shall nominate an expert (the cost of whom shall be borne by such Party),
and both experts appointed by the Parties shall jointly appoint the expert who
shall make such determination. Any expert appointed pursuant to this Section
15.5(a) shall have at least fifteen (15) years' experience in the business of
pharmaceutical development and commercialization. Except as provided above, the
costs and expenses of any expert acting under this Section 15.5(a) shall be
borne equally by the Parties.

        (b) Notwithstanding the foregoing:

        (i) In the event of any termination of this Agreement by NEOTHERAPEUTICS
pursuant to Section 15.3 or by GPC pursuant to Section 15.4 with respect to
fewer than all of the Covered Products and/or fewer than all of the countries in
the Territory, the rights, licenses and other benefits to be transferred,
granted and otherwise assigned to NEOTHERAPEUTICS under Section 15.5(a) shall be
expressly limited to those pertaining to the Covered Products and/or the
countries in the Territory to which such termination applies; and

        (ii) At any time prior to any transfer, granting and assignment of
rights, licenses and benefits to NEOTHERAPEUTICS pursuant to Section 15.5(a),
NEOTHERAPEUTICS may elect, upon notice to GPC, to waive the application of
Section 15.5(a) with respect to such rights, licenses and benefits. Following
any such waiver neither Party shall have any obligation or liability to the
other with respect to such rights, licenses and benefits.

        15.6. RIGHT TO SELL STOCK ON HAND. Provided that GPC is not in material
breach of any obligation under this Agreement at the time of any termination of
this Agreement, in whole or in part, GPC shall have the right for one year
thereafter to dispose of all Covered Product then in its inventory and to
complete manufacture of and dispose of any work-in-progress then being
manufactured, as though this Agreement had


not terminated. GPC shall pay royalties thereon, in accordance with the
provisions of this Agreement, as though this Agreement had not terminated.

        15.7. SURVIVAL OF SUBLICENSES. Upon any termination of this Agreement,
all sublicenses granted by GPC under this Agreement shall be automatically
assigned to NEOTHERAPEUTICS, which shall thereafter receive all benefits and
have all obligations under the sublicenses as in the place and stead of GPC.

        15.8. EFFECT OF TERMINATION OF J-M LICENSE AGREEMENT. Upon any
termination of the J-M License Agreement, GPC shall attorn to and accept J-M in
place of NEOTHERAPEUTICS such that this Agreement shall be deemed to be an
agreement between J-M and GPC.

        15.9. ACCRUED RIGHTS, SURVIVING OBLIGATIONS. (a) Termination,
relinquishment or expiration of this Agreement for any reason shall be without
prejudice to any rights which shall have accrued to the benefit of either Party
prior to such termination, relinquishment or expiration. Such termination,
relinquishment or expiration shall not relieve either Party from obligations
which are expressly indicated to survive termination or expiration of this
Agreement. The rights of the Parties upon termination described in this
Agreement shall not be exclusive of any other rights or claims at law or in
equity that either Party may have against the other arising out of this
Agreement.

        (b) Termination, relinquishment or expiration of this Agreement shall
not terminate each Party's obligation to pay all royalties, milestone payments
and other monetary obligations that may have accrued hereunder prior to such
termination. All of the Parties' rights and obligations under Sections 6.1, 6.2,
8.5, 10, 12, 13 (solely with respect to actions pending at such time), 14, 15.2,
15.5, 15.6, 15.7, 15.8, 15.9, 17.1 (if in effect at such time), 17.3, 17.5,
17.12, 17.13 and 17.14 shall survive termination, relinquishment or expiration
hereof.

16. FORCE MAJEURE

        Neither Party shall be held liable or responsible to the other Party nor
be deemed to be in default under or in breach of any provision of this Agreement
for failure or delay in fulfilling or performing any obligation under this
Agreement when such failure or delay is due to force majeure, and without the
fault or negligence of the Party so failing or delaying. For purposes of this
Agreement, force majeure shall be defined as causes beyond the control of the
Party, including, without limitation, acts of God; acts, regulations, or laws of
any government; war; civil commotion; destruction of production facilities or
materials by fire, flood, earthquake, explosion or storm; labor disturbances;
epidemic; and failure of public utilities or common carriers. In such event
NEOTHERAPEUTICS or GPC, as the case may be, shall immediately notify the other
Party of such inability and of the period for which such inability is expected
to continue. The Party giving such notice shall thereupon be excused from such
of its obligations under this Agreement as it is thereby disabled from
performing for so long as it is so disabled and for thirty (30) days thereafter.
To the extent possible, each Party shall use reasonable efforts to minimize the
duration of any force majeure.



17. MISCELLANEOUS

        17.1. RELATIONSHIP OF PARTIES. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, employment or joint venture
relationship between the Parties. Neither Party shall be entitled to, or shall,
incur any debts or make any commitments for the other, except to the extent, if
at all, specifically provided herein.

        17.2. ASSIGNMENT. (a) Each Party shall be entitled to assign this
Agreement to any of its Affiliates upon sixty (60) days' prior written notice to
the other Party; provided, however, that in the event of any such assignment,
the assigning Party shall remain jointly and severally liable with respect to
all of its obligations hereunder, and in the event of any default relating to
any such obligations, the other Party shall be entitled to proceed against
either such Affiliate or directly against the assigning Party, as such other
Party may determine in its sole discretion, to enforce this Agreement.

