8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934

May 7, 2003
Date of Report (Date of earliest event reported)

SPECTRUM PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other Jurisdiction
of Incorporation) 000-28782
(Commission File Number) 93-0979187
(IRS Employer
Identification Number)

157 Technology Drive
Irvine, California
(Address of principal executive offices) 92618
(Zip Code)

(949) 788-6700
(Registrant’s telephone number, including area code)

N/A
(Former Name or Former Address, if Changed Since Last Report)

TABLE OF CONTENTS

	Item 5. Other Events
	Item 7. Exhibits
SIGNATURES
EXHIBIT INDEX
EXHIBIT 3.1
EXHIBIT 3.2
EXHIBIT 4.1
EXHIBIT 4.2
EXHIBIT 4.3
EXHIBIT 4.4
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 99.1
EXHIBIT 99.2

Item 5. Other Events

     On May 7, 2003, Spectrum Pharmaceuticals, Inc. (“Spectrum”) completed a sale in a private placement transaction to certain institutional investors of 444 shares of its Series D 8% Cumulative Convertible Voting Preferred Stock, stated value $10,000 per share (the “Preferred Stock”), Series D-1 Warrants to purchase up to an aggregate of 944,681 shares of Spectrum common stock, at an exercise price of $3.00 per share and Series D-2 Warrants to purchase up to an aggregate of 944,681 shares of Spectrum common stock at an exercise price of $3.50 per share for an aggregate purchase price of $4,440,000. The Preferred Stock is convertible into Spectrum common stock at a price of $2.35 per share. Dividends on the Preferred Stock are payable quarterly either in cash or common stock at Spectrum’s discretion. Attached hereto as Exhibits 10.1, 3.1, 4.4, 4.1, 4.2 and 10.3 are copies of the Purchase Agreement; Certificate of Designations, Rights and Preferences of the Preferred Stock; Registration Rights Agreement; form of Series D-1 Warrant; form of Series D-2 Warrant; and form of Lock-up Agreement, respectively.

     On May 13, 2003, Spectrum completed a second sale in a private placement transaction to the same institutional investors of an additional 156 shares of the Preferred Stock, Series D-1 Warrants to purchase up to an aggregate of 331,914 shares of Spectrum common stock, at an exercise price of $3.00 per share and Series D-2 Warrants to purchase up to an aggregate of 331,914 shares of Spectrum common stock at an exercise price of $3.50 per share for an aggregate purchase price of $1,560,000. Attached hereto as Exhibits 10.2 and 3.2 are copies of Amendment No. 1 of the Preferred Stock and Warrant Purchase Agreement and Registration Rights Agreement and the Certificate of Increase authorizing an increase in the number of shares of Preferred Stock, respectively.

     Spectrum paid fees and granted Series D-3 Warrants to purchase up to an aggregate of 255,319 shares of Spectrum common stock, at an exercise price of $3.00 per share, to a finder in connection with this transaction. Attached hereto as Exhibit 4.3 is a copy of the Series D-3 Warrant and as Exhibit 10.4 is a copy of the engagement letter between Spectrum and the finder.

     Pursuant to the Registration Rights Agreement, Spectrum is required to register the resale of the shares of Spectrum common stock issuable upon conversion of the Preferred Stock (including shares of Spectrum common stock issued as dividends on the Preferred Stock), and shares of Spectrum common stock issuable upon exercise of the warrants.

     On May 8, 2003, Spectrum issued a press release announcing the completion of the sale of 444 shares of Spectrum Preferred Stock. The text of the press release is set forth in Exhibit 99.1 attached to this report and incorporated herein by this reference. On May 14, 2003, Spectrum issued a press release announcing the completion of the sale of the additional 156 shares of Spectrum Preferred Stock. The text of the press release is set forth in Exhibit 99.2 attached to this report and incorporated herein by this reference.

Item 7. Exhibits

Exhibits:
3.1	Certificate of Designations, Rights and Preference of the Series D 8% Cumulative Convertible Voting Preferred Stock
3.2	Certificate of Increase
4.1	Form of Series D-1 Warrant
4.2	Form of Series D-2 Warrant
4.3	Series D-3 Warrant
4.4	Registration Rights Agreement dated as of May 7, 2003, by and among Spectrum and the persons listed on Schedule 1 attached thereto.
10.1	Preferred Stock and Warrant Purchase Agreement dated as of April 29, 2003, by and among Spectrum and the purchasers listed on Schedule 1 attached thereto.
10.2	Amendment No. 1 of the Preferred Stock and Warrant Purchase Agreement and Registration Rights Agreement dated as of May 13, 2003 by and among Spectrum and the persons listed on Schedule 1B attached thereto.
10.3	Form of Lock-up Agreement
10.4	Engagement Letter dated as of February 1, 2003, by and among Spectrum and SCO Financial Group LLC
99.1	Press Release dated May 8, 2003
99.2	Press Release dated May 14, 2003

2

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 hereunto duly authorized.

	SPECTRUM PHARMACEUTICALS, INC.
Date: May 14, 2003	By:   Name: Title:	/s/Rajesh C. Shrotriya Rajesh C. Shrotriya, M.D. Chairman of the Board, Chief Executive Officer and President

3

EXHIBIT INDEX

Exhibits:
3.1	Certificate of Designations, Rights and Preference of the Series D 8% Cumulative Convertible Voting Preferred Stock
3.2	Certificate of Increase
4.1	Form of Series D-1 Warrant
4.2	Form of Series D-2 Warrant
4.3	Series D-3 Warrant
4.4	Registration Rights Agreement dated as of May 7, 2003, by and among Spectrum and the persons listed on Schedule 1 attached thereto.
10.1	Preferred Stock and Warrant Purchase Agreement dated as of April 29, 2003, by and among Spectrum and the purchasers listed on Schedule 1 attached thereto.
10.2	Amendment No. 1 of the Preferred Stock and Warrant Purchase Agreement and Registration Rights Agreement dated as of May 13, 2003 by and among Spectrum and the persons listed on Schedule 1B attached thereto.
10.3	Form of Lock-up Agreement
10.4	Engagement Letter dated as of February 1, 2003, by and among Spectrum and SCO Financial Group LLC
99.1	Press Release dated May 8, 2003
99.2	Press Release dated May 14, 2003

EX-3.1

                                                                    EXHIBIT 3.1

               CERTIFICATE OF DESIGNATIONS, RIGHTS AND PREFERENCES
                                     OF THE
            SERIES D 8% CUMULATIVE CONVERTIBLE VOTING PREFERRED STOCK
                                       OF
                         SPECTRUM PHARMACEUTICALS, INC.

    (Pursuant to Section 151 of the General Corporation Law of the State of
                                   Delaware)

         The undersigned, being the Chief Executive Officer of Spectrum
Pharmaceuticals, Inc., a Delaware corporation (the "Corporation"), does hereby
certify, that the following resolution has been duly adopted by the board of
directors of the Corporation:

                  RESOLVED, that pursuant to the authority expressly granted to
         and vested in the board of directors of the Corporation (the "Board")
         pursuant to the General Corporation Law of the State of Delaware, as
         amended, and by the provisions of the Corporation's Certificate of
         Incorporation, as amended to date (the "Certificate of Incorporation"),
         the Board hereby creates a series of preferred stock of the
         Corporation, par value $0.001 per share, each share having a stated
         value (the "Stated Value") of $10,000.00, such series consisting of 444
         shares (which shall not be subject to increase without the consent of
         the Holders (as defined below) of a majority of the outstanding
         Preferred Stock, which majority shall include each Holder who acquired
         in the aggregate more than 100 shares of Preferred Stock so long as
         such Holder continues to hold more than 100 shares of Preferred Stock,
         which such majority is hereinafter referred to as a "Special
         Majority"), which shall be designated as the "Series D 8% Cumulative
         Convertible Voting Preferred Stock" (hereinafter, the "Convertible
         Preferred Stock" or the "Preferred Stock"), which series shall have the
         following powers, designations, preferences and relative participating,
         optional, voting or other rights, and the following qualifications,
         limitations or restrictions:

         1.       Dividends. The holders of the Convertible Preferred Stock
(each, a "Holder" and collectively, the "Holders") shall be entitled to receive,
when, if and as declared by the Corporation's Board of Directors, out of funds
legally available therefor, cumulative dividends payable as set forth in this
Section 1.

                  a.       Dividends on the Convertible Preferred Stock shall
accrue and shall be cumulative from the date of issuance of the shares of
Convertible Preferred Stock (the "Date of Original Issue"), whether or not
earned or declared by the Board of Directors of the Corporation. Until paid, the
right to receive dividends on the Convertible Preferred Stock shall accumulate,
and shall be payable in cash or shares of common stock, par value $0.001 per
share, of the Corporation, or stock of any other class into which such shares
may hereafter have been reclassified or changed (the "Common Stock"), in
arrears, on March 31, June 30, September 30 and December 31 of each year (a
"Dividend Payment Date"), commencing on June 30, 2003 (the "Initial Dividend
Payment Date") except that if such Dividend Payment Date is not a business day,
then the Dividend Payment Date will be the immediately preceding business day.
The decision whether to pay dividends

                                        1



hereunder in Common Stock or cash shall be at the discretion of the Corporation;
provided, however, that if the Corporation elects to pay a dividend in Common
Stock and the receipt thereof by a Holder would be in excess of the Beneficial
Ownership Cap (as defined in Section 5(g)), then such dividend shall cumulate
for up to 10 years (the "Final Distribution Date") and shall be paid, in whole
or in part, on the first date when such payment would not be in excess of the
Beneficial Ownership Cap, and the unpaid portion of any such dividend shall
continue to cumulate and be paid thereafter on the next date when such payment
would not be in excess of the Beneficial Ownership Cap. Any dividends not paid
pursuant to the preceding sentence shall be paid on the Final Distribution Date.
It shall be the responsibility of each Holder to determine such Holder's
compliance with the Beneficial Ownership Cap and to advise the Corporation of
whether or not, and how much, if any, of the dividends payable in Common Stock
may then be paid to such Holder, and the Corporation, when advised in writing to
make such dividend payment, shall do so promptly. Subject to the foregoing, each
such dividend declared by the Board of Directors on the Convertible Preferred
Stock shall be paid to the Holders of record as they appear on the stock
register of the Corporation on the Record Date (defined below). Dividends in
arrears for any past dividend period may be declared by the Board of Directors
of the Corporation and, subject to the provisions with respect to the Beneficial
Ownership Cap, paid on shares of the Convertible Preferred Stock on any date
fixed by the Board of Directors of the Corporation, whether or not a regular
Dividend Payment Date, to Holders of record as they appear on the Corporation's
stock register on the record date. The record date (the "Record Date"), shall be
fixed in advance by the Board of Directors, or to the extent not fixed, shall be
the business day immediately preceding the date such dividend is paid. Any
dividend payment made on shares of the Convertible Preferred Stock shall first
be credited against the dividends accumulated with respect to the earliest
dividend period for which dividends have not been paid. Dividends not paid on a
Dividend Payment Date shall bear interest, whether or not such dividend has been
declared, at the Dividend Rate (or such lesser rate equal to the highest rate
permitted by applicable law) until paid.

                  b.       The dividend rate (the "Dividend Rate") on each share
of Convertible Preferred Stock shall be 8% per share per annum compounded
quarterly on the Stated Value of each such share for the period from the Date of
Original Issue until the Initial Dividend Payment Date and, for each dividend
period thereafter, which shall commence on the last day of the preceding
dividend period and shall end on the next Dividend Payment Date, shall be at the
Dividend Rate on such Stated Value. The amount of dividends per share of the
Convertible Preferred Stock payable for each dividend period or part thereof
(the "Dividend Value") shall be computed by multiplying the Dividend Rate for
such dividend period by a fraction the numerator of which shall be the number of
days in the dividend period or part thereof (calculated by counting the first
day thereof but excluding the last day thereof) on which such share was
outstanding and the denominator of which shall be 360 and multiplying the result
by the Stated Value. If a dividend is to be paid in kind in Common Stock, the
Common Stock shall be valued at the Current Market Price (as hereinafter
defined) as of the Record Date for such payment date. In furtherance thereof,
the Corporation shall reserve out of the authorized but unissued shares of
Common Stock, solely for issuance in respect of the payment of dividends as
herein described, a sufficient number of shares of Common Stock to pay such
dividends, when, if and as declared by the Board of Directors.

                                        2



                  For purposes hereof, "Current Market Price" means, in respect
of any share of Common Stock on any date herein specified:

                                    (i)      if there shall not then be a public
         market for the Common Stock, the Appraised Value (as hereinafter
         defined) per share of Common Stock at such date, or

                                    (ii)     if there shall then be a public
         market for the Common Stock, the average of the daily market prices for
         the 20 consecutive trading days immediately before such date. The daily
         market price for each such trading day shall be (I) the last sale price
         on such day on the principal stock exchange (including NASDAQ) on which
         such Common Stock is then listed or admitted to trading, or quoted, as
         applicable, (II) if no sale takes place on such day on any such
         exchange, the average of the last reported closing bid and asked prices
         on such day as officially quoted on any such exchange (including
         NASDAQ), (III) if the Common Stock is not then listed or admitted to
         trading on any stock exchange, the average of the last reported closing
         bid and asked prices on such day in the over-the-counter market, as
         furnished by the National Association of Securities Dealers Automatic
         Quotation System or the National Quotation Bureau, Inc., (IV) if
         neither such corporation at the time is engaged in the business of
         reporting such prices, as furnished by any similar firm then engaged in
         such business, or (V) if there is no such firm, as furnished by any
         member of the NASD selected mutually by the Holders of a Special
         Majority of the Preferred Stock and the Corporation or, if they cannot
         agree upon such selection, as selected by two such members of the NASD,
         one of which shall be selected by a Special Majority of the Holders and
         one of which shall be selected by the Corporation.

                           For purposes hereof, "Appraised Value" means, in
         respect of any share of Common Stock on any date herein specified, the
         fair saleable value of such share of Common Stock (determined without
         giving effect to the discount for (i) a minority interest or (ii) any
         lack of liquidity of the Common Stock or to the fact that the
         Corporation may have no class of equity registered under the Securities
         Exchange Act of 1934, as amended (the "Exchange Act")) as of the last
         day of the most recent fiscal month end prior to such date specified,
         based on the value of the Corporation, as determined by a nationally
         recognized investment banking firm selected by the Corporation's Board
         of Directors and having no prior relationship with the Corporation, and
         reasonably acceptable to a Special Majority of the Holders.

                  c.       Except as hereinafter provided, no dividends shall be
declared or paid or set apart for payment on the shares of Common Stock or any
other class or series of capital stock of the Corporation for any dividend
period unless full cumulative dividends have been or contemporaneously are
declared and paid on the Convertible Preferred Stock through the most recent
Dividend Payment Date. If full cumulative dividends have not been paid on shares
of the Convertible Preferred Stock, all dividends declared on shares of the
Convertible Preferred Stock shall be paid pro rata to the Holders in proportion
to the full accrued but unpaid dividends attributable to each such Holder's
Preferred Stock. No dividend on any other class or series of capital stock of
the Corporation shall be paid unless, at the time of such payment, all accrued

                                        3



dividends on the Series D Preferred Stock have been paid, and the Corporation
has on hand cash and other liquid assets sufficient to pay in full, in cash, the
Liquidation Preference that would be payable to the holders of the Series D
Preferred Stock under Section 3(a) below, as if such Liquidation Preference were
then payable.

                  d.       So long as any shares of the Convertible Preferred
Stock are outstanding, the Corporation may not, without the prior consent of the
Holders of a Special Majority of the outstanding Preferred Stock, purchase or
otherwise acquire for any consideration (except through a redemption of all the
outstanding shares of the Convertible Preferred Stock) any shares of the Common
Stock or any other outstanding shares of the capital stock of the Corporation.

         2.       Voting Rights. Except as otherwise provided herein or by law,
the Holders shall have full voting rights and powers, subject to the Beneficial
Ownership Cap (as defined in Section 5(g)), equal to the voting rights and
powers of holders of Common Stock and shall be entitled to notice of any
stockholders meeting in accordance with the Bylaws of the Corporation, and shall
be entitled to vote, with respect to any question upon which holders of Common
Stock have the right to vote, including, without limitation, the right to vote
for the election of directors, voting together with the holders of Common Stock
as one class. Each Holder shall be entitled to the number of votes equal to the
number of shares of Common Stock into which such shares of Convertible Preferred
Stock could be converted on the record date for the taking of a vote at the then
current Conversion Value (as hereinafter defined), subject to the Beneficial
Ownership Cap, or, if no record date is established, at the day prior to the
date such vote is taken or any written consent of shareholders is first
executed. Fractional votes shall not be permitted, and any fractional voting
rights resulting from the above formula (after aggregating all shares into which
shares of Convertible Preferred Stock held by each Holder could be converted)
shall be rounded to the nearest whole number (with one-half being rounded
upward), subject to the Beneficial Ownership Cap.

         3.       Rights on Liquidation.

                  a.       In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation (any such event being
hereinafter referred to as a "Liquidation"), before any distribution of assets
of the Corporation shall be made to or set apart for the holders of Common
Stock, the Holders shall be entitled to receive payment out of such assets of
the Corporation in an amount equal to the greater of (i) the Liquidation
Preference for the Convertible Preferred Stock, or (ii) the cash or other
property distributable upon such Liquidation with respect to the shares of
Common Stock into which such shares of Series D Preferred Stock, including any
accrued dividends thereon, could have been converted immediately prior to such
payment. The "Liquidation Preference for the Convertible Preferred Stock shall
be an amount equal to 120% of the Stated Value per share of Convertible
Preferred Stock plus any accumulated and unpaid dividends thereon (whether or
not earned or declared). If the assets of the Corporation available for
distribution to the Holders shall not be sufficient to make in full the payment
herein required, such assets shall be distributed pro-rata among the Holders
based on the aggregate Liquidation Preferences of the shares of Convertible
Preferred Stock held by each such Holder.

                                        4



                  b.       If the assets of the Corporation available for
distribution to shareholders exceed the aggregate amount of payable pursuant to
paragraph 3(a) above with respect to all shares of Convertible Preferred Stock
then outstanding, then, after the payment required by paragraph 3(a) above shall
have been made or irrevocably set aside, the holders of Common Stock shall be
entitled to receive with respect to each share of Common Stock payment of a pro
rata portion of such assets based on the aggregate number of shares of Common
Stock held by each such holder.

         4.       Actions Requiring the Consent of Holders. As long as more than
20% of the shares of Convertible Preferred Stock issued on the Date of Original
Issue are outstanding, the consent of the Holders of a Special Majority of the
outstanding Preferred Stock, given in person or by proxy, either in writing
without a meeting or by vote at a meeting called for the purpose, shall be
necessary for effecting or validating any of the following transactions or acts:

                  (a)      Any amendment, alteration or repeal of any provision
of the Charter or Bylaws which adversely affects the terms of the Preferred
Stock or the relative rights, preferences and privileges of the Holders of the
Preferred Stock as such holders;

                  (b)      Any amendments or changes to the Rights Plan or the
adoption of any other similar plans or arrangements, provided that nothing
herein shall be deemed to restrict the right of the Corporation to redeem all,
but not less than all, of the outstanding Rights (as defined in the Rights Plan)
or otherwise terminate the Rights Plan (as defined in Section 5(h) hereof);

                  (c)      The offer, sale, designation or issuance by the
Corporation or any of its Subsidiaries of any equity or debt security senior to
or pari passu with the Preferred Stock in any respect;

                  (d)      The sale or issuance of any shares of Common Stock,
any warrant, option, subscription or purchase right with respect to shares of
Common Stock, any security convertible into, exchangeable for, or otherwise
entitling the holder thereof to acquire shares of Common Stock, or any warrant,
option, subscription or purchase right with respect to any such convertible,
exchangeable or other security at a price below the Conversion Value (as
hereinafter defined), other than (A) options, warrants, and other rights
outstanding on the date hereof to acquire, directly or indirectly, Common Stock,
and the Common Stock acquirable thereunder, and (B) options granted hereafter to
any employee, officer, Director or consultant pursuant to any plan approved by
stockholders for the benefit of employees, officers, Directors and consultants
("Incentive Options"), and the Common Stock acquirable thereunder, and (C)
awards presently outstanding or hereafter awarded under the Seller's employee
stock purchase plan effective as of January 26, 2001 (the "ESPP"), provided that
the aggregate number of shares of Common Stock acquirable under such Incentive
Options and awards under the ESPP, and the options which may hereafter be issued
as disclosed in Schedule 3.21, is not greater than 1,300,000;

                  (e)      The entering into by the Corporation or any
Subsidiary of any bank or other non-trade indebtedness for borrowed money;

                                        5



                  (f)      The granting or making by the Corporation or any of
its Subsidiaries of any mortgage or pledge, or the assumption or suffering to
exist on, or the imposition on, any of its material properties or assets any
Lien;

                  (g)      The liquidation, dissolution or winding-up of the
Corporation or any of its Subsidiaries or any merger or consolidation of the
Corporation or any of its Subsidiaries with or into another entity or the sale,
conveyance or other disposition of all, or substantially all, the assets,
property or business of the Corporation or any of its Subsidiaries;

                  (h)      The reorganization, recapitalization, sale,
conveyance, or other disposition of or encumbrance of all or substantially all
of the property or business of the Corporation or any of its Subsidiaries or the
merger into or consolidation with any other corporation (other than a wholly
owned subsidiary corporation) or effect any transaction or series of related
transactions in which, in any case, more than 20% of the voting power of the
corporation is disposed of;

                  (i)      The redemption, purchase, repurchase or other
acquisition, directly or indirectly, of any shares of capital stock of the
Corporation or any of its Subsidiaries or any option, warrant or other right to
purchase or acquire any such shares;

                  (j)      The declaration or payment of any dividend or other
distribution (whether cash, stock or property) with respect to the capital stock
of the Corporation, other than the Preferred Stock; and

                  (k)      The taking of any action by the Corporation with the
primary intent of causing the Common Stock to be delisted from any securities
exchange or quotation system upon which the Common Stock is then listed.

         The restrictions contained in this Section 4 shall cease to apply if
for no less than 20 trading days during any period of 30 consecutive trading
days following the Date of Original Issue (i) the Fair Market Value (as defined
in that certain purchase agreement between the Corporation and the original
purchasers of the Convertible Preferred Stock by which such purchasers agreed to
acquire the Convertible Preferred Stock on the Original Issue Date (the
"Purchase Agreement")) of the Common Stock exceeds five dollars ($5) per share,
(ii) all of the Conversion Shares, Warrants Shares and Dividend Shares (as
defined in the Purchase Agreement) have been duly registered for sale under an
effective registration statement pursuant to the Securities Act of 1933, as
amended (the "Securities Act") and such registration statement is effective
throughout the aforesaid 30-day period, and (iii) the actual daily trading
volume of the Common Stock is greater than 100,000 shares per day on each day on
which the Fair Market Value is greater than five dollars ($5).

         5.       Conversion.

                  a.       Right to Convert. Subject to the limitation set forth
in Section 5(g) hereof, each Holder shall have the right at any time, at such
Holder's option, to convert all or any whole number of such Holder's shares of
Convertible Preferred Stock into such number of fully paid and non-assessable
shares of Common Stock as is determined by dividing (i) the aggregate Stated
Value of the shares of Convertible Preferred Stock to be converted plus any
accrued but unpaid dividends

                                        6



thereon by (ii) the Conversion Value (as hereinafter defined) then in effect for
such Convertible Preferred Stock. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any Convertible
Preferred Stock. With respect to any fraction of a share of Common Stock called
for upon any conversion, the Corporation shall pay to the Holder an amount in
cash equal to such fraction multiplied by the Current Market Price per share of
the Common Stock.

                  b.       Mechanics of Conversion. Such right of conversion
shall be exercised by any Holder by delivering to the Corporation a conversion
notice in the form attached hereto as Exhibit A (the "Conversion Notice"),
appropriately completed and duly signed and specifying the number of whole
shares of Convertible Preferred Stock that the Holder elects to convert (the
"Converting Shares") into shares of Common Stock on the date specified in the
Conversion Notice (which date shall not be earlier than the date on which the
Conversion Notice is delivered to the Corporation), and by surrender of the
certificate or certificates representing such Converting Shares. The Conversion
Notice shall also contain a statement of the name or names (with addresses and
tax identification or social security numbers) in which the certificate or
certificates for Common Stock shall be issued, if other than the name in which
the Converting Shares are registered. Promptly, but in no event more than two
business days, after the receipt of the Conversion Notice and surrender of the
Converting Shares, the Corporation shall issue and deliver, or cause to be
delivered, to the holder of the Converting Shares or such holder's nominee, a
certificate or certificates for the number of shares of Common Stock issuable
upon the conversion of such Converting Shares together with cash in lieu of any
fractional interest in a share of Common Stock together with a new certificate
covering the number of shares of Preferred Stock representing the unconverted
portion of the shares represented by the Preferred Stock certificate
surrendered. Such conversion shall be deemed to have been effected as of the
close of business on the date specified in the Conversion Notice in accordance
with the terms hereof (the "Conversion Date"), and the person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall be
treated for all purposes as the holder or holders of record of such shares of
Common Stock as of the close of business on the Conversion Date.

                  c.       Common Stock Reserved. The Corporation shall at all
times reserve and keep available out of its authorized but unissued Common
Stock, solely for issuance upon the conversion of shares of Convertible
Preferred Stock as herein provided, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion of all the shares of
Convertible Preferred Stock at the time outstanding.

                  d.       Conversion Value. The initial conversion value for
the Convertible Preferred Stock shall be $2.35 per share of Common Stock, such
value to be subject to adjustment in accordance with the provisions of this
Section 5. Such conversion value in effect from time to time, as adjusted
pursuant to this Section 5, is referred to herein as a "Conversion Value." All
of the remaining provisions of this Section 5 shall apply separately to each
Conversion Value in effect from time to time with respect to Convertible
Preferred Stock.

                  e.       Stock Dividends, Subdivisions and Combinations. If at
any time while the Preferred Stock is outstanding, the Corporation shall:

                                        7



                  i.       take a record of the holders of its Common Stock for
         the purpose of entitling them to receive a dividend payable in, or
         other distribution of, additional shares of Common Stock,

                  ii.      subdivide its outstanding shares of Common Stock into
         a larger number of shares of Common Stock, or

                  iii.     combine its outstanding shares of Common Stock into a
         smaller number of shares of Common Stock,

then in each such case the Conversion Value shall be multiplied by a fraction of
which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately after such event. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of shareholders entitled
to receive such dividend or distribution, and any adjustment pursuant to clauses
(ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination. If any event requiring an
adjustment under this paragraph occurs during the period that a Conversion Value
is calculated hereunder, then the calculation of such Conversion Value shall be
adjusted appropriately to reflect such event.

                  f.       Certain Other Distributions. If, at any time while
the Series D Preferred Stock is outstanding, the Corporation shall take a record
of the holders of its Common Stock for the purpose of entitling them to receive
any dividend or other distribution of:

                           i.       cash (other than a cash dividend payable out
         of earnings or earned surplus legally available for the payment of
         dividends under the laws of the jurisdiction of incorporation of the
         Corporation),

                           ii.      any evidences of its indebtedness, any
         shares of stock of any class or any other securities or property of any
         nature whatsoever (other than cash, convertible securities or
         additional shares of Common Stock), or

                           iii.     any warrants or other rights to subscribe
         for or purchase any evidences of its indebtedness, any shares of stock
         of any class or any other securities or property of any nature
         whatsoever (other than cash, convertible securities or additional
         shares of Common Stock) (in each case set forth in subparagraphs (i),
         (ii) and (iii) hereof, the "Distributed Property"),

then upon any conversion of Series D Preferred Stock that occurs after such
record date, the holder of Series D Preferred Stock shall be entitled to
receive, in addition to the Conversion Shares otherwise issuable upon such
conversion, the Distributed Property that such holder would have been entitled
to receive if the Series D Preferred Stock had been converted into Common Stock
as of such

                                        8



record date. If the Distributed Property consists of property other than cash,
then the fair value of such Distributed Property shall be as determined in good
faith by the Board of Directors and set forth in reasonable detail in a written
valuation report (the "Valuation Report") prepared by the Board of Directors.
The Corporation shall give written notice of such determination and a copy of
the Valuation Report to all holders of Series D Preferred Stock, and if the
holders of 25% of the outstanding Series D Preferred Stock object to such
determination within twenty (20) business days following the date such notice is
given to all of the holders of Series D Preferred Stock, the Corporation shall
submit such valuation to an investment banking firm of recognized national
standing selected by holders of not less than 75% of the Series D Preferred
Stock, and the opinion of such investment banking firm shall be binding upon the
Corporation and the holders of all the Series D Preferred Stock. A
reclassification of the Common Stock (other than a change in par value, or from
par value to no par value or from no par value to par value) into shares of
Common Stock and shares of any other class of stock shall be deemed a
distribution by the Corporation to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 5(f); and
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of
the outstanding shares of Common Stock within the meaning of Section 5(e).

                  g.       Blocking Provision. Notwithstanding any contrary or
inconsistent provision hereof, the number of shares of Convertible Preferred
Stock that may be acquired by any Holder upon any conversion of Convertible
Preferred Stock or that shall be entitled to voting rights under Section 2
hereof shall be limited to the extent necessary to insure that, following such
conversion, the number of shares of Common Stock then beneficially owned by such
Holder and any other persons or entities whose beneficial ownership of Common
Stock would be aggregated with the Holder's for purposes of Section 13(d) of the
Exchange Act (including shares held by any "group" of which the Holder is a
member) does not exceed 4.95% of the total number of shares of Common Stock of
the Corporation then issued and outstanding (the "Beneficial Ownership Cap").
For purposes hereof, "group" has the meaning set forth in Section 13(d) of the
Exchange Act and applicable regulations of the Securities and Exchange
Commission, and the percentage held by the Holder shall be determined in a
manner consistent with the provisions of Section 13(d) of the Exchange Act. Each
delivery of a Conversion Notice by a Holder will constitute a representation by
such Holder that it has evaluated the limitation set forth in this paragraph and
determined, subject to the accuracy of information filed under the Securities
Act and the Exchange Act by any person other than such Holder with respect to
the outstanding Common Stock of the Corporation (including securities or
property convertible into or exchangeable for Common Stock, with or without the
payment of consideration), that the issuance of the full number of shares of
Common Stock requested in such Conversion Notice is permitted under this
paragraph, and the Corporation shall have no obligations to such Holder to
verify compliance with the Beneficial Ownership Cap. This paragraph shall be
construed and administered in such manner as shall be consistent with the intent
of the first sentence of this paragraph. Any provision hereof which would
require a result that is not consistent with such intent shall be deemed severed
herefrom and of no force or effect with respect to the conversion contemplated
by a particular Conversion Notice.

                                        9



                  h.       Rights Distributed Under Rights Agreement.
Capitalized terms used in this Section 5(h) and which are not otherwise defined
herein, shall have the meanings ascribed to them in the Rights Agreement (the
"Rights Agreement") dated as of December, 13, 2000 between the Corporation and
U.S. Stock Transfer Corporation. While the Rights Agreement or any other poison
pill, rights plan or similar arrangement (each, a "Rights Plan") shall be in
effect:

                           i.       Holders who convert Preferred Stock before
                                    the Distribution Date or before any Rights
                                    Certificates or similar right (each a
                                    "Right") shall be evidenced by a separate
                                    rights certificate or shall otherwise be
                                    transferable otherwise than in connection
                                    with the transfer of the underlying shares
                                    of Common Stock (the date of the occurrence
                                    of any of the foregoing being referred to
                                    herein as a "Rights Distribution Date"),
                                    will receive, in addition to shares of
                                    Common Stock issued on conversion, one Right
                                    for each such shares of Common Stock.

                           ii.      Upon the occurrence of a Rights Distribution
                                    Date, each Holder shall receive, without any
                                    further action by the Corporation, such
                                    number of Rights equal to the number of
                                    Rights such Holder would have held if,
                                    immediately prior to the Rights Distribution
                                    Date, all of the shares of Convertible
                                    Preferred Stock had been converted into
                                    shares of Common Stock at the then current
                                    Conversion Value. The Corporation shall
                                    issue to each Holder certificates evidencing
                                    such Rights, no later than five business
                                    days following such Rights Distribution
                                    Date. In the event the applicable Rights
                                    Plan does not permit such Rights to be
                                    granted to each Holder, the Corporation
                                    shall promptly (i) amend the applicable
                                    Rights Plan to permit the Corporation to
                                    take the actions set forth in this Section
                                    5(h), or (ii) issue to each Holder an
                                    option, right or similar arrangement giving
                                    each Holder the same rights and benefits as
                                    they would have held upon the receipt of the
                                    applicable number of Rights.

         6.       Other Provisions Applicable to Adjustments. The following
provisions shall be applicable to the making of adjustments of the number of
shares of Common Stock into which the Preferred Stock is convertible and the
current Conversion Value provided for in Section 5:

                  a.       When Adjustments to Be Made. The adjustments required
by Section 5 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment to the
Conversion Value that would otherwise be required may be postponed up to, but
not beyond the Conversion Date if such adjustment either by itself or with other
adjustments not previously made adds or subtracts less than 1% of the shares of
Common Stock into which the Preferred Stock is convertible immediately prior to
the making of such adjustment. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other adjustments
required by Section 5 and not previously made, would result in a minimum
adjustment or on the

                                       10



Conversion Date. For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of its occurrence.

                  b.       Fractional Adjustments. In computing adjustments
under Section 5, fractional adjustments to the Conversion Value shall be taken
into account to the nearest 1/100th of a cent.

                  c.       Escrow of Stock. If after any property becomes
distributable pursuant to Section 5 by reason of the taking of any record of the
holders of Common Stock, but prior to the occurrence of the event for which such
record is taken, a holder of the Preferred Stock converts the Preferred Stock,
such holder of Preferred Stock shall continue to be entitled to receive any
shares of Common Stock issuable upon conversion under Section 5 by reason of
such adjustment and such shares or other property shall be held in escrow for
the holder of the Preferred Stock by the Corporation to be issued to holder of
the Preferred Stock upon and to the extent that the event actually takes place.
Notwithstanding any other provision to the contrary herein, if the event for
which such record was taken fails to occur or is rescinded, then such escrowed
shares shall be canceled by the Corporation and escrowed property returned to
the Corporation.