        (b) Except as provided in Section 17.5(a), neither Party shall be
entitled to assign its rights hereunder without the express written consent of
the other Party, except that each Party may assign this Agreement to any
assignee of all or substantially all of such Party's business (or that portion
thereof to which this Agreement relates) or in the event of such Party's merger,
consolidation or similar transaction.

        (c) No assignment contemplated by this Section 17.3 shall be valid or
effective unless and until the assignee/transferee shall agree in writing to be
bound by the provisions of this Agreement.

        17.3. DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS
2 AND 3.1, THE PARTIES EXPRESSLY DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR
A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR ARISING FROM
A COURSE OF DEALING OR USAGE OF TRADE PRACTICE.

        17.4. FURTHER ACTIONS. Each Party shall execute, acknowledge and deliver
such further instruments, and take all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.

        17.5. NOTICE. Any notice or request required or permitted to be given
under or in connection with this Agreement shall be deemed to have been
sufficiently given if in writing and personally delivered or sent by certified
mail (return receipt requested), facsimile transmission (receipt verified), or
overnight express courier service (signature required), prepaid, to the Party
for which such notice is intended, at the address set forth for such Party
below:

        (i) In the case of GPC, to:

                GPC BIOTECH AG

                   Fraunhoferstrasse 20
                   D-82152 Martinsried/Munich
                   Germany

                   Attention: Chief Executive Officer
                   Facsimile No.:  011-49-89-8565-2610

          With a copy to:

                   Ropes & Gray
                   One International Place
                   Boston, Massachusetts
                   USA
                   Attention:  Marc A. Rubenstein, Esq.
                   Facsimile No.: 617-951-7050

          (ii)  In the case of NEOTHERAPEUTICS, to:

                   157 Technology Drive
                   Irvine, California 92618
                   USA
                   Attention:
                   Facsimile No.: 949-788-6706


or to such other address for such Party as it shall have specified by like
notice to the other Party, provided that notices of a change of address shall be
effective only upon actual receipt thereof. If delivered personally or by
facsimile transmission, the date of delivery shall be deemed to be the date on
which such notice or request was given. If sent by overnight express courier
service, the date of delivery shall be deemed to be the next business day after
such notice or request was deposited with such service. If sent by certified
mail, the date of delivery shall be deemed to be the fifth (5th) business day
after such notice or request was deposited with the postal service in the
country of mailing.

        17.6. USE OF NAME. Except as otherwise provided herein, neither Party
shall have any right, express or implied, to use in any manner the name or other
designation of the other Party or any other trade name or trademark of the other
Party (including, without limitation, any Trademark) for any purpose in
connection with the performance of this Agreement.

        17.7. PUBLIC ANNOUNCEMENTS. (a) Except as required by law (including,
without limitation, the applicable disclosure requirements of any relevant
regulatory authority or stock exchange) and as permitted by Section 12.2,
neither Party shall make any public announcement concerning this Agreement, any
Covered Product or any other subject matter hereof without the prior written
consent of the other Party, which shall not be unreasonably withheld or delayed.
It shall not be unreasonable for a Party to withhold consent with respect to any
public announcement containing any of such Party's


Confidential Information. In the event of any required or proposed public
announcement, (i) the Parties shall consult with each other in good faith as to
the timing thereof, and (ii) the Party making such announcement shall provide
the other Party with a copy of the proposed text prior to such announcement
sufficiently in advance of the scheduled release of such announcement to afford
such other Party a reasonable opportunity to review and comment upon the
proposed text. Notwithstanding the foregoing, the Parties agree to prepare a
mutually agreeable press release that may be used by either Party in connection
with this Agreement, and any further announcement containing substantially the
same information may be used without the need to seek the consent of the other
Party.

        (b) Each Party acknowledges and agrees that the other Party needs to
communicate with its investors regularly and keep them apprised of the
development status of the products in which such Party has an interest. In order
to facilitate this communication, promptly after the Effective Date each Party
shall designate, from time to time, one employee who shall have primary
responsibility for reviewing and approving all proposed investor communications
of the other Party, to the extent that they pertain to this Agreement, any
Covered Product or any other subject matter hereof. Each Party shall instruct
such employee to review the content of such draft communications as
expeditiously as possible and otherwise to cooperate with and assist the other
Party in connection therewith, so long as the number of such communications and
the timing thereof are reasonable.

        (c) Following a Party's consent to or approval of the public
announcement of any information pursuant to this Section 17.7, both Parties
shall be entitled to make subsequent public announcements of such information
without renewed compliance with this Section 17.7, unless the scope and/or
duration of such consent or approval is expressly limited.

        17.8. WAIVER. A waiver by either Party of any of the terms and
conditions of this Agreement in any instance shall not be deemed or construed to
be a waiver of such term or condition for the future, or of any subsequent
breach hereof. All rights, remedies, undertakings, obligations and agreements
contained in this Agreement shall be cumulative, and none of them shall be in
limitation of any other remedy, right, undertaking, obligation or agreement of
either Party.

        17.9. COMPLIANCE WITH LAW. Nothing in this Agreement shall be deemed to
permit a Party to export, re-export or otherwise transfer any Covered Product
sold under this Agreement without compliance with applicable laws.

        17.10. SEVERABILITY. When possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.


        17.11. AMENDMENT. No amendment, modification or supplement of any
provisions of this Agreement shall be valid or effective unless made in writing
and signed by a duly authorized officer of each Party.

        17.12. GOVERNING LAW; ENGLISH ORIGINAL; JURISDICTION. (a) This Agreement
shall be governed by and interpreted in accordance with the laws of the
Commonwealth of Massachusetts without regard to its choice of law principles.
The English original of this Agreement shall prevail over any translation
hereof.

        (b) Without prejudice to the rights and obligations of the Parties under
Section 17.13, each Party hereby consents to the in personam jurisdiction of any
state or federal court sitting in the Commonwealth of Massachusetts with respect
to any matter arising in connection with this Agreement and further consents to
the service of any process, notice of motion or other application to any such
court or a judge thereof outside the Commonwealth of Massachusetts by registered
or certified mail or personal service, provided that reasonable time is allowed
for appearance. Each Party hereby waives, to the greatest extent it may do so,
any defense it may have on the grounds of inconvenient forum with respect to any
action or proceeding maintained in any state or federal court in Massachusetts.

        17.13. ARBITRATION. (a) Any dispute arising out of or relating to any
provisions of this Agreement shall be finally settled by arbitration to be held
in Boston, Massachusetts, under the auspices and then current commercial
arbitration rules of the American Arbitration Association (the "AAA"). Such
arbitration shall be conducted by three (3) arbitrators. Within thirty (30) days
after the commencement of any arbitration, each Party shall appoint one
arbitrator, and these two arbitrators shall jointly appoint the third
arbitrator, who shall have significant experience in pharmaceutical drug
development and commercialization; provided, however, that if the two
arbitrators appointed by the Parties are unable to agree upon the third
arbitrator within thirty (30) days after their appointment, then the third
arbitrator shall be appointed by the AAA. The Parties shall instruct such
arbitrators to render a determination of any such dispute within four (4) months
after their appointment. All arbitration proceedings shall be conducted in
English. Judgment upon any award rendered may be entered in any court having
jurisdiction, or application may be made to such court for a judicial acceptance
of the award and an order of enforcement, as the case may be.

        (b) Section 17.14(a) shall not prohibit a Party from seeking injunctive
relief from a court of competent jurisdiction in the event of a breach or
prospective breach of this Agreement by the other Party which would cause
irreparable harm to the first Party.

        17.14. NO CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL EITHER PARTY OR ANY
OF ITS RESPECTIVE AFFILIATES OR SUBLICENSEES BE LIABLE TO THE OTHER PARTY OR ANY
OF ITS AFFILIATES OR SUBLICENSEES FOR SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT
LIABILITY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, LOSS OF


PROFITS OR REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES
FOR SUCH OR OTHER DAMAGES.

        17.15. ENTIRE AGREEMENT. This Agreement (together with the Exhibits
hereto) sets forth the entire agreement and understanding between the Parties as
to the subject matter hereof and merges all prior discussions and negotiations
between them, and neither of the Parties shall be bound by any conditions,
definitions, warranties, understandings or representations with respect to such
subject matter other than as expressly provided herein or as duly set forth on
or subsequent to the Effective Date in writing and signed by a proper and duly
authorized officer or representative of the Party to be bound thereby. Without
limiting the generality of the foregoing, the terms and conditions of this
Agreement shall supersede the terms and conditions of any confidentiality,
non-disclosure or similar such agreement that the Parties may have executed
prior to the Effective Date.

        17.16. PARTIES IN INTEREST. All the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the Parties hereto and their respective permitted successors and assigns.

        17.17. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.

        17.18. COUNTERPARTS. This Agreement may be executed simultaneously in
two counterparts, any one of which need not contain the signature of more than
one Party, but both such counterparts taken together shall constitute one and
the same agreement.



        IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.


                                       NEOTHERAPEUTICS, INC.



                                       By: /s/ Rajesh Shrotriya
                                          --------------------------------------
                                       Name:  Rajesh C. Shrotriya, M.D.
                                       Title: Chairman, CEO & President





                                       GPC BIOTECH AG

                                       By: /s/ Bernd R. Seizinger
                                          --------------------------------------
                                       Name:   Bernd R. Seizinger
                                       Title:  Chief Executive Officer


                                       By: /s/ S. Meier-Ewert
                                          --------------------------------------
                                       Name:   S. Meier-Ewert
                                       Title:  Chief Scientific Officer



                                    EXHIBIT A


                              J-M License Agreement

The Johnson Matthey PLC License Agreement was filed as Exhibit 10.5 to Form
10-Q, as filed with the Securities and Exchange Commission on November 14,
2001, and incorporated herein by this reference.

The First Amendment to the License Agreement dated August 28, 2001 between
Johnson Matthey PLC and NeoTherapeutics, Inc. dated September 30, 2002, is
filed as Exhibit 10.8 to this Form 10-Q and incorporated herein by this
reference.



                                    EXHIBIT B


                                  Patent Rights

Filed as Schedule A of Exhibit 10.5 to Form 10-Q, as filed with the Securities
and Exchange Commission on November 14, 2001, and incorporated herein by this
reference.

                                    EXHIBIT C


                 Initial Members of Joint Development Committee



        GPC Designees:           Marcel Rozencweig, Chairman
                                 Michael Petrone
                                 Ed McNiff


        NEOTHERAPEUTICS
        Designees:               Gino Lenaz
                                 Ashok Gore
                                 Shanta Chawla


                                    EXHIBIT D


                          Registration Rights Agreement



                              NEOTHERAPEUTICS, INC.