         7.       Merger, Consolidation or Disposition of Assets. If, while the
Preferred Stock is outstanding, there occurs: (i) an acquisition by an
individual or legal entity or group (as defined in Rule 13-d of the Exchange
Act) of more than one-half of the voting rights or equity interests in the
Corporation; or (ii) a merger or consolidation of the Corporation or a sale,
transfer or other disposition of all or substantially all the Corporation's
property, assets or business to another corporation where the holders of the
Corporation's voting securities prior to such transaction fail to continue to
hold at least a majority of the voting power of the surviving or acquiring
corporation (a "Change of Control"), and, pursuant to the terms of such Change
of Control, shares of common stock of the surviving or acquiring corporation, or
any cash, shares of stock or other securities or property of any nature
whatsoever (including warrants or other subscription or purchase rights) in
addition to or in lieu of common stock of the successor or acquiring corporation
("Other Property"), are to be received by or distributed to the holders of
Common Stock of the Corporation, then the certificates evidencing the
Convertible Preferred Stock shall, as of and after the Change of Control,
evidence only the right to receive, at each Holder's election, which must be
delivered by each Holder to the Corporation within 20 days after receiving
notice from the Corporation of the right to make such election, either:

                  i.       the number of shares of common stock of the successor
         or acquiring corporation or of the Corporation, if it is the surviving
         corporation, and Other Property receivable upon or as a result of such
         Change of Control by a holder of the number of shares of Common Stock
         into which the Convertible Preferred Stock is convertible immediately
         prior to such event, or

                  ii.      at the effective time of such Change of Control, such
         Holder's Liquidation Preference.

If a timely election is not made pursuant to this Section 7(a), the holder shall
receive the benefit of Section 7(a)(i) and shall not be entitled to the benefit
of Section 7(a)(ii). If notice of a Change of

                                       11



Control is given but the Change of Control transaction is not, for any reason,
consummated, the elections of the Holders given in connection with such notice
shall be of no force or effect, ab initio.

         8.       Other Action Affecting Common Stock. In case at any time or
from time to time the Corporation shall take any action in respect of its Common
Stock, other than the payment of dividends permitted by Section 5 or any other
action described in Section 5, then, unless such action will not have a
materially adverse effect upon the rights of the holder of Convertible Preferred
Stock, the number of shares of Common Stock or other stock into which the
Convertible Preferred Stock is convertible exercisable and/or the purchase price
thereof shall be adjusted in such manner as may be equitable in the
circumstances.

         9.       Certain Limitations. Notwithstanding anything herein to the
contrary, the Corporation agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the current Conversion Value to
be less than the par value per share of Common Stock.

         10.      Stock Transfer Taxes. The issue of stock certificates upon
conversion of the Convertible Preferred Stock shall be made without charge to
the converting holder for any tax in respect of such issue; provided, however,
that the Corporation shall be entitled to withhold any applicable withholding
taxes with respect to such issue, if any.

         11.      Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Value, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each Holder a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any Holder, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Value at the time in effect for the
Convertible Preferred Stock and (iii) the number of shares of Common Stock and
the amount, if any, or other property which at the time would be received upon
the conversion of Convertible Preferred Stock owned by such holder.

         12.      Notices of Record Date. In the event of any fixing by the
Corporation of a record date for the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any shares of
Common Stock or other securities, or any right to subscribe for, purchase or
otherwise acquire, or any option for the purchase of, any shares of stock of any
class or any other securities or property, or to receive any other right, the
Corporation shall mail to each Holder at least twenty (20) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend, distribution or rights, and the
amount and character of such dividend, distribution or right.

         13.      Redemption.

                  a.       Redemption at the Holders' Elections. If a Redemption
Triggering Event (as defined below) has occurred, and a holder has so elected,
the Corporation shall redeem the

                                       12



Convertible Preferred Stock of any Holder who gives a Demand for Redemption (as
defined below). The Corporation shall, promptly thereafter, redeem the shares of
Convertible Preferred Stock as set forth in the Demand for Redemption, to the
extent permitted under Section 160 of the Delaware General Corporation Law. The
Corporation shall effect such redemption by paying in cash for each such share
to be redeemed an amount equal to the sum of such Holder's Liquidation
Preference (the "Redemption Price"). A "Redemption Triggering Event" is any one
of the following:

                           i.       The Corporation's failure or refusal to
         convert any shares of Convertible Preferred Stock in accordance with
         the terms hereof, or the Corporation's breach of any other term or
         provision of the terms of the Convertible Preferred Stock, other than
         Section 4(d) hereof; provided, however, that with respect to the
         Corporation's obligation to deliver certificates evidencing the Common
         Stock acquired upon conversion of the Convertible Preferred Stock, the
         Corporation shall have a grace period of 3 business days in addition to
         the two trading days within which the Corporation is required to issue
         such certificates in Section 5(b) (Mechanics of Conversion) hereof, it
         being understood that the aforesaid grace period is applicable only
         with respect to the right of the Holder to make a Demand for
         Redemption, and such grace period is not applicable with respect to any
         other liability of the Corporation arising out of the Corporation's
         failure or refusal to deliver certificates evidencing such Common Stock
         within the period of two business days required by Section 5(b) hereof.

                           ii.      Any breach of any warranty, covenant (other
         than Section 5.8(d) of the Purchase Agreement), or representation of
         the Corporation or any of its subsidiaries in the Purchase Agreement or
         the Registration Rights Agreement (as such term are defined in the
         Purchase Agreement) that is reasonably likely to have a material
         adverse effect on the Corporation or the Preferred Stock and which
         breach, if reasonably capable of being cured, has not been cured within
         ten (10) days after the Corporation has notice of such breach (the
         "Breach Cure Period"); provided, however, that for purposes of this
         Section 13(a)(ii), the Corporation's breach of, among other provisions,
         any provision of paragraph (c) of Section 4 of this Certificate of
         Designation or paragraph (c) of Section 5.8 of the Purchase Agreement
         shall be deemed to constitute a breach "that is reasonably likely to
         have a material adverse effect on the Corporation or the Preferred
         Stock"; provided, further, that the preceding clause shall not be
         construed to imply that any breach of any other paragraph of Section 4
         of the Certificate of Designation or any other paragraph of Section 5.8
         of the Purchase Agreement does not constitute a breach "that is
         reasonably likely to have a material adverse effect on the Corporation
         or the Preferred Stock."

The Corporation shall promptly notify each Holder of the occurrence of a
Redemption Triggering Event.

                  b.       Demand for Redemption. A Holder desiring to elect a
redemption as herein provided shall deliver a notice (the "Demand for
Redemption") to the Corporation specifying the following:

                           i.       The approximate date and nature of the
         Redemption Triggering Event;

                           ii.      The number of shares of Convertible
         Preferred Stock to be redeemed; and

                                       13



                           iii.     The address to which the payment of the
         Redemption Price shall be delivered, or, at the election of the Holder,
         wire instructions with respect to the account to which payment of the
         Redemption Price shall be required.

A Holder may deliver the certificates evidencing the Convertible Preferred Stock
to be redeemed with the Demand for Redemption or under separate cover. Payment
of the Redemption Price shall be made not later than two (2) business days
following the Redemption Date. The Redemption Date shall be the date on which
each of the following conditions has been satisfied: (i) a Holder has delivered
a Demand for Redemption and the certificates evidencing the shares of
Convertible Preferred Stock to be redeemed; and (ii) the Breach Cure Period has
expired.

                  c.       Early Redemption at the Corporation's Election.

                           i.       If, at any time after the third anniversary
         of the issuance of the first share of Preferred Stock, (A) the Common
         Stock is traded on any national securities exchange or quoted on the
         Nasdaq National Market or Nasdaq SmallCap Market, and (B) the closing
         price per share of the Common Stock exceeds $10.00 per share for at
         least 20 consecutive trading days (the "Trading Period"), and (C) in
         such Trading Period the average daily trading volume is greater than
         200,000 shares per day, then the Corporation may, not later than 5
         business days after the end of any such Trading Period (the "Call
         Notice Period"), call for the redemption of all (but not less than all)
         the Preferred Stock. If the Corporation does not timely call for such
         redemption, the Corporation may thereafter call for redemption as
         herein provided only if the conditions set forth in clauses (A), (B),
         and (C) of the preceding sentence are again fulfilled, and the
         Corporation calls for redemption within the new Call Notice Period.

                           ii.      If the Corporation elects to redeem the
         Preferred Stock, the Corporation shall give written notice thereof (the
         "Call for Redemption"), signed by the Chief Executive Officer or Chief
         Financial Officer, to the Holders of the Preferred Stock not later than
         the end of the Call Notice Period. The Call for Redemption shall (A)
         specify the beginning and end of the Trading Period and shall (B) set
         forth the Corporation's undertaking to pay the Stated Value on each
         outstanding share of Preferred Stock plus any accrued but unpaid
         dividends thereon, and (C) certify that the Corporation has the funds
         on hand to make such payments, and that the Corporation is not under
         any lawful order of any court or other governmental authority
         restricting or prohibiting such payment and not bound by any agreement,
         undertaking or other obligation which would prohibit or restrict the
         authority of the Corporation to make such payment, and (D) set forth
         the name and address of the Corporation or, if applicable, any transfer
         or paying agent, to which the Holders shall deliver their certificates
         evidencing the Preferred Stock to obtain payment therefor.

                           iii.     Simultaneously with the Corporation's
         issuance of any Call for Redemption, the Corporation shall set aside,
         in a segregated account, sufficient funds to pay all amounts owed to
         the Holders of the Preferred Stock on account of such redemption.

                                       14



                           iv.      The issuance of a Call for Redemption shall
         not impair or diminish in any way the right of the Holders of the
         Preferred Stock to convert the Preferred Stock into Common Stock;
         provided, however, that sixty days after the Call for Redemption, the
         Preferred Stock not otherwise converted or redeemed shall be deemed
         redeemed, and the certificates therefor shall evidence only the right
         of the Holder to receive the payments payable by the Corporation upon
         redemption.

                           v.       Payment of the Stated Value, plus all
         accrued, accumulated and unpaid dividends, shall be made to each Holder
         not later than two (2) business days following the Corporation's
         receipt of such Holder's certificates evidencing the Preferred Stock,
         or the usual and customary proof of loss of such certificates, if
         applicable.

                  d.       Status of Redeemed or Purchased Shares. Any shares of
the Convertible Preferred Stock at any time purchased, redeemed or otherwise
acquired by the Corporation shall not be reissued and shall be retired.

                  e.       Insufficient Funds. If the funds of the Corporation
legally available for redemption of shares of the Preferred Stock on any
Redemption Date are insufficient to redeem the total number of shares of
Preferred Stock to be redeemed on such date, those funds which are legally
available, if any, will be used to redeem the maximum possible number of such
shares ratably among the Holders of such shares to be redeemed based upon the
total Redemption Price applicable to each such Holder's shares of Preferred
Stock which are subject to redemption on such Redemption Date. The shares of
Preferred Stock not redeemed shall remain outstanding and entitled to all the
rights and preferences provided herein. At any time thereafter when additional
funds of the Corporation are legally available for the redemption of shares of
the Preferred Stock, such funds will immediately be used to redeem the balance
of the shares which the Corporation has become obliged to redeem on any
Redemption Date but which it has not redeemed.

         14.      Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 4:00 p.m. (New York City
time) on a business day, (b) the next business day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a business day
or later than 4:00 p.m. (New York City time) on any business day, or (c) the
business day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service such as Federal Express. The address for
such notices and communications shall be as follows: (i) if to the Corporation,
to 157 Technology Drive , Irvine, California 92618, facsimile: 949.788.6706,
Attention: Chief Executive Officer or (ii) if to a holder of Preferred Stock, to
the address or facsimile number appearing on the Corporation's shareholder
records or, in either case, to such other address or facsimile number as the
Corporation or a holder of Preferred Stock may provide to the other in
accordance with this Section.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designation on behalf of the Corporation this 6th day of May, 2003.

                                    /s/Rajesh C. Shrotriya
                                    --------------------------------------------
                                    Name: Rajesh C. Shrotriya, M.D.
                                    Title: Chairman, Chief Executive
                                           Officer and President

                                       15



                                                                       EXHIBIT A

                            FORM OF CONVERSION NOTICE

(To be executed by the registered Holder in order to convert shares of Preferred
Stock)

The undersigned hereby irrevocably elects to convert the number of shares of
Series D 8% Cumulative Convertible Voting Preferred Stock (the "PREFERRED
STOCK") indicated below into shares of common stock, par value $.001 per share
(the "COMMON STOCK"), of Spectrum Pharmaceuticals, Inc., a Delaware corporation
(the "COMPANY"), according to the Certificate of Designations of the Preferred
Stock and the conditions hereof, as of the date written below. The undersigned
hereby requests that certificates for the shares of Common Stock to be issued to
the undersigned pursuant to this Conversion Notice be issued in the name of, and
delivered to, the undersigned or its designee as indicated below. A copy of the
certificate representing the Preferred Stock being converted is attached hereto.

________________________________________________________________________________
Date to Effect Conversion

________________________________________________________________________________
Number of shares of Preferred Stock owned prior to Conversion

________________________________________________________________________________
Number of shares of Preferred Stock to be Converted

________________________________________________________________________________
Stated Value of Preferred Stock to be Converted

________________________________________________________________________________
Amount of accumulated and unpaid dividends on shares of Preferred Stock to be
Converted

________________________________________________________________________________
Number of shares of Common Stock to be Issued (including conversion of accrued
but unpaid dividends on shares of Preferred Stock to be Converted)

________________________________________________________________________________
Applicable Conversion Value

________________________________________________________________________________
Number of shares of Preferred Stock owned subsequent to Conversion

                                    i of iii



Conversion Information:    [NAME OF HOLDER]

                           By:__________________________________________________
                              Name:
                              Title:

                           Address of Holder:

                           _____________________________________________________

                           _____________________________________________________

                           Issue Common Stock to (if different than above):

                           Name:________________________________________________

                           Address:_____________________________________________

                                   _____________________________________________

The undersigned represents, subject to the accuracy of information filed under
the Securities Act and the Exchange Act by any person other than such holder
with respect to the outstanding Common Stock of the Company (including
securities or property convertible into or exchangeable for Common Stock, with
or without the payment of consideration), as of the date hereof that, after
giving effect to the conversion of Preferred Shares pursuant to this Conversion
Notice, the undersigned will not exceed the "Beneficial Ownership Cap" contained
in Section 5(g) of the Certificate of Designations of the Preferred Stock.

                           _____________________________________________________
                           Name of Holder

                           By:__________________________________________________
                           Name:________________________________________________
                           Title:_______________________________________________

                                       ii

EX-3.2

                                                                     EXHIBIT 3.2


                            CERTIFICATE OF INCREASE
                                       OF
                         SPECTRUM PHARMACEUTICALS, INC.

                   Pursuant to Section 151(g) of the General
                    Corporation Law of the State of Delaware

            Spectrum Pharmaceuticals, Inc., a corporation organized and existing
under and by virtue of the laws of the State of Delaware (the "Corporation"),
DOES HEREBY CERTIFY:

      1.    That pursuant to the authority conferred upon the Board of Directors
of the Corporation by the certificate of incorporation of the Corporation, as
amended, the Board unanimously adopted the following recitals and resolutions on
May 9, 2003 authorizing the issuance of the Series D 8% Cumulative Convertible
Voting Preferred Stock of the Corporation, which recitals and resolutions are
still in full force and effect and are not in conflict with any provisions of
the certificate of incorporation or bylaws of the Corporation:

            WHEREAS, the resolutions adopted by the Board on April 16, 2003 and
the Certificate of Designation, Preferences and Rights of Series D 8% Cumulative
Convertible Voting Preferred Stock, filed with the Delaware Secretary of State
on May 7, 2003 (the "Series D Certificate of Designation") stated the number of
authorized shares of Series D 8% Cumulative Convertible Voting Preferred Stock
(the "Series D Preferred Stock") as 444;

            WHEREAS, the Board has determined that it is in the best interest of
the Corporation to increase the number of authorized shares of Series D
Preferred Stock to 600;

            NOW, THEREFORE, BE IT RESOLVED, that pursuant to authority vested in
the Board of Directors by the Certificate of Incorporation, the Board does
hereby increase the number of authorized shares of Series D Preferred Stock to
600, and does hereby amend and restate the first paragraph of the Series D
Certificate of Designation in its entirety to read as follows:

            "RESOLVED, that pursuant to the authority expressly granted to and
      vested in the board of directors of the Corporation (the "Board") pursuant
      to the General Corporation Law of the State of Delaware, as amended, and
      by the provisions of the Corporation's Certificate of Incorporation, as
      amended to date (the "Certificate of Incorporation"), the Board hereby
      creates a series of preferred stock of the Corporation, par value $0.001
      per share, each share having a stated value (the "Stated Value") of
      $10,000.00, such series consisting of 600 shares (which shall not be
      subject to increase without the consent of the Holders (as defined below)
      of a majority of the outstanding Preferred Stock, which majority shall
      include each Holder who acquired in the aggregate more than 100 shares of
      Preferred Stock so long as such Holder continues to hold more than 100
      shares of Preferred Stock, which such majority is hereinafter referred to
      as a "Special Majority"), which shall be designated as the "Series D 8%
      Cumulative Convertible Voting Preferred Stock" (hereinafter, the
      "Convertible Preferred Stock" or the "Preferred Stock"), which series
      shall have the following powers, designations, preferences and relative
      participating, optional, voting or other rights, and the following
      qualifications, limitations or restrictions:"

      2.    That the holders of the shares of the Series D Preferred Stock duly
approved of the increase in the number of authorized shares of Series D
Preferred Stock to 600 by written consent on May 12, 2003, in accordance with
the Series D Certificate of Designation.

                            [Signature Page Follows]

      IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Increase to be executed by Rajesh C. Shrotriya, M.D., its Chairman, Chief
Executive Officer and President, this 13th day of May, 2003.


                                    SPECTRUM PHARMACEUTICALS, INC.
                                    a Delaware corporation


                                    By:         /s/ Rajesh C. Shrotriya
                                                -----------------------
                                          Rajesh C. Shrotriya, M.D.
                                          Chairman, Chief Executive Officer and
                                          President

EX-4.1

                                                                     EXHIBIT 4.1

                                                            WARRANT NO. ________

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY OR ACQUIRABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION UNDER SAID ACT IS NOT REQUIRED.

                               SERIES D-1 WARRANT

                  To Purchase _______ Shares of Common Stock of

                         SPECTRUM PHARMACEUTICALS, INC.

                  THIS IS TO CERTIFY THAT ____________________, or registered
assigns (the "Holder"), is entitled, at any time prior to the Expiration Date
(as hereinafter defined), to purchase from Spectrum Pharmaceuticals, Inc. a
Delaware corporation (the "Company"), the Warrant Shares (as hereinafter defined
and subject to adjustment as provided herein), in whole or in part, at a
purchase price of $3.00 per share, all on and subject to the terms and
conditions hereinafter set forth.

                  1.       DEFINITIONS. As used in this Warrant, the following
terms have the respective meanings set forth below:

                  "Additional Shares of Common Stock" means any shares of Common
Stock issued by the Company after the Closing Date.

                  "Affiliate" means any person or entity that, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with a person or entity, as such terms are used in and
construed under Rule 144 under the Securities Act. With respect to a Holder of
Warrants, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such holder will be deemed
to be an Affiliate of such Holder.

                  "Appraised Value" means, in respect of any share of Common
Stock on any date herein specified, the fair saleable value of such share of
Common Stock (determined without giving effect to the discount for (i) a
minority interest or (ii) any lack of liquidity of the Common Stock or to the
fact that the Company may have no class of equity registered under the Exchange
Act) as of the last day of the most recent fiscal month ending prior to such
date specified, based on the value of the Company, as determined by a nationally
recognized investment banking firm selected by the Company's Board of Directors
and having no prior relationship with the Company.



                  "Business Day" means any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in the State of
New York.

                  "Change of Control" means the (i) acquisition by an individual
or legal entity or group (as defined in Rule 13-d of the Exchange Act) of more
than one-half of the voting rights or equity interests in the Company; (ii)
sale, conveyance, or other disposition of all or substantially all of the
assets, property or business of the Company, (iii) any reorganization of the
Company's capital, or (iv) the merger into or consolidation with any other
corporation (other than a wholly owned subsidiary corporation) or effectuation
of any transaction or series of related transactions where holders of the
Company's voting securities prior to such transaction or series of transactions
fail to continue to hold at least 50% of the voting power of the Company.

                  "Closing Date" means May 7, 2003.

                  "Commission" means the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.

                  "Common Stock" means (except where the context otherwise
indicates) the Common Stock, $0.001 par value per share, of the Company as
constituted on the Closing Date, and any capital stock into which such Common
Stock may thereafter be changed or converted, and shall also include (i) capital
stock of the Company of any other class (regardless of how denominated) issued
to the holders of shares of Common Stock upon any reclassification thereof which
is also not preferred as to dividends or assets on liquidation over any other
class of stock of the Company and which is not subject to redemption and (ii)
shares of common stock of any successor or acquiring corporation received by or
distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section 4.3.

                   "Current Market Price" means, in respect of any share of
Common Stock on any date herein specified, if there shall not then be a public
market for the Common Stock, the higher of (a) the book value per share of
Common Stock on such date and (b) the Appraised Value per share of Common Stock
at such date, or if there shall then be a public market for the Common Stock,
the higher of (a) the book value per share of Common Stock on such date, and (b)
the average of the daily market prices for 20 consecutive Trading Days
immediately preceding such date. The daily market price for each such Trading
Day shall be (i) the last sale price on such day on the principal stock exchange
on which such Common Stock is then listed or admitted to trading, (ii) if no
sale takes place on such day on any such exchange, the average of the last
reported closing bid and asked prices on such day as officially quoted on any
such exchange, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange, the average of the last reported closing bid and
asked prices on such day in the over-the-counter market, as furnished by the
National Association of Securities Dealers Automatic Quotation System or the
National Quotation Bureau, Inc., (iv) if neither such corporation at the time is
engaged in the business of reporting such prices, as furnished by any similar
firm then engaged in such business, or (v) if there is no such firm, as
furnished by any member of the NASD selected mutually by the holder of this
Warrant and the Company or, if they cannot agree upon such selection, as
selected by two such members of the NASD, one of which shall be selected by
holder of this Warrant and one of which shall be selected by the Company.

                                       2



                  "Current Warrant Price" means, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date. Until the Current
Warrant Price is adjusted pursuant to the terms herein, the initial Current
Warrant Price shall be $3.00 per share.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

                  "Exercise Period" means the period during which this Warrant
is exercisable pursuant to Section 2.1.

                  "Expiration Date" means May 7, 2008.

                  "GAAP" means generally accepted accounting principles in the
United States of America as from time to time in effect.

                  "NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.

                  "Other Property" has the meaning set forth in Section 4.3.

                   "Person" means any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

                  "Restricted Common Stock" means shares of Common Stock which
are, or which upon their issuance upon the exercise of any Warrant would be
required to be, evidenced by a certificate bearing the restrictive legend set
forth in Section 3.2.

                  "Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

                  "Trading Day" means any day on which the primary market on
which shares of Common Stock are listed is open for trading.

                  "Transfer" means any disposition of any Warrant or Warrant
Shares or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.

                  "Warrants" means this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof. All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the number of shares of Common Stock for which they may be
exercised.

                                       3



                  "Warrant Price" means an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price.

                  "Warrant Shares" means any one or more of the ______ shares of
Common Stock to be purchased upon the exercise hereof, subject to adjustment as
provided herein.

                  2.       EXERCISE OF WARRANT.

                  2.1.     Manner of Exercise. (a) From and after the Closing
Date, and until 5:00 P.M., New York time, on the Expiration Date (the "Exercise
Period"), the Holder may exercise this Warrant, on any Business Day, for all or
any part of the number of shares of Warrant Shares purchasable hereunder.

                           (b)      In order to exercise this Warrant, in whole
or in part, the Holder shall deliver to the Company at its principal office or
at the office or agency designated by the Company pursuant to Section 10, (i) a
written notice of Holder's election to exercise this Warrant, which notice shall
specify the number of shares of Warrant Shares to be purchased, (ii) payment of
the Warrant Price as provided herein, and (iii) this Warrant. Such notice shall
be substantially in the form of the subscription form appearing at the end of
this Warrant as Exhibit A, duly executed by the Holder or its agent or attorney.
Upon receipt thereof, the Company shall, as promptly as reasonably practicable,
and in any event within five Business Days thereafter, execute or cause to be
executed and deliver or cause to be delivered to the Holder a certificate or
certificates representing the aggregate number of Warrant Shares issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as the Holder
shall request in the notice and shall be registered in the name of the Holder or
such other name as shall be designated in the notice. This Warrant shall be
deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and the Holder or any other Person so designated to
be named therein shall be deemed to have become a Holder of record of such
shares for all purposes, as of the date when the notice, together with the
payment of the Warrant Price and this Warrant, is received by the Company as
described above. If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the unpurchased shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.

                           (c)      Payment of the Warrant Price may be made at
the option of the Holder by: (i) certified or official bank check payable to the
order of the Company, or (ii) wire transfer to the account of the Company. All
shares of Common Stock issuable upon the exercise of this Warrant pursuant to
the terms hereof shall be validly issued and, upon payment of the Warrant Price,
shall be fully paid and nonassessable and not subject to any preemptive rights.
The Company shall pay all expenses in connection with, and all transfer, stamp
or similar taxes and other governmental charges that may be imposed with respect
to, the issue or deliver thereof, provided, however, that the Company shall not
be required to pay any tax which may be payable

                                       4



in respect of any transfer involved in the issuance of any certificates for
Warrant Shares or Warrants in a name other than the name of the Holder.

                           (d)      Except for the provisions with respect to
the Rights Agreement set forth in Section 4.7 hereof, prior to the exercise of
this Warrant, the Holder shall not be entitled to any rights as a stockholder of
the Company with respect to the Warrant Shares, including, without limitation,
the right to vote such Warrant Shares, receive dividends or other distributions
thereon or to be notified of stockholder meetings, except as set forth herein.

                  2.2.     Fractional Shares. The Company shall not be required
to issue a fractional share of Common Stock upon exercise of any Warrant. As to
any fraction of a share which the Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be entitled
to purchase upon such exercise, the Company shall pay an amount in cash equal to
the Current Market Price per share of Common Stock on the date of exercise,
multiplied by such fraction.

                  2.3.     Restrictions on Exercise Amount. Notwithstanding any
contrary or inconsistent provision hereof, the holder may not acquire a number
of Warrant Shares to the extent that, upon such exercise, the number of shares
of Common Stock then beneficially owned by such holder and its Affiliates and
any other persons or entities whose beneficial ownership of Common Stock would
be aggregated with the Holder's for purposes of Section 13(d) of the Exchange
Act (including shares held by any "group" of which the holder is a member)
exceeds 4.95% of the total number of shares of Common Stock of the Company then
issued and outstanding (such limitation being herein referred to as the
"Beneficial Ownership Cap"). For purposes hereof, "group" has the meaning set
forth in Section 13(d) of the Exchange Act and applicable regulations of the
Securities and Exchange Commission, and the percentage held by the holder shall
be determined in a manner consistent with the provisions of Section 13(d) of the
Exchange Act. The Company shall have no obligation to verify compliance with
this Section 2.3, other than to issue Warrant Shares in accordance with the
exercise notice of each Holder. It shall be the responsibility of each Holder to
determine such Holder's compliance with the Beneficial Ownership Cap, and the
Holder's exercise notice shall be deemed a representation of the Holder that the
number of shares of Common Stock to be acquired pursuant to such exercise notice
shall be in compliance with the Beneficial Ownership Cap.

                  3.       TRANSFER, DIVISION AND COMBINATION.

                  3.1.     Transfer. The Warrants and the Warrant Shares shall
be freely transferable, subject to compliance with all applicable laws,
including, but not limited to the Securities Act. Transfer of this Warrant and
all rights hereunder, in whole or in part, shall be registered on the books of
the Company to be maintained for such purpose, upon surrender of this Warrant at
the principal office of the Company referred to in Section 12.2 or the office or
agency designated by the Company pursuant to Section 10, together with a written
assignment of this Warrant substantially in the form of Exhibit B hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new

                                       5



Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. The acceptance of the New Warrant or Warrants by
the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations of a holder of this Warrant. Notwithstanding
anything herein to the contrary, this Warrant may not be transferred or assigned
in whole or in part without compliance with applicable federal and state
securities laws. Following a transfer that complies with the requirements of
this Section 3.1, the Warrant may be exercised by a new Holder for the purchase
of shares of Common Stock regardless of whether the Company issued or registered
a new Warrant on the books of the Company.

                  3.2.     Restrictive Legend. Unless the resale of the Warrant
Shares has been registered under the Securities Act of 1933, as amended, each
certificate for Warrant Shares initially issued upon the exercise of this
Warrant, and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:

                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, AND
                  MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE
                  ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT
                  OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
                  REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER
                  SAID ACT IS NOT REQUIRED."

                  3.3.     Division and Combination; Expenses; Books. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 3.1 as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. The Company shall prepare, issue and deliver at its own
expense the new Warrant or Warrants under this Section 3. The Company agrees to
maintain, at its aforesaid office or agency, books for the registration and the
registration of transfer of the Warrants.

                  4.       ADJUSTMENTS. The number of shares of Common Stock for
which this Warrant is exercisable, and the price at which such shares may be
purchased upon exercise of this Warrant, shall be subject to adjustment from
time to time as set forth in this Section 4. The Company shall give the Holder
notice of any event described below which requires an adjustment pursuant to
this Section 4 in accordance with Sections 5.1 and 5.2.

                                       6



                  4.1      Stock Dividends, Subdivisions and Combinations. If at
any time while this Warrant is outstanding the Company shall:

                           i.       take a record of the holders of its Common
                  Stock for the purpose of entitling them to receive a dividend
                  payable in, or other distribution of, additional shares of
                  Common Stock,

                           ii.      subdivide its outstanding shares of Common
                  Stock into a larger number of shares of Common Stock, or

                           iii.     combine its outstanding shares of Common
                  Stock into a smaller number of shares of Common Stock,

then:

                           (1)      the number of shares of Common Stock
                                    acquirable upon exercise of this Warrant
                                    immediately after the occurrence of any such
                                    event shall be adjusted to equal the number
                                    of shares of Common Stock which a record
                                    holder of the same number of shares of
                                    Common Stock that would have been acquirable
                                    under this Warrant immediately prior to the
                                    occurrence of such event would own or be
                                    entitled to receive after the happening of
                                    such event, and

                           (2)      the Warrant Price shall be adjusted to
                                    equal:

                                    (A)     the Current Warrant Price in effect
                                            immediately prior to the occurrence
                                            of such event multiplied by the
                                            number of shares of Common Stock
                                            into which this Warrant is
                                            exercisable immediately prior to the
                                            adjustment, divided by

                                    (B)     the number of shares of Common Stock
                                            into which this Warrant is
                                            exercisable immediately after such
                                            adjustment.

Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clauses (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.

                  4.2      Fractional Interests. In computing adjustments under
this Section 4, all calculations shall be made to the nearest 1/100th of a
share.

                  4.3      Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets.

                           a.       If, during the Exercise Period, there shall
occur a Change of Control and, pursuant to the terms of such Change of Control,
shares of common stock of the successor or acquiring corporation, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to

                                       7



or in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder of this Warrant shall have the right thereafter
to receive, upon the exercise of the Warrant, the number of shares of common
stock of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and the Other Property receivable upon or as a result of
such Change of Control by a holder of the number of shares of Common Stock into
which this Warrant is exercisable immediately prior to such event.

                           b.       In case of any such Change of Control, the
successor or acquiring corporation (if other than the Company) shall expressly
assume the due and punctual observance and performance of each and every
covenant and condition of contained in this Warrant to be performed and observed
by the Company and all the obligations and liabilities hereunder, subject to
such modifications as may be deemed appropriate (as determined by resolution of
the Board of Directors of the Company) in order to provide for adjustments of
shares of the Common Stock into which this Warrant is exercisable which shall be
as nearly equivalent as practicable to the adjustments provided for in Section
4.

                  4.4      Other Action Affecting Common Stock. In case at any
time or from time to time the Company shall take any action in respect of its
Common Stock, then, unless such action will not have a materially adverse effect
upon the rights of the holder of this Warrant, the number of shares of Common
Stock or other stock into which this Warrant is exercisable and/or the purchase
price thereof shall be adjusted in such manner as may be equitable in the
circumstances.

                  4.5      Certain Limitations. Notwithstanding anything herein
to the contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price to be
less than the par value per share of Common Stock.

                  4.6      Stock Transfer Taxes. The issue of stock certificates
upon exercise of this Warrant shall be made without charge to the holder for any
tax in respect of such issue.

                  4.7      Rights Distributed Under Rights Agreement.
Capitalized terms used in this Section 4.7 and which are not otherwise defined
herein shall have the meanings ascribed to them in the Rights Agreement (the
"Rights Agreement") dated as of December, 13, 2000, between the Company and U.S.
Stock Transfer Corporation. While the Rights Agreement or any other poison pill,
rights plan or similar arrangement (each, a "Rights Plan") shall be in effect:

                           a.       A Holder who exercises any portion of this
Warrant before the Distribution Date or before any Rights Certificates or
similar right (each a "Right") shall be evidenced by a separate rights
certificate or before any Right shall otherwise be transferable otherwise than
in connection with the transfer of the Warrant Shares (the date of the
occurrence of any of the foregoing being referred to herein as a "Rights
Distribution Date") will receive, upon exercise of this Warrant, in addition to
the Warrant Shares issuable upon exercise of this Warrant, one Right for each
such Warrant Share.

                           b.       A Holder who exercises any portion of this
Warrant after a Rights Distribution Date shall receive, upon exercise of this
Warrant, in addition to the Warrant Shares issuable upon exercise of this
Warrant, such number of Rights equal to the number of Rights

                                       8



such Holder would have held if, immediately prior to the Rights Distribution
Date, the portion of this Warrant being exercised at such time had been
exercised and the Warrant Shares issuable upon such exercise were outstanding
immediately prior to the Rights Distribution Date. The Company shall issue to
the Holder certificates evidencing such Rights, no later than five business days
following such exercise date. In the event the applicable Rights Plan does not
permit such Rights to be granted to each Holder, the Corporation shall, in lieu
of the Rights issuable pursuant to the immediately preceding sentence, issue to
each Holder an option, right or similar arrangement giving each Holder the same
rights and benefits as they would have held upon the receipt of the applicable
number of Rights.