                          REGISTRATION RIGHTS AGREEMENT

      This Registration Rights Agreement (this "Agreement") is made as of
_______ __, 2002, between NeoTherapeutics, Inc., a Delaware corporation (the
"Company"), and GPC Biotech AG, a company organized under the laws of the
Federal Republic of Germany (the "GPC").

                                    RECITALS

      The Company and GPC are parties to a Co-Development and License Agreement
(the "License Agreement") dated as of September __, 2002, pursuant to which the
Company has agreed to sell to GPC and GPC has agreed to purchase from the
Company shares of the Company's Common Stock, upon the attainment of certain
milestones under the License Agreement. As a condition to GPC's obligation to
purchase shares of Common Stock under the License Agreement, the Company and GPC
are required to enter into this Agreement in order to provide GPC with certain
rights to register for resale the shares of the Company's Common Stock purchased
under the License Agreement.

                                    AGREEMENT

      The parties agree as follows:

1.    DEFINITIONS; REGISTRATION RIGHTS.

      1.1   DEFINITIONS. For purposes of this Agreement:

            (a) "Common Stock" means the common stock, par value $0.001 per
share, of the Company.

            (b) "Exempt Registration" means a registration statement relating to
the sale of securities by the Company pursuant to a stock option, stock purchase
or similar benefit plan or an SEC Rule 145 transaction or any other registration
statement that would not customarily provide for the secondary sale of equity
shares for cash.

            (c) "Holder" means (i) GPC and (ii) any person owning Registrable
Securities to whom the rights under this Section 1 have been transferred in
accordance with Section 1.9 of this Agreement.

            (d) "person" means any individual, corporation, partnership, limited
liability company, trust, business, association or government or political
subdivision thereof, governmental agency or other entity.

            (e) "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act and the declaration or
ordering of effectiveness of such registration statement or document.

            (f) The term "Registrable Securities" means (i) the shares of Common
Stock issued under the License Agreement, and (ii) any other shares of Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
shares listed in clause (i) and this clause (ii); provided, however, that the
foregoing definition shall exclude in all cases any Registrable Securities sold
or transferred by a Holder in a transaction in which such Holder's rights under
this Agreement are not assigned. Notwithstanding the foregoing, securities shall
only be treated as Registrable Securities if and so long as they have not been
(A) sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, or (B) sold in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(1) thereof so that all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale.

            (g) "SEC" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.

            (h) "Securities Act" means the Securities Act of 1933, as amended.

      1.2   COMPANY REGISTRATION.

            (a) Initiation. If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by the
Company for stockholders other than the Holders) any of its stock in connection
with the public offering of such securities solely for cash (other than an
Exempt Registration), the Company shall, at such time, promptly give each Holder
notice of such proposed registration. Upon the written request of each Holder
given within 20 days after receipt by such Holder of the Company's notice, the
Company shall, subject to the provisions of Section 1.2(b), cause to be
registered all of the Registrable Securities that each such Holder has requested
to be registered.

            (b) Underwritten Offering. In connection with any offering involving
an underwriting of shares of the Company's capital stock, the Company shall not
be required under Section 1.2(a) to include any of the Holders' securities in
such underwriting unless they accept the terms of the underwriting as agreed
upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata (to the nearest 100 shares) among the selling stockholders according to the
total amount of securities entitled to be included therein owned by each selling
stockholder or in such other proportions as shall mutually be agreed to by such
selling stockholders). For purposes of the preceding apportionment, for any
participating Holder that is a partnership, limited liability company or
corporation, the partners, retired partners, members,


                                       2

retired members and stockholders of such Holder, or the estates and family
members of any such partners, members, retired partners or members and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single "selling stockholder," and any pro-rata reduction with respect to such
"selling stockholder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all Persons included in such "selling
stockholder," as defined in this sentence.

            (c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 1.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include Registrable Securities in such registration.

      1.3 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

            (a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective.

            (b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act.

            (c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of such Registrable Securities.

            (d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.

            (e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement with the managing
underwriter of such offering in usual and customary form and consistent with the
other provisions of this Agreement. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement.

            (f) Promptly notify each Holder covered by the registration
statement at any time when the Company becomes aware of the happening of any
event as a result of which the registration statement or the prospectus included
in such registration statement or any supplement to the prospectus (as then in
effect) contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements there in (in the case of the
prospectus, in light of the circumstances under which they were made) not
misleading or, if for any other reason it shall be necessary during such time
period to amend or supplement the


                                       3

registration statement or the prospectus in order to comply with the Securities
Act, whereupon, in either case, each Holder shall immediately cease to use such
registration statement or prospectus for any purpose and, as promptly as
practicable thereafter, the Company shall prepare and file with the SEC, and
furnish without charge to the appropriate Holders and managing underwriters, if
any, a supplement or amendment to such registration statement or prospectus
which will correct such statement or omission or effect such compliance and such
copies thereof as the Holders and any underwriters may reasonably request.

            (g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or market on which similar
securities issued by the Company are then listed or traded, if applicable.

            (h) Use its reasonable best efforts to furnish, at the request of
any Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and
(ii) a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities (to the extent the then applicable
standards of professional conduct permit said letter to be addressed to the
Holders).

      1.4 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.

      1.5 EXPENSES OF REGISTRATION. All expenses other than underwriting
discounts and commissions incurred in connection with registrations initiated
pursuant to Section 1.2, including without limitation all registration, filing
and qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company and the reasonable fees and disbursements of one counsel
for the Holders, shall be borne by the Company.

      1.6 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.