                  5.       NOTICES TO WARRANT HOLDERS.

                  5.1.     Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Current Warrant Price, or the number of
shares of Common Stock and the amount, if any of other property which at the
time would be received upon exercise of the Warrants owned by such Holder, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder of
this Warrant a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request at any time of the Holder of this
Warrant, furnish or cause to be furnished to such Holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Current Warrant
Price at the time in effect and (iii) the number of shares of Common Stock and
the amount, if any, or other property which at the time would be received upon
the exercise of Warrants owned by such Holder.

                  5.2.     Notice of Corporate Action. If at any time:

                           (a)      the Company shall take a record of the
         holders of its Common Stock for the purpose of entitling them to
         receive a dividend or other distribution, or any right to subscribe for
         or purchase any evidences of its indebtedness, any shares of stock of
         any class or any other securities or property, or to receive any other
         right, or

                           (b)      there shall be any capital reorganization of
         the Company, any reclassification or recapitalization of the capital
         stock of the Company or any consolidation or merger of the Company
         with, or any sale, transfer or other disposition of all or
         substantially all the property, assets or business of the Company to,
         another corporation, or

                           (c)      there shall be a voluntary or involuntary
         dissolution, liquidation or winding up of the Company;

         then, in any one or more of such cases, the Company shall give to the
         Holder (i) at least 15 days' prior written notice of the record date
         shall be selected for such dividend, distribution or right or for
         determining rights to vote in respect of any such reorganization,
         reclassification, merger, consolidation, sale, transfer, disposition,
         dissolution, liquidation or winding up, and (ii) in the case of any
         such reorganization, reclassification, merger, consolidation, sale,
         transfer, disposition, dissolution, liquidation or winding up, at least
         15 days' prior written notice of the date when the same shall take

                                       9



         place. Such notice in accordance with the foregoing clause also shall
         specify (i) the date on which any such record is to be taken for the
         purpose of such dividend, distribution or right, the date on which the
         holders of Common Stock shall be entitled to any such dividend,
         distribution or right, and the amount and character thereof, and (ii)
         the date on which any such reorganization, reclassification, merger,
         consolidation, sale, transfer, disposition, dissolution, liquidation or
         winding up is to take place and the time, if any such time is to be
         fixed, as of which the holders of Common Stock shall be entitled to
         exchange their shares of Common Stock for securities or other property
         deliverable upon such reorganization, reclassification, merger,
         consolidation, sale, transfer, disposition, dissolution, liquidation or
         winding up. Each such written notice shall be sufficiently given if
         addressed to the Holder at the last address of the Holder appearing on
         the books of the Company and delivered in accordance with Section 12.2.
         The failure to give any notice required by this Section 5.2 shall not
         invalidate any such corporate action.

                  5.3.     Notice to Stockholders. The Holder shall be entitled
to the same rights to receive notice of corporation action as any holder of
Common Stock.

                  6.       NO IMPAIRMENT. The Company shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of the Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form satisfactory to the
Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.

                  7.       RESERVATION AND AUTHORIZATION OF COMMON STOCK:
REGISTRATION WITH APPROVAL OF ANY GOVERNMENTAL AUTHORITY. From and after the
Closing Date, the Company shall at all times reserve and keep available for
issue upon the exercise of Warrants such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full of
all outstanding Warrants. All shares of Common Stock which shall be so issuable,
when issued upon exercise of any Warrant and payment therefor in accordance with
the terms of such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights. Before taking any action
which would cause an adjustment reducing the Current Warrant Price below the
then par value, if any, of the shares of Common Stock issuable upon exercise of
the Warrants, the Company shall take any corporate action which may be necessary
in order that the Company may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Current Warrant
Price. Before taking any action which would result in an adjustment in the
number of shares of Common Stock

                                       10



for which this Warrant is exercisable or in the Current Warrant Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof. If any shares of Common Stock required to be reserved for
issuance upon exercise of Warrants require registration or qualification with
any governmental authority under any federal or state law before such shares may
be so issued (other than as a result of a prior or contemplated distribution by
the Holder of this Warrant), the Company will in good faith and as expeditiously
as possible and at its expense endeavor to cause such shares to be duly
registered.

                  8.       TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.

                  9.       LOSS OR MUTILATION. Upon receipt by the Company from
the Holder of evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of this Warrant and indemnity reasonably
satisfactory to it (it being understood that the written agreement of the
original Holder shall be sufficient indemnity) and in case of mutilation upon
surrender and cancellation hereof, the Company will execute and deliver in lieu
hereof a new Warrant of like tenor to the Holder; provided, however, that in the
case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to the Company for cancellation. Applicants for
a replacement Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.

                  10.      OFFICE OF THE COMPANY. As long as any of the Warrants
remain outstanding, the Company shall maintain an office or agency (which may be
the principal executive offices of the Company) where the Warrants may be
presented for exercise, registration of transfer, division or combination as
provided in this Warrant.

                  11.      LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of the Holder for the purchase price of any
Common Stock, whether such liability is asserted by the Company or by creditors
of the Company.

                  12.      MISCELLANEOUS.

                  12.1.    Nonwaiver and Expenses. No course of dealing or any
delay or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of

                                       11



appellate proceedings, incurred by the Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

                  12.2.    Notice Generally. All notices, requests, demands or
other communications provided for herein shall be in writing and shall be deemed
to have been given the next Business Day after being deposited with a nationally
recognized overnight courier such as Federal Express, or when personally
delivered, or successfully sent by facsimile transmission as evidenced by a fax
machine confirmation report thereof, addressed, as the case may be, to the
Holder at the address on the books and records of the Company, with a copy to
Kane Kessler, P.C., 1350 Avenue of the Americas, New York, New York 10019,
Attention: Robert L. Lawrence, Esq., Facsimile No. (212) 245-3009; or to the
Company, Spectrum Pharmaceuticals, Inc., at 157 Technology Drive, Irvine,
California 92618, Att'n: CEO, Fax No. (949) 788-6706; with a copy to Latham and
Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa, California 92626,
Att'n: Alan W. Pettis, Esq., Fax No. (714) 755-8290, or to such other person or
address as either party shall designate to the other from time to time in
writing forwarded in like manner.

                  12.3.    Successors and Assigns. Subject to compliance with
the provisions of Section 3.1, this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant,
and shall be enforceable by any such Holder, but nothing in this Warrant shall
be construed to give any person or corporation or other entity, other than the
Company and the Holder and their respective successors and assigns, any legal or
equitable right, remedy or cause under this Warrant.

                  12.4.    Amendment. This Warrant may be modified or amended or
the provisions of this Warrant waived with the written consent of the Company
and the Holder.

                  12.5.    Severability. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be modified to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.

                  12.6.    Headings. The headings used in this Warrant are for
the convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant

                  12.7.    Governing Law. This Warrant and the transactions
contemplated hereby shall be deemed to be consummated in the State of New York
and shall be governed by and interpreted in accordance with the local laws of
the State of New York without regard to the provisions thereof relating to
conflict of laws. The Company hereby irrevocably consents to the exclusive
jurisdiction of the State and Federal courts located in New York City, New York
in connection with any action or proceeding arising out of or relating to this
Warrant. In any such litigation the Company waives personal service of any
summons, complaint or other process and agrees that the service thereof may be
made by certified or registered mail directed to the Company at its address set
forth in Section 12.2.

                                       12



                            [SIGNATURE PAGE FOLLOWS:]

                                       13



                  IN WITNESS WHEREOF, the Company has caused this Series D-1
Warrant to be executed by its duly authorized officer and attested by its
Secretary.

Dated: May 7, 2003

                                      SPECTRUM PHARMACEUTICALS, INC.

                                      By: /s/Rajesh C. Shrotriya
                                         ---------------------------------------
                                         Rajesh C. Shrotriya, M.D.
                                         Chairman, President and Chief Executive
                                         Officer
Attest:

By: /s/Carol Gruetter
   ------------------------------------
    Carol Gruetter, Corporate Secretary



                                    EXHIBIT A

                                SUBSCRIPTION FORM

                 [To be executed only upon exercise of Warrant]

The undersigned registered owner of this Warrant exercises this Warrant for the
purchase of shares of Common Stock of Spectrum Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to and whose address is _______________. And, if such shares of
Common Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.

As of the date hereof, and assuming the accuracy of all information filed by the
Company with the Securities and Exchange Commission, the undersigned Holder
hereby certifies that the exercise of the referenced Warrant for the number of
Warrant Shares herein indicated will not put the undersigned Holder out of
compliance with the Beneficial Ownership Cap (as defined in the Warrant).

By signing below, the Holder warrants and represents that the Holder is an
"accredited investor" as that term is defined under Regulation D of the
Securities and Exchange Commission promulgated under the Securities Act of 1933,
as amended.

                           (Name of Registered Owner)

                           (Signature of Registered Owner)

                           (Street Address)

                           (State) (Zip Code)

NOTICE:  The signature on this subscription must correspond with the name as
         written upon the face of the Warrant.



                                    EXHIBIT B

                                 ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned registered owner of this Warrant for the
purchase of shares of Spectrum Pharmaceuticals, Inc., a Delaware corporation,
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:

Name and Address of Assignee

No. of Shares of Common Stock

and does hereby irrevocably constitute and appoint _______________
attorney-in-fact to register such transfer on the books of the Company,
maintained for the purpose, with full power of substitution in the premises.

Dated: Print Name:

Signature:

Witness:

NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the Warrant in every particular.

EX-4.2

                                                                     EXHIBIT 4.2

                                                           WARRANT NO. _________

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY OR ACQUIRABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION UNDER SAID ACT IS NOT REQUIRED.

                               SERIES D-2 WARRANT

                 To Purchase ________ Shares of Common Stock of

                         SPECTRUM PHARMACEUTICALS, INC.

                  THIS IS TO CERTIFY THAT ______________________ or registered
assigns (the "Holder"), is entitled, at any time prior to the Expiration Date
(as hereinafter defined), to purchase from Spectrum Pharmaceuticals, Inc. a
Delaware corporation (the "Company"), the Warrant Shares (as hereinafter defined
and subject to adjustment as provided herein), in whole or in part, at a
purchase price of $3.50 per share, all on and subject to the terms and
conditions hereinafter set forth.

                  1.       DEFINITIONS. As used in this Warrant, the following
terms have the respective meanings set forth below:

                  "Additional Shares of Common Stock" means any shares of Common
Stock issued by the Company after the Closing Date.

                  "Affiliate" means any person or entity that, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with a person or entity, as such terms are used in and
construed under Rule 144 under the Securities Act. With respect to a Holder of
Warrants, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such holder will be deemed
to be an Affiliate of such Holder.

                  "Appraised Value" means, in respect of any share of Common
Stock on any date herein specified, the fair saleable value of such share of
Common Stock (determined without giving effect to the discount for (i) a
minority interest or (ii) any lack of liquidity of the Common Stock or to the
fact that the Company may have no class of equity registered under the Exchange
Act) as of the last day of the most recent fiscal month ending prior to such
date specified, based on the value of the Company, as determined by a nationally
recognized investment banking firm selected by the Company's Board of Directors
and having no prior relationship with the Company.



                  "Business Day" means any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in the State of
New York.

                  "Change of Control" means the (i) acquisition by an individual
or legal entity or group (as defined in Rule 13-d of the Exchange Act) of more
than one-half of the voting rights or equity interests in the Company; (ii)
sale, conveyance, or other disposition of all or substantially all of the
assets, property or business of the Company, (iii) any reorganization of the
Company's capital, or (iv) the merger into or consolidation with any other
corporation (other than a wholly owned subsidiary corporation) or effectuation
of any transaction or series of related transactions where holders of the
Company's voting securities prior to such transaction or series of transactions
fail to continue to hold at least 50% of the voting power of the Company.

                  "Closing Date" means May 7, 2003.

                  "Commission" means the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.

                  "Common Stock" means (except where the context otherwise
indicates) the Common Stock, $0.001 par value per share, of the Company as
constituted on the Closing Date, and any capital stock into which such Common
Stock may thereafter be changed or converted, and shall also include (i) capital
stock of the Company of any other class (regardless of how denominated) issued
to the holders of shares of Common Stock upon any reclassification thereof which
is also not preferred as to dividends or assets on liquidation over any other
class of stock of the Company and which is not subject to redemption and (ii)
shares of common stock of any successor or acquiring corporation received by or
distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section 4.3.

                  "Current Market Price" means, in respect of any share of
Common Stock on any date herein specified, if there shall not then be a public
market for the Common Stock, the higher of (a) the book value per share of
Common Stock on such date and (b) the Appraised Value per share of Common Stock
at such date, or if there shall then be a public market for the Common Stock,
the higher of (a) the book value per share of Common Stock on such date, and (b)
the average of the daily market prices for 20 consecutive Trading Days
immediately preceding such date. The daily market price for each such Trading
Day shall be (i) the last sale price on such day on the principal stock exchange
on which such Common Stock is then listed or admitted to trading, (ii) if no
sale takes place on such day on any such exchange, the average of the last
reported closing bid and asked prices on such day as officially quoted on any
such exchange, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange, the average of the last reported closing bid and
asked prices on such day in the over-the-counter market, as furnished by the
National Association of Securities Dealers Automatic Quotation System or the
National Quotation Bureau, Inc., (iv) if neither such corporation at the time is
engaged in the business of reporting such prices, as furnished by any similar
firm then engaged in such business, or (v) if there is no such firm, as
furnished by any member of the NASD selected mutually by the holder of this
Warrant and the Company or, if they cannot agree upon such selection, as
selected by two such members of the NASD, one of which shall be selected by
holder of this Warrant and one of which shall be selected by the Company.

                                       2



                  "Current Warrant Price" means, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date. Until the Current
Warrant Price is adjusted pursuant to the terms herein, the initial Current
Warrant Price shall be $3.50 per share.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

                  "Exercise Period" means the period during which this Warrant
is exercisable pursuant to Section 2.1.

                  "Expiration Date" means May 7, 2008.

                   "GAAP" means generally accepted accounting principles in the
United States of America as from time to time in effect.

                  "NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.

                  "Other Property" has the meaning set forth in Section 4.3.

                   "Person" means any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

                  "Restricted Common Stock" means shares of Common Stock which
are, or which upon their issuance upon the exercise of any Warrant would be
required to be, evidenced by a certificate bearing the restrictive legend set
forth in Section 3.2.

                  "Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

                  "Trading Day" means any day on which the primary market on
which shares of Common Stock are listed is open for trading.

                  "Transfer" means any disposition of any Warrant or Warrant
Shares or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.

                  "Warrants" means this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof. All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the number of shares of Common Stock for which they may be
exercised.

                                       3



                  "Warrant Price" means an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price.

                  "Warrant Shares" means any one or more of the ________ shares
of Common Stock to be purchased upon the exercise hereof, subject to adjustment
as provided herein.

                  2.       EXERCISE OF WARRANT.

                  2.1.     Manner of Exercise. (a) From and after the Closing
Date, and until 5:00 P.M., New York time, on the Expiration Date (the "Exercise
Period"), the Holder may exercise this Warrant, on any Business Day, for all or
any part of the number of shares of Warrant Shares purchasable hereunder.

                           (b)      In order to exercise this Warrant, in whole
or in part, the Holder shall deliver to the Company at its principal office or
at the office or agency designated by the Company pursuant to Section 10, (i) a
written notice of Holder's election to exercise this Warrant, which notice shall
specify the number of shares of Warrant Shares to be purchased, (ii) payment of
the Warrant Price as provided herein, and (iii) this Warrant. Such notice shall
be substantially in the form of the subscription form appearing at the end of
this Warrant as Exhibit A, duly executed by the Holder or its agent or attorney.
Upon receipt thereof, the Company shall, as promptly as reasonably practicable,
and in any event within five Business Days thereafter, execute or cause to be
executed and deliver or cause to be delivered to the Holder a certificate or
certificates representing the aggregate number of Warrant Shares issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as the Holder
shall request in the notice and shall be registered in the name of the Holder or
such other name as shall be designated in the notice. This Warrant shall be
deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and the Holder or any other Person so designated to
be named therein shall be deemed to have become a Holder of record of such
shares for all purposes, as of the date when the notice, together with the
payment of the Warrant Price and this Warrant, is received by the Company as
described above. If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the unpurchased shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.

                           (c)      Payment of the Warrant Price may be made at
the option of the Holder by: (i) certified or official bank check payable to the
order of the Company, or (ii) wire transfer to the account of the Company. All
shares of Common Stock issuable upon the exercise of this Warrant pursuant to
the terms hereof shall be validly issued and, upon payment of the Warrant Price,
shall be fully paid and nonassessable and not subject to any preemptive rights.
The Company shall pay all expenses in connection with, and all transfer, stamp
or similar taxes and other governmental charges that may be imposed with respect
to, the issue or deliver thereof, provided, however, that the Company shall not
be required to pay any tax which may be payable

                                       4



in respect of any transfer involved in the issuance of any certificates for
Warrant Shares or Warrants in a name other than the name of the Holder.

                           (d)      Except for the provisions with respect to
the Rights Agreement set forth in Section 4.7 hereof, prior to the exercise of
this Warrant, the Holder shall not be entitled to any rights as a stockholder of
the Company with respect to the Warrant Shares, including, without limitation,
the right to vote such Warrant Shares, receive dividends or other distributions
thereon or to be notified of stockholder meetings, except as set forth herein.

                  2.2.     Fractional Shares. The Company shall not be required
to issue a fractional share of Common Stock upon exercise of any Warrant. As to
any fraction of a share which the Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be entitled
to purchase upon such exercise, the Company shall pay an amount in cash equal to
the Current Market Price per share of Common Stock on the date of exercise,
multiplied by such fraction.

                  2.3.     Restrictions on Exercise Amount. Notwithstanding any
contrary or inconsistent provision hereof, the holder may not acquire a number
of Warrant Shares to the extent that, upon such exercise, the number of shares
of Common Stock then beneficially owned by such holder and its Affiliates and
any other persons or entities whose beneficial ownership of Common Stock would
be aggregated with the Holder's for purposes of Section 13(d) of the Exchange
Act (including shares held by any "group" of which the holder is a member)
exceeds 4.95% of the total number of shares of Common Stock of the Company then
issued and outstanding (such limitation being herein referred to as the
"Beneficial Ownership Cap"). For purposes hereof, "group" has the meaning set
forth in Section 13(d) of the Exchange Act and applicable regulations of the
Securities and Exchange Commission, and the percentage held by the holder shall
be determined in a manner consistent with the provisions of Section 13(d) of the
Exchange Act. The Company shall have no obligation to verify compliance with
this Section 2.3, other than to issue Warrant Shares in accordance with the
exercise notice of each Holder. It shall be the responsibility of each Holder to
determine such Holder's compliance with the Beneficial Ownership Cap, and the
Holder's exercise notice shall be deemed a representation of the Holder that the
number of shares of Common Stock to be acquired pursuant to such exercise notice
shall be in compliance with the Beneficial Ownership Cap.

                  3.       TRANSFER, DIVISION AND COMBINATION.

                  3.1.     Transfer. The Warrants and the Warrant Shares shall
be freely transferable, subject to compliance with all applicable laws,
including, but not limited to the Securities Act. Transfer of this Warrant and
all rights hereunder, in whole or in part, shall be registered on the books of
the Company to be maintained for such purpose, upon surrender of this Warrant at
the principal office of the Company referred to in Section 12.2 or the office or
agency designated by the Company pursuant to Section 10, together with a written
assignment of this Warrant substantially in the form of Exhibit B hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new

                                       5



Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. The acceptance of the New Warrant or Warrants by
the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations of a holder of this Warrant. Notwithstanding
anything herein to the contrary, this Warrant may not be transferred or assigned
in whole or in part without compliance with applicable federal and state
securities laws. Following a transfer that complies with the requirements of
this Section 3.1, the Warrant may be exercised by a new Holder for the purchase
of shares of Common Stock regardless of whether the Company issued or registered
a new Warrant on the books of the Company.

                  3.2.     Restrictive Legend. Unless the resale of the Warrant
Shares has been registered under the Securities Act of 1933, as amended, each
certificate for Warrant Shares initially issued upon the exercise of this
Warrant, and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:

                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, AND
                  MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE
                  ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT
                  OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
                  REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER
                  SAID ACT IS NOT REQUIRED."

                  3.3.     Division and Combination; Expenses; Books. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 3.1 as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. The Company shall prepare, issue and deliver at its own
expense the new Warrant or Warrants under this Section 3. The Company agrees to
maintain, at its aforesaid office or agency, books for the registration and the
registration of transfer of the Warrants.

                  4.       ADJUSTMENTS. The number of shares of Common Stock for
which this Warrant is exercisable, and the price at which such shares may be
purchased upon exercise of this Warrant, shall be subject to adjustment from
time to time as set forth in this Section 4. The Company shall give the Holder
notice of any event described below which requires an adjustment pursuant to
this Section 4 in accordance with Sections 5.1 and 5.2.

                                       6



                  4.1      Stock Dividends, Subdivisions and Combinations. If at
any time while this Warrant is outstanding the Company shall:

                           i.       take a record of the holders of its Common
                  Stock for the purpose of entitling them to receive a dividend
                  payable in, or other distribution of, additional shares of
                  Common Stock,

                           ii.      subdivide its outstanding shares of Common
                  Stock into a larger number of shares of Common Stock, or

                           iii.     combine its outstanding shares of Common
                  Stock into a smaller number of shares of Common Stock,

then:

                           (1)      the number of shares of Common Stock
                                    acquirable upon exercise of this Warrant
                                    immediately after the occurrence of any such
                                    event shall be adjusted to equal the number
                                    of shares of Common Stock which a record
                                    holder of the same number of shares of
                                    Common Stock that would have been acquirable
                                    under this Warrant immediately prior to the
                                    occurrence of such event would own or be
                                    entitled to receive after the happening of
                                    such event, and

                           (2)      the Warrant Price shall be adjusted to
                                    equal:

                                    (A)     the Current Warrant Price in effect
                                            immediately prior to the occurrence
                                            of such event multiplied by the
                                            number of shares of Common Stock
                                            into which this Warrant is
                                            exercisable immediately prior to the
                                            adjustment, divided by

                                    (B)     the number of shares of Common Stock
                                            into which this Warrant is
                                            exercisable immediately after such
                                            adjustment.

Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clauses (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.

                  4.2      Fractional Interests. In computing adjustments under
this Section 4, all calculations shall be made to the nearest 1/100th of a
share.

                  4.3      Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets.

                           a.       If, during the Exercise Period, there shall
occur a Change of Control and, pursuant to the terms of such Change of Control,
shares of common stock of the successor or acquiring corporation, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to

                                       7



or in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder of this Warrant shall have the right thereafter
to receive, upon the exercise of the Warrant, the number of shares of common
stock of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and the Other Property receivable upon or as a result of
such Change of Control by a holder of the number of shares of Common Stock into
which this Warrant is exercisable immediately prior to such event.

                           b.       In case of any such Change of Control, the
successor or acquiring corporation (if other than the Company) shall expressly
assume the due and punctual observance and performance of each and every
covenant and condition of contained in this Warrant to be performed and observed
by the Company and all the obligations and liabilities hereunder, subject to
such modifications as may be deemed appropriate (as determined by resolution of
the Board of Directors of the Company) in order to provide for adjustments of
shares of the Common Stock into which this Warrant is exercisable which shall be
as nearly equivalent as practicable to the adjustments provided for in Section
4.

                  4.4      Other Action Affecting Common Stock. In case at any
time or from time to time the Company shall take any action in respect of its
Common Stock, then, unless such action will not have a materially adverse effect
upon the rights of the holder of this Warrant, the number of shares of Common
Stock or other stock into which this Warrant is exercisable and/or the purchase
price thereof shall be adjusted in such manner as may be equitable in the
circumstances.

                  4.5      Certain Limitations. Notwithstanding anything herein
to the contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price to be
less than the par value per share of Common Stock.

                  4.6      Stock Transfer Taxes. The issue of stock certificates
upon exercise of this Warrant shall be made without charge to the holder for any
tax in respect of such issue.

                  4.7      Rights Distributed Under Rights Agreement.
Capitalized terms used in this Section 4.7 and which are not otherwise defined
herein shall have the meanings ascribed to them in the Rights Agreement (the
"Rights Agreement") dated as of December, 13, 2000, between the Company and U.S.
Stock Transfer Corporation. While the Rights Agreement or any other poison pill,
rights plan or similar arrangement (each, a "Rights Plan") shall be in effect:

                           a.       A Holder who exercises any portion of this
Warrant before the Distribution Date or before any Rights Certificates or
similar right (each a "Right") shall be evidenced by a separate rights
certificate or before any Right shall otherwise be transferable otherwise than
in connection with the transfer of the Warrant Shares (the date of the
occurrence of any of the foregoing being referred to herein as a "Rights
Distribution Date") will receive, upon exercise of this Warrant, in addition to
the Warrant Shares issuable upon exercise of this Warrant, one Right for each
such Warrant Share.

                           b.       A Holder who exercises any portion of this
Warrant after a Rights Distribution Date shall receive, upon exercise of this
Warrant, in addition to the Warrant Shares issuable upon exercise of this
Warrant, such number of Rights equal to the number of Rights

                                       8



such Holder would have held if, immediately prior to the Rights Distribution
Date, the portion of this Warrant being exercised at such time had been
exercised and the Warrant Shares issuable upon such exercise were outstanding
immediately prior to the Rights Distribution Date. The Company shall issue to
the Holder certificates evidencing such Rights, no later than five business days
following such exercise date. In the event the applicable Rights Plan does not
permit such Rights to be granted to each Holder, the Corporation shall, in lieu
of the Rights issuable pursuant to the immediately preceding sentence, issue to
each Holder an option, right or similar arrangement giving each Holder the same
rights and benefits as they would have held upon the receipt of the applicable
number of Rights.

                  5.       NOTICES TO WARRANT HOLDERS.

                  5.1.     Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Current Warrant Price, or the number of
shares of Common Stock and the amount, if any of other property which at the
time would be received upon exercise of the Warrants owned by such Holder, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder of
this Warrant a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request at any time of the Holder of this
Warrant, furnish or cause to be furnished to such Holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Current Warrant
Price at the time in effect and (iii) the number of shares of Common Stock and
the amount, if any, or other property which at the time would be received upon
the exercise of Warrants owned by such Holder.

                  5.2.     Notice of Corporate Action. If at any time:

                           (a)      the Company shall take a record of the
         holders of its Common Stock for the purpose of entitling them to
         receive a dividend or other distribution, or any right to subscribe for
         or purchase any evidences of its indebtedness, any shares of stock of
         any class or any other securities or property, or to receive any other
         right, or

                           (b)      there shall be any capital reorganization of
         the Company, any reclassification or recapitalization of the capital
         stock of the Company or any consolidation or merger of the Company
         with, or any sale, transfer or other disposition of all or
         substantially all the property, assets or business of the Company to,
         another corporation, or

                           (c)      there shall be a voluntary or involuntary
         dissolution, liquidation or winding up of the Company;

         then, in any one or more of such cases, the Company shall give to the
         Holder (i) at least 15 days' prior written notice of the record date
         shall be selected for such dividend, distribution or right or for
         determining rights to vote in respect of any such reorganization,
         reclassification, merger, consolidation, sale, transfer, disposition,
         dissolution, liquidation or winding up, and (ii) in the case of any
         such reorganization, reclassification, merger, consolidation, sale,
         transfer, disposition, dissolution, liquidation or winding up, at least
         15 days' prior written notice of the date when the same shall take

                                       9



         place. Such notice in accordance with the foregoing clause also shall
         specify (i) the date on which any such record is to be taken for the
         purpose of such dividend, distribution or right, the date on which the
         holders of Common Stock shall be entitled to any such dividend,
         distribution or right, and the amount and character thereof, and (ii)
         the date on which any such reorganization, reclassification, merger,
         consolidation, sale, transfer, disposition, dissolution, liquidation or
         winding up is to take place and the time, if any such time is to be
         fixed, as of which the holders of Common Stock shall be entitled to
         exchange their shares of Common Stock for securities or other property
         deliverable upon such reorganization, reclassification, merger,
         consolidation, sale, transfer, disposition, dissolution, liquidation or
         winding up. Each such written notice shall be sufficiently given if
         addressed to the Holder at the last address of the Holder appearing on
         the books of the Company and delivered in accordance with Section 12.2.
         The failure to give any notice required by this Section 5.2 shall not
         invalidate any such corporate action.

                  5.3.     Notice to Stockholders. The Holder shall be entitled
to the same rights to receive notice of corporation action as any holder of
Common Stock.

                  6.       NO IMPAIRMENT. The Company shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of the Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form satisfactory to the
Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.

                  7.       RESERVATION AND AUTHORIZATION OF COMMON STOCK:
REGISTRATION WITH APPROVAL OF ANY GOVERNMENTAL AUTHORITY. From and after the
Closing Date, the Company shall at all times reserve and keep available for
issue upon the exercise of Warrants such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full of
all outstanding Warrants. All shares of Common Stock which shall be so issuable,
when issued upon exercise of any Warrant and payment therefor in accordance with
the terms of such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights. Before taking any action
which would cause an adjustment reducing the Current Warrant Price below the
then par value, if any, of the shares of Common Stock issuable upon exercise of
the Warrants, the Company shall take any corporate action which may be necessary
in order that the Company may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Current Warrant
Price. Before taking any action which would result in an adjustment in the
number of shares of Common Stock

                                       10



for which this Warrant is exercisable or in the Current Warrant Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof. If any shares of Common Stock required to be reserved for
issuance upon exercise of Warrants require registration or qualification with
any governmental authority under any federal or state law before such shares may
be so issued (other than as a result of a prior or contemplated distribution by
the Holder of this Warrant), the Company will in good faith and as expeditiously
as possible and at its expense endeavor to cause such shares to be duly
registered.

                  8.       TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.

                  9.       LOSS OR MUTILATION. Upon receipt by the Company from
the Holder of evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of this Warrant and indemnity reasonably
satisfactory to it (it being understood that the written agreement of the
original Holder shall be sufficient indemnity) and in case of mutilation upon
surrender and cancellation hereof, the Company will execute and deliver in lieu
hereof a new Warrant of like tenor to the Holder; provided, however, that in the
case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to the Company for cancellation. Applicants for
a replacement Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.

                  10.      OFFICE OF THE COMPANY. As long as any of the Warrants
remain outstanding, the Company shall maintain an office or agency (which may be
the principal executive offices of the Company) where the Warrants may be
presented for exercise, registration of transfer, division or combination as
provided in this Warrant.

                  11.      LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of the Holder for the purchase price of any
Common Stock, whether such liability is asserted by the Company or by creditors
of the Company.

                  12.      MISCELLANEOUS.

                  12.1.    Nonwaiver and Expenses. No course of dealing or any
delay or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of

                                       11



appellate proceedings, incurred by the Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

                  12.2.    Notice Generally. All notices, requests, demands or
other communications provided for herein shall be in writing and shall be deemed
to have been given the next Business Day after being deposited with a nationally
recognized overnight courier such as Federal Express, or when personally
delivered, or successfully sent by facsimile transmission as evidenced by a fax
machine confirmation report thereof, addressed, as the case may be, to the
Holder at the address on the books and records of the Company, with a copy to
Kane Kessler, P.C., 1350 Avenue of the Americas, New York, New York 10019,
Attention: Robert L. Lawrence, Esq., Facsimile No. (212) 245-3009; or to the
Company, Spectrum Pharmaceuticals, Inc., at 157 Technology Drive, Irvine,
California 92618, Att'n: CEO, Fax No. (949) 788-6706; with a copy to Latham and
Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa, California 92626,
Att'n: Alan W. Pettis, Esq., Fax No. (714) 755-8290, or to such other person or
address as either party shall designate to the other from time to time in
writing forwarded in like manner.

                  12.3.    Successors and Assigns. Subject to compliance with
the provisions of Section 3.1, this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant,
and shall be enforceable by any such Holder, but nothing in this Warrant shall
be construed to give any person or corporation or other entity, other than the
Company and the Holder and their respective successors and assigns, any legal or
equitable right, remedy or cause under this Warrant.

                  12.4.    Amendment. This Warrant may be modified or amended or
the provisions of this Warrant waived with the written consent of the Company
and the Holder.

                  12.5.    Severability. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be modified to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.

                  12.6.    Headings. The headings used in this Warrant are for
the convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant

                  12.7.    Governing Law. This Warrant and the transactions
contemplated hereby shall be deemed to be consummated in the State of New York
and shall be governed by and interpreted in accordance with the local laws of
the State of New York without regard to the provisions thereof relating to
conflict of laws. The Company hereby irrevocably consents to the exclusive
jurisdiction of the State and Federal courts located in New York City, New York
in connection with any action or proceeding arising out of or relating to this
Warrant. In any such litigation the Company waives personal service of any
summons, complaint or other process and agrees that the service thereof may be
made by certified or registered mail directed to the Company at its address set
forth in Section 12.2.

                                       12



                            [SIGNATURE PAGE FOLLOWS:]

                                       13



                  IN WITNESS WHEREOF, the Company has caused this Series D-2
Warrant to be executed by its duly authorized officer and attested by its
Secretary.

Dated: May 7, 2003

                                      SPECTRUM PHARMACEUTICALS, INC.

                                      By: /s/Rajesh C. Shrotriya
                                         ---------------------------------------
                                         Rajesh C. Shrotriya, M.D.
                                         Chairman, President and Chief Executive
                                         Officer
Attest:

By: /s/Carol Gruetter
   ------------------------------------
    Carol Gruetter, Corporate Secretary



                                    EXHIBIT A

                                SUBSCRIPTION FORM

                 [To be executed only upon exercise of Warrant]

The undersigned registered owner of this Warrant exercises this Warrant for the
purchase of shares of Common Stock of Spectrum Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to and whose address is _____________. And, if such shares of
Common Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.

As of the date hereof, and assuming the accuracy of all information filed by the
Company with the Securities and Exchange Commission, the undersigned Holder
hereby certifies that the exercise of the referenced Warrant for the number of
Warrant Shares herein indicated will not put the undersigned Holder out of
compliance with the Beneficial Ownership Cap (as defined in the Warrant).

By signing below, the Holder warrants and represents that the Holder is an
"accredited investor" as that term is defined under Regulation D of the
Securities and Exchange Commission promulgated under the Securities Act of 1933,
as amended.

                           (Name of Registered Owner)

                           (Signature of Registered Owner)

                           (Street Address)

                           (State) (Zip Code)

NOTICE:  The signature on this subscription must correspond with the name as
         written upon the face of the Warrant.



                                    EXHIBIT B

                                 ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned registered owner of this Warrant for the
purchase of shares of Spectrum Pharmaceuticals, Inc., a Delaware corporation,
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:

Name and Address of Assignee

No. of Shares of Common Stock

and does hereby irrevocably constitute and appoint _______________
attorney-in-fact to register such transfer on the books of the Company,
maintained for the purpose, with full power of substitution in the premises.

Dated: Print Name:

Signature:

Witness:

NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the Warrant in every particular.

EX-4.3

                                                                     EXHIBIT 4.3

                                                           WARRANT NO. _________

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY OR ACQUIRABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION UNDER SAID ACT IS NOT REQUIRED.

                               SERIES D-3 WARRANT

                 To Purchase _________ Shares of Common Stock of

                         SPECTRUM PHARMACEUTICALS, INC.

                  THIS IS TO CERTIFY THAT SCO Financial Group LLC, or registered
assigns (the "Holder"), is entitled, at any time prior to the Expiration Date
(as hereinafter defined), to purchase from Spectrum Pharmaceuticals, Inc. a
Delaware corporation (the "Company"), the Warrant Shares (as hereinafter defined
and subject to adjustment as provided herein), in whole or in part, at a
purchase price of $3.00 per share, all on and subject to the terms and
conditions hereinafter set forth.

                  1.       DEFINITIONS. As used in this Warrant, the following
terms have the respective meanings set forth below:

                  "Additional Shares of Common Stock" means any shares of Common
Stock issued by the Company after the Closing Date.

                  "Affiliate" means any person or entity that, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with a person or entity, as such terms are used in and
construed under Rule 144 under the Securities Act. With respect to a Holder of
Warrants, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such holder will be deemed
to be an Affiliate of such Holder.

                  "Appraised Value" means, in respect of any share of Common
Stock on any date herein specified, the fair saleable value of such share of
Common Stock (determined without giving effect to the discount for (i) a
minority interest or (ii) any lack of liquidity of the Common Stock or to the
fact that the Company may have no class of equity registered under the Exchange
Act) as of the last day of the most recent fiscal month ending prior to such
date specified, based on the value of the Company, as determined by a nationally
recognized investment banking firm



selected by the Company's Board of Directors and having no prior relationship
with the Company.

                  "Business Day" means any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in the State of
New York.

                  "Change of Control" means the (i) acquisition by an individual
or legal entity or group (as defined in Rule 13-d of the Exchange Act) of more
than one-half of the voting rights or equity interests in the Company; (ii)
sale, conveyance, or other disposition of all or substantially all of the
assets, property or business of the Company, (iii) any reorganization of the
Company's capital, or (iv) the merger into or consolidation with any other
corporation (other than a wholly owned subsidiary corporation) or effectuation
of any transaction or series of related transactions where holders of the
Company's voting securities prior to such transaction or series of transactions
fail to continue to hold at least 50% of the voting power of the Company.

                  "Closing Date" means May 7, 2003.

                  "Commission" means the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.

                  "Common Stock" means (except where the context otherwise
indicates) the Common Stock, $0.001 par value per share, of the Company as
constituted on the Closing Date, and any capital stock into which such Common
Stock may thereafter be changed or converted, and shall also include (i) capital
stock of the Company of any other class (regardless of how denominated) issued
to the holders of shares of Common Stock upon any reclassification thereof which
is also not preferred as to dividends or assets on liquidation over any other
class of stock of the Company and which is not subject to redemption and (ii)
shares of common stock of any successor or acquiring corporation received by or
distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section 4.3.

                   "Current Market Price" means, in respect of any share of
Common Stock on any date herein specified, if there shall not then be a public
market for the Common Stock, the higher of (a) the book value per share of
Common Stock on such date and (b) the Appraised Value per share of Common Stock
at such date, or if there shall then be a public market for the Common Stock,
the higher of (a) the book value per share of Common Stock on such date, and (b)
the average of the daily market prices for 20 consecutive Trading Days
immediately preceding such date. The daily market price for each such Trading
Day shall be (i) the last sale price on such day on the principal stock exchange
on which such Common Stock is then listed or admitted to trading, (ii) if no
sale takes place on such day on any such exchange, the average of the last
reported closing bid and asked prices on such day as officially quoted on any
such exchange, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange, the average of the last reported closing bid and
asked prices on such day in the over-the-counter market, as furnished by the
National Association of Securities Dealers Automatic Quotation System or the
National Quotation Bureau, Inc., (iv) if neither such corporation at the time is
engaged in the business of reporting such prices, as furnished by any similar
firm then engaged in such business, or (v) if there is no such firm, as
furnished by any member of the NASD selected mutually by the

                                        2



holder of this Warrant and the Company or, if they cannot agree upon such
selection, as selected by two such members of the NASD, one of which shall be
selected by holder of this Warrant and one of which shall be selected by the
Company.

                  "Current Warrant Price" means, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date. Until the Current
Warrant Price is adjusted pursuant to the terms herein, the initial Current
Warrant Price shall be $3.00 per share.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

                  "Exercise Period" means the period during which this Warrant
is exercisable pursuant to Section 2.1.

                  "Expiration Date" means May 7, 2008.

                  "GAAP" means generally accepted accounting principles in the
United States of America as from time to time in effect.

                  "NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.

                  "Other Property" has the meaning set forth in Section 4.3.

                  "Person" means any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

                  "Restricted Common Stock" means shares of Common Stock which
are, or which upon their issuance upon the exercise of any Warrant would be
required to be, evidenced by a certificate bearing the restrictive legend set
forth in Section 3.2.

                  "Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

                  "Trading Day" means any day on which the primary market on
which shares of Common Stock are listed is open for trading.

                  "Transfer" means any disposition of any Warrant or Warrant
Shares or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.

                                        3



                  "Warrants" means this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof. All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the number of shares of Common Stock for which they may be
exercised.

                  "Warrant Price" means an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price.

                  "Warrant Shares" means any one or more of the _________ shares
of Common Stock to be purchased upon the exercise hereof, subject to adjustment
as provided herein.

                  2.       EXERCISE OF WARRANT.

                  2.1.     Manner of Exercise. (a) From and after the Closing
Date, and until 5:00 P.M., New York time, on the Expiration Date (the "Exercise
Period"), the Holder may exercise this Warrant, on any Business Day, for all or
any part of the number of shares of Warrant Shares purchasable hereunder.

                           (b)      In order to exercise this Warrant, in whole
or in part, the Holder shall deliver to the Company at its principal office or
at the office or agency designated by the Company pursuant to Section 10, (i) a
written notice of Holder's election to exercise this Warrant, which notice shall
specify the number of shares of Warrant Shares to be purchased, (ii) payment of
the Warrant Price as provided herein, and (iii) this Warrant. Such notice shall
be substantially in the form of the subscription form appearing at the end of
this Warrant as Exhibit A, duly executed by the Holder or its agent or attorney.
Upon receipt thereof, the Company shall, as promptly as reasonably practicable,
and in any event within five Business Days thereafter, execute or cause to be
executed and deliver or cause to be delivered to the Holder a certificate or
certificates representing the aggregate number of Warrant Shares issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as the Holder
shall request in the notice and shall be registered in the name of the Holder or
such other name as shall be designated in the notice. This Warrant shall be
deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and the Holder or any other Person so designated to
be named therein shall be deemed to have become a Holder of record of such
shares for all purposes, as of the date when the notice, together with the
payment of the Warrant Price and this Warrant, is received by the Company as
described above. If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the unpurchased shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.

                                        4



                           (c)      Payment of the Warrant Price may be made at
the option of the Holder by: (i) certified or official bank check payable to the
order of the Company, (ii) wire transfer to the account of the Company or (iii)
the surrender and cancellation of a portion of shares of Common Stock then held
by the Holder or issuable upon such exercise of this Warrant, which shall be
valued and credited toward the total Warrant Price due the Company for the
exercise of the Warrant based upon the Current Market Price of the Common Stock.
All shares of Common Stock issuable upon the exercise of this Warrant pursuant
to the terms hereof shall be validly issued and, upon payment of the Warrant
Price, shall be fully paid and nonassessable and not subject to any preemptive
rights. The Company shall pay all expenses in connection with, and all transfer,
stamp or similar taxes and other governmental charges that may be imposed with
respect to, the issue or deliver thereof, provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance of any certificates for Warrant Shares or
Warrants in a name other than the name of the Holder.

                           (d)      Except for the provisions with respect to
the Rights Agreement set forth in Section 4.7 hereof, prior to the exercise of
this Warrant, the Holder shall not be entitled to any rights as a stockholder of
the Company with respect to the Warrant Shares, including, without limitation,
the right to vote such Warrant Shares, receive dividends or other distributions
thereon or to be notified of stockholder meetings, except as set forth herein.

                  2.2.     Fractional Shares. The Company shall not be required
to issue a fractional share of Common Stock upon exercise of any Warrant. As to
any fraction of a share which the Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be entitled
to purchase upon such exercise, the Company shall pay an amount in cash equal to
the Current Market Price per share of Common Stock on the date of exercise,
multiplied by such fraction.

                  2.3.     Restrictions on Exercise Amount. Notwithstanding any
contrary or inconsistent provision hereof, the holder may not acquire a number
of Warrant Shares to the extent that, upon such exercise, the number of shares
of Common Stock then beneficially owned by such holder and its Affiliates and
any other persons or entities whose beneficial ownership of Common Stock would
be aggregated with the Holder's for purposes of Section 13(d) of the Exchange
Act (including shares held by any "group" of which the holder is a member)
exceeds 4.95% of the total number of shares of Common Stock of the Company then
issued and outstanding (such limitation being herein referred to as the
"Beneficial Ownership Cap"). For purposes hereof, "group" has the meaning set
forth in Section 13(d) of the Exchange Act and applicable regulations of the
Securities and Exchange Commission, and the percentage held by the holder shall
be determined in a manner consistent with the provisions of Section 13(d) of the
Exchange Act. The Company shall have no obligation to verify compliance with
this Section 2.3, other than to issue Warrant Shares in accordance with the
exercise notice of each Holder. It shall be the responsibility of each Holder to
determine such Holder's compliance with the Beneficial Ownership Cap, and the
Holder's exercise notice shall be deemed a representation of the Holder that the
number of shares of Common Stock to be acquired pursuant to such exercise notice
shall be in compliance with the Beneficial Ownership Cap.

                                        5



                  3.       TRANSFER, DIVISION AND COMBINATION.

                  3.1.     Transfer. The Warrants and the Warrant Shares shall
be freely transferable, subject to compliance with all applicable laws,
including, but not limited to the Securities Act. Transfer of this Warrant and
all rights hereunder, in whole or in part, shall be registered on the books of
the Company to be maintained for such purpose, upon surrender of this Warrant at
the principal office of the Company referred to in Section 12.2 or the office or
agency designated by the Company pursuant to Section 10, together with a written
assignment of this Warrant substantially in the form of Exhibit B hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. The acceptance of the New Warrant
or Warrants by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of this Warrant.
Notwithstanding anything herein to the contrary, this Warrant may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws. Following a transfer that complies with the
requirements of this Section 3.1, the Warrant may be exercised by a new Holder
for the purchase of shares of Common Stock regardless of whether the Company
issued or registered a new Warrant on the books of the Company.

                  3.2.     Restrictive Legend. Unless the resale of the Warrant
Shares has been registered under the Securities Act of 1933, as amended, each
certificate for Warrant Shares initially issued upon the exercise of this
Warrant, and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:

                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, AND
                  MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE
                  ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT
                  OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
                  REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER
                  SAID ACT IS NOT REQUIRED."

                  3.3.     Division and Combination; Expenses; Books. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 3.1 as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. The Company shall prepare, issue and deliver at its own
expense the new Warrant or Warrants under

                                        6



this Section 3. The Company agrees to maintain, at its aforesaid office or
agency, books for the registration and the registration of transfer of the
Warrants.

                  4.       ADJUSTMENTS. The number of shares of Common Stock for
which this Warrant is exercisable, and the price at which such shares may be
purchased upon exercise of this Warrant, shall be subject to adjustment from
time to time as set forth in this Section 4. The Company shall give the Holder
notice of any event described below which requires an adjustment pursuant to
this Section 4 in accordance with Sections 5.1 and 5.2.

                  4.1      Stock Dividends, Subdivisions and Combinations. If at
any time while this Warrant is outstanding the Company shall:

                           i.       take a record of the holders of its Common
                  Stock for the purpose of entitling them to receive a dividend
                  payable in, or other distribution of, additional shares of
                  Common Stock,

                           ii.      subdivide its outstanding shares of Common
                  Stock into a larger number of shares of Common Stock, or

                           iii.     combine its outstanding shares of Common
                  Stock into a smaller number of shares of Common Stock,

then:

                           (1)      the number of shares of Common Stock
                                    acquirable upon exercise of this Warrant
                                    immediately after the occurrence of any such
                                    event shall be adjusted to equal the number
                                    of shares of Common Stock which a record
                                    holder of the same number of shares of
                                    Common Stock that would have been acquirable
                                    under this Warrant immediately prior to the
                                    occurrence of such event would own or be
                                    entitled to receive after the happening of
                                    such event, and

                           (2)      the Warrant Price shall be adjusted to
                                    equal:

                                    (A)     the Current Warrant Price in effect
                                            immediately prior to the occurrence
                                            of such event multiplied by the
                                            number of shares of Common Stock
                                            into which this Warrant is
                                            exercisable immediately prior to the
                                            adjustment, divided by

                                    (B)     the number of shares of Common Stock
                                            into which this Warrant is
                                            exercisable immediately after such
                                            adjustment.

Any adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clauses (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.

                                        7



                  4.2      Fractional Interests. In computing adjustments under
this Section 4, all calculations shall be made to the nearest 1/100th of a
share.

                  4.3      Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets.

                           a.       If, during the Exercise Period, there shall
occur a Change of Control and, pursuant to the terms of such Change of Control,
shares of common stock of the successor or acquiring corporation, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder of this Warrant shall have the right thereafter
to receive, upon the exercise of the Warrant, the number of shares of common
stock of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and the Other Property receivable upon or as a result of
such Change of Control by a holder of the number of shares of Common Stock into
which this Warrant is exercisable immediately prior to such event.

                           b.       In case of any such Change of Control, the
successor or acquiring corporation (if other than the Company) shall expressly
assume the due and punctual observance and performance of each and every
covenant and condition of contained in this Warrant to be performed and observed
by the Company and all the obligations and liabilities hereunder, subject to
such modifications as may be deemed appropriate (as determined by resolution of
the Board of Directors of the Company) in order to provide for adjustments of
shares of the Common Stock into which this Warrant is exercisable which shall be
as nearly equivalent as practicable to the adjustments provided for in Section
4.

                  4.4      Other Action Affecting Common Stock. In case at any
time or from time to time the Company shall take any action in respect of its
Common Stock, then, unless such action will not have a materially adverse effect
upon the rights of the holder of this Warrant, the number of shares of Common
Stock or other stock into which this Warrant is exercisable and/or the purchase
price thereof shall be adjusted in such manner as may be equitable in the
circumstances.

                  4.5      Certain Limitations. Notwithstanding anything herein
to the contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price to be
less than the par value per share of Common Stock.

                  4.6      Stock Transfer Taxes. The issue of stock certificates
upon exercise of this Warrant shall be made without charge to the holder for any
tax in respect of such issue.

                  4.7      Rights Distributed Under Rights Agreement.
Capitalized terms used in this Section 4.7 and which are not otherwise defined
herein shall have the meanings ascribed to them in the Rights Agreement (the
"Rights Agreement") dated as of December, 13, 2000, between the Company and U.S.
Stock Transfer Corporation. While the Rights Agreement or any

                                        8



other poison pill, rights plan or similar arrangement (each, a "Rights Plan")
shall be in effect:

                           a.       A Holder who exercises any portion of this
Warrant before the Distribution Date or before any Rights Certificates or
similar right (each a "Right") shall be evidenced by a separate rights
certificate or before any Right shall otherwise be transferable otherwise than
in connection with the transfer of the Warrant Shares (the date of the
occurrence of any of the foregoing being referred to herein as a "Rights
Distribution Date") will receive, upon exercise of this Warrant, in addition to
the Warrant Shares issuable upon exercise of this Warrant, one Right for each
such Warrant Share.

                           b.       A Holder who exercises any portion of this
Warrant after a Rights Distribution Date shall receive, upon exercise of this
Warrant, in addition to the Warrant Shares issuable upon exercise of this
Warrant, such number of Rights equal to the number of Rights such Holder would
have held if, immediately prior to the Rights Distribution Date, the portion of
this Warrant being exercised at such time had been exercised and the Warrant
Shares issuable upon such exercise were outstanding immediately prior to the
Rights Distribution Date. The Company shall issue to the Holder certificates
evidencing such Rights, no later than five business days following such exercise
date. In the event the applicable Rights Plan does not permit such Rights to be
granted to each Holder, the Corporation shall, in lieu of the Rights issuable
pursuant to the immediately preceding sentence, issue to each Holder an option,
right or similar arrangement giving each Holder the same rights and benefits as
they would have held upon the receipt of the applicable number of Rights.

                  5.       NOTICES TO WARRANT HOLDERS.

                  5.1.     Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Current Warrant Price, or the number of
shares of Common Stock and the amount, if any of other property which at the
time would be received upon exercise of the Warrants owned by such Holder, the
Company, at its expense, shall promptly compute such adjustment or readjustment
in accordance with the terms hereof and prepare and furnish to the Holder of
this Warrant a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request at any time of the Holder of this
Warrant, furnish or cause to be furnished to such Holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Current Warrant
Price at the time in effect and (iii) the number of shares of Common Stock and
the amount, if any, or other property which at the time would be received upon
the exercise of Warrants owned by such Holder.

                  5.2.     Notice of Corporate Action. If at any time:

                           (a)      the Company shall take a record of the
         holders of its Common Stock for the purpose of entitling them to
         receive a dividend or other distribution, or any right to subscribe for
         or purchase any evidences of its indebtedness, any shares of stock of
         any class or any other securities or property, or to receive any other
         right, or

                           (b)      there shall be any capital reorganization of
         the Company, any reclassification or recapitalization of the capital
         stock of the Company or any

                                        9



         consolidation or merger of the Company with, or any sale, transfer or
         other disposition of all or substantially all the property, assets or
         business of the Company to, another corporation, or

                           (c)      there shall be a voluntary or involuntary
         dissolution, liquidation or winding up of the Company;

         then, in any one or more of such cases, the Company shall give to the
         Holder (i) at least 15 days' prior written notice of the record date
         shall be selected for such dividend, distribution or right or for
         determining rights to vote in respect of any such reorganization,
         reclassification, merger, consolidation, sale, transfer, disposition,
         dissolution, liquidation or winding up, and (ii) in the case of any
         such reorganization, reclassification, merger, consolidation, sale,
         transfer, disposition, dissolution, liquidation or winding up, at least
         15 days' prior written notice of the date when the same shall take
         place. Such notice in accordance with the foregoing clause also shall
         specify (i) the date on which any such record is to be taken for the
         purpose of such dividend, distribution or right, the date on which the
         holders of Common Stock shall be entitled to any such dividend,
         distribution or right, and the amount and character thereof, and (ii)
         the date on which any such reorganization, reclassification, merger,
         consolidation, sale, transfer, disposition, dissolution, liquidation or
         winding up is to take place and the time, if any such time is to be
         fixed, as of which the holders of Common Stock shall be entitled to
         exchange their shares of Common Stock for securities or other property
         deliverable upon such reorganization, reclassification, merger,
         consolidation, sale, transfer, disposition, dissolution, liquidation or
         winding up. Each such written notice shall be sufficiently given if
         addressed to the Holder at the last address of the Holder appearing on
         the books of the Company and delivered in accordance with Section 12.2.
         The failure to give any notice required by this Section 5.2 shall not
         invalidate any such corporate action.

                  5.3.     Notice to Stockholders. The Holder shall be entitled
to the same rights to receive notice of corporation action as any holder of
Common Stock.

                  6.       NO IMPAIRMENT. The Company shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of the Holder, the Company will at any time during the period
this Warrant is

                                       10



outstanding acknowledge in writing, in form satisfactory to the Holder, the
continuing validity of this Warrant and the obligations of the Company
hereunder.

                  7.       RESERVATION AND AUTHORIZATION OF COMMON STOCK:
REGISTRATION WITH APPROVAL OF ANY GOVERNMENTAL AUTHORITY. From and after the
Closing Date, the Company shall at all times reserve and keep available for
issue upon the exercise of Warrants such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full of
all outstanding Warrants. All shares of Common Stock which shall be so issuable,
when issued upon exercise of any Warrant and payment therefor in accordance with
the terms of such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights. Before taking any action
which would cause an adjustment reducing the Current Warrant Price below the
then par value, if any, of the shares of Common Stock issuable upon exercise of
the Warrants, the Company shall take any corporate action which may be necessary
in order that the Company may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Current Warrant
Price. Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof. If any shares of Common
Stock required to be reserved for issuance upon exercise of Warrants require
registration or qualification with any governmental authority under any federal
or state law before such shares may be so issued (other than as a result of a
prior or contemplated distribution by the Holder of this Warrant), the Company
will in good faith and as expeditiously as possible and at its expense endeavor
to cause such shares to be duly registered.

                  8.       TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.

                  9.       LOSS OR MUTILATION. Upon receipt by the Company from
the Holder of evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of this Warrant and indemnity reasonably
satisfactory to it (it being understood that the written agreement of the
original Holder shall be sufficient indemnity) and in case of mutilation upon
surrender and cancellation hereof, the Company will execute and deliver in lieu
hereof a new Warrant of like tenor to the Holder; provided, however, that in the
case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to the Company for cancellation. Applicants for
a replacement Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable charges as
the Company may prescribe.

                  10.      OFFICE OF THE COMPANY. As long as any of the Warrants
remain outstanding, the Company shall maintain an office or agency (which may be
the principal

                                       11



executive offices of the Company) where the Warrants may be presented for
exercise, registration of transfer, division or combination as provided in this
Warrant.

                  11.      LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of the Holder for the purchase price of any
Common Stock, whether such liability is asserted by the Company or by creditors
of the Company.

                  12.      MISCELLANEOUS.

                  12.1.    Nonwaiver and Expenses. No course of dealing or any
delay or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.

                  12.2.    Notice Generally. All notices, requests, demands or
other communications provided for herein shall be in writing and shall be deemed
to have been given the next Business Day after being deposited with a nationally
recognized overnight courier such as Federal Express, or when personally
delivered, or successfully sent by facsimile transmission as evidenced by a fax
machine confirmation report thereof, addressed, as the case may be, to the
Holder at the address on the books and records of the Company, with a copy to
Kane Kessler, P.C., 1350 Avenue of the Americas, New York, New York 10019,
Attention: Robert L. Lawrence, Esq., Facsimile No. (212) 245-3009; or to the
Company, Spectrum Pharmaceuticals, Inc., at 157 Technology Drive, Irvine,
California 92618, Att'n: CEO, Fax No. (949) 788-6706; with a copy to Latham and
Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa, California 92626,
Att'n: Alan W. Pettis, Esq., Fax No. (714) 755-8290, or to such other person or
address as either party shall designate to the other from time to time in
writing forwarded in like manner.

                  12.3.    Successors and Assigns. Subject to compliance with
the provisions of Section 3.1, this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of the Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant,
and shall be enforceable by any such Holder, but nothing in this Warrant shall
be construed to give any person or corporation or other entity, other than the
Company and the Holder and their respective successors and assigns, any legal or
equitable right, remedy or cause under this Warrant.

                  12.4.    Amendment. This Warrant may be modified or amended or
the provisions of this Warrant waived with the written consent of the Company
and the Holder.

                                       12



                  12.5.    Severability. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited
by or invalid under applicable law, such provision shall be modified to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Warrant.

                  12.6.    Headings. The headings used in this Warrant are for
the convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.

                  12.7.    Governing Law. This Warrant and the transactions
contemplated hereby shall be deemed to be consummated in the State of New York
and shall be governed by and interpreted in accordance with the local laws of
the State of New York without regard to the provisions thereof relating to
conflict of laws. The Company hereby irrevocably consents to the exclusive
jurisdiction of the State and Federal courts located in New York City, New York
in connection with any action or proceeding arising out of or relating to this
Warrant. In any such litigation the Company waives personal service of any
summons, complaint or other process and agrees that the service thereof may be
made by certified or registered mail directed to the Company at its address set
forth in Section 12.2.

                            [SIGNATURE PAGE FOLLOWS:]

                                       13



                  IN WITNESS WHEREOF, the Company has caused this Series D-3
Warrant to be executed by its duly authorized officer and attested by its
Secretary.

Dated: May 7, 2003

                                    SPECTRUM PHARMACEUTICALS, INC.

                                    By: /s/Rajesh C. Shrotriya
                                       -----------------------------------------
                                        Rajesh C. Shrotriya, M.D.
                                        Chairman, President and Chief Executive
                                        Officer

Attest:

By: /s/Carol Gruetter
   ------------------------------------
    Carol Gruetter, Corporate Secretary



                                    EXHIBIT A
                                SUBSCRIPTION FORM

                 [To be executed only upon exercise of Warrant]

The undersigned registered owner of this Warrant exercises this Warrant for the
purchase of shares of Common Stock of Spectrum Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to and whose address is________ . And, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as provided
in this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the undersigned.

As of the date hereof, and assuming the accuracy of all information filed by the
Company with the Securities and Exchange Commission, the undersigned Holder
hereby certifies that the exercise of the referenced Warrant for the number of
Warrant Shares herein indicated will not put the undersigned Holder out of
compliance with the Beneficial Ownership Cap (as defined in the Warrant).

By signing below, the Holder warrants and represents that the Holder is an
"accredited investor" as that term is defined under Regulation D of the
Securities and Exchange Commission promulgated under the Securities Act of 1933,
as amended.

                           (Name of Registered Owner)

                           (Signature of Registered Owner)

                           (Street Address)

                           (State) (Zip Code)

NOTICE:  The signature on this subscription must correspond with the name as
         written upon the face of the Warrant.



                                    EXHIBIT B

                                 ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned registered owner of this Warrant for the
purchase of shares of Spectrum Pharmaceuticals, Inc., a Delaware corporation,
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:

Name and Address of Assignee

No. of Shares of Common Stock

and does hereby irrevocably constitute and appoint _______________
attorney-in-fact to register such transfer on the books of the Company,
maintained for the purpose, with full power of substitution in the premises.

Dated: Print Name:

Signature:

Witness:

NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the Warrant in every particular.

EX-4.4

                                                                    EXHIBIT 4.4

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (this "Agreement") is made
and entered into as of May 7, 2003, among Spectrum Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), and each of the purchasers executing this
Agreement and listed on Schedule 1 attached hereto (collectively, the
"Purchasers"), and each of the holders of the Placement Agent Warrants (as
hereinafter defined).

                  This Agreement is being entered into pursuant to the Preferred
Stock and Warrant Purchase Agreement, dated as of the date hereof, by and among
the Company and the Purchasers (the "Purchase Agreement").

                  The Company and the other parties hereto hereby agree as
follows:

         1.       Definitions.

                  Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

                  "Advice" shall have the meaning set forth in Section 3(m).

                  "Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.

                  "Blackout Period" shall have the meaning set forth in Section
3(n).

                  "Board" shall have the meaning set forth in Section 3(n).

                  "Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.

                  "Commission" means the Securities and Exchange Commission.

                  "Common Stock" means the Company's Common Stock, par value
$0.001 per share.

                  "Effectiveness Date" means with respect to the Registration
Statement the 90th day following the Closing Date.

                                       1


                  "Effectiveness Period" shall have the meaning set forth in
Section 2.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                  "Filing Date" means the 45th day following the Closing Date.

                  "Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities, including without
limitation the Purchasers and their assignees.

                  "Indemnified Party" shall have the meaning set forth in
Section 5(c).

                  "Indemnifying Party" shall have the meaning set forth in
Section 5(c).

                  "Losses" shall have the meaning set forth in Section 5(a).

                  "NASDAQ" shall mean the National Association of Securities
Dealers Automatic Quotation System.

                  "Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.

                  "Placement Agent Warrants" means those certain warrants issued
or issuable to SCO Financial Group LLC, and/or its designees, pursuant to that
certain financial advisory agreement between the Company and SCO Financial Group
LLC, dated February 1, 2003.

                  "Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

                  "Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.

                  "Registrable Securities" means (i) the Conversion Shares, the
Dividend Shares, and the Warrant Shares, and any shares issued upon any stock
split, stock dividend, recapitalization or similar event with respect to such
Conversion Shares, Dividend Shares or Warrant Shares and (ii) any other
securities (whether issued by the Company or any other Person) distributed as a
dividend or other distribution with respect to, conversion or exchange of, or in
replacement of, Registrable Securities.

                                       2


                  "Registration Statement" means the registration statements and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference into such
registration statement.

                  "Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Special Counsel" means any special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.

                  "Warrant Shares" includes (i) the Warrant Shares as defined in
the Purchase Agreement, and (ii) the shares of Common Stock acquirable upon
exercise of the Placement Agent Warrants.

                  "Warrants" includes (i) the Warrants as defined in the
Purchase Agreement, and (ii) the Placement Agent Warrants.

         2.       Registration. On or prior to the Filing Date, the Company
shall prepare and file with the Commission a "shelf" Registration Statement
covering all Registrable Securities (but in no event less than 4,967,600 shares
of Common Stock) for a secondary or resale offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (or
on another form appropriate for such registration in accordance herewith). The
Company shall (i) not permit any securities other than the Registrable
Securities to be included in the Registration Statement, other than up to an
additional 10,538 shares, and (ii) use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act
(including filing with the Commission a request for acceleration of
effectiveness in accordance with Rule 12dl-2 promulgated under the Exchange Act)
by the earlier of (i) five (5) Business Days after the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be "reviewed," or not be subject to further
review or (ii) the 90th day after the Closing Date, but in any event prior to
the Effectiveness Date, and to keep such Registration Statement continuously
effective under the Securities Act until such date as is the earlier of (x) the
date when all Registrable Securities covered by such Registration Statement have
been sold or (y) as to any particular Holder, the date on which all such
Holder's Registrable Securities may be sold

                                       3


without any restriction pursuant to Rule 144(k), provided that if any such
Holder requests, the Company shall deliver unlegended certificates evidencing
the Registrable Securities to such Holder (the "Effectiveness Period");
provided, that if notwithstanding the Company best efforts, a Registration
Statement has not become effective on or before the Effectiveness Date, the
Company shall continue to use its best efforts after the Effectiveness Date to
cause a Registration Statement to become effective.

         3.       Registration Procedures.

                  In connection with the Company's registration obligations
hereunder, the Company shall:

                  (a)      Prepare and file with the Commission on or prior to
the Filing Date a Registration Statement on Form S-3 (or on another form
appropriate for such registration in accordance herewith) in accordance with the
method or methods of distribution thereof as specified by the Holders, and cause
the Registration Statement to become effective and remain effective as provided
herein; provided, however, that not less than five (5) Business Days prior to
the filing of the Registration Statement or any related Prospectus and not less
than two (2) Business Days prior to the filing of any amendment or supplement
thereto (including any document that would be incorporated therein by
reference), the Company shall (i) furnish to the Holders and any Special
Counsel, copies of all such documents proposed to be filed, which documents
(other than those incorporated by reference) will be subject to the review of
such Holders and such Special Counsel, and (ii) at the request of any Holder,
cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of counsel to such Holders, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities or any Special Counsel shall reasonably object in writing within
three (3) Business Days after their receipt thereof.

                  (b)      (i)      If necessary to keep such Registration
Statement accurate and complete, prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration Statement
as may be necessary to keep the Registration Statement continuously (but for the
filing of such post-effective amendment) effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with
the Commission such additional Registration Statements in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) respond as promptly as reasonably practicable to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as reasonably practicable provide the Holders true and
complete copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the Effectiveness Period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.

                                       4


                  (c)      Notify the Holders of Registrable Securities to be
sold and any Special Counsel as promptly as reasonably practicable (A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed; (B) when the Commission notifies
the Company whether there will be a "review" of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement; and
(C) with respect to the Registration Statement or any post-effective amendment,
when the same has become effective, and thereafter: (i) of any request by the
Commission or any other Federal or state governmental authority for amendments
or supplements to the Registration Statement or Prospectus or for additional
information; (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (iv) of the occurrence of
any event that makes any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

                  (d)      Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction within the United States, at the earliest practicable moment.

                  (e)      If requested by the Holders of a majority in interest
of the Registrable Securities, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to the Registration Statement such
information regarding a Holder or the plan of distribution as such majority of
Holders may request, provided that such information is true and complete in all
material respects, and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment.

                  (f)      Furnish to each Holder and any Special Counsel,
without charge, at least one conformed copy of each Registration Statement and
each amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.

                  (g)      Promptly deliver to each Holder and any Special
Counsel, without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders

                                       5


in connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto in conformity with
the requirements of the Securities Act.

                  (h)      Prior to any public offering of Registrable
Securities, use its best efforts to register or qualify or cooperate with the
Holders and any Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action that would subject the Company to general service of process in any
jurisdiction were it is not then so subject.

                  (i)      Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold pursuant to a Registration Statement, which certificates shall be free of
all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any Holder may request at least
two (2) Business Days prior to any sale of Registrable Securities.

                  (j)      Upon the occurrence of any event contemplated by
Section 3(c)(iv), as promptly as possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

                  (k)      Use its best efforts to cause all Registrable
Securities relating to such Registration Statement to be listed on NASDAQ and
any other securities exchange, quotation system, market or over-the-counter
bulletin board, if any, on which similar securities issued by the Company are
then listed as and when required pursuant to the Purchase Agreement.

                  (l)      Comply in all material respects with all applicable
rules and regulations of the Commission and make generally available to its
security holders earning statements satisfying the provisions of Section 11(a)
of the Securities Act and Rule 158 not later than 45 days after the end of any
3-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.

                  (m)      (i)           Require each Holder to furnish to the
Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement, Prospectus, supplemented Prospectus and/or amended Registration
Statement, including any information necessary to allow the Company to fulfill
its undertakings

                                       6


made in accordance with Item 512 of Regulation S-K, and the Company may exclude
from such registration the Registrable Securities of any such Holder who fails
to furnish such information within a reasonable time prior to the filing of each
Registration Statement, Prospectus, supplemented Prospectus and/or amended
Registration Statement.

                           (ii)     If the Registration Statement refers to any
Holder by name or otherwise as the holder of any securities of the Company, then
such Holder shall have the right to require (if such reference to such Holder by
name or otherwise is not required by the Securities Act or any similar federal
statute then in force) the deletion of the reference to such Holder in any
amendment or supplement to the Registration Statement filed at a time when such
reference is not required.