      1.7 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under this Section 1:


                                       4

            (a) Indemnification by the Company. To the extent permitted by law,
the Company will indemnify and hold harmless each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities Act or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), against
any losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 1.7(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable to any Holder, underwriter or controlling person for
any such loss, claim, damage, liability, or action to the extent that it arises
out of or is based upon a Violation (x) which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person or
(y) which occurs in any preliminary prospectus if a final, amended or
supplemental prospectus which corrects such Violation is delivered by the
Company to such person at or prior to the written confirmation of the sale
giving rise to such loss, claim, damage, liability, or action.

            (b) Indemnification by the Holders. To the extent permitted by law,
each selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration statement; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this Section 1.7(b), in connection with investigating or defending
any such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 1.7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that in no event shall any
indemnification by a Holder under this Section 1.7(b) exceed the net


                                       5

proceeds from the offering received by such Holder, except in the case of
willful fraud by such Holder.

            (c) Procedures. Promptly after receipt by an indemnified party under
this Section 1.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.7, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.7. No indemnifying party,
in the defense of any such claim or litigation, shall, except with the consent
of each indemnified party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. The indemnity agreements
contained in this Section 1.7 shall not apply to amounts paid in settlement of
any loss, claim, damage, liability or action if such settlement is effected
without the consent of the indemnifying party, such consent not to be
unreasonably withheld.

            (d) Contribution. If the indemnification provided for in this
Section 1.7 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by a Holder
under this Section 1.7(d) exceed the net proceeds from the offering received by
such Holder, except in the case of willful fraud by such Holder. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or omission.


                                       6

            (e) Underwriting Agreement. Notwithstanding the foregoing, to the
extent that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.

            (f) Survival. The obligations of the Company and Holders under this
Section 1.7 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.

      1.8 REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration, the Company agrees
to:

            (a) make and keep public information available, in accordance with
SEC Rule 144, at all times after the effective date of the first registration
statement filed by the Company for the offering of its securities to the general
public so long as the Company remains subject to the periodic reporting
requirements under Sections 13 or 15(d) of the Exchange Act;

            (b) file with the SEC in a timely manner all reports and other
documents as may be required of the Company under the Securities Act and the
Exchange Act; and

            (c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.

      1.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted Holders under Section 1.2 may not be assigned to a
transferee or assignee of Registrable Shares without the prior written consent
of the Company, except that such rights may be freely transferred to any party
controlling, controlled by or under common control with a Holder without such
consent; provided, that the Company is provided with prompt notice of the name
and address of such transferee and such transferee agrees in writing to be bound
by the provisions of this Agreement.

      1.10 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled to
exercise any registration right provided for in this Section 1 after such time
as Rule 144(k) or another similar exemption under the Securities Act is
available for the sale of all of such Holder's shares without limitation as to
volume or manner of sale.

2.    MISCELLANEOUS.

      2.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof, and any and
all other written or oral


                                       7

agreements relating to the subject matter hereof existing among any of the
parties hereto are expressly canceled.

      2.2 RECAPITALIZATIONS, ETC. The provisions of this Agreement (including
any calculation of share ownership) shall apply, to the full extent set forth
herein with respect to the Registrable Securities and to the Common Stock, to
any and all shares of capital stock of the Company or any capital stock,
partnership or member units or any other security evidencing ownership interests
in any successor or assign of the Company (whether by merger, consolidation,
sale of assets or otherwise) that may be issued in respect of, in exchange for,
or in substitution of the Registrable Securities by reason of any stock
dividend, split, combination, recapitalization, liquidation, reclassification,
merger, consolidation or otherwise.

      2.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective permitted successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.

      2.4 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended or
waived only with the written consent of the Company and the holders of at least
a majority of the Registrable Securities then outstanding. GPC and its
successors and assigns acknowledge that by operation of this Section 2.4, the
holders of at least a majority of the then outstanding Registrable Securities,
when acting together with the Company, will have the right and power to diminish
or eliminate any rights or increase any or all obligations under this Agreement.

      2.5 NOTICES. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by electronic mail or fax, or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, addressed (a) if to the Company or
NeoTherapeutics, to 157 Technology Drive, Irvine, California 92618, Attention:
Chief Executive Officer or via facsimile to (949) 788-6706, with a copy to
Latham & Watkins, 650 Town Center Drive, Suite 2000, Costa Mesa, California
92626-1925, Attention: Alan W. Pettis, or via facsimile to (714) 755-8290, or
(b) if to GPC, to Fraunhoferstrasse 20, D-82152 Martinsried/Munich, Germany,
Attention: Chief Executive Officer or via facsimile to 49-89-8565-2610, with a
copy to Ropes & Gray, One International Place, Boston, Massachusetts 02110,
Attention: Marc A. Rubenstein, or via facsimile to (617) 951-7050.

      2.6 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. Until the parties have agreed upon an enforceable
replacement for such provision, (a) such provision shall be excluded from this
Agreement, (b) the balance of the Agreement shall be interpreted as if such
provision were so excluded and (c) the balance of the Agreement shall be
enforceable in accordance with its terms.

      2.7 DELAYS OR OMISSIONS; REMEDIES CUMULATIVE. No delay or omission to
exercise any right, power or remedy accruing to any party under this Agreement,
upon any breach or


                                       8

default of any other party under this Agreement, shall impair any such right,
power or remedy of such non-breaching or non-defaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

      2.8 ATTORNEY'S FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any this
Agreement, the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.