                           (iii)    Each Holder agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Section 3(c)(ii), 3(c)(iii)
or 3(c)(iv), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
stop orders to enforce the provisions of this paragraph, provided that the
Company shall promptly remove any such stop orders as soon as such stop orders
are no longer necessary.

                  (n)      If (i) there is material non-public information
regarding the Company which the Company's Board of Directors (the "Board")
reasonably determines not to be in the Company's best interest to disclose and
which the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then, notwithstanding anything to the contrary
in this Agreement, the Company may postpone or suspend filing or effectiveness
of a Registration Statement for a period not to exceed 20 consecutive days,
provided that the Company may not postpone or suspend its obligation under this
Section 3(n) for more than 40 days in the aggregate during any 12 month period
(each, a "Blackout Period"); provided, however, that no such postponement or
suspension shall be permitted for consecutive 20 day periods, arising out of the
same set of facts, circumstances or transactions.

         4.       Registration Expenses

                  All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees

                                       7


and expenses (A) with respect to filings required to be made with NASDAQ or any
other securities exchange, quotation system, market or over-the-counter bulletin
board on which Registrable Securities are required hereunder to be listed, (B)
with respect to filings required to be made with the Commission, (C) with
respect to filings required to be made under NASDAQ and any other securities
exchange, quotation system, market or over-the-counter bulletin board and (D) in
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of the Holders' Special Counsel in
connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the Holders of a majority of Registrable
Securities may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
Holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) Securities
Act liability insurance, if the Company so desires such insurance, and (v) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters, if
requested by any underwriter) and legal counsel. In addition, the Company shall
be responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any audit, the fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange as required hereunder and the reasonable fees and
expenses of Special Counsel.

         5.       Indemnification

                  (a)      Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them, each Person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained or incorporated by
reference in (i) the Registration Statement, (ii) any Prospectus or any form of
prospectus, (iii) any amendment or supplement thereto, or (iv) any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (A)
such untrue statements or omissions are based solely upon information regarding
such Holder furnished in writing to the Company by such Holder expressly for use
therein, which information was reasonably relied on by the Company for use
therein or to the extent that such information relates to such Holder or such
Holder's proposed

                                       8


method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto, or (B) such Losses arise in connection with the use by such
Holder of a Prospectus (x) after the Company has notified such Holder of the
occurrence of an event as described in Section 3(n) and prior to receipt by such
notice, or (y) during a Blackout Period of which the Holder has received written
notice from the Company. The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding of which the Company is aware
in connection with the transactions contemplated by this Agreement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of an Indemnified Party and shall survive the transfer of
the Registrable Securities by the Holders.

                  (b)      Indemnification by Holders. Each Holder shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses, as incurred, arising solely out of or based solely upon any
untrue statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or arising solely out of or based solely
upon any omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in the light of the circumstances under which
they were made) not misleading, to the extent, but only to the extent, that (i)
such untrue statement or omission is contained in or omitted from any
information furnished in writing by such Holder to the Company specifically for
inclusion in the Registration Statement or such Prospectus and that such
information was reasonably relied upon by the Company for use in the
Registration Statement, such Prospectus or such form of prospectus or to the
extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus Supplement, or (ii) such
Losses arise in connection with the use by such Holder of a Prospectus (x) after
the Company has notified such Holder of the occurrence of an event as described
in Section 3(n) and prior to receipt of such notice, or (y) during a Blackout
Period of which the Holder has received written notice from the Company.
Notwithstanding anything to the contrary contained herein, the Holder shall be
liable under this Section 5(b) for only that amount as does not exceed the net
proceeds to such Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement.

                  (c)      Conduct of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party promptly shall notify
the Person from whom indemnity is sought (the "Indemnifying Party) in writing,
and the Indemnifying Party shall diligently assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have proximately and materially adversely prejudiced the Indemnifying
Party.

                                       9


                  An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly, diligently and appropriately to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified
Party in any such Proceeding; (3) the Indemnified Party shall reasonably
determine that there may be legal defenses available to it which are not
available to the Indemnifying Party; or (4) the Indemnified Party shall
reasonably determine that there is an actual or potential conflict of interest
between it and the Indemnifying Party, including, without limitation, situations
in which there are one or more legal defenses available to the Indemnified Party
that are antithetical or in opposition to those available to the Indemnifying
Party, and in any of such cases, the Indemnifying Party shall not have the right
to assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party. The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding and does
not impose any monetary or other obligation or restriction on the Indemnified
Party.

                  All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).

                  (d)      Contribution. If a claim for indemnification under
Section 5(a) or 5(b) is unavailable to an Indemnified Party because of a failure
or refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses

                                       10


if the indemnification provided for in this Section was available to such party
in accordance with its terms. Notwithstanding anything to the contrary contained
herein, the Holder shall be liable or required to contribute under this Section
5(c) for only that amount as does not exceed the net proceeds to such Holder as
a result of the sale of Registrable Securities pursuant to such Registration
Statement.

                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

                  The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties. The indemnity and contribution agreements herein are
in addition to and not in diminution or limitation of any indemnification
provisions under the Purchase Agreement.

         6.       Rule 144.

                  As long as any Holder owns Preferred Stock, Conversion Shares,
Dividend Shares, Warrants or Warrant Shares, the Company covenants to timely
file all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act. As long as any Holder
owns Preferred Stock, Conversion Shares, Dividend Shares, Warrants or Warrant
Shares, if the Company is not required to file reports pursuant to Section 13(a)
or 15(d) of the Exchange Act, it will prepare and furnish to the Holders and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Person to sell Conversion Shares, Dividend Shares and Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act, including compliance
with the provisions of the Purchase Agreement relating to the transfer of the
Conversion Shares and Warrant Shares. Upon the request of any Holder, the
Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such requirements.

         7.       Miscellaneous.

                  (a)      Remedies. In the event of a breach by the Company or
by a Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation

                                       11


for any losses incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

                  (b)      No Inconsistent Agreements. Neither the Company nor
any of its subsidiaries has, as of the date hereof, entered into and currently
in effect, nor shall the Company or any of its subsidiaries, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Without limiting the generality
of the foregoing, without the written consent of the Holders of a majority of
the then outstanding Registrable Securities, the Company shall not grant to any
Person the right to request the Company to register any securities of the
Company under the Securities Act unless the rights so granted are subject in all
respects to the prior rights in full of the Holders set forth herein, and are
not otherwise in conflict with the provisions of this Agreement.

                  (c)      No Piggyback on Registrations. Except for the
registration of up to 5,270 shares of Common Stock acquirable under a warrant
dated December 13, 2001, issued to Jefferies & Company Inc. (the "Jefferies
Warrant"), and up to 538 shares of Common Stock acquirable under a warrant dated
September 9, 1998, issued to Leasing Technologies International, Inc. (the
("LTII Warrant"), neither the Company nor any of its security holders (other
than the Holders in such capacity pursuant hereto) may include securities of the
Company in the Registration Statement, and the Company shall not after the date
hereof enter into any agreement providing such right to any of its security
holders, unless the right so granted is subject in all respects to the prior
rights in full of the Holders set forth herein, and is not otherwise in conflict
with the provisions of this Agreement. The numbers of shares of Common Stock
underlying the Jefferies Warrant and the LTII Warrant to be registered in the
Registration Statement shall not be increased on account of any adjustments
provided for in such warrants, other than on account of a stock split (including
a stock split effected by means of a stock dividend) or other issuance of Common
Stock in which the Company does not receive any consideration therefor.

                  (d)      Piggy-Back Registrations. If at any time when there
is not an effective Registration Statement covering all of the Registrable
Securities, the Company shall determine to prepare and file with the Commission
a registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, the Company shall send to each holder of Registrable Securities written
notice of such determination and, if within twenty (20) days after receipt of
such notice, any such Holder shall so request in writing (which request shall
specify the Registrable Securities intended to be disposed of by the Holders),
the Company will cause the registration under the Securities Act of all
Registrable Securities which the Company has been so requested to register by
the Holder, to the extent required to permit the disposition of the Registrable
Securities so to be registered, provided that if at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election,

                                       12


give written notice of such determination to such Holders and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay expenses in accordance with Section 4 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay registering any Registrable Securities being registered pursuant to
this Section 7(d) for the same period as the delay in registering such other
securities. The Company shall include in such registration statement all or any
part of such Registrable Securities such Holder requests to be registered;
provided, however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 7(d) that are eligible for sale
pursuant to Rule 144(k) of the Securities Act. In the case of an underwritten
public offering, if the managing underwriter(s) should reasonably object to the
inclusion of the Registrable Securities in such registration statement, then if
the Company after consultation with the managing underwriter should reasonably
determine that the inclusion of such Registrable Securities would materially
adversely affect the offering contemplated in such registration statement, and
based on such determination recommends inclusion in such registration statement
of fewer or none of the Registrable Securities of the Holders, then (x) the
number of Registrable Securities of the Holders to be included in such
registration statement shall be reduced pro-rata among such Holders (based upon
the number of Registrable Securities requested to be included in the
registration), if the Company after consultation with the underwriter(s)
recommends the inclusion of fewer Registrable Securities, or (y) none of the
Registrable Securities of the Holders shall be included in such registration
statement, if the Company after consultation with the underwriter(s) recommends
the inclusion of none of such Registrable Securities; provided, however, that if
securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction of
the number of Registrable Securities intended to be offered by the Holders than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company). The right of any Holder to participate in an
underwritten public offering hereunder shall be conditioned upon such Holder's
entering into the underwriting agreement and lock-up agreement with the
representative of the underwriter or underwriters on the same terms as required
of other selling securities holders in such offering.

                  (e)      Specific Enforcement, Consent to Jurisdiction.

                           (i)      The Company and the Holders  acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement or the Purchase Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement or
the Purchase Agreement and to enforce specifically the terms and provisions
hereof or thereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity.

                           (ii)     Each of the Company and the Holders (i)
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts located in New York County, New York, for the purposes of any
suit, action or proceeding arising out of or relating to this Agreement or the
Purchase Agreement and (ii) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Holders consents to process being served
in

                                       13


any such suit, action or proceeding by mailing a copy thereof to such party at
the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 7(f) shall affect or limit any right to serve
process in any other manner permitted by law.

                  (f)      Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and each of the Holders. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of at
least a majority of the Registrable Securities to which such waiver or consent
relates; provided, however, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the immediately preceding sentence.

                  (g)      Notices. Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., Eastern
United States time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., Eastern
United States time, on any date and earlier than 11:59 p.m., Eastern United
States time, on such date, (iii) the Business Day following the date of mailing,
if sent by nationally recognized overnight courier service or (iv) actual
receipt by the party to whom such notice is required to be given. The addresses
for such communications shall be with respect to each Holder at its address set
forth under its name on Schedule 1 attached hereto, or with respect to the
Company, addressed to:

                  Spectrum Pharmaceuticals, Inc.
                  157 Technology Drive
                  Irvine, California 92618
                  Attention: CEO
                  Facsimile No.: 949-788-6706

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Latham &
Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa, California 92626,
Att'n: Allan W. Pettis, Esq., Fax No. 714-755-8290. Copies of notices to any
Holder shall be sent to Kane Kessler, P.C., 1350 Avenue of the Americas, New
York, New York 10019, Attention: Robert L. Lawrence, Esq., Facsimile No.: (212)
245-3009.

                  (h)      Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns and shall inure to the benefit of each Holder and its
successors and assigns. The Company may not assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of each
Holder. Each Holder may assign its rights hereunder in the manner and to the
Persons as permitted under the Purchase

                                       14


Agreement, which for purposes hereof shall include Holders of the Placement
Agent Warrants, whether or not such Holders are parties to the Purchase
Agreement.

                  (i)      Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any transferee of such Holder of all
or a portion of the Preferred Stock, the Warrants or the Registrable Securities
held by such Holder if: (i) the Holder agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, and (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned. In addition, each Holder shall have the right to assign
its rights hereunder to any other Person with the prior written consent of the
Company, which consent shall not be unreasonably withheld. The rights to
assignment shall apply to the Holders (and to subsequent) successors and
assigns.

                  (j)      Counterparts; Facsimile. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and, all of which taken together shall constitute one
and the same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding obligation
of the party executing (or on whose behalf such signature is executed) the same
with the same force and effect as if such facsimile signature were the original
thereof.

                  (k)      Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law thereof. The Company hereby irrevocably
consents to the exclusive jurisdiction of the State and Federal Courts located
in New York County, New York in connection with any action or proceeding arising
out of or relating to this Agreement.

                  (l)      Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.

                  (m)      Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

                  (n)      Headings. The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.

                                       15


                  (o)      Shares Held by the Company and its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Company or its Affiliates (other than any Holder or transferees or successors or
assigns thereof if such Holder is deemed to be an Affiliate solely by reason of
its holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

                  (p)      Notice of Effectiveness. Within two (2) Business Days
after the Registration Statement which includes the Registrable Securities is
ordered effective by the Commission, the Company shall deliver, and if requested
by the Company's transfer agent, shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to
the Holders whose Registrable Securities are included in such Registration
Statement) confirmation that the Registration Statement has been declared
effective by the Commission in the form attached hereto as Exhibit A.

                  (q)      Securities Act Compliance. Each Purchaser, severally
and not jointly, hereby covenants and agrees that such Purchaser (i) will not
sell or otherwise dispose of such Purchaser's Registrable Shares except in
compliance with the Securities Act, (ii) if selling under a Registration
Statement, will sell such Purchaser's Registrable Shares only in accordance with
the plan of distribution set forth in the Prospectus forming a part of the
Registration Statement, (iii) will comply with the requirements of the
Securities Act when selling or otherwise disposing of the Registrable Shares,
including, but not limited to, the prospectus delivery requirements of the
Securities Act.

                           [SIGNATURE PAGES FOLLOWS:]

                                       16


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

                                             COMPANY:

SCO CAPITAL PARTNERS LLC, a Delaware         SPECTRUM PHARMACEUTICALS, INC.,
limited liability company                    a Delaware corporation

By: /s/Steven H. Rouhandeh                   By: /s/Rajesh C. Shrotriya
    ------------------------------------         -------------------------------
    Steven H. Rouhandeh, Managing Member         Name: Rajesh C. Shrotriya, M.D.
                                                 Title: Chairman, President and
                                                       Chief Executive Officer

SCO FINANCIAL GROUP LLC

By: /s/Steven H. Rouhandeh                   PURCHASERS/HOLDERS (CONT'D):
    --------------------------------------
    Steven H. Rouhandeh, Managing Member

NORTH SOUND LEGACY FUND, LLC                 PROMED PARTNERS, L.P.

By: /s/Andrew Wilder                         By: /s/Barry Kurokawa
    --------------------------------------       -------------------------------
    Andrew Wilder, Chief Financial Officer       Barry Kurokawa, Managing Member

NORTH SOUND LEGACY FUND INTERNATIONAL, LTD.  SDS MERCHANT FUND, L.P.
                                             By: SDS Capital Partners, LLC

By: /s/Andrew Wilder                         By: /s/Scott E. Derby
    --------------------------------------       -------------------------------
    Andrew Wilder, Chief Financial Officer       Scott E. Derby, General Counsel

NORTH SOUND LEGACY INSTITUTIONAL FUND, LLC  XMARK FUND, LTD.

By: /s/Andrew Wilder                         By: /s/Mitchell D. Kay
    --------------------------------------       -------------------------------
    Andrew Wilder, Chief Financial Officer       Mitchell D. Kay,
                                                 Chief Investment Officer

OTA LLC

By: /s/Richard M. Cayne
    --------------------------------------
    Richard M. Cayne, General Counsel



                   SCHEDULE 1 TO REGISTRATION RIGHTS AGREEMENT



================================================================================================================
                                                                      Shares of       Shares of
                                                                       Common          Common
                                                        Share of        Stock           Stock
                                                        Series D      Acquirable      Acquirable        Total
                                                        Preferred    under Series    under Series      Purchase
Name and Address of Purchaser                             Stock      D-1 Warrants    D-2 Warrant        Price
- -----------------------------------------------------------------------------------------------------------------
                                                                                          
North Sound Legacy Fund LLC
c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, Connecticut 06870
Att'n:  Mr. Andrew Wilder, Chief Financial
Officer
Fax:  203-967-5701
a Qualified Institutional Buyer                             4             8,511           8,511       $   40,000
- -----------------------------------------------------------------------------------------------------------------
North Sound Legacy International Ltd.
c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, Connecticut 06870
Att'n:  Mr. Andrew Wilder, Chief Financial
Officer
Fax:  203-967-5701
a Qualified Institutional Buyer                            47           100,000         100,000       $  470,000
- -----------------------------------------------------------------------------------------------------------------
North Sound Legacy Institutional Fund LLC
c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, Connecticut 06870
Att'n:  Mr. Andrew Wilder, Chief Financial
Officer
Fax:  203-967-5701
a Qualified Institutional Buyer                            49           104,255         104,255       $  490,000
- -----------------------------------------------------------------------------------------------------------------
OTA LLC
1 Manhattanville Road
Purchase, New York 10577
Att'n:  Mr. Richard M. Cayne
Fax:  914-694-6335
a Qualified Institutional Buyer                            10            21,277          21,277       $  100,000
- -----------------------------------------------------------------------------------------------------------------
ProMed Partners, L.P.
237 Park Avenue, 9th Floor
New York, N.Y. 10017
Att'n:  Mr. Barry Kurokawa
Fax:  212-692-3627                                         30            63,830          63,830       $  300,000
- -----------------------------------------------------------------------------------------------------------------
SCO Capital Partners LLC
1285 Avenue of the Americas, 35th Floor
New York, New York 10019
Att'n:  Mr. Steven H. Rouhandeh
Fax: 212-554-4058                                          70           148,936         148,936       $  700,000
- -----------------------------------------------------------------------------------------------------------------
SDS Merchant Fund, L.P.
c/o SDS Capital Partners, LLC
53 Forest Avenue, 2nd Floor
Old Greenwich, CT 06870
Att'n:  Mr. Steven Derby
Fax:  203-967-5851
a Qualified Institutional Buyer                           100           212,766         212,766       $1,000,000
- -----------------------------------------------------------------------------------------------------------------
Xmark Fund Ltd.
152 West 57th Street, 21st Floor
New York, New York 10019
Att'n:  Mr. Mitchell D. Kaye
Fax:  212-247-1329                                        134           285,106          285,106      $1,340,000






================================================================================================================
                                                                      Shares of       Shares of
                                                                       Common          Common
                                                        Share of        Stock           Stock
                                                        Series D      Acquirable      Acquirable        Total
                                                        Preferred    under Series    under Series      Purchase
Name and Address of Purchaser                             Stock      D-1 Warrants    D-2 Warrant        Price
- -----------------------------------------------------------------------------------------------------------------
                                                                                          
         Total (Excluding Placement Agent
                  Warrants)                               444           944,681          944,681      $4,440,000
================================================================================================================




                                                                      Shares of
                                                                       Common
                                                                        Stock
                                                                      Acquirable
                                                                        under
                                                                      Placement
                                                                        Agent
                                                                       Warrants
- -----------------------------------------------------------------------------------------------------------------
                                                                                          
SCO Financial Group LLC
1285 Avenue of the Americas, 35th Floor
New York, New York 10019
Att'n:  Mr. Steven H. Rouhandeh
Fax: 212-554-4058                                           0           188,936           0               0
================================================================================================================




EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[Name and Address of Transfer Agent]

                  RE:      SPECTRUM PHARMACEUTICALS, INC.

Dear [______]:

         We are counsel to Spectrum Pharmaceuticals, Inc. a Delaware corporation
(the "COMPANY"), and have represented the Company in connection with that
certain Preferred Stock and Warrant Purchase Agreement (the "PURCHASE
AGREEMENT") dated as of April 29, 2003 by and among the Company and the buyers
named therein (collectively, the "HOLDERS") pursuant to which the Company issued
to the Holders its Series D 8% Cumulative Convertible Voting Preferred Stock,
par value $0.001 per share (the "Preferred Stock") convertible into shares of
the Company's common stock, par value $0.001 per share (the "COMMON STOCK"), and
warrants to purchase shares of the Common Stock (the "WARRANTS"). Pursuant to
the Purchase Agreement, the Company has also entered into a Registration Rights
Agreement with the Holders (the "REGISTRATION RIGHTS AGREEMENT") pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
shares of Common Stock issuable upon conversion of the Preferred Stock and
exercise of the Warrants, under the Securities Act of 1933, as amended (the
"1933 ACT"). In connection with the Company's obligations under the Registration
Rights Agreement, on __________, 2003, the Company filed a Registration
Statement on Form S-3 (File No. 333-_____________) (the "REGISTRATION
STATEMENT") with the Securities and Exchange Commission (the "SEC") relating to
the Registrable Securities which names each of the Holders as a selling
stockholder thereunder.

         In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

                                                     Very truly yours,

                                                     By:________________________

cc:      [LIST NAMES OF HOLDERS]

EX-10.1

                                                                    EXHIBIT 10.1

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

                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

                                   DATED AS OF

                                 APRIL 29, 2003

                                  BY AND AMONG

              SPECTRUM PHARMACEUTICALS, INC., AS ISSUER AND SELLER
                                       AND

             EACH OF THE PARTIES LISTED ON SCHEDULE 1, AS PURCHASERS
                                 WITH RESPECT TO

            SERIES D 8% CUMULATIVE CONVERTIBLE VOTING PREFERRED STOCK
                 AND SERIES D WARRANTS TO PURCHASE COMMON STOCK

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



                         TABLE OF EXHIBITS AND SCHEDULES
                        
Exhibit A                  Form of Certificate of Designation of the Series D 8%
                              Cumulative Convertible Voting Preferred Stock
Exhibit B                  Form of Warrant
Exhibit C                  Form of Registration Rights Agreement
Exhibit D                  Form of Management Lock-up Agreement

Schedule 1                 Purchasers
Schedule 3                 Schedule of Representations and Warranties of
                              Spectrum Pharmaceuticals, Inc.
Schedule 6.1(j)            Officers and Directors of the Seller





         PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated
as of April 29, 2003, by and among Spectrum Pharmaceuticals, Inc., a Delaware
corporation (the "Seller"), and each of the persons listed on Schedule 1 hereto
(individually, "Purchaser" and collectively, the "Purchasers").

                                   WITNESSETH:

         WHEREAS, each of the Purchasers is willing to purchase from the Seller,
and the Seller desires to sell to the Purchasers, the numbers of shares set
forth on Schedule 1 attached hereto, which aggregate 444 shares of its Series D
8% Cumulative Convertible Voting Preferred Stock, stated value $10,000 per
share, par value $0.001 per share (the "Preferred Stock"), and Series D-1 Common
Stock Purchase Warrants (the "Series D-1 Warrants") entitling the holders
thereof to purchase up to an aggregate of 944,681 shares of the Seller's common
stock, $0.001 par value per share (the "Common Stock"), at an exercise price of
$3.00 per share and Series D-2 Common Stock Purchase Warrants (the "Series D-2
Warrants" and, collectively with the Series D-1 Warrants, the "Series D
Warrants" or the "Warrants") to purchase up to an aggregate of 944,681 shares of
Common Stock at an exercise price of $3.50 per share (in each case subject to
adjustment as more fully set forth herein and in the Warrants).

         NOW, THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, hereby agree as follows:

                          ARTICLE I - PURCHASE AND SALE

         1.1      PURCHASE AND SALE. On the terms and subject to the conditions
set forth in this Agreement, at the Closing (as defined in Section 2.2), the
Seller will sell and each of the Purchasers will purchase (i) the Preferred
Stock in the amounts set forth on Schedule 1 hereto, and (ii) the numbers of
Warrants set forth on Schedule 1 hereto. The shares of Common Stock issuable
upon conversion of the Preferred Stock are referred to herein as the "Conversion
Shares," and the shares of Common Stock issuable upon exercise of the Warrants
are referred to herein as the "Warrant Shares." The Preferred Stock, the
Warrants, the Conversion Shares, the Dividend Shares (as hereinafter defined)
and the Warrant Shares are collectively referred to as the "Securities."

         1.2      TERMS OF THE PREFERRED STOCK AND WARRANTS. The terms and
provisions of the Preferred Stock are set forth in the Form of Certificate of
Designation of Series D 8% Cumulative Convertible Voting Preferred Stock, in the
form attached hereto as Exhibit A. The terms and provisions of the Warrants are
more fully set forth in the Form of Common Stock Purchase Warrant, in the form
attached hereto as Exhibit B.

         1.3      TRANSFERS; LEGENDS.

                  (a)      Any of the Securities may be transferred, in whole or
in part, by any of the Purchasers at any time by delivering written transfer
instructions to the Seller, and the Seller shall reflect such transfer on its
books and records and reissue certificates evidencing the Securities being
transferred. The Seller hereby consents to and agrees to register on the books

                                       1


of the Seller and with any transfer agent for the securities of the Seller any
transfer of Securities by a Purchaser to an Affiliate of such Purchaser. Any
transferee other than a purchaser of shares of Common Stock which have been
registered under the Securities Act shall have the rights of a Purchaser under
this Agreement and the Registration Rights Agreement. The Seller shall reissue
certificates evidencing the Securities upon surrender of certificates evidencing
the Securities being transferred in accordance with this Section 1.3(a). Any
such transfer shall be made by a Purchaser in accordance with applicable federal
and state securities laws and other applicable laws. An "Affiliate" means any
Person (as such term is defined below) that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"). With respect to a
Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser. A "Person" means any individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision of any thereof) or other entity of any kind.

                  (b)      The certificates representing the Securities shall
bear the following legend:

                  "THE SHARES REPRESENTED BY, OR ACQUIRABLE UPON
                  CONVERSION OR EXERCISE OF SECURITIES EVIDENCED BY,
                  THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
                  SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
                  OFFERED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
                  REGISTRATION STATEMENT UNDER SAID ACT UNLESS THE
                  ISSUER OF THIS CERTIFICATE RECEIVES AN OPINION OF
                  LEGAL COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER
                  AND ITS LEGAL COUNSEL THAT SUCH SALE IS EXEMPT FROM
                  REGISTRATION UNDER SUCH ACT AND IS IN COMPLIANCE
                  WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS
                  UNLESS SUCH REGISTRATION IS NOT REQUIRED."

                     ARTICLE II - PURCHASE PRICE AND CLOSING

         2.1      PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") to be paid by the Purchasers to the Seller to acquire the Preferred
Stock and the Warrants shall be the total amount set forth on Schedule 1 hereto.

         2.2      THE CLOSING. The closing of the transactions contemplated
under this Agreement (the "Closing") shall take place at the offices of Kane
Kessler, P.C., 1350 Avenue of the Americas, 26th Floor, New York, New York, on a
date to be determined by the mutual agreement of the parties, but if they cannot
so agree, then on the 10th day after the date hereof; provided, however, that if
such day is not a Tuesday, Wednesday or Thursday, the Closing Date shall be on
the first Tuesday after such 10th day. The date on which the Closing occurs is
herein called the "Closing Date," and the 10th day after the date hereof (or, if
such 10th day after the date hereof is not a Tuesday, Wednesday or Thursday, the
first Tuesday after such 10th day) is herein called the "Expiration Date." All
proceedings to be taken and all documents to be

                                       2


executed at the Closing shall be deemed to have been taken, delivered and
executed simultaneously, and no proceeding shall be deemed taken nor documents
deemed executed or delivered until all have been taken, delivered and executed.

         2.3      DELIVERIES.

                  (a)      DELIVERIES BY THE SELLER. At the Closing, the Seller
shall deliver or cause to be delivered to each of the Purchasers the following:

                  1.       (i) One or more certificates evidencing the aggregate
                           number of shares of the Preferred Stock, duly
                           authorized, issued, fully paid and non-assessable, as
                           is indicated on Schedule 1 for such Purchaser,
                           registered in the name of such Purchaser, in such
                           denominations as is indicated on Schedule 1 for such
                           Purchaser;

                           (ii) One or more Warrants in the form of Exhibit B
                           hereto, registered in the name of such Purchaser, in
                           such denominations as is indicated on Schedule 1 for
                           such Purchaser, pursuant to which such Purchaser
                           shall be entitled to purchase an aggregate of that
                           number of shares of Common Stock as is indicated on
                           Schedule 1 for such Purchaser.

                  2.       The Registration Rights Agreement, in the form
                           attached hereto as Exhibit C (the "Registration
                           Rights Agreement"), duly executed by the Seller.

                  3.       The legal opinion of Latham & Watkins LLP ("Seller's
                           Counsel"), counsel to the Seller, in form and
                           substance reasonably satisfactory to the Purchasers.

                  4.       A certificate of the Secretary of the Seller (the
                           "Secretary's Certificate"), in form and substance
                           satisfactory to the Purchasers, certifying as
                           follows:

                           (i)      that the Certificate of Designation
                                    authorizing the Preferred Stock has been
                                    duly filed in the office of the Secretary of
                                    State of the State of Delaware, and that
                                    attached to the Secretary's Certificate is
                                    true and complete copy of the Certificate of
                                    Incorporation of the Seller together with
                                    all amendments thereto and the Certificate
                                    of Designation;

                           (ii)     that a true copy of the Bylaws of the
                                    Seller, as amended to the Closing Date, is
                                    attached to the Secretary's Certificate;

                           (iii)    that attached to the Secretary's Certificate
                                    are true and complete copies of the
                                    resolutions of the Board of Directors of the
                                    Seller authorizing the execution, delivery
                                    and performance of this Agreement and the
                                    Related Documents (as defined below),
                                    instruments and certificates required to be
                                    executed by it in connection herewith and
                                    therewith and approving the consummation of
                                    the transactions in the manner contemplated

                                       3


                                    hereby including, but not limited to, the
                                    authorization and issuance of the Preferred
                                    Stock,

                           (iv)     the names and true signatures of the
                                    officers of the Seller signing this
                                    Agreement and all other documents to be
                                    delivered in connection with this Agreement,

                           (v)      that (A) set forth in or attached to the
                                    Secretary's Certificate is a true and
                                    complete list of all directors and officers
                                    of Seller as of the date thereof, and that
                                    attached to such certificate is an original
                                    or true and complete copy of the Management
                                    Lock-up Agreement in the form of Exhibit D
                                    attached hereto (the "Management Lock-up
                                    Agreement") executed by each of such
                                    officers and directors, and (B) the staff of
                                    the Nasdaq Stock Market has verbally
                                    confirmed to the Seller that (y) it has
                                    reviewed this Agreement, the form of
                                    Certificate of Designation, form of Series
                                    D-1 Warrant, form of Series D-2 Warrant,
                                    form of Placement Agent Warrant and form of
                                    Registration Rights Agreement and (z) on the
                                    basis of such review, approval by the
                                    stockholders of the Seller of the issuance
                                    of the Preferred Stock, the Warrants, the
                                    Conversion Shares, the Dividend Shares and
                                    the Warrant Shares is not required, and the
                                    Seller has not received from such staff any
                                    oral or written information or advice
                                    contrary to such verbal confirmation.

                  5.       A wire transfer representing the Purchasers'
                           reasonable legal fees and expenses as described in
                           Section 9.2 hereof; such fee may, at the election of
                           the Seller, be paid out of the funds due from the
                           Purchasers at the Closing.

                  6.       Proof of due filing with the Secretary of State of
                           the State of Delaware of the Certificate of
                           Designation authorizing the Preferred Stock.

                  7.       The Management Lock-up Agreements executed by all the
                           directors and officers of the Company.

                  (b)      DELIVERIES BY THE PURCHASERS. At the Closing, each of
the Purchasers shall deliver or cause to be delivered to the Seller the
following:

                  1.       Payment of the purchase price set forth opposite such
                           Purchaser's name on Schedule 1, in cash by wire
                           transfer of immediately available funds to an account
                           designated in writing by Seller.

                  2.       The Registration Rights Agreement duly executed by
                           such Purchaser.

           ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER

         For purposes of this Article III, all references to the Seller and its
Subsidiaries shall be deemed to include all their respective predecessor
entities, if any. The Seller represents,

                                       4


warrants and covenants to the Purchasers, except as set forth on the Schedule of
Representations and Warranties attached hereto as Schedule 3 specifically
identifying the applicable section of this Article III, it being understood that
information disclosed under a particular section of Schedule 3 shall be deemed
disclosed only for purposes of such section and not for purposes of or with
respect to any other section of this Article III, as of the date hereof, as
follows:

         3.1      CORPORATE EXISTENCE AND POWER; SUBSIDIARIES. The Seller and
its Subsidiaries are corporations duly incorporated, validly existing and in
good standing under the laws of the state in which they are incorporated, and
have all corporate powers required to carry on their business as now conducted.
The Seller and its Subsidiaries are duly qualified to do business as a foreign
corporation and are in good standing in each jurisdiction where the character of
the property owned or leased by them or the nature of their activities makes
such qualification necessary, except for those jurisdictions where the failure
to be so qualified would not have a Material Adverse Effect on the Seller or any
of its Subsidiaries. For purposes of this Agreement, the term "Material Adverse
Effect" means, with respect to any person or entity, a material adverse effect
on its or its Subsidiaries' condition (financial or otherwise), business,
properties, assets, liabilities (including contingent liabilities), and results
of operations. True and complete copies of the Seller's Certificate of
Incorporation, as amended, and Bylaws, as amended (collectively, the "Charter"
and Bylaws") have previously been provided to the Purchasers. For purposes of
this Agreement, the term "Subsidiary" or "Subsidiaries" means, with respect to
any entity, any corporation or other organization of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are directly or
indirectly owned by such entity or of which such entity is a partner or is,
directly or indirectly, the beneficial owner of 50% or more of any class of
equity securities or equivalent profit participation interests. The Seller has
no Subsidiaries other than as set forth in Exhibit 21 to the Seller's annual
report on Form 10-K for the fiscal year ended December 31, 2002.

         3.2      CORPORATE AUTHORIZATION; RIGHTS PLAN. (a) The execution,
delivery and performance by the Seller of this Agreement, the Warrants, the
Registration Rights Agreement, the Certificate of Designation and each of the
other documents executed pursuant to and in connection with this Agreement (the
"Related Documents"), and the consummation of the transactions contemplated
hereby and thereby (including, but not limited to, the sale and delivery of the
Preferred Stock and the Warrants, and the subsequent issuance of the Conversion
Shares upon conversion of the Preferred Stock, and the subsequent issuance of
the Warrant Shares upon exercise of the Warrants, and the subsequent issuance,
if the Seller so elects, of shares of Common Stock in payment of the dividends
on the Preferred Stock, which shares of Common Stock are herein referred to as
"Dividend Shares") have been duly authorized, and no additional corporate action
is required for the approval of this Agreement or the Related Documents. The
Conversion Shares, the Dividend Shares and the Warrant Shares have been duly
reserved for issuance by the Seller. This Agreement and the Related Documents
have been or, to the extent contemplated hereby or by the Related Documents,
will be duly executed and delivered and constitute the legal, valid and binding
agreement of the Seller, enforceable against the Seller in accordance with their
terms, except as may be limited by bankruptcy, reorganization, insolvency,
moratorium and similar laws of general application relating to or affecting the
enforcement of

                                       5


rights of creditors, and except as enforceability of its obligations hereunder
are subject to general principles of equity.

                  (b)      The Preferred Stock that will be issued to the
Purchasers at Closing will have been duly and validly reserved for issuance and,
when issued and delivered in accordance with the terms hereof, will be duly
authorized, validly issued, fully paid and non-assessable and free of
restrictions on transfer other than applicable state and federal securities
laws. The Common Stock issuable upon conversion of the Preferred Stock and
exercise of the Warrants has been duly and validly reserved for issuance, and
upon issuance in accordance with the terms of the Certificate of Designation or
the Warrants, will be duly authorized, validly issued, fully paid and
non-assessable and free of restrictions on transfer other than applicable
federal and state securities laws and, assuming the accuracy of the
representations and warranties of the Purchasers, will be issued in compliance
with all applicable federal and state securities laws.

                  (c)      The issuance of the Preferred Stock, the Warrants, or
the Common Stock upon conversion or exercise of the Preferred Stock or Warrants,
as applicable, will not result in or obligate the Seller to (i) issue or offer
to issue, with or without consideration, any securities or rights to acquire any
securities to any person, whether as a pre-emptive right, or pursuant to any to
rights plan, or pursuant to any agreement, undertaking or other obligation of
any nature, or (ii) adjust the number or kind of securities held by or issuable
(with or without the payment of any consideration) to any person.

         3.3      CORPORATE RECORDS. The minute books of the Seller and its
Subsidiaries contain complete and accurate records of all meetings and other
corporate actions of the board of directors, committees of the board of
directors, incorporators and shareholders of the Seller and its Subsidiaries
from the date of their incorporation to the date hereof. All material corporate
decisions and actions have been validly made or taken. The Seller's share
transfer register complies with applicable laws and regulations and has been
regularly updated through the date hereof. Such books fully and correctly
reflect all the decisions of the shareholders. The Seller maintains complete and
correct books and records of the Seller and its Subsidiaries which fairly
present, in all material respects, the financial position and the results of
operations and cash flows of the Seller and its Subsidiaries as of the dates and
for the periods indicated therein, subject to customary and usual audit
adjustments consistently applied.

         3.4      GOVERNMENTAL AUTHORIZATION; NASD AND NASDAQ. (a) Except as
otherwise specifically contemplated in this Agreement and the Related Documents,
and except for: (i) the filing of the Registration Statement with the
Commission; (ii) any filings required under SEC Regulation D or any state
securities laws that are permitted to be made after the date hereof, including
but not limited to filings pursuant to Section 25102(f) of the California
Corporate Securities Law of 1968, as amended, and the rules thereunder, and
(iii) the filing of the Certificate of Designation in the office of the
Secretary of State of the State of Delaware, the execution, delivery and
performance by the Seller of this Agreement and the Related Documents, and the
consummation of the transactions contemplated hereby and thereby (including, but
not limited to, the sale and delivery of the Preferred Stock and Warrants and
the subsequent issuance of the Conversion Shares and Warrant Shares upon
conversion of the Preferred Stock or exercise of the Warrants, and the issuance
of the Dividend Shares if and when issued, as applicable) by

                                       6


the Seller require no action by or in respect of, or filing with, any
governmental body, agency, official or authority.

                  (b)      The Seller will provide a Listing Notice, which shall
include true copies of this Agreement, the form of Certificate of Designation,
form of Series D-1 Warrant, form of Series D-2 Warrant, form of Placement Agent
Warrant and form of Registration Rights Agreement, to the Nasdaq SmallCap Market
with respect to the Conversion Shares, the Dividend Shares and the Warrant
Shares.

         3.5      NON-CONTRAVENTION. The execution, delivery and performance by
the Seller and its Subsidiaries, as applicable, of this Agreement and the
Related Documents, and the consummation by the Seller of the transactions
contemplated hereby and thereby (including, but not limited to, the issuance of
the Conversion Shares, Dividend Shares and Warrant Shares) do not and will not
(a) violate or conflict with the Charter and Bylaws of the Seller and its
Subsidiaries or any material agreement (which, for purposes of this Agreement,
means any agreement, contract or other document which the Seller would be
required to disclose pursuant to SEC Regulation S-K, Item 601, Exhibits 1, 2, 3,
4, 9 or 10) to which the Seller or any of its Subsidiaries is a party or bound;
(b) violate or conflict with or constitute a material violation of any provision
of any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Seller or any of its Subsidiaries; (c) constitute a default
under or give rise to a right of termination, cancellation or acceleration or
loss of any benefit under any material agreement, contract or other instrument
binding upon the Seller or any of its Subsidiaries or under any material
license, franchise, permit or other similar authorization held by the Seller or
any of its Subsidiaries; or (d) result in the creation or imposition of any Lien
(as defined below) on any material asset of the Seller or any of its
Subsidiaries. For purposes of this Agreement, the term "Lien" means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest,
claim or encumbrance of any kind in respect of such asset.

         3.6      SEC DOCUMENTS. The Seller is obligated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") to file reports pursuant
to Sections 13 and 15(d) thereof (all such reports filed or required to be filed
by the Seller, including all exhibits thereto or incorporated therein by
reference, and all documents filed by the Seller under the Securities Act are
hereinafter called the "SEC Documents"). The Seller has filed all reports or
other documents required to be filed under the Exchange Act. All SEC Documents
filed by the Seller (i) were prepared in all material respects in accordance
with the requirements of the Exchange Act and the Securities Act and (ii) did
not at the time they were filed (or, if amended or superseded by a filing prior
to the date hereof, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Seller has
previously delivered to the Purchaser a correct and complete copy of each report
which the Seller filed with the Securities and Exchange Commission (the "SEC" or
the "Commission") under the Exchange Act for any period ending on or after
December 31, 2001 (the "Recent Reports," which term includes all exhibits
thereto and all exhibits and other information incorporated by reference into
the Recent Reports) other than those Recent Reports, if any, which have been
filed via the SEC's EDGAR filing system; Schedule 3.6 identifies all Recent
Reports which have not been filed via the SEC's EDGAR filing system. All of the
information about the Seller or its Subsidiaries which has been disclosed to the
Purchasers herein

                                       7


or in the course of discussions and negotiations with respect hereto which is
material to the Seller has been disclosed in the Recent Reports.

         3.7      FINANCIAL STATEMENTS. Each of the Seller's consolidated
balance sheet and related consolidated statements of income, cash flows and
changes in stockholders' equity (including the related notes), as contained in
the Recent Reports (collectively, the "Seller's Financial Statements" or the
"Financial Statements") (x) present fairly in all material respects the
financial position of the Seller and its consolidated Subsidiaries as of the
dates thereof and the results of operations, cash flows and stockholders' equity
as of and for each of the periods then ended, except that any unaudited
financial statements are subject to normal year-end adjustments, and (y) were
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved, in each case,
except as otherwise indicated in the notes thereto.

         3.8      COMPLIANCE WITH LAW. The Seller and its Subsidiaries are in
compliance and have conducted their business so as to comply in all respects
with all laws, rules and regulations, judgments, decrees or orders of any court,
administrative agency, commission, self regulatory organization, regulatory
authority or other governmental authority or instrumentality, domestic or
foreign, applicable to its operations except as in each case could not in the
aggregate have or result in a Material Adverse Effect. There are no judgments or
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration), including any such actions
relating to affirmative action claims or claims of discrimination, against the
Seller or its Subsidiaries or against any of their properties or businesses.

         3.9      NO DEFAULTS. The Seller and its Subsidiaries are not, nor will
they be with the passage of time, giving of notice, or both, (i) in violation of
any provision of their Charter and Bylaws (ii) in default or violation of any
term, condition or provision of (A) any judgment, decree, order, injunction or
stipulation applicable to the Seller or its Subsidiaries or (B) any material
agreement, note, mortgage, indenture, contract, lease or instrument, permit,
concession, franchise or license to which the Seller or its Subsidiaries are a
party or by which the Seller or its Subsidiaries or their properties or assets
may be bound, and no circumstances exist which would entitle any party to any
material agreement, note, mortgage, indenture, contract, lease or instrument to
which such Seller or its Subsidiaries are a party, to terminate such as a result
of such Seller or its Subsidiaries, having failed to meet any provision thereof
including, but not limited to, meeting any applicable milestone under any
material agreement or contract.

         3.10     LITIGATION. Except as disclosed in Item 3 of the Seller's
Annual Report on Form 10-K for the year ended December 31, 2002, there is no
action, suit, proceeding, judgment, claim or investigation pending or, to the
best knowledge of the Seller, threatened against the Seller and any of its
Subsidiaries which could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Seller or its Subsidiaries.
There is no action, suit, proceeding, judgment, claim or investigation pending
or, to the best knowledge of the Seller, threatened, which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay any of the
transactions contemplated hereby, and, to the Seller's knowledge, there is no
basis for the assertion of any of the foregoing. There are no claims or
complaints existing or, to the knowledge of the Seller or its Subsidiaries,
threatened for product liability in respect of any

                                       8


product of the Seller or its Subsidiaries, and the Seller and its Subsidiaries
are not aware of any basis for the assertion of any such claim.

         3.11     ABSENCE OF CERTAIN CHANGES. Since December 31, 2002, the
Seller has conducted its business only in the ordinary course and there has not
occurred, except as set forth in the Recent Reports:

                  (a)      Any event that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Seller or any of its Subsidiaries;

                  (b)      Any amendments or changes in the Charter or Bylaws of
the Seller and its Subsidiaries, other than on account of the filing of the
Certificate of Designation;

                  (c)      Any damage, destruction or loss, whether or not
covered by insurance, that would, individually or in the aggregate, have a
Material Adverse Effect on the Seller and its Subsidiaries;

                  (d)      Any

                           (i)      incurrence, assumption or guarantee by the
                                    Seller or its Subsidiaries of any debt for
                                    borrowed money (other than for equipment
                                    leases or working capital lines of credit);

                           (ii)     issuance or sale of any securities
                                    convertible into or exchangeable for
                                    securities of the Seller other than to
                                    directors, employees and consultants
                                    pursuant to existing equity compensation or
                                    stock purchase plans of the Seller in
                                    accordance with past business practices;

                           (iii)    issuance or sale of options or other rights
                                    to acquire from the Seller or its
                                    Subsidiaries, directly or indirectly,
                                    securities of the Seller or any securities
                                    convertible into or exchangeable for any
                                    such securities, other than options issued
                                    to directors, employees and consultants in
                                    the ordinary course of business pursuant to
                                    existing equity compensation or stock
                                    purchase plans of the Seller in accordance
                                    with past practices;

                           (iv)     issuance or sale of any stock, bond or other
                                    corporate security;

                           (v)      declaration or making any dividend, payment
                                    or other distribution to shareholders or
                                    purchase or redemption of any share of its
                                    capital stock or other security;

                           (vi)     sale, assignment or transfer any of its
                                    intangible assets except in the ordinary
                                    course of business, or cancellation of any
                                    debt or claim except in the ordinary course
                                    of business all in accordance with past
                                    practices;

                                       9


                           (vii)    waiver of any right of substantial value
                                    whether or not in the ordinary course of
                                    business;

                           (viii)   material change in officer compensation; or

                           (ix)     other commitment (contingent or otherwise)
                                    to do any of the foregoing.

                  (e)      Any creation, sufferance or assumption by the Seller
or any of its Subsidiaries of any Lien on any asset or any making of any loan,
advance or capital contribution to or investment in any Person in an aggregate
amount which exceeds $25,000 outstanding at any time;

                  (f)      Any entry into, amendment of, relinquishment,
termination or non-renewal by the Seller or its Subsidiaries of any material
contract, license, lease, transaction, commitment or other right or obligation,
other than in the ordinary course of business; or

                  (g)      Any transfer or grant of a right with respect to the
patents, patent applications, patent licenses, trademarks, trade names, service
marks, trade secrets, copyrights or other intellectual property rights owned or
licensed by the Seller or its Subsidiaries, except as among the Seller and its
Subsidiaries.

         3.12     NO UNDISCLOSED LIABILITIES. The Seller and its Subsidiaries do
not have any direct or indirect indebtedness, liabilities, claim, loss, damage,
deficiency, obligation or responsibility, known or unknown, fixed or unfixed,
choate or inchoate, liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise, whether or not of a kind required by GAAP to
be set forth in financial statements, including but not limited to off-balance
sheet financings, guarantees and similar transactions ("Liabilities") which are
not fully and adequately reflected in the Financial Statements. To the knowledge
of the Seller, there are no existing circumstances, conditions, events or
arrangements which may hereafter give rise to any Liabilities of the Seller or
its Subsidiaries except in the ordinary course of business.

         3.13     TAXES. All tax returns and tax reports required to be filed
with respect to the income, operations, business or assets of the Seller and its
Subsidiaries have been timely filed (or appropriate extensions have been
obtained) with the appropriate governmental agencies in all jurisdictions in
which such returns and reports are required to be filed, and all of the
foregoing as filed are correct and complete and, in all material respects,
reflect accurately all liability for taxes of the Seller and its Subsidiaries
for the periods to which such returns relate, and all amounts shown as owing
thereon have been paid. All income, profits, franchise, sales, use, value added,
occupancy, property, excise, payroll, withholding, FICA, FUTA and other taxes
(including interest and penalties), if any, collectible or payable by the Seller
and its Subsidiaries or relating to or chargeable against any of its material
assets, revenues or income or relating to any employee, independent contractor,
creditor, stockholder or other third party through the Closing Date, were fully
collected and paid by such date if due by such date or provided for by adequate
reserves in the Financial Statements as of and for the periods ended December
31, 2002 (other than taxes accruing after such date) and all similar items due
through the Closing Date will have been fully paid by that date or provided for
by adequate reserves, whether or not any such taxes

                                       10


were reported or reflected in any tax returns or filings. No taxation authority
has sought to audit the records of the Seller or any of its Subsidiaries for the
purpose of verifying or disputing any tax returns, reports or related
information and disclosures provided to such taxation authority, or for the
Seller's or any of its Subsidiaries' alleged failure to provide any such tax
returns, reports or related information and disclosure. To the knowledge of
Seller and its Subsidiaries, no material claims or deficiencies have been
asserted against or inquiries raised with the Seller or any of its Subsidiaries
with respect to any taxes or other governmental charges or levies which have not
been paid or otherwise satisfied, including claims that, or inquiries whether,
the Seller or any of its Subsidiaries has not filed a tax return that it was
required to file, and there exists no reasonable basis for the making of any
such claims or inquiries. Neither the Seller nor any of its Subsidiaries has
waived any restrictions on assessment or collection of taxes or consented to the
extension of any statute of limitations relating to taxation. Neither the Seller
nor any of its Subsidiaries is a party to any tax sharing or indemnification
agreement, and none of them is liable for the taxes of any other Person (other
than Subsidiaries) whether as a transferee, successor, by contract or otherwise.

         3.14     INTERESTS OF OFFICERS, DIRECTORS AND OTHER AFFILIATES. The
description of any material interest held, directly or indirectly, by any
officer, director or other Affiliate of Seller in any property, real or
personal, tangible or intangible, used in or pertaining to Seller's business,
including any interest in the Seller's Intellectual Property (as defined in
Section 3.15 hereof), as set forth in the Recent Reports, is true and complete,
and no officer, director or, to the Seller's knowledge, other Affiliate of the
Seller has any interest in any property, real or personal, tangible or
intangible, used in or pertaining to the Seller's business, including the
Seller's Intellectual Property, other than as set forth in the Recent Reports.

         3.15     INTELLECTUAL PROPERTY. Other than as set forth in the Recent
Reports: (a) the Seller or a Subsidiary thereof has the right to use or is the
sole and exclusive owner of all right, title and interest in and to all foreign
and domestic patents, patent rights, patent applications, trademarks, service
marks, trade names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) owned, used or
controlled by the Seller and its Subsidiaries (collectively, the "Rights") and
in and to each material invention, software, trade secret, technology, product,
composition, formula, method of process used by the Seller and any intangible
property and assets that are material to the business of the Seller or its
Subsidiaries (the Rights and such other items, the "Intellectual Property"), and
has the right to use the same, free and clear of any claim or conflict with the
rights of others; (b) no royalties or fees (license or otherwise) are payable by
the Seller or its Subsidiaries to any Person by reason of the ownership or use
of any of the Intellectual Property except as set forth on Schedule 3.15; (c) to
the Seller's knowledge, there have been no claims made against the Seller or any
Subsidiary asserting the invalidity, abuse, misuse, or unenforceability of any
of the Intellectual Property, and, to each of their knowledge, there are no
reasonable grounds for any such claims; (d) neither the Seller nor any
subsidiary has made any claim of any violation or infringement by others of its
rights in the Intellectual Property, and to the best of their knowledge, no
reasonable grounds for such claims exist; and (e) neither the Seller nor any
Subsidiary has received any notice that it is in conflict with or infringing
upon the asserted rights of others in connection with the Intellectual Property,
and to the best of their knowledge, no reasonable grounds for such claims exist.
Each of the Seller and its Subsidiaries has taken security measures designed to
enable it to assert trade secret protection in its non-patented technology.

                                       11


         3.16     RESTRICTIONS ON BUSINESS ACTIVITIES. Other than as set forth
in the Recent Reports, there is no agreement, judgment, injunction, order or
decree binding upon the Seller or its Subsidiaries which has or could reasonably
be expected to have the effect of prohibiting or materially impairing any
business practice of the Seller or its Subsidiaries, any acquisition of property
by the Seller or its Subsidiaries or the conduct of business by the Seller or
its Subsidiaries as currently conducted or as currently proposed to be conducted
by the Seller.

         3.17     PREEMPTIVE RIGHTS. No Person possesses any preemptive rights,
registration rights or anti-dilution rights, in respect of the Preferred Stock
or the Conversion Shares or Warrant Shares to be issued to the Purchasers upon
conversion of the Preferred Stock or exercise of the Warrants, or the Dividend
Shares, if any, issuable (at the Seller's election) in payment of dividends on
the Preferred Stock, as applicable.

         3.18     INSURANCE. The insurance policies providing insurance coverage
to the Seller or its Subsidiaries, including for product liability, provide
adequate and customary coverage for the business conducted by the Seller and its
Subsidiaries and are sufficient for compliance by the Seller and its
Subsidiaries with all requirements of law and all material agreements to which
the Seller or its Subsidiaries are a party or by which any of their assets are
bound. All of such policies are with financially sound and reputable insurers
having an "A" rating or better from Best's Rating Service (or any successor
thereto), are in full force and effect and are valid and enforceable in
accordance with their terms, and the Seller and its Subsidiaries have complied
with all material terms and conditions of such policies, including premium
payments. None of the insurance carriers has indicated to the Seller or its
Subsidiaries an intention to cancel any such policy.

         3.19     SUBSIDIARIES AND INVESTMENTS. Except as set forth in the
Recent Reports or on Schedule 3.19, the Seller has no Subsidiaries or
Investments. For purposes of this Agreement, the term "Investments" shall mean,
with respect to any Person, all advances, loans or extensions of credit to any
other Person, all purchases or commitments to purchase any stock, bonds, notes,
debentures or other securities of any other Person, and any other investment in
any other Person, including partnerships or joint ventures (whether by capital
contribution or otherwise) or other similar arrangement (whether written or
oral) with any Person, including but not limited to arrangements in which (i)
the Person shares profits and losses, (ii) any such other Person has the right
to obligate or bind the Person to any third party, or (iii) the Person may be
wholly or partially liable for the debts or obligations of such partnership,
joint venture or other arrangement.

         3.20     CAPITALIZATION. The authorized capital stock of the Seller
consists of 50,000,000 shares of common stock, $0.001 par value per share, of
which 3,109,701 shares are issued and outstanding as of the date hereof, and
5,000,000 shares of preferred stock, issuable in one or more classes or series,
with such relative rights and preferences as the Board of Directors may
determine, none of which has been authorized for issuance or designated and
provided with terms, other than as follows:

                  400 shares have been designated 5% Series A Preferred Stock,
                           of which no shares are outstanding and as to which
                           there is no obligation (including any contingent
                           obligation) to issue any such shares;

                                       12


                  200,000 shares have been designated Series B Junior
                           participating Preferred Stock, of which no shares are
                           outstanding and as to which there is no obligation
                           (including any contingent obligation) to issue any
                           such shares, other than pursuant to the Rights
                           Agreement by and between the Seller and U.S. Stock
                           Transfer Corporation (the "Rights Plan");

                  200 shares have been designated 7% Series C Preferred Stock,
                           of which no shares are outstanding and as to which
                           there is no obligation (including any contingent
                           obligation) to issue any such shares;

                  A number of shares equal to the number set forth on Schedule 1
                           hereto will be, immediately prior to the Closing of
                           this Agreement, designated as the Series D 8%
                           Cumulative Convertible Voting Preferred Stock, of
                           which no shares are issued and outstanding
                           immediately prior to the execution of this Agreement.

All shares of the Seller's issued and outstanding capital stock have been duly
authorized, are validly issued and outstanding, and are fully paid and
nonassessable. No securities issued by the Seller from January 1, 2000, to the
date hereof were issued in violation of any statutory, contractual or common law
preemptive rights. There are no dividends which have accrued or been declared
but are unpaid on the capital stock of the Seller. All taxes required to be paid
by Seller in connection with the issuance and any transfers of the Seller's
capital stock have been paid. All permits or authorizations required to be
obtained from or registrations required to be effected with any Person in
connection with any and all issuances of securities of the Seller from January
1, 2000, to the date hereof have been obtained or effected, and all securities
of the Seller issued on or after January 1, 2000, have been issued in accordance
with the provisions of all applicable securities or other laws.

         3.21     OPTIONS, WARRANTS, RIGHTS. Except as set forth on Schedule
3.21, there are no outstanding (a) securities, notes or instruments convertible
into or exercisable for any of the capital stock or other equity interests of
the Seller or its Subsidiaries; (b) options, warrants, subscriptions or other
rights to acquire capital stock or other equity interests of the Seller or its
Subsidiaries; or (c) commitments, agreements or understandings of any kind,
including employee benefit arrangements, relating to the issuance or repurchase
by the Seller or its Subsidiaries of any capital stock or other equity interests
of the Seller or its Subsidiaries, any such securities or instruments
convertible into or exercisable for securities or any such options, warrants or
rights. Other than the rights of the Purchasers under the Preferred Stock and
the Warrants, and except as set forth on Schedule 3.21, neither the Seller nor
any Subsidiary has granted anti-dilution rights to any person or entity in
connection with any option, warrant, subscription or any other instrument
convertible into or exercisable for the securities of the Seller or any of its
Subsidiaries. Other than the rights granted to the Purchasers under the
Registration Rights Agreement, there are no outstanding rights which permit the
holder thereof to cause the Seller or the Subsidiaries to file a registration
statement under the Securities Act or which permit the holder thereof to include
securities of the Seller or any of its Subsidiaries in a registration statement
filed by the Seller or any of its Subsidiaries under the Securities Act, and
there are no outstanding agreements or other commitments which otherwise relate
to the registration of any

                                       13


securities of the Seller or any of its Subsidiaries for sale or distribution in
any jurisdiction, except as set forth on Schedule 3.21.

         3.22     EMPLOYEES, EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in the Recent Reports or on Schedule 3.22, there are no
employment, consulting, severance or indemnification arrangements, agreements,
or understandings between the Seller or its Subsidiaries and any officer,
director, consultant or employee of the Seller or its Subsidiaries (the
"Employment Agreements"). No Employment Agreement provides for the acceleration
or change in the award, grant, vesting or determination of options, warrants,
rights, severance payments, or other contingent obligations of any nature
whatsoever of the Seller or its Subsidiaries in favor of any such parties in
connection with the transactions contemplated by this Agreement. Except as
disclosed in the Recent Reports or on Schedule 3.22, the terms of employment or
engagement of all directors, officers, employees, agents, consultants and
professional advisors of the Seller and its Subsidiaries are such that their
employment or engagement may be terminated upon not more than two weeks' notice
given at any time without liability for payment of compensation or damages and
the Seller and its Subsidiaries have not entered into any agreement or
arrangement for the management of their business or any part thereof other than
with their directors or employees.

                  (b)      Except as set forth on Schedule 3.22, the Seller and
its Subsidiaries have no pension, retirement, stock purchase, stock bonus, stock
ownership, stock option, profit sharing, savings, medical, disability,
hospitalization, insurance, deferred compensation, bonus, incentive, welfare or
any other employee benefit plan, policy, agreement, commitment, arrangement or
practice currently or previously maintained or contributed to by the Seller or
its Subsidiaries for any of its directors, officers, consultants, employees or
former employees (the "Seller Plans"). The Seller has previously made available
to Purchaser, to the extent applicable, (i) a true and complete copy of all of
the Seller Plans (or, if oral, a true and complete written summary thereof);
(ii) a current summary plan description (plus summaries of any subsequent
modifications thereto) for each Seller Plan; (iii) the latest IRS determination
letter obtained with respect to any Seller Plan qualified under Section 401 or
501 of the Code; and (iv) Forms 5500 for the last three (3) plan years for each
Seller Plan required to file such form. Except as set forth on Schedule 3.22,
none of the Seller Plans is subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and, except as set forth on Schedule 3.22,
neither the Seller nor any of its Subsidiaries has established, maintained, made
or been required to make any contributions to, or terminated, and has no
liability with respect to, any "employee benefit plan" within the meaning of
ERISA. The Seller and its Subsidiaries have not incurred any liability to the
Pension Benefit Guaranty Corporation (the "PBGC"), and, to the Seller's
knowledge, no facts or circumstances exist which might give rise to any
liability of the Seller or its Subsidiaries to the PBGC or which could
reasonably be anticipated to result in any claims being made against the
Purchaser, the Seller or their Subsidiaries by the PBGC. To the Seller's
knowledge, no facts or circumstances exist which might give rise to any
liability of any Seller Plan to any other Person, other than in the ordinary
course of the Seller's business. The Seller and its Subsidiaries have paid all
amounts required under applicable law and any Seller Plan to be paid as a
contribution to any Seller Plan through the date hereof. The Seller has set
aside adequate reserves to meet contributions which are not yet due under any
Seller Plan. Neither the Seller, nor its Subsidiaries nor, to the Seller's
knowledge, any other Person has engaged in any transaction with respect to any
Seller Plan which would subject the Seller to any tax, penalty or

                                       14


liability for prohibited transactions. No director, officer or employee of the
Seller or its Subsidiaries, to the extent he or she is a fiduciary with respect
to any Seller Plan, has breached any of his/her responsibilities or obligations
imposed upon fiduciaries or which could result in any claim being made under, by
or on behalf of any Seller Plan. No Seller Plan provides post-employment
medical, health, or life insurance benefits for present or future retirees or
present or future terminated employees, except for continuation coverage
provided pursuant to the requirements of Section 4980B of the Code or Sections
601-608 of ERISA or a similar state law.

                  (c)      No material labor dispute with employees of the
Seller exists or, to the best knowledge of the Seller is imminent.

         3.23     ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Seller, nor
any Affiliate of the Seller (including, but not limited to, its Subsidiaries),
nor any agent or employee of the Seller, any other Person acting on behalf of or
associated with the Seller, or any individual related to any of the foregoing
Persons, acting on behalf of the Seller alone or together, has: (a) received,
directly or indirectly, any rebates, payments, commissions, promotional
allowances or any other economic benefits, regardless of their nature or type,
from any customer, supplier, trading company, shipping company, governmental
employee or other Person with whom the Seller or its Subsidiaries has done
business directly or indirectly; or (b) directly or indirectly, given or agreed
to give any gift or similar benefit to any customer, supplier, trading company,
shipping company, governmental employee or other Person who is or may be in a
position to help or hinder the business of the Seller or its Subsidiaries (or
assist the Seller or its Subsidiaries in connection with any actual or proposed
transaction) which (i) may subject the Seller or its Subsidiaries to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, may have had an adverse effect on the Seller or its
Subsidiaries or (iii) if not continued in the future, may adversely affect the
assets, business, operations or prospects of the Seller or its Subsidiaries or
subject the Seller or its Subsidiaries to suit or penalty in any private or
governmental litigation or proceeding.

         3.24     PRODUCTS AND SERVICES. There exists no set of facts (i) which
could furnish a basis for the withdrawal, suspension or cancellation of any
registration, license, permit or other governmental approval or consent of any
governmental or regulatory agency issued to the Seller with respect to any
component of any product being developed by, or that is material to and used by,
the Seller or its Subsidiaries, or (ii) which could have a Material Adverse
Effect on the continued development of any product candidate of the Seller or
its Subsidiaries or which could otherwise cause the Seller or its Subsidiaries
to withdraw, suspend or cancel development of any such product, it being
understood that the Seller is not presently offering any product or service for
sale and has never in the past offered any product or service for sale, and that
the Seller's product candidates will require, before they can be offered for
commercial sale, certain governmental or regulatory licenses, permits or
approvals which have not been issued.

         3.25     ENVIRONMENTAL MATTERS. None of the premises or any other
property owned, occupied or leased by the Seller or its Subsidiaries (the
"Premises") in the past has been used by the Seller or its Subsidiaries, or to
the Seller's knowledge, by any other Person, to manufacture, treat, utilize,
store, or dispose of any waste, pollutant or toxic or hazardous substance
(including, without limitation, asbestos, radioactive material and pesticides)
or any other substance that has been designated to be a "hazardous substance"
under Environmental Laws ("Hazardous

                                       15


Substances") other than substances customarily used in the Seller's or its
Subsidiaries' businesses and in accordance with applications laws and
regulations. The Seller and its Subsidiaries have not disposed of, discharged,
emitted or released any Hazardous Substances which would require, under
applicable Environmental Laws, remediation, investigation or similar response
activity. No Hazardous Substances are present as a result of the actions of the
Seller or its Subsidiaries or, to the Seller's or its Subsidiaries' knowledge,
any other Person, in, on or under the Premises which would give rise to any
liability or clean-up obligations of the Seller or its Subsidiaries under
applicable Environmental Laws. The Seller and its Subsidiaries and, to the
Seller's and its Subsidiaries' knowledge, any other Person for whose conduct it
may be responsible, are in material compliance with all laws, regulations and
other federal, state or local governmental requirements, and all applicable
judgments, orders, writs, notices, decrees, permits, licenses, approvals,
consents or injunctions in effect on the applicable Closing Date relating to the
generation, management, handling, transportation, treatment, disposal, storage,
delivery, discharge, release or emission of any waste, pollutant or toxic or
hazardous substance (including, without limitation, asbestos, radioactive
material and pesticides) or to any other actions, omissions or conditions
affecting the environment (the "Environmental Laws"). Neither the Seller nor its
Subsidiaries nor, to the Seller's or its Subsidiaries' knowledge, any other
Person for whose conduct it may be responsible has received any complaint,
notice, order, or citation of any actual, threatened or alleged noncompliance
with any of the Environmental Laws, and there is no proceeding, suit or
investigation pending or, to the Seller's or its Subsidiaries knowledge,
threatened against the Seller or its Subsidiaries or any such Person with
respect to any violation or alleged violation of the Environmental Laws, and
there is no basis for the institution of any such proceeding, suit or
investigation.

         3.26     LICENSES; COMPLIANCE WITH FDA AND OTHER REGULATORY
REQUIREMENTS.

                  (a)      GENERAL. The Seller and its Subsidiaries hold all
authorizations, consents, approvals, franchises, licenses and permits required
under applicable law or regulation for the operation of the business of the
Seller and its Subsidiaries as presently operated (the "Governmental
Authorizations"). All the Governmental Authorizations have been duly issued or
obtained and are in full force and effect, and the Seller and its Subsidiaries
are in compliance with the terms of all the Governmental Authorizations. The
Seller and its Subsidiaries have not engaged in any activity that could cause
revocation or suspension of any such Governmental Authorizations. The Seller and
its Subsidiaries have no knowledge of any facts which could reasonably be
expected to cause them to believe that the Governmental Authorizations will not
be renewed by the appropriate governmental authorities in the ordinary course.
Neither the execution, delivery nor performance of this Agreement will adversely
affect the status of any of the Governmental Authorizations.

                  (b)      FDA. Without limiting the generality of the
representations and warranties made in paragraph (a) above, the Seller
represents and warrants that (i) the Seller and each of its Subsidiaries is in
compliance in all material respects with all applicable provisions of the United
States Federal Food, Drug, and Cosmetic Act (the "FDC Act"), (ii) the Seller and
each of its Subsidiaries is in compliance with the following specific
requirements: (A) all of the products used by the Seller and its Subsidiaries
comply in all material respects with any conditions of approval and the terms of
the applications, if any, submitted by or on behalf of the Seller to the United
States Food and Drug Administration (the "FDA"); (B) all adverse events

                                       16


that were required to be reported by Seller or its Subsidiaries to the FDA have
been reported to the FDA in a timely manner; (C) neither the Seller nor any of
its Subsidiaries is, to their knowledge, employing or utilizing the services of
any individual who has been debarred under the FDC Act; (D) all stability
studies required to be performed by or on behalf of the Seller for products used
by the Seller or any of its Subsidiaries have been completed or are ongoing in
accordance with the applicable FDA requirements; and (E) any substances exported
by the Seller or any of its Subsidiaries have been exported in compliance in all
material respects with the FDC Act. Without limiting the general liability of
the representations and warranties made in paragraph (a) above, the Seller and
its Subsidiaries are in compliance in all material respects with all applicable
provisions of the Controlled Substances Act.

         3.27     BROKERS. Except as set forth in Schedule 3.27 hereto, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement, based upon any arrangement made by or on behalf of the Seller or any
of its Affiliates.