      2.9 GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
California, without regard to the principles of conflicts of law thereof. The
Company and GPC hereby irrevocably submit to the exclusive jurisdiction of the
state and federal courts sitting in Orange County, California, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, or that
such suit, action or proceeding is improper. Each of the Company and GPC hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by receiving a copy thereof sent
to the Company at the address in effect for notices to it under this instrument
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law.

      2.10 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

      2.11 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

      2.12 AGGREGATION OF STOCK. All shares of Company stock held or acquired by
affiliated Persons (including former and current partners, former and current
members and former and current stockholders) shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.

      2.13 CONFIDENTIALITY. Each Holder agrees that, except with the prior
written permission of the applicable party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the Company or any other party to which such


                                       9

Holder has been or shall become privy by reason of this Agreement. The
provisions of this Section 2.13 shall be in addition to, and not in substitution
for, the provisions of any separate nondisclosure agreement executed by the
parties hereto with respect to the transactions contemplated hereby.


                            [Signature Page Follows]


                                       10

      The parties have executed this Registration Rights Agreement as of the
date first above written.

NEOTHERAPEUTICS, INC.                     GPC BIOTECH AG


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


                                       11

EX-10.10

                                                                   EXHIBIT 10.10


                       CONFIDENTIAL SEPARATION AGREEMENT
                               AND GENERAL RELEASE


               THIS CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE (this
"Agreement") is entered into as of November 6, 2002 (the "Effective Date"), by
and between NeoTherapeutics, Inc., a Delaware corporation (the "Company") and
Michelle S. Glasky, Ph.D., an individual ("Executive").

                                    RECITALS

               WHEREAS, Executive is employed by the Company pursuant to that
certain executive employment agreement dated as of December 1, 2002 (the
"Employment Agreement");

               WHEREAS, Executive and the Company (collectively, the "Parties")
have agreed that Executive's employment as an officer and employee of the
Company shall terminate as of the Effective Date;

               WHEREAS, the Parties wish to specify the terms of the termination
and resolve any outstanding issues between them.

                                    AGREEMENT

               NOW THEREFORE, in consideration of the representations and
agreements contained herein, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
bound hereby, the Company and Executive hereby agree to terminate their
employment relationship on the following basis:

        1. Termination of the Employment Agreement. The Employment Agreement and
each Party's rights thereunder are hereby terminated, including, without
limitation, Executive's right to receive any "Base Salary" (as defined in the
Employment Agreement), bonus or other compensation, or any entitlement to
severance or other payments upon termination of employment under the Employment
Agreement.

        2. Separation. Executive and Company hereby agree that Executive's
employment as Vice President, Scientific Affairs and an employee of the Company
shall terminate as of the Effective Date. Executive understands and agrees that
she is giving up any right or claim to future employment with the Company and
any compensation or benefit of such employment, including any compensation
and/or benefits owed to the Executive pursuant to the Employment Agreement,
except for compensation and/or benefits provided for in this Agreement.
Executive acknowledges that she has received all compensation and benefits due
to her through the Effective Date.

        3. Compensation. In consideration of the termination of Executive's
employment pursuant to the terms of this Agreement:


               (a) As of the Effective Date, Executive shall be paid the
following: (i) $ 43,269.30 in lieu of severance, (ii) $ 13,411.30 in full
payment of Executive's accrued and unpaid vacation pay, and (iii) $ 2812.50 as
full payment of all deferred salary owed to Executive.

               (b) All stock options previously granted to Executive shall
become fully vested as of the Effective Date, and Executive shall be entitled to
exercise such options in whole or in part from time to time during the one year
period commencing on the Effective Date. Executive agrees that, notwithstanding
any other provision in the Company's stock option plan or the stock option
agreements between the Company and Executive, nothing in this Agreement or the
terms of the consulting agreement set forth in Section 5 hereof shall entitle
Executive to exercise any stock options beyond the one year period following the
Effective Date.

               (c) As of the Effective Date, the Company hereby transfers to
Executive ownership of (i) the laptop computer and accessories (docking station,
monitor, keyboard, mouse, stand, speakers and printer) provided to her by the
Company in consideration of the payment by Executive to the Company of $150 and
(ii) the cellular telephone provided to her by the Company. After the Effective
Date, Executive agrees to assume and pay all costs of the laptop computer and
cellular telephone or their use.

        4. Options. Executive and the Company are parties to certain written
agreements pursuant to which Executive has been granted options to purchase
stock in the Company. Executive acknowledges that although such options might be
identified as incentive stock options, such options may not be qualified for
treatment as incentive stock options, either now or in the future. Executive is
advised to consult with her personal tax advisor to determine whether the
options are qualified for treatment as incentive stock options. Except as set
forth in Section 3(b) and this Section 4, Executive's rights under her existing
option agreements are not intended to be modified by this Agreement in any way.

        5. Future Consulting. Executive shall provide consulting services to the
Company as may be reasonably requested by the Company from time to time up to
and through December 31, 2003, such requests to be made on reasonable notice to
Executive and such services to be performed solely during ordinary business
hours. It is the express intent of the parties that Executive shall provide
consulting services to the Company as an independent contractor pursuant to this
Agreement. Executive will not be an employee of the Company after the Effective
Date, and Executive shall not hold herself out to be an employee of the Company,
and shall not have the authority to enter into or bind the Company to any
contract, promise, or obligation under any circumstances. The Company is
interested only in the results to be achieved by Executive under this Agreement,
and the manner and method of performing all services of Executive under this
Agreement, and achieving the desired results, shall be under the exclusive
control of Executive. The Company shall have no right or authority to direct or
control Executive with respect to the performance of Executive's services under
this Agreement, except as otherwise provided by this Agreement.