         3.28     SECURITIES LAWS. Neither the Seller nor its Subsidiaries nor
any agent acting on behalf of the Seller or its Subsidiaries has taken or will
take any action which might cause this Agreement or any of the Securities to
violate the Securities Act or the Exchange Act or any rules or regulations
promulgated thereunder, or any applicable state securities laws, as in effect on
the Closing Date. All offers and sales of capital stock, securities and notes of
the Seller were conducted and completed in compliance with the Securities Act,
the rules and regulations promulgated thereunder and applicable state securities
laws. All shares of capital stock and other securities issued by the Seller and
its Subsidiaries prior to the date hereof have been issued in transactions that
were either registered offerings or were exempt from the registration
requirements under the Securities Act and all applicable state securities or
state securities laws and in compliance with all applicable corporate laws.

         3.29     DISCLOSURE. No representation or warranty made by the Seller
in this Agreement, nor in any document, written information, financial
statement, certificate, schedule or exhibit prepared and furnished by the Seller
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
furnished.

         3.30     CHANGE IN CONTROL. Assuming that there are no contractual
agreements (other than this Agreement) among any two or more of the Purchasers
with respect to the purchase, sale or other disposition, or voting of the equity
securities of the Company, the execution, delivery and performance of this
Agreement and the Related Documents, and the consummation of the transactions
contemplated hereby and thereby (including the conversion of some or all of the
Preferred Stock, the exercise of some or all of the Warrants and the issuance of
the Conversion Shares, Dividend Shares and Warrant Shares) do not and will not
constitute a change in control under or give rise to a right of termination,
cancellation, severance or similar payments, or acceleration or loss of any
benefit under any material agreement, contract or other instrument binding upon
the Seller or any of its Subsidiaries, under any material license, franchise,
permit or other similar authorization held by the Seller or any of its
Subsidiaries or under any agreement or

                                       17


arrangement between the Seller or any of its Subsidiaries and their directors,
officers, employees or consultants.

         3.31     APPLICATION OF TAKEOVER PROTECTION. The Seller and its board
of directors have taken all necessary action in order to render inapplicable,
and have rendered inapplicable, any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti- takeover provision under the Charter, the By-laws, the
laws of the state of its incorporation or any rights plan or similar arrangement
which is or could become applicable as a result of the transactions contemplated
by this Agreement, including, without limitation, the Seller's issuance of the
Securities and the Purchasers' ownership of the Preferred Stock, the Warrants,
the Conversion Shares, the Dividend Shares or the Warrant Shares.

         3.32     NASDAQ COMPLIANCE. The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act, and is listed on the Nasdaq SmallCap Market
(the "Nasdaq Stock Market"), and the Seller has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq Stock Market. The issuance of the Securities does not
require stockholder approval, including, without limitation, pursuant to the
Nasdaq Marketplace Rules as in effect on the Closing Date, including without
limitation all Interpretive Materials issued on or before the Closing Date. No
order ceasing or suspending trading in any securities of Seller or prohibiting
the issuance and/or sale of the Preferred Stock, Warrants, Conversion Shares,
Dividend Shares or Warrant Shares is in effect and no proceedings for such
purpose are pending or, to the Seller's knowledge, threatened.

         3.33     MATERIAL CONTRACTS. Each of the Seller's and its Subsidiaries
material contracts (which, for purposes of this Agreement, means any agreement,
contract or other document which the Seller would be required to disclose
pursuant to SEC Regulation S-K, Item 601, Exhibits 1, 2, 3, 4, 9 or 10) are
listed as exhibits to the Recent Reports and are in full force and effect on the
date hereof, and none of the Seller, its Subsidiaries nor, to the Seller's or
any Subsidiary's knowledge, any other party to such contracts is in breach of or
default under any of such contracts. The Seller is not required to file and will
not be required to file any agreement, note, lease, mortgage, deed or other
instrument entered into by the Seller or any Subsidiary prior to the date hereof
which has not been previously filed as an exhibit to its Recent Reports.

         3.34     TITLE TO AND CONDITION OF PERSONAL PROPERTY; NO LIENS. The
Seller and its Subsidiaries have good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of their
tangible properties and assets, real, personal and mixed, used in their
business, free and clear of any Liens, except as set forth on Schedule 3.34. All
tangible personal property owned by the Seller and its Subsidiaries is in good
operating condition and in a good state of maintenance and repair, and is
adequate for the business conducted and proposed to be conducted by the Seller
and its Subsidiaries. Except for the Leases specifically identified in Schedule
3.34, there are no assets owned by any third party which are material to the
operation of the business of the Seller or its Subsidiaries, as presently
conducted or proposed to be conducted.

                                       18


          ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

                  Each Purchaser, for itself, hereby severally, and not jointly,
represents and warrants to the Seller as follows:

         4.1      EXISTENCE AND POWER. The Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of such
Purchaser's organization. The Purchaser has all powers required to carry on such
Purchaser's business as now conducted.

         4.2      AUTHORIZATION. The execution, delivery and performance by the
Purchaser of this Agreement, the Related Documents to which such Purchaser is a
party, and the consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized, and no additional action is required for the
approval of this Agreement. This Agreement and the Related Documents to which
the Purchaser is a party have been or, to the extent contemplated hereby, will
be duly executed and delivered and constitute valid and binding agreements of
the Purchaser, enforceable against such Purchaser in accordance with their
terms, except as may be limited by bankruptcy, reorganization, insolvency,
moratorium and similar laws of general application relating to or affecting the
enforcement of rights of creditors and except that enforceability of their
obligations thereunder are subject to general principles of equity.

         4.3      INVESTMENT. The Purchaser is acquiring the Securities for its
own account for investment and not with a view to, or for sale in connection
with, any distribution thereof, nor with the intention of distributing or
reselling the same, provided, however, that by making the representation herein,
the Purchaser does not agree to hold any of the securities for any minimum or
other specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an exemption
under the Securities Act. The Purchaser is aware that none of the Securities has
been registered under the Securities Act or under applicable state securities or
blue sky laws. The Purchaser is an "Accredited Investor" as such term is defined
in Rule 501 of Regulation D, as promulgated under the Securities Act.

         4.4      NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Purchaser is subject or any provision of
its charter or bylaws or other similar governing instruments.

         4.5      NO REGISTRATION. The Purchaser understands that the Preferred
Stock and Warrants are being offered and sold to such Purchaser in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Seller is relying upon the truth and
accuracy of, and such Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Securities.

         4.6      BUSINESS OR FINANCIAL EXPERTISE; QUALIFIED INSTITUTIONAL
BUYER. Purchaser has, by reason of Purchaser's business or financial expertise
or the business or financial experience of its professional advisors who are
unaffiliated with and who are not, to such Purchaser's

                                       19


knowledge, compensated by the Seller or any affiliate or selling agent of the
Seller, directly or indirectly, the capacity to protect its own interests in
connection with its acquisition of the Securities. If the Purchaser is
identified on Schedule 1 as being a "qualified institutional buyer," such
Purchaser is a "qualified institutional buyer" as defined in Rule 144A
promulgated under the Securities Act. Purchaser has had the opportunity to ask
questions about the Seller's business affairs and financial condition, and has
acquired sufficient information about the Seller to reach an informed and
knowledgeable decision to acquire the Securities.

         4.7      BROKERS' FEES. Purchaser has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated; without limiting the generality of the foregoing, the
Purchaser understands that certain fees payable in the form of cash and warrants
will be paid by the Seller to SCO Group in accordance with agreements between
the Seller and SCO Group.

               ARTICLE V - COVENANTS OF THE SELLER AND PURCHASERS

         5.1      INSURANCE. The Seller and its Subsidiaries shall maintain
insurance coverage which is adequate and customary coverage for the business in
which the Seller and its Subsidiaries shall then be engaged in. The Seller and
its Subsidiaries shall, from time to time upon the written request of the
Purchasers, promptly furnish or cause to be furnished to the Seller evidence, in
form and substance reasonably satisfactory to the Purchasers, of the maintenance
of all insurance maintained by it for loss or damage by fire and other hazards,
damage or injury to persons and property, including from product liability, and
under workmen's compensation laws.

         5.2      REPORTING OBLIGATIONS. So long as at least 60 shares of
Preferred Stock are outstanding, and so long as Warrants are outstanding under
which more than 700,000 shares of Common Stock may be acquired, the Seller shall
furnish to the Purchasers, or any other persons who hold any of the Preferred
Stock or Warrants (provided that such holders give notice to the Seller that
they hold Preferred Stock or Warrants and furnish their addresses) promptly upon
their becoming available one copy of each report, notice or proxy statement sent
by the Seller to its stockholders generally, and of each regular or periodic
report (pursuant to the Exchange Act) and any registration statement, prospectus
or written communication other than transmittal letters (pursuant to the
Securities Act) relating to the Conversion Shares, the Dividend Shares and the
Warrant Shares and filed by the Seller with (i) the Commission or (ii) any
securities exchange on which shares of Common Stock are listed, provided,
however, that the Seller shall not be required to deliver any report filed and
available through the SEC's EDGAR website. To the extent that the Seller is no
longer required to provide information pursuant to the Exchange Act, the Seller
shall provide the Purchasers with (i) within 45 days after the close of each
fiscal quarter in each fiscal year of the Seller an unaudited consolidated
balance sheet of the Seller, a consolidated statement of income of the Seller,
and a consolidated statement of cash flows of the Seller, as at the end of and
for the period commencing at the end of the previous fiscal year and ending with
such month, prepared in accordance with GAAP, subject to normal year-end
adjustments and complete notes thereto; and (ii) within 90 days after the close
of each fiscal year then ended of the Seller a consolidated balance sheet of the
Seller, a consolidated statement of income of the Seller, and a consolidated
statement of cash flows of the Seller, as at the end of

                                       20


and for the fiscal year then ended, setting forth the corresponding figures of
the previous fiscal year in comparative form, and certified (without any
qualification or exception reasonably deemed material by the Purchasers, other
than a qualification as to the going-concern status of the Seller or the
unavailability of Arthur Anderson LLP) by the independent certified public
accountants of the Seller.

         5.3      INVESTIGATION. The representations, warranties, covenants and
agreements set forth in this Agreement shall not be affected or diminished in
any way by any investigation (or failure to investigate) at any time by or on
behalf of the party for whose benefit such representations, warranties,
covenants and agreements were made. Without limiting the generality of the
foregoing, the inability or failure of the Purchasers to discover any breach,
default or misrepresentation by the Seller under this Agreement or the Related
Documents (including under any certificate furnished pursuant to this Agreement)
shall not in any way diminish any liability hereunder.

         5.4      PUBLIC ANNOUNCEMENTS. Neither the Purchasers nor the Seller
shall (and each such party shall use its reasonable efforts to cause its
Subsidiaries, Affiliates, directors, officers, employees and authorized
representatives not to), issue any press release, make any public announcement
or furnish any written statement to its employees or stockholders generally
concerning the transactions contemplated by this Agreement without the consent
of the other party (which consent shall not be unreasonably withheld), except to
the extent required by applicable law or the applicable requirements of
applicable stock exchange rules (including Nasdaq) or as otherwise contemplated
herein (and in either such case such party shall, to the extent consistent with
timely compliance with such requirement, consult with the other party prior to
making the required release, announcement or statement). Notwithstanding the
foregoing, the Seller shall, promptly after the Closing, issue a press release
disclosing the transactions contemplated hereby.

         5.5      USE OF PROCEEDS. The Seller covenants and agrees that the
proceeds of the Purchase Price shall be used by the Seller for working capital
and general corporate purposes.

         5.6      CORPORATE EXISTENCE. So long as a Purchaser owns Preferred
Stock, Warrants, Conversion Shares, Dividend Shares or Warrant Shares, the
Seller shall preserve and maintain and cause its Subsidiaries to preserve and
maintain their corporate existence and good standing in the jurisdiction of
their incorporation and the rights, privileges and franchises of the Seller and
its Subsidiary in each case where failure to so preserve or maintain could have
a Material Adverse Effect on the financial condition, business or operations of
the Seller and its Subsidiaries taken as a whole.

         5.7      PERFORM COVENANTS. The Seller shall (a) make full and timely
payment of any and all payments on the Preferred Stock, and all other
indebtedness of the Seller to the Purchasers in connection therewith, whether
now existing or hereafter arising, and (b) duly comply with all the terms and
covenants contained herein and in each of the instruments and documents given to
the Purchasers in connection with or pursuant to this Agreement, all at the
times and places and in the manner set forth herein or therein.

                                       21


         5.8      ADDITIONAL COVENANTS. Subject to the limitations set forth in
the last paragraph of this Section 5.8, the Seller covenants and agrees that so
long as 20% of the Preferred Stock issued at the Closing is outstanding, none of
the following actions will take place without the prior written consent of the
holders of a Special Majority (as defined in Section 9.10 hereof) of the
outstanding Preferred Stock, which consent may be withheld for any or no reason:

                  (a)      Any amendment, alteration or repeal of any provision
of the Charter or Bylaws which adversely affects the terms of the Preferred
Stock or the relative rights, preferences and privileges of the Holders of the
Preferred Stock as such holders;

                  (b)      Any amendments or changes to the Rights Plan or the
adoption of any other similar plans or arrangements, provided that nothing
herein shall be deemed to restrict the right of the Seller to redeem all, but
not less than all, of the outstanding Rights (as defined in the Rights Plan) or
otherwise terminate the Rights Plan;

                  (c)      The offer, sale, designation or issuance by the
Seller or any of its Subsidiaries of any equity or debt security senior to or
pari passu with the Preferred Stock in any respect;

                  (d)      The sale or issuance of any shares of Common Stock,
any warrant, option, subscription or purchase right with respect to shares of
Common Stock, any security convertible into, exchangeable for, or otherwise
entitling the holder thereof to acquire shares of Common Stock, or any warrant,
option, subscription or purchase right with respect to any such convertible,
exchangeable or other security at a price below the Conversion Value, other than
(A) options, warrants, and other rights outstanding on the date hereof to
acquire, directly or indirectly, Common Stock, and the Common Stock acquirable
thereunder, and (B) options granted hereafter to any employee, officer, Director
or consultant pursuant to any plan approved by stockholders for the benefit of
employees, officers, Directors and consultants ("Incentive Options"), and the
Common Stock acquirable thereunder, and (C) awards presently outstanding or
hereafter awarded under the Seller's employee stock purchase plan effective as
of January 26, 2001 (the "ESPP"), provided that the aggregate number of shares
of Common Stock acquirable under such Incentive Options and awards under the
ESPP, and the options which may hereafter be issued as disclosed in Schedule
3.21, is not greater than 1,300,000;

                  (e)      The entering into by the Seller or any Subsidiary of
any bank or other non-trade indebtedness for borrowed money;

                  (f)      The granting or making by the Seller or any of its
Subsidiaries of any mortgage or pledge, or the assumption or suffering to exist
on, or the imposition on, any of its material properties or assets any Lien;

                  (g)      The liquidation, dissolution or winding-up of the
Corporation or any of its Subsidiaries or any merger or consolidation of the
Corporation or any of its Subsidiaries with or into another entity or the sale,
conveyance or other disposition of all, or substantially all, the assets,
property or business of the Corporation or any of its Subsidiaries;

                                       22


                  (h)      The reorganization, recapitalization, sale,
conveyance, or other disposition of or encumbrance of all or substantially all
of the property or business of the Corporation or any of its Subsidiaries or the
merger into or consolidation with any other corporation (other than a wholly
owned subsidiary corporation) or effect any transaction or series of related
transactions in which, in any case, more than 20% of the voting power of the
corporation is disposed of;

                  (i)      The redemption, purchase, repurchase or other
acquisition, directly or indirectly, of any shares of capital stock of the
Seller or any of its Subsidiaries or any option, warrant or other right to
purchase or acquire any such shares;

                  (j)      The declaration or payment of any dividend or other
distribution (whether cash, stock or property) with respect to the capital stock
of the Seller, other than the Preferred Stock; and

                  (k)      The taking of any action by the Company with the
primary intent of causing the Common Stock to be delisted from any securities
exchange or quotation system upon which the Common Stock is then listed.

For purposes of this Agreement, "Fair Market Value" shall mean: (i) if the
Common Stock is then listed for trading on a national securities exchange or
through the Nasdaq National Market System or the Nasdaq SmallCap Market, the
closing price of the Common Stock for such Trading Day; (ii) if on the date as
of which Fair Market Value is to be determined the Common Stock is not so
listed, the average of the highest bid and lowest asked prices of the Common
Stock quoted in the Nasdaq OTC Bulletin Board or the over-the-counter-market,
for such Trading Day as reported by Bloomberg Financial, L.P.; or (iii) if on
the date for which Fair Market Value is to be determined the Common Stock is not
listed on any national securities exchange, the Nasdaq National Market System,
the Nasdaq SmallCap or quoted in the Nasdaq System or the over-the-counter
market, the Fair Market Value of Common Stock shall be the highest price per
share which the Corporation could then obtain from a willing buyer (not an
employee or director of the Corporation at the time of determination), under no
compulsion to buy, in an arms'-length for shares of Common Stock sold by the
Corporation, from authorized but unissued shares, as determined in good faith by
the Board of Directors. For purposes of this Agreement, "Trading Day" means a
day on whichever of (x) the national securities exchange, (y) the Nasdaq or (z)
such other securities market, in any such case which at the time constitutes the
principal securities market for the Common Stock, is open for general trading of
securities.

         The restrictions contained in this Section 5.8 shall cease to apply if,
for no less than 20 trading days during any period of 30 consecutive trading
days following the Closing Date, (i) the Fair Market Value (as defined herein)
of the Common Stock exceeds five dollars ($5) per share, (ii) all of the
Conversion Shares, Warrants Shares and Dividend Shares have been duly registered
for sale under an effective registration statement pursuant to the Securities
Act, and such registration statement is effective throughout the aforesaid
30-day period, and (iii) the actual daily trading volume of the Common Stock is
greater than 100,000 shares per day on each day on which the Fair Market Value
is greater than five dollars ($5).

         5.9      LISTING OF SHARES. The Seller shall use its best efforts to
list the Conversion Shares, Dividend Shares and Warrant Shares on each
securities exchange or quotation system

                                       23


upon which the Common Stock may be listed from time to time during the time
period that the Common Stock is listed on such securities exchange or quotation
system.

         5.10     RESERVATION OF SHARES. The Seller shall hereafter take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 100% of the number of shares of Common Stock needed to
provide for the issuance of the shares of Common Stock upon conversion of all
outstanding Preferred Stock and exercise of all outstanding Warrants (without
regard to any limitations on conversions or exercise).

         5.11     INTERNAL ACCOUNTING CONTROLS. The Seller and each of its
Subsidiaries shall maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability and (iii) assets are amortized and depreciated, as applicable, in
accordance with generally accepted accounting principles.

         5.12     FILING OF FORM D. The Seller will timely file Form D in
accordance with the provisions of Regulation D promulgated by the SEC under the
Securities Act.

         5.13     INDEMNIFICATION FOR CLAIMS. The Seller agrees to indemnify and
hold harmless the Purchasers, their Affiliates, each of their officers,
directors, employees and agents and their respective successors and assigns (for
purposes of this subsection 5.13, the "Indemnified Parties"), from and against
any losses, damages, or expenses (net of any related insurance proceeds)
incurred by the Indemnified Parties due to any and all third party actions,
suits, proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal fees and expenses) which are brought by or on behalf of a third
party or any of its successors or assigns claiming a right to participate as a
placement agent, underwriter, financial advisor, finder or broker with respect
to the offering of the Securities pursuant to this Agreement, against any of the
Indemnified Parties, with respect to any act or omission occurring on or before
the Closing Date. The indemnification herein provided shall be provided in the
manner and in accordance with the procedures set forth in Section 7.3 hereof.
The indemnification provided for in this Section 5.13 shall be made
notwithstanding the reference to any underwriting, placement agent, financial
advisory, finder's or broker's agreement in the Schedule to the Representations
and Warranties, and notwithstanding any knowledge or information which the
Purchasers have with respect to any underwriting, placement agent, financial
advisory, finder's or broker's agreement.

         5.14     NO SOLICITATION OF TRANSACTION. Prior to the earlier of (i)
the Closing, or (ii) the termination of this Agreement pursuant to Section 8,
the Seller shall not, and shall use its best efforts to cause its
representatives (other than SCO Financial Group LLC and its affiliates) not to,
directly or indirectly, take any of the following actions with any person other
than the Purchasers without the prior written consent of all the Purchasers: (A)
solicit, initiate, facilitate or encourage, or furnish information with respect
to the Seller, in connection with, any inquiry, proposal or offer with respect
to any equity transaction involving the Seller (an "Alternative Transaction")
(other than the information which the Seller provides to other persons in the
ordinary course of its business consistent with past custom and practice, so
long as the Seller and its shareholders have no reason to believe that the
information may be utilized to evaluate an

                                       24


Alternative Transaction); (B) negotiate, discuss explore or otherwise
communicate or cooperate in any way with any third party with respect to any
Alternative Transaction; or (C) enter into any agreement, arrangement or
understanding with respect to an Alternative Transaction or requiring the Seller
to abandon, terminate or refrain from consummating a transaction with the
Purchasers. The Seller shall, and shall use its best efforts to cause its
representatives (other than SCO Financial Group LLC and its affiliates) to,
notify the Purchasers orally and in writing promptly upon receipt of any
inquiry, offer or proposal with respect to an Alternative Transaction, including
the identity of the party making such inquiry, offer or proposal and stating the
terms thereof. The Seller shall immediately cease any existing discussions or
negotiations with any third party relating to any proposed Alternative
Transaction.

         5.15     CONDUCT OF THE SELLER PENDING CLOSING. The Seller covenants
and agrees that until the earlier of the time of Closing or the termination of
the Agreement pursuant to Section 8, the Seller shall conduct its business only
in the ordinary course consistent with past practice and shall use its
commercially reasonable best efforts to preserve intact its business
organizations and relationships with third parties. Without limiting the
generality of the foregoing, other than as contemplated pursuant to the terms of
this Agreement, without the prior written consent of the Purchasers:

                  (a)      There shall not be any declaration, setting aside or
payment of any dividend or other distribution with respect to any shares of
capital stock of the Seller or any repurchase, redemption or other acquisition
by the Seller of any outstanding shares of its capital stock or of the Seller;

                  (b)      There shall not be any amendment of any term of any
outstanding security of the Seller or any Subsidiary;

                  (c)      There shall not be any transaction or commitment
made, or any contract, agreement or settlement entered into, by (or judgment,
order or decree affecting) the Seller relating to its assets or business
(including the acquisition or disposition of any material amount of assets) or
any relinquishment by the Seller of any contract or other right, other than
transactions, commitments, contracts, agreements or settlements (including
without limitation settlements of litigation and tax proceedings) in the
ordinary course of business and those contemplated by this Agreement;

                  (d)      Except for any change required by reason of a
concurrent change in GAAP, there shall not be any change in any method of
accounting or accounting practice by the Seller;

                  (e)      There shall not be any (i) grant of any severance or
termination pay to (or amendment to any such existing arrangement with) any
director or officer of the Seller, (ii) entering into of any employment,
deferred compensation, supplemental retirement or other similar agreement (or
any amendment to any such existing agreement) with any director or officer of
the Seller, (iii) increase in, or accelerated vesting and/or payment of,
benefits under any existing severance or termination pay policies or employment
agreements of any director or officer of the Seller or (iv) increase in or
enhancement of any rights or features related to

                                       25


compensation, bonus or other benefits payable to directors or officers of the
Seller, in each case, other than in the ordinary course of business consistent
with past practice; or

                  (f)      There shall not be any material tax election made or
changed, any material audit settled or any material amended tax returns filed;

                  (g)      Except as required herein, the Seller will not adopt
any change in its Certificate of Incorporation or by-laws;

                  (h)      The Seller will not adopt a plan or agreement of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Seller;

                  (i)      The Seller will not issue, sell, transfer, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class or series of the Seller;

                  (j)      The Seller will not (A) split, combine, subdivide or
reclassify its outstanding shares of capital stock, or (B) declare, set aside or
pay any dividend or other distribution payable in cash, stock or property with
respect to its capital stock; and

                  (k)      The Seller will not agree or commit to do any of the
foregoing.

         5.16     SUBMISSION TO NASDAQ. Promptly after the execution of this
Agreement, the Seller shall submit to the staff of the Nasdaq Stock Market this
Agreement, the form of Certificate of Designation, form of Series D-1 Warrant,
form of Series D-2 Warrant, form of Placement Agent Warrant and form of
Registration Rights Agreement and shall request confirmation that approval of
the stockholders of the Seller to any or all such agreements, instruments and
securities is not required under any rule, procedure, practice or requirement
with respect to the continued listing of the Seller's Common Stock on the Nasdaq
Stock Market.

                                   ARTICLE VI
                            CONDITIONS TO THE CLOSING

         6.1      CONDITIONS TO OBLIGATIONS OF THE PURCHASERS. The obligations
of the Purchasers are subject to the fulfillment or satisfaction, on and as of
the Closing Date, except as otherwise expressly indicated below or in Section
2.3 hereof, of each of the following conditions (any one or more of which may be
waived by any Purchaser, in its sole discretion, but only with respect to its
investments and only in a writing signed by such Purchaser):

                  (a)      OPINION. The Purchasers shall have received the
opinion of Seller's Counsel, in form and substance reasonably satisfactory to
the Purchasers.

                                       26


                  (b)      PROOF OF FILING. At the Closing, the Seller shall
deliver or cause to be delivered to each of the Purchasers proof of due filing
with the Secretary of State of the State of Delaware of the Certificate of
Designation authorizing the Preferred Stock.

                  (c)      SUPPORTING DOCUMENTS. The Purchasers shall have
received the following:

                           (i)      Such certificates to evidence compliance
with the conditions set forth in this Section 6 as may be reasonably requested
by the Purchasers, executed by the chief executive officer and chief financial
officer of the Seller.

                           (ii)     Certificates of good standing with respect
to the Seller issued by the Secretaries of State of Delaware and California; and
copies of the resolutions of the Seller's Board of Directors approving this
Agreement, the Registration Rights Agreement, the creation and issuance of
Series D Preferred Stock, the filing of the Certificate of Designation and the
transactions, contemplated herein and therein, certified by an appropriate
officer.

                           (iii)    Such additional supporting documentation and
other information with respect to the transactions contemplated by this
Agreement as the Purchasers may reasonably request.

                  (d)      PREFERRED STOCK, WARRANTS. The Seller shall have
executed and delivered certificates evidencing the Preferred Stock and the
Warrants purchased hereby.

                  (e)      REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement shall have been duly executed, and the Seller, its Subsidiaries
and Affiliates shall not be in breach of default of any provision thereof. There
shall not then exist any facts or circumstances which would prevent the Seller
from registering the Registrable Shares (as that term is defined in the
Registration Rights Agreement) in accordance with the Registration Rights
Agreement..

                  (f)      PERFORMANCE; REPRESENTATION AND WARRANTIES.
COVENANTS; REPRESENTATIONS AND WARRANTIES. (i) The Seller shall have performed
and observed in all material respects all of its obligations hereunder required
to be performed by it at or prior to the Closing Date; (ii) the representations
and warranties of the Seller contained in this Agreement and in any certificate
delivered by the Seller pursuant hereto shall be true and correct in all
material respects (except to the extent such representations and warranties
contain a materiality qualification, in which case they shall be true and
correct in all respects) at and as of the Closing Date as if made at and as of
such time (except to the extent expressly made as of an earlier date, in which
case as of such earlier date); and (iii) the Purchasers shall have received a
certificates signed by the chief executive officer and the chief financial
officer to the foregoing effect.

                  (g)      CONSENTS AND WAIVERS. The Seller shall have obtained
all consents or waivers necessary to execute and perform its obligations under
this Agreement, and the documents contemplated herein, to issue the Preferred
Stock and Warrants, and to carry out the transactions contemplated hereby and
thereby. All corporate and other action and governmental filings necessary to
effectuate the terms of this Agreement, the Preferred Stock and Warrants and

                                       27


other agreements and instruments to be executed and to be delivered, or executed
and delivered, by the Seller in connection herewith shall have been made or
taken.

                  (h)      NO MATERIAL ADVERSE CHANGE. There shall not have
been, nor shall there have occurred any event which could result in, a material
adverse change in the business, properties, assets, results of operations, or
condition (financial or otherwise) of the Seller from and after the date of this
Agreement and until the Closing Date.

                  (i)      NO LITIGATION. No litigation, arbitration or other
legal or administrative proceeding against the Seller or its Subsidiaries shall
have been commenced or be pending by or before any court, arbitration panel or
governmental authority or official, and no statute, rule or regulation of any
foreign or domestic, national or local government or agency thereof shall have
been enacted after the date of this Agreement, and no judicial or administrative
decision shall have been rendered which enjoins or prohibits, or seeks to enjoin
or prohibit, the consummation of all or any of the transactions contemplated by
this Agreement.

                  (j)      MANAGEMENT LOCK-UP AGREEMENTS. Each of the directors
and officers of the Registrant has executed a management lock-up agreement in
the form set forth in Exhibit D. Schedule 6.1(j) correctly and completely
identifies all officers and directors of the Seller.

                  (k)      NASDAQ CONFIRMATION. The staff of the Nasdaq Stock
Market shall have verbally confirmed to the Seller that (i) it has reviewed this
Agreement, the form of Certificate of Designation, form of Series D-1 Warrant,
form of Series D-2 Warrant, form of Placement Agent Warrant and form of
Registration Rights Agreement and (ii) on the basis of such review, approval by
the stockholders of the Seller of the issuance of the Preferred Stock, the
Warrants, the Conversion Shares, the Dividend Shares and the Warrant Shares is
not required, and the Seller shall not have received from such staff any oral or
written information or advice contrary to such verbal confirmation

         6.2      CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of
the Seller hereunder with respect to each Purchaser are subject to the
fulfillment or satisfaction, on and as of the Closing Date, of the following
condition (which may be waived by the Seller, in its sole discretion):

                  (a)      PERFORMANCE; REPRESENTATION AND WARRANTIES. Such
Purchaser shall have performed and complied in all respects with all agreements
and conditions contained in this Agreement which are required to be performed or
complied with by such Purchaser prior to or at the Closing, the representation
and warranties of such Purchaser contained herein shall be true and correct on
and as of the Closing Date as though made on such date.

                  (b)      NO LITIGATION. No litigation, arbitration or other
legal or administrative proceeding against the Purchasers shall have been
commenced or be pending by or before any court, arbitration panel or
governmental authority or official, and no statute, rule or regulation of any
foreign or domestic, national or local government or agency thereof shall have
been enacted after the date of this Agreement, and no judicial or administrative
decision shall have been

                                       28


rendered which enjoins or prohibits, or seeks to enjoin or prohibit, the
consummation of all or any of the transactions contemplated by this Agreement.

                         ARTICLE VII - - INDEMNIFICATION

         7.1      SURVIVAL OF REPRESENTATIONS. Except as otherwise provided
herein, the representations and warranties of the Seller and the Purchasers
contained in or made pursuant to this Agreement shall survive the execution and
delivery of this Agreement and the Closing Date and shall continue in full force
and effect for a period of 24 months after the Closing Date and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of the Seller or the Purchasers.

         7.2      INDEMNIFICATION. (a) The Seller agrees to indemnify and hold
harmless the Purchasers, their Affiliates, each of their officers, directors,
employees and agents and their respective successors and assigns, from and
against any losses, damages, or expenses (net of any related insurance proceeds)
due to any and all third party actions, suits, proceedings, claims, demands,
judgments, costs and expenses (including reasonable legal fees and expenses)
(all of the foregoing, "Third Party Claims") which are caused by or arise out of
(i) any breach or default in the performance by the Seller of any covenant or
agreement made by the Seller in this Agreement or in any of the Related
Documents; (ii) any breach of warranty or representation made by the Seller in
this Agreement or in any of the Related Document.

                           (b) Each of the Purchasers agrees to indemnify and
hold harmless the Seller, its Affiliates, each of their officers, directors,
employees and agents and their respective successors and assigns, from and
against any Third Party Claims (net of any related insurance proceeds) which are
caused by or arise out of (i) any breach or default in the performance by it of
any covenant or agreement made by it in this Agreement or in any of the Related
Documents; (ii) any breach of warranty or representation made by it in this
Agreement or in any of the Related Documents; provided, however, that a
Purchaser's liability under this Section 7.2(b) shall not exceed the Purchase
Price paid by such Purchaser hereunder.

         7.3      INDEMNITY PROCEDURE. A party or parties hereto agreeing to be
responsible for or to indemnify against any matter pursuant to this Agreement is
referred to herein as the "Indemnifying Party" and the other party or parties
claiming indemnity is referred to as the "Indemnified Party".

                           An Indemnified Party under this Agreement shall, with
respect to claims asserted against such party by any third party, give written
notice to the Indemnifying Party of any liability which might give rise to a
claim for indemnity under this Agreement within sixty (60) business days of the
receipt of any written claim from any such third party, but not later than
twenty (20) days prior to the date any answer or responsive pleading is due, and
with respect to other matters for which the Indemnified Party may seek
indemnification, give prompt written notice to the Indemnifying Party of any
liability which might give rise to a claim for indemnity; provided, however,
that any failure to give such notice will not waive any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party are
materially prejudiced.

                                       29


                           The  Indemnified  Party shall have the right to
conduct and control, through counsel of its choosing, the defense, compromise or
settlement of any third Person claim, action or suit against such Indemnified
Party as to which indemnification will be sought by any Indemnified Party from
any Indemnifying Party hereunder, and in any such case the Indemnifying Party
shall cooperate in connection therewith and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested by the Indemnified
Party in connection therewith; provided, that the Indemnifying Party may
participate, through counsel chosen by it and at its own expense, in the defense
of any such claim, action or suit as to which the Indemnified Party has so
elected to conduct and control the defense thereof; and provided, further, that
the Indemnified Party shall not, without the written consent of the Indemnifying
Party (which written consent shall not be unreasonably withheld), pay,
compromise or settle any such claim, action or suit, except that no such consent
shall be required if, following a written request from the Indemnified Party,
the Indemnifying Party shall fail, within 14 days after the making of such
request, to acknowledge and agree in writing that, if such claim, action or suit
shall be adversely determined, such Indemnifying Party has an obligation to
provide indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided, that
in such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.

                           The parties agree to cooperate in defending such
third party claims and the Indemnified Party shall provide such cooperation and
such access to its books, records and properties as the Indemnifying Party shall
reasonably request with respect to any matter for which indemnification is
sought hereunder; and the parties hereto agree to cooperate with each other in
order to ensure the proper and adequate defense thereof.

                           With regard to claims of third parties for which
indemnification is payable hereunder, such indemnification shall be paid by the
Indemnifying Party upon the earlier to occur of: (i) the entry of a judgment
against the Indemnified Party and the expiration of any applicable appeal
period, or if earlier, five (5) days prior to the date that the judgment
creditor has the right to execute the judgment; (ii) the entry of an
unappealable judgment or final appellate decision against the Indemnified Party;
or (iii) a settlement of the claim. Notwithstanding the foregoing, the
reasonable expenses of counsel to the Indemnified Party shall be reimbursed on a
current basis by the Indemnifying Party if such expenses are required to be paid
pursuant to this Agreement. With regard to other claims for which
indemnification is payable hereunder, such indemnification shall be paid
promptly by the Indemnifying Party upon demand by the Indemnified Party.

                           ARTICLE VIII - TERMINATION

         8.1      BEST EFFORTS. Subject to the terms and conditions provided in
this Agreement, each of the parties shall use their respective best efforts in
good faith to take or cause to be taken as promptly as practicable all
reasonable actions that are within its power to cause to be fulfilled those of
the conditions precedent to its obligations or the obligations of the other
parties to consummate the transactions contemplated by this Agreement that are
dependent upon its

                                       30


actions, including obtaining all necessary consents, authorizations, orders,
approvals and waivers.

         8.2      TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated:

                           (i)      at any time by the mutual consent of the
Seller and the Purchasers;

                           (ii)     by the Purchasers at any time at or prior to
Closing in their sole discretion if:

                                    (1)      any of the representations or
                                             warranties of the Seller in this
                                             Agreement are not true, accurate
                                             and complete in all material
                                             respects (except to the extent such
                                             representations and warranties
                                             contain a materiality
                                             qualification, in which case they
                                             shall be true and correct in all
                                             respects) and such breach, if
                                             curable, is not cured by the
                                             Expiration Date;

                                    (2)      the Seller materially breaches any
                                             covenant contained in this
                                             Agreement and such breach, if
                                             curable, is not cured by the
                                             Expiration Date;

                                    (3)      any of the conditions precedent to
                                             the Purchasers' obligations to
                                             conduct the Closing have not been
                                             satisfied by the date required
                                             thereof;

                                    (4)      any legal proceeding is commenced
                                             or threatened by any governmental
                                             agency or other person directed
                                             against the consummation of the
                                             Closing or any other transaction
                                             contemplated hereby, and the
                                             Purchasers reasonably and in good
                                             faith deem it impractical or
                                             inadvisable to proceed in view of
                                             such legal proceeding or threat
                                             thereof;

                                    (5)      the Closing has not occurred on or
                                             before the Expiration Date,
                                             provided that the failure of the
                                             Closing to occur has not been
                                             caused by any breach or default by
                                             the Purchasers.

                           (iii)    by the Seller at any time at or prior to
Closing in its sole discretion if:

                                    (1)      any of the representations or
                                             warranties of the Purchaser in this
                                             Agreement are not true, accurate
                                             and complete in all material
                                             respects (except to the extent such
                                             representations and warranties
                                             contain a materiality
                                             qualification, in which case they
                                             shall be true and correct in all
                                             respects) and such breach, if
                                             curable, is not cured by the
                                             Expiration Date;

                                       31


                                    (2)      Purchasers materially breach any
                                             covenant contained in this
                                             Agreement and such breach, if
                                             curable, is not cured by the
                                             Expiration Date; or

                                    (3)      any of the conditions precedent to
                                             Seller's obligations to conduct the
                                             Closing have not been satisfied by
                                             the date required thereof;

                                    (4)      the Closing has not occurred on or
                                             before the Expiration Date,
                                             provided that the failure of the
                                             Closing to occur has not been
                                             caused by any breach or default by
                                             the Seller.

         8.3      EFFECT OF TERMINATION. In the event of termination of this
Agreement as expressly permitted under 8.2 hereof, this Agreement shall
forthwith become void and no party hereto shall be liable to any other party
hereto or their respective officers, directors or affiliates; provided, that, if
such termination shall result from the willful breach by a party of the
covenants of such party contained in this Agreement, such party shall be fully
liable for any and all damages sustained or incurred as a result of such breach,
including without limitation all expenses incurred in connection with this
Agreement.

                           ARTICLE IX - MISCELLANEOUS

         9.1      FURTHER ASSURANCES. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement, and further agrees to take promptly, or cause to
be taken, all actions, and to do promptly, or cause to be done, all things
necessary, proper or advisable under applicable law to consummate and make
effective the transactions contemplated hereby, to obtain all necessary waivers,
consents and approvals, to effect all necessary registrations and filings, and
to remove any injunctions or other impediments or delays, legal or otherwise, in
order to consummate and make effective the transactions contemplated by this
Agreement for the purpose of securing to the parties hereto the benefits
contemplated by this Agreement.

         9.2      FEES AND EXPENSES. The Seller shall be responsible for the
payment of the Purchasers' reasonable legal fees and expenses relating to the
preparation and negotiation of this Agreement, the Related Documents, the
conversion of any Preferred Stock or the exercise of any Warrants.

         9.3      NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 5:00 p.m. (New York City
time) on a business day, (b) the next business day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a business day
or later than 5:00 p.m. (New York City time) on any business day, or (c) the
business day following the date of mailing, if sent by U.S. nationally
recognized

                                       32


overnight courier service such as Federal Express. The address for such notices
and communications shall be as follows:

                                          
If to the Purchasers, to their respective    If to the Seller:
addresses set forth on Schedule 1.           Spectrum Pharmaceuticals, Inc.
                                             157 Technology Dr
                                             Irvine, CA 92618
                                             Att'n: CEO
                                             Fax No. 949-788-6706

With a copy in each case to:                 With a copy in each case to:
Kane Kessler, P.C.                           Latham and Watkins LLP
1350 Avenue of the Americas - 26th Floor     650 Town Center Drive, Twentieth Floor
New York, New York 10019                     Costa Mesa, California 92626
Attention:  Robert L. Lawrence, Esq.         Att'n: Allan W. Pettis, Esq.
Fax No.: (212) 245-3009                      Fax No. 714-755-8290



Unless otherwise stated above, such communications shall be effective when they
are received by the addressee thereof in conformity with this Section. Any party
may change its address for such communications by giving notice thereof to the
other parties in conformity with this Section.

         9.4      GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and enforced in accordance with the laws of the State of New York without
reference to the choice of law principles thereof.

         9.5      JURISDICTION AND VENUE. This Agreement shall be subject to the
exclusive jurisdiction of the Federal and State Courts located in New York
County, New York. The parties to this Agreement agree that any breach of any
term or condition of this Agreement shall be deemed to be a breach occurring in
the State of New York by virtue of a failure to perform an act required to be
performed in the State of New York and irrevocably and expressly agree to submit
to the jurisdiction of the Federal District Court, Southern District of New York
and if such court does not have proper jurisdiction, the State Courts of New
York County, New York for the purpose of resolving any disputes among the
parties relating to this Agreement or the transactions contemplated hereby. The
parties irrevocably waive, to the fullest extent permitted by law, any objection
which they may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to this Agreement, or any judgment
entered by any court in respect hereof brought in New York County, New York, and
further irrevocably waive any claim that any suit, action or proceeding brought
in Federal or State Courts located in New York County, New York has been brought
in an inconvenient forum.

         9.6      SUCCESSORS AND ASSIGNS. This Agreement is personal to each of
the parties and may not be assigned without the written consent of the other
parties; provided, however, that any of the Purchasers shall be permitted to
assign their rights under this Agreement to any transferee of such Purchaser to
whom it assigns or transfers Securities, as provided in Section 1.3 hereof.

                                       33


         9.7      SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.

         9.8      ENTIRE AGREEMENT. This Agreement and the other agreements and
instruments referenced herein constitute the entire understanding and agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings.

         9.9      OTHER REMEDIES. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law, or in
equity on such party, and the exercise of any one remedy shall not preclude the
exercise of any other.

         9.10     AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the Seller, the holders of at least a
majority of the outstanding Preferred Stock, which majority shall include each
holder who acquired in the aggregate more than 100 shares of Preferred Stock so
long as such holder continues to hold more than 100 shares of Preferred Stock
(such majority herein called a "Special Majority"). The waiver by a party of any
breach hereof or default in the performance hereof shall not be deemed to
constitute a waiver of any other default or any succeeding breach or default.

         9.11     NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.

         9.12     CONSTRUCTION OF AGREEMENT; KNOWLEDGE. For purposes of this
Agreement, the term "knowledge," when used in reference to a corporation means
the knowledge of the directors, officers and managers of such corporation
assuming such officers shall have made inquiry that is customary and appropriate
under the circumstances to which reference is made, and when used in reference
to an individual means the knowledge of such individual assuming the individual
shall have made inquiry that is customary and appropriate under the
circumstances to which reference is made.

         9.13     COUNTERPARTS; FACSIMILE. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against any party
whose signature appears thereon and all of which together shall constitute one
and the same instrument. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.

         9.14     NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
person other than the parties hereto

                                       34


and their respective heirs, personal representatives, legal representatives,
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.

                            [SIGNATURE PAGES FOLLOW:]

                                       35


         IN WITNESS WHEREOF, the undersigned Purchasers and the Seller have
caused this Preferred Stock and Warrant Purchase Agreement to be duly executed
as of the date first above written.

                                    SELLER:

                                    SPECTRUM PHARMACEUTICALS, INC.

                                    By: /s/ Rajesh C. Shrotriya
                                        -------------------------
                                        Rajesh C. Shrotriya, M.D.
                                        Chief Executive Officer



                            OMNIBUS SIGNATURE PAGE TO
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.

                                 Print Name: North Sound Legacy Fund LLC

                                 By:         /s/Andrew Wilder
                                             -------------------
                                 Name:       Andrew Wilder
                                 Title:      Chief Financial Officer

                                 Address:    c/o North Sound Capital LLC
                                             53 Forest Avenue, Suite 202
                                             Old Greenwich, CT 06870

                                 Telephone:  203-967-5700
                                 Facsimile:  203-967-5701
                                 SOC/EIN#:   XX-XXXXXXX

                                 Number of Shares of Series D Preferred Stock

                                 Purchased                             4

                                 Series D-1 Warrants Purchased     8,511

                                 Series D-2 Warrants Purchased     8,511

                                 Aggregate Purchase Price        $40,000



                            OMNIBUS SIGNATURE PAGE TO
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.

                               Print Name: North Sound Legacy International Ltd.

                               By:         /s/Andrew Wilder
                                           ------------------
                               Name:       Andrew Wilder
                               Title:      Chief Financial Officer

                               Address:    c/o North Sound Capital LLC
                                           53 Forest Avenue, Suite 202
                                           Old Greenwich, CT 06870

                               Telephone:  203-967-5700
                               Facsimile:  203-967-5701
                               SOC/EIN#:   XX-XXXXXXX

                               Number of Shares of Series D Preferred Stock

                               Purchased                             47

                               Series D-1 Warrants Purchased    100,000

                               Series D-2 Warrants Purchased    100,000

                               Aggregate Purchase Price        $470,000



                            OMNIBUS SIGNATURE PAGE TO
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.

                           Print Name: North Sound Legacy Institutional Fund LLC

                           By:         /s/Andrew Wilder
                                       ------------------
                           Name:       Andrew Wilder
                           Title:      Chief Financial Officer

                           Address:    c/o North Sound Capital LLC
                                       53 Forest Avenue, Suite 202
                                       Old Greenwich, CT 06870

                           Telephone:  203-967-5700
                           Facsimile:  203-967-5701
                           SOC/EIN#:   XX-XXXXXXX

                           Number of Shares of Series D Preferred Stock

                           Purchased                              49

                           Series D-1 Warrants Purchased     104,255

                           Series D-2 Warrants Purchased     104,255

                           Aggregate Purchase Price         $490,000



                            OMNIBUS SIGNATURE PAGE TO
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.

                                Print Name: OTA LLC

                                By:         /s/Richard M. Cayne
                                            --------------------
                                Name:       Richard M. Cayne
                                Title:      General Counsel

                                Address:    c/o OTA LLC
                                            One Manhattanville Road
                                            Purchase, New York 10577

                                Telephone:  (914) 694-5857
                                Facsimile:  (914) 694-6335
                                SOC/EIN#:   XX-XXXXXXX

                                Number of Shares of Series D Preferred Stock

                                Purchased                             10

                                Series D-1 Warrants Purchased     21,277

                                Series D-2 Warrants Purchased     21,277

                                Aggregate Purchase Price        $100,000



                            OMNIBUS SIGNATURE PAGE TO
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.

                              Print Name:  ProMed Partners, L.P.

                              By:         /s/Barry Kurokawa
                                          ------------------
                              Name:       Barry Kurokawa
                              Title:      Managing Member

                              Address:    237 Park Avenue, 9th Floor
                                          New York, NY 10017
                                          Old Greenwich, CT 06870

                              Telephone:  (212) 692-3626
                              Facsimile:  (212) 692-3627
                              SOC/EIN#:   XX-XXXXXXX

                              Number of Shares of Series D Preferred Stock

                              Purchased                            30

                              Series D-1 Warrants Purchased    63,830

                              Series D-2 Warrants Purchased    63,830

                              Aggregate Purchase Price       $300,000



                            OMNIBUS SIGNATURE PAGE TO
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.

                               Print Name: SCO Capital Partners LLC

                               By:         /s/Steve H. Rouhandeh
                                           -----------------------
                               Name:       Steve H. Rouhandeh
                               Title:      Chairman

                               Address:    1285 Avenue of the Americas
                                           35th Floor
                                           New York, NY 10019

                               Telephone:  212-554-4158
                               Facsimile:  212-554-4058
                               SOC/EIN#:   XX-XXXXXXX

                               Number of Shares of Series D Preferred Stock

                               Purchased                             70

                               Series D-1 Warrants Purchased    148,936

                               Series D-2 Warrants Purchased    148,936

                               Aggregate Purchase Price        $700,000



                            OMNIBUS SIGNATURE PAGE TO
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.

                         Print Name: SDS Merchant Fund, L.P.

                         By:         /s/Scott E. Derby
                                     -------------------
                         Name:       Scott E. Derby
                         Title:      General Counsel

                         Address:    c/o SDS Capital Partners, LLC
                                     53 Forest Avenue, 2nd Floor
                                     Old Greenwich, CT 06870

                         Telephone:  203-967-5850
                         Facsimile:  203-967-5851
                         SOC/EIN#:   XX-XXXXXXX

                         Number of Shares of Series D Preferred Stock

                         Purchased                              100

                         Series D-1 Warrants Purchased      212,766

                         Series D-2 Warrants Purchased      212,766

                         Aggregate Purchase Price        $1,000,000



                            OMNIBUS SIGNATURE PAGE TO
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Preferred Stock and Warrant
Purchase Agreement to which this signature page is attached, which, together
with all counterparts of the Agreement and signature pages of the other parties
named in said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.

                             Print Name: Xmark Fund, Ltd.

                             By:         /s/Mitchell D. Kaye
                                         -------------------
                             Name:       Mitchell D. Kaye
                             Title:      CIO

                             Address:    152 West 57th Street
                                         21st Floor
                                         New York, NY 10019

                             Telephone:  212-247-8200
                             Facsimile:  212-247-1329
                             SOC/EIN#:   XX-XXXXXXX

                             Number of Shares of Series D Preferred Stock

                             Purchased                              134

                             Series D-1 Warrants Purchased      285,106

                             Series D-2 Warrants Purchased      285,106

                             Aggregate Purchase Price        $1,340,000



                                   SCHEDULE 1
                                       TO
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
         PURCHASERS AND SHARES OF PREFERRED STOCK AND WARRANTS PURCHASED



======================================================================================================================
                                                                     Shares of       Shares of
                                                                       Common          Common
                                                       Shares of       Stock           Stock
                                                       Series D      Acquirable      Acquirable       Total
                                                       Preferred    under Series    under Series     Purchase
Name and Address of Purchase                             Stock      D-1 Warrants     D-2 Warrant      Price
- ----------------------------------------------------------------------------------------------------------------------
                                                                                        
North Sound Legacy Fund LLC
c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, Connecticut 06870
Att'n: Mr. Andrew Wilder, Chief Financial Officer
Fax: 203-967-5701
a Qualified Institutional Buyer                            4           8,511            8,511       $   40,000
- ----------------------------------------------------------------------------------------------------------------------
North Sound Legacy International Ltd.
c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, Connecticut 06870
Att'n: Mr. Andrew Wilder, Chief Financial Officer
Fax: 203-967-5701
a Qualified Institutional Buyer                           47         100,000          100,000       $  470,000
- ----------------------------------------------------------------------------------------------------------------------
North Sound Legacy Institutional Fund LLC
c/o North Sound Capital LLC
53 Forest Avenue, Suite 202
Old Greenwich, Connecticut 06870
Att'n: Mr. Andrew Wilder, Chief Financial Officer
Fax: 203-967-5701
a Qualified Institutional Buyer                           49         104,255          104,255       $  490,000
- ----------------------------------------------------------------------------------------------------------------------
OTA LLC
1 Manhattanville Road
Purchase, New York 10577
Att'n: Mr. Richard M. Cayne
Fax: 914-694-6335
a Qualified Institutional Buyer                           10          21,277           21,277       $  100,000
- ----------------------------------------------------------------------------------------------------------------------
ProMed Partners, L.P.
237 Park Avenue, 9th Floor
New York, N.Y. 10017
Att'n: Mr. Barry Kurokawa
Fax: 212-692-3627                                         30          63,830           63,830       $  300,000
- ----------------------------------------------------------------------------------------------------------------------
SCO Capital Partners LLC
1285 Avenue of the Americas, 35th Floor
New York, New York 10019
Att'n: Mr. Steven H. Rouhandeh
Fax: 212-554-4058                                         70         148,936          148,936       $  700,000
- ----------------------------------------------------------------------------------------------------------------------
SDS Merchant Fund, L.P.
c/o SDS Capital Partners, LLC
53 Forest Avenue, 2nd Floor
Old Greenwich, CT 06870
Att'n: Mr. Steven Derby
Fax: 203-967-5851
a Qualified Institutional Buyer                          100         212,766          212,766       $1,000,000




SCHEDULE 1 (CONT'D)



======================================================================================================================
                                                                     Shares of       Shares of
                                                                       Common          Common
                                                       Shares of       Stock           Stock
                                                       Series D      Acquirable      Acquirable       Total
                                                       Preferred    under Series    under Series     Purchase
Name and Address of Purchase                             Stock      D-1 Warrants     D-2 Warrant      Price
- ----------------------------------------------------------------------------------------------------------------------
                                                                                        
Xmark Fund Ltd.
152 West 57th Street, 21st Floor
New York, New York 10019
Att'n: Mr. Mitchell D. Kaye
Fax: 212-247-1329                                        134         285,106          285,106       $1,340,000
- ----------------------------------------------------------------------------------------------------------------------

         Total                                           444         944,681          944,681       $4,440,000
======================================================================================================================

EX-10.2

                                                                    EXHIBIT 10.2

                                 AMENDMENT NO. 1
                                     OF THE
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                       AND
                          REGISTRATION RIGHTS AGREEMENT

         This Amendment (the "Amendment" or "Amendment No. 1") is dated as of
May 13, 2003, by and among Spectrum Pharmaceuticals, Inc., a Delaware
corporation (the "Seller"), and each of the persons listed on Schedule 1B
attached hereto. Capitalized terms used but not otherwise defined herein shall
have the meanings set forth in the Original Purchase Agreement or the Original
Registration Rights Agreement, as appropriate (each as hereinafter defined).

                                   WITNESSETH:

         WHEREAS, the Seller and each of the Purchasers is a party to that
certain preferred stock and warrant purchase agreement dated as of April 29,
2003 (the "Original Purchase Agreement"), pursuant to which the Seller sold to
the Purchasers an aggregate of 444 shares of the Seller's Series D 8% Cumulative
Convertible Voting Preferred Stock, stated value $10,000 per share, par value
$0.001 per share (the "Preferred Stock"), and Series D-1 Common Stock Purchase
Warrants (the "Series D-1 Warrants") entitling the holders thereof to purchase
up to an aggregate of 944,681 shares of the Seller's common stock, $0.001 par
value per share (the "Common Stock"), at an exercise price of $3.00 per share
and Series D-2 Common Stock Purchase Warrants (the "Series D-2 Warrants" and,
collectively with the Series D-1 Warrants, the "Series D Warrants" or the
"Warrants") to purchase up to an aggregate of 944,681 shares of Common Stock at
an exercise price of $3.50 per share (in each case subject to adjustment as more
fully set forth in the Original Purchase Agreement and in the Warrants);

         WHEREAS, pursuant to the Original Purchase Agreement, the Seller and
each of the Purchasers entered into that certain registration rights agreement
dated May 7, 2003 (the "Original Registration Rights Agreement"); SCO Financial
Group LLC (the "Advisor"), an affiliate of one of the Purchasers, is also a
party to the Original Registration Rights Agreement and is joining in this
Amendment only with respect to the Original Registration Rights Agreement;

         WHEREAS, the Seller desires to sell, and the Purchasers desire to
purchase from the Seller, the numbers of shares of Preferred Stock, and Series
D-1 Warrants and Series D-2 Warrants entitling the holders thereof to purchase
the numbers of shares of Common Stock, set forth on Schedule 1A attached hereto;
and

         WHEREAS, the Seller and Purchasers desire to amend the Original
Purchase Agreement and the Original Registration Rights Agreement in the manner
and on the terms and conditions set forth in this Amendment, and, as so amended,
to confirm the continuing validity and enforceability thereof;

                                       1

         NOW, THEREFORE, in consideration of the mutual promises and
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, hereby agree as follows:

         1. ORIGINAL PURCHASE AGREEMENT DEFINED TERMS. The following capitalized
terms as used in the Original Purchase Agreement are hereby amended as set forth
below. Any inconsistency with the definitions of such terms as set forth in the
Original Purchase Agreement shall be construed in accordance with the provisions
of this Amendment.

                  "Agreement" means the "Original Purchase Agreement" as amended
by this Amendment.

                  "Conversion Shares" is hereby amended to include the shares of
Common Stock which are acquirable upon conversion of the Preferred Stock issued
or issuable pursuant to this Amendment, as is listed on Schedule 1A attached
hereto.

                  "Dividend Shares" is hereby amended to include the shares of
Common Stock issued as dividends on the additional Preferred Stock issued
pursuant to this Amendment, as is listed on Schedule 1A attached hereto.

                  "Preferred Stock" is hereby amended to include the additional
shares of Preferred Stock issued pursuant to this Amendment, as is listed on
Schedule 1A attached hereto.

                  "Registration Rights Agreement" means the Original
Registration Rights Agreement as amended by this Amendment.

                  "Warrants" is hereby amended to include the additional
warrants issued or to be issued pursuant to this Amendment, as is listed on
Schedule 1A attached hereto.

                  "Warrant Shares" is hereby amended to include the additional
shares of Common Stock or other securities acquirable upon exercise of the
additional Warrants issued or to be issued pursuant to this Amendment, as is
listed on Schedule 1A attached hereto.

         2. ORIGINAL REGISTRATION RIGHTS AGREEMENT DEFINED TERMS. The following
capitalized terms as used in the Original Registration Rights Agreement are
hereby amended as set forth below. Any inconsistency with the definitions of
such terms as set forth in the Original Registration Rights Agreement shall be
construed in accordance with the provisions of this Amendment.

                  "Agreement" means the "Original Registration Rights Agreement"
as amended by this Amendment.

                  "Placement Agent Warrants" is hereby amended to include the
warrants issued or issuable to SCO Financial Group LLC, and/or its designees,
pursuant to that certain financial advisory agreement between the Company and
SCO Financial Group LLC, dated February 1,

                                       2

2003, as a result of the sale of securities by the Seller pursuant to this
Amendment.

                  "Purchase Agreement" means the "Original Purchase Agreement"
as amended by this Amendment.

                  "Registrable Securities" is hereby amended to include the
Conversion Shares, Dividend Shares and Warrant Shares acquirable upon conversion
or exercise of the Preferred Stock and Warrants issued or issuable pursuant to
this Amendment, and the Warrant Shares issuable upon conversion of the Placement
Agent Warrants issued on account of the sale of the additional Securities
pursuant to this Amendment.

         3. PURCHASE AND SALE OF ADDITIONAL PREFERRED STOCK AND WARRANTS. The
Original Purchase Agreement is hereby amended to add a new Section 1.4 which
reads in its entirety as follows:

         "1.4 PURCHASE AND SALE OF ADDITIONAL PREFERRED STOCK AND WARRANTS. On
         the terms and subject to the conditions set forth in this Agreement (as
         amended by Amendment No. 1 dated as of May 13, 2003, of this Agreement
         and the Registration Rights Agreement (the "Amendment No. 1")), at the
         Second Closing (as hereinafter defined), the Seller will sell and each
         of the Purchasers will purchase (i) the Preferred Stock in the amounts
         set forth on Schedule 1A hereto, and (ii) the numbers of Warrants set
         forth on Schedule 1A hereto."

         4. PURCHASE PRICE. The Original Purchase Agreement is hereby amended to
add a new Section 2.4 which reads in its entirety as follows:

         "2.4 ADDITIONAL PURCHASE PRICE. The aggregate purchase price of the
         Securities purchased at the Second Closing to be paid by the Purchasers
         to the Seller to acquire the additional shares of Preferred Stock and
         the Warrants shall be the total amount set forth on Schedule 1A
         hereto."

         5. THE SECOND CLOSING. The Original Purchase Agreement is hereby
amended to add a new Section 2.5 which reads in its entirety as follows:

         "2.5 THE SECOND CLOSING. The closing with respect to the Securities to
         be purchased that are listed on Schedule 1A (the "Second Closing")
         shall take place at the offices of Kane Kessler, P.C., 1350 Avenue of
         the Americas, 26th Floor, New York, New York, on the date of execution
         of Amendment No.1. The date on which the Second Closing occurs is
         herein called the "Second Closing Date." All proceedings to be taken
         and all documents to be executed at the Second Closing shall be deemed
         to have been taken, delivered and executed simultaneously, and no
         proceeding shall be deemed taken nor documents deemed executed or
         delivered until all have been taken, delivered and executed."

         6. SECOND CLOSING DELIVERIES. The Original Purchase Agreement is hereby

                                       3

amended to add a new Section 2.6 which reads in its entirety as follows:

         "2.6 SECOND CLOSING DELIVERIES.



                  "(A) DELIVERIES BY THE SELLER. At the Second Closing, the
Seller shall deliver or cause to be delivered to each of the Purchasers the
following:

                  "1. One or more certificates evidencing the aggregate number
                  of shares of the Preferred Stock, duly authorized, issued,
                  fully paid and non-assessable, as is indicated on Schedule 1A
                  for such Purchaser, registered in the name of such Purchaser,
                  in such denominations as is indicated on Schedule 1A for such
                  Purchaser;

                  "2. One or more Warrants in the form of Exhibit B hereto,
                  registered in the name of such Purchaser, in such
                  denominations as is indicated on Schedule 1A for such
                  Purchaser, pursuant to which such Purchaser shall be entitled
                  to purchase an aggregate of that number of shares of Common
                  Stock as is indicated on Schedule 1A for such Purchaser.

                  "3. A legal opinion of Seller's Counsel in form and substance
                  reasonably satisfactory to the Purchasers.

                  "4. A certificate of the Secretary of the Seller (the "Second
                  Secretary's Certificate"), in form and substance satisfactory
                  to the Purchasers, certifying as follows:

                           "(i) that the Certificate of Increase of the Seller
                           in the form attached hereto as Exhibit E has been
                           duly filed in the office of the Secretary of State of
                           the State of Delaware;

                           "(ii) that the Certificate of Incorporation and
                           Bylaws of the Company have not been amended or
                           otherwise modified since the date of the Second
                           Secretary's Certificate delivered at the Closing,
                           except as amended or modified by the Certificate of
                           Designation and the Certificate of Increase, and said
                           Certificate of Incorporation and Bylaws, including
                           the Certificate of Designation and the Certificate of
                           Increase, are in full force and effect;

                           "(iii) that attached to the Second Secretary's
                           Certificate are true and complete copies of the
                           resolutions of the Board of Directors of the Seller
                           authorizing the execution, delivery and performance
                           of Amendment No.1, and that said resolutions, and the
                           resolutions of the Board of Directors and Placement
                           Committee of the Board of Directors with respect to
                           this Agreement and the Registration Rights Agreement,
                           are in full force and effect, except as modified by
                           the resolutions of the Placement Committee and/or
                           Board of

                                       4

                           Directors with respect to Amendment No.1;

                           "(iv) that the names and true signatures of the
                           officers of the Seller authorized to sign Amendment
                           No.1 and all other documents to be delivered in
                           connection with Amendment No. 1 on behalf of the
                           Seller are the same as set forth in the Secretary's
                           Certificate delivered at the Closing.

                  "5. A wire transfer representing the Purchasers' reasonable
                  legal fees and expenses as described in Section 9.15 hereof;
                  such fee may, at the election of the Seller, be paid out of
                  the funds due from the Purchasers at the Second Closing.

                  "6. Proof of due filing with the Secretary of State of the
                  State of Delaware of the Certificate of Increase of the
                  Seller.

                  "(b) At the Second Closing, each of the Purchasers shall
deliver or cause to be delivered to the Seller the payment of the purchase price
set forth opposite such Purchaser's name on Schedule 1A, in cash by wire
transfer of immediately available funds to an account designated in writing by
Seller."

         7. FEES AND EXPENSES. The Original Purchase Agreement is hereby amended
to add a new Section 9.15 which reads in its entirety as follows:

                  "9.15 AMENDMENT NO. 1 FEES AND EXPENSES. The Seller shall be
                  responsible for the payment of the Purchasers' reasonable
                  legal fees and expenses relating to the preparation and
                  negotiation of Amendment No.1."

         8. EXHIBIT E. The Original Purchase Agreement is hereby amended to add
Exhibit E attached hereto.

         9. SCHEDULE 1A AND SCHEDULE 1B. The Original Purchase Agreement is
hereby amended to add the Schedule 1A attached hereto and the Original
Registration Rights Agreement is hereby amended to add the Schedule 1B attached
hereto.

         10. REPRESENTATIONS AND WARRANTIES. The Seller, by entering into this
Amendment, hereby certifies that the representations and warranties of the
Seller contained in the Original Purchase Agreement and in any certificate
delivered by the Seller pursuant thereto are true and correct in all material
respects (except to the extent such representations and warranties contain a
materiality qualification, in which case they are true and correct in all
respects) at and as of the date hereof as if made at and as of such time (except
to the extent expressly made as of an earlier date, in which case as of such
earlier date); and each of the Purchasers, by entering into this Amendment,
hereby certifies that the representation and warranties of such Purchaser
contained in the Original Purchase Agreement are true and correct at and as of
the date hereof as if made at and as of such time.

                                       5

         11. NASDAQ STOCK MARKET. The Seller, by entering into this Amendment,
hereby certifies that the staff of the Nasdaq Stock Market has verbally
confirmed to the Seller that (i) it has reviewed this Amendment, the Certificate
of Increase, the Purchase Agreement, the form of Certificate of Designation,
form of Series D-1 Warrant, form of Series D-2 Warrant, form of Placement Agent
Warrant and form of Registration Rights Agreement, and (ii) on the basis of such
review, approval by the stockholders of the Seller of the issuance of the
Preferred Stock, the Warrants, the Conversion Shares, the Dividend Shares and
the Warrant Shares, including without limitation the Securities to be issued at
the Second Closing and the Securities issued pursuant to the Original Purchase
Agreement, is not required, and the Seller has not received from such staff any
oral or written information or advice contrary to such verbal confirmation.

         12. GOVERNING LAW, JURISDICTION AND VENUE. All questions concerning the
construction, validity, enforcement and interpretation of this Amendment shall
be governed by and enforced in accordance with the laws of the State of New York
without reference to the choice of law principles thereof. This Amendment shall
be subject to the exclusive jurisdiction of the Federal and State Courts located
in New York County, New York. The parties to this Amendment agree that any
breach of any term or condition of this Amendment shall be deemed to be a breach
occurring in the State of New York by virtue of a failure to perform an act
required to be performed in the State of New York and irrevocably and expressly
agree to submit to the jurisdiction of the Federal District Court, Southern
District of New York and if such court does not have proper jurisdiction, the
State Courts of New York County, New York for the purpose of resolving any
disputes among the parties relating to this Amendment or the transactions
contemplated hereby. The parties irrevocably waive, to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Amendment, or any judgment entered by any court in respect hereof brought
in New York County, New York, and further irrevocably waive any claim that any
suit, action or proceeding brought in Federal or State Courts located in New
York County, New York has been brought in an inconvenient forum.

         13. NO FURTHER AMENDMENT. Except as set forth herein, the Original
Purchase Agreement and the Original Registration Rights Agreement remain in full
force and effect without amendment.

         14. COUNTERPARTS; FACSIMILE. This Amendment may be executed in any
number of counterparts, each of which shall be an original as against any party
whose signature appears thereon and all of which together shall constitute one
and the same instrument. This Amendment shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as signatories. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile
signature page were an original thereof.

                            [SIGNATURE PAGES FOLLOW:]



                                       6

         IN WITNESS WHEREOF, the undersigned Purchasers and the Seller have
caused this Amendment No. 1 of the Preferred Stock and Warrant Purchase
Agreement dated April 29, 2003, and the Registration Rights Agreement dated May
7, 2003, to be duly executed as of the date first above written.

                                    SELLER:

                                    SPECTRUM PHARMACEUTICALS, INC.

                                    By:  /s/ Rajesh C. Shrotriya
                                         ------------------------
                                         Rajesh C. Shrotriya, M.D.
                                         Chairman, President and Chief Executive
                                         Officer

                             OMNIBUS SIGNATURE PAGE
                                       OF
                                 AMENDMENT NO. 1
                                     OF THE
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                       AND
                          REGISTRATION RIGHTS AGREEMENT

         The undersigned hereby executes and delivers Amendment No. 1 of the
Preferred Stock and Warrant Purchase Agreement and Registration Rights
Agreement, to which this signature page is attached, which, together with all
counterparts of the Amendment and signature pages of the other parties named in
said Amendment, shall constitute one and the same document in accordance with
the terms of the Amendment.

                                Print Name: North Sound Legacy Fund LLC
                                            --------------------------------

                                By:         /s/ Thomas McAuley
                                            --------------------------------
                                Name:       Thomas McAuley
                                            --------------------------------
                                Title:      Chief Investment Officer
                                            --------------------------------

                                Address:    c/o North Sound Capital LLC