               The Company shall compensate Executive for consulting services
actually rendered hereunder at the rate of $150 per hour and reimburse her for
other amounts actually expended by Executive in the course of performing her
duties as a consultant to the Company, if such amounts are approved in writing
by the Company beforehand and Executive tenders



                                       2

receipts or other documentation reasonably substantiating the amounts as
required by the Company.

        6. Return of Company Property. Except as expressly provided for herein,
at the Company's request, the Executive will return to the Company all files,
records, credit cards, keys, equipment, and any other property of the Company or
documents maintained by her for the Company's use or benefit, on or before the
Effective Date.

        7. Confidentiality. The Parties acknowledge that this Agreement and all
matters relating to or leading up to the negotiation and effectuation of this
Agreement are confidential and shall not be disclosed to any third party except
as follows: the Company may disclose the terms of this Agreement to the public
as required by law, including without limitation, the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended; the Company may
disclose the terms of this Agreement to Company employees with a business
purpose for receiving such information; the Parties may disclose the terms of
the Agreement to their respective legal, accounting and tax advisors to the
extent necessary for them to perform services; and the Parties may disclose the
terms of this Agreement to the Internal Revenue Service and the California
Franchise Tax Board as required by law, rule or regulation, or as otherwise
required by law or necessary to enforce the terms of this Agreement. If any
disclosure is made as permitted by this paragraph other than to governmental
authorities as required by law, then such persons or entities shall be cautioned
about the confidentiality obligations imposed by this Agreement.

        8. Non-Disclosure, Non-Competition and Non-Solicitation.

               (a) Executive agrees that she will not disclose at any time,
other than to an authorized employee, officer, director or agent of the Company,
any information relating to the Company's business, trade, practices, trade
secrets or know-how or proprietary information without the Company's prior
express written consent. Following the Effective Date, Executive shall be
permitted to continue in her usual occupation and shall not be prohibited from
competing with the Company. Executive agrees that until December 31, 2003,
Executive shall not directly or indirectly solicit, induce, recruit or encourage
any of the Company's employees to leave their employment or take away such
employees to leave their employment or take away such employees or attempts to
solicit, induce, recruit, encourage or take away employees of the Company.

               (b) Executive understands and agrees that future payments under
this Agreement may be terminated by the Company if she violates this provision
in addition to any other remedies available under applicable law. In the event
the Company terminates payments pursuant to this Section, Executive may
challenge such termination in accordance with Section 15 below. In the event of
any other breach or violation of this Agreement, the party asserting a breach or
violation of the Agreement may seek remedies otherwise available under
applicable law or another provision of this Agreement in accordance with Section
15 below.

        9. General Release by Executive.



                                       3

               (a) Release of Claims. Executive does hereby for herself and her
respective heirs, successors and assigns, release, acquit and forever discharge
the Company, its parents, subsidiaries and affiliates and any of their officers,
directors, managers, employees, representatives, related entities, successors
and assigns, and all persons acting by, through or in concert with them (the
"Company Releasees") of and from any and all claims, actions, charges,
complaints, causes of action, rights, demands, debts, damages, or accountings of
whatever nature, known or unknown which Executive may have against the Company
Releasees, or any of them, based on any actions or events which occurred prior
to the effective date of this Agreement, including, but not limited to, those
related to, or arising from, Executive's employment with the Company or the
termination thereof, including, without limitation, any claims under Title VII
of the Civil Rights Act of 1964, the Americans with Disabilities Act and the
California Fair Employment and Housing Act (collectively, the "Claims" or
individually, "Claim"); provided, however, that the release set forth in this
Section 10(a) shall not be effective with respect to any Company Releasee, other
than the Company, who commences any claim, action or proceeding against
Executive based on any actions or events which occurred prior to the effective
date of this Agreement.

               (b) Release of Unknown Claims. In addition, Executive expressly
waives all rights under Section 1542 of the Civil Code of the State of
California, which reads as follows:

               A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES
               NOT KNOW OR SUSPECT TO EXIST IN HER FAVOR AT THE TIME OF
               EXECUTING THE RELEASE, WHICH IF KNOWN BY HER MUST HAVE MATERIALLY
               AFFECTED HER SETTLEMENT WITH THE DEBTOR.

               (c) No Assignment of Claims. Executive represents and warrants to
the Company Releasees that there has been no assignment or other transfer of any
interest in any Claim which Executive may have against the Company Releasees, or
any of them, and Executive agrees to indemnify and hold the Company Releasees
harmless from any liability, claims, demands, damages, costs, expenses and
attorneys' fees incurred as a result of any person asserting any such assignment
or transfer of any rights or Claims if Executive has made such assignment or
transfer from such party.

               (d) No Suits or Actions. Executive represents and warrants to the
Company that there have been no claims, suits, actions, complaints, or charges
filed by her against the Company Releasees, or any of them. Executive agrees
that if she hereafter commences, joins in, or in any manner seeks relief through
any suit arising out of, based upon, or relating to any of the Claims released
hereunder, or in any manner asserts against the Company Releasees, or any of
them, any of the Claims released hereunder, then she will pay to the Company
Releasees against whom such claim(s) is asserted, in addition to any other
damages caused thereby, all attorneys' fees incurred by such Company Releasees
in defending or otherwise responding to said suit or Claim.

               (e) No Admission. Executive further understands and agrees that
neither the payment of money nor the execution of this Release shall constitute
or be construed as an admission of any liability whatsoever by the Company
Releasees.



                                       4


        10. General Release by the Company.

               (a) Release of Claims. The Company does hereby for itself and its
respective successors and assigns, release, acquit and forever discharge
Executive and her heirs, estates, successors and assigns, and all persons acting
by, through or in concert with them (the "Executive Releasees") of and from any
and all claims, actions, charges, complaints, causes of action, rights, demands,
debts, damages, or accountings of whatever nature, known or unknown which the
Company may have against the Executive Releasees, or any of them, based on any
actions or events which occurred prior to the effective date of this Agreement,
including, but not limited to, those related to, or arising from, Executive's
employment with the Company or the termination thereof (collectively, the
"Claims" or individually, "Claim").

               (b) Release of Unknown Claims. In addition, the Company expressly
waives all rights under Section 1542 of the Civil Code of the State of
California, which reads as follows:

               A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH A CREDITOR DOES
               NOT KNOW OR SUSPECT TO EXIST IN HER FAVOR AT THE TIME OF
               EXECUTING THE RELEASE, WHICH IF KNOWN BY HER MUST HAVE MATERIALLY
               AFFECTED HER SETTLEMENT WITH THE DEBTOR.

               (c) No Assignment of Claims. The Company represents and warrants
to the Executive Releasees that there has been no assignment or other transfer
of any interest in any Claim which the Company may have against the Executive
Releasees, or any of them, and the Company agrees to indemnify and hold the
Executive Releasees harmless from any liability, claims, demands, damages,
costs, expenses and attorneys' fees incurred as a result of any person asserting
any such assignment or transfer of any rights or Claims if the Company has made
such assignment or transfer from such party.

               (d) No Suits or Actions. The Company agrees that if it hereafter
commences, joins in, or in any manner seeks relief through any suit arising out
of, based upon, or relating to any of the Claims released hereunder, or in any
manner asserts against the Executive Releasees, or any of them, any of the
Claims released hereunder, then it will pay to the Executive Releasees against
whom such claim(s) is asserted, in addition to any other damages caused thereby,
all attorneys' fees incurred by such Executive Releasees in defending or
otherwise responding to said suit or Claim.

               (e) No Admission. The Company further understands and agrees that
neither the payment of money nor the execution of this Release shall constitute
or be construed as an admission of any liability whatsoever by the Executive
Releasees.

        11. Nondisparagement. The Parties shall not make any disparaging or
derogatory comments, public or otherwise, concerning each other, and Executive
shall refrain from making any disparaging comments, public or otherwise,
concerning any employees, officers or directors of the Company.

        12. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns.



                                       5


Notwithstanding the foregoing, neither this Agreement nor any rights hereunder
may be assigned to any party by the Company or Executive without the prior
written consent of the other party hereto.

        13. Entire Agreement/No Oral Modification. This Agreement contains all
of the terms, promises, representations, and understandings, oral or written,
made between the Company and Executive with respect to the subject matter hereof
and supersedes all prior representations, understandings, or agreements, oral or
written, between the Company and Executive, with respect to such matters, which
the Parties acknowledge have been merged into this Agreement. This Agreement may
not be modified other than with a writing executed by both parties and stating
an intent to modify this agreement.

        14. Governing Law. This Agreement shall be governed by the laws of the
State of California, without regard for conflict of law principles.

        15. Arbitration; Waiver of Jury Trial. Except for claims for equitable
or injunctive relief which cannot be timely addressed through arbitration (which
claims may be brought in any state or federal court in Orange County,
California), the parties hereby agree to submit any claim or dispute arising out
of the terms of this Agreement, including, without limitation, claims regarding
confidentiality under Section 8 of this Agreement and/or any dispute arising out
of or relating to Executive's employment or consulting relationship with the
Company in any way, to private and confidential arbitration by a single neutral
arbitrator through JAMS. All arbitration proceedings shall be governed by the
then current JAMS rules governing employment disputes, and shall take place in
Orange County, California. The decision of the arbitrator shall be rendered in
writing and shall be final and binding on all parties to this Agreement.
Judgment thereon may be entered in any court having jurisdiction. The Company
shall advance the arbitrator's fee and all costs of services provided by the
arbitrator and arbitration organization; however, all costs of the arbitration
proceeding or litigation to enforce this Agreement, including attorneys' fees
and witness expenses, may be awarded to the prevailing party in addition to such
other relief as the arbitrator may determine. Except for claims for equitable or
injunctive relief which cannot be timely addressed through arbitration (which
claims may be brought in any state or federal court in Orange County,
California), this arbitration procedure is intended to be the exclusive method
of resolving any claim relating to the obligations set forth in this Agreement.
Executive hereby waives any right to a jury trial on any dispute or claim
covered by this paragraph.

        16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument.



                                       6



               IN WITNESS WHEREOF, this Agreement is executed by the parties set
forth below as of the date first indicated above.

THE COMPANY                                   EXECUTIVE

NEOTHERAPEUTICS, INC.                         MICHELLE S. GLASKY, PH.D.,
a Delaware corporation                        an individual



By: /s/ John L. McManus                       /s/ Michelle S. Glasky
   ---------------------------------          ----------------------------------


Title: V.P. Strategic Planning &
       Finance
      ------------------------------



                                       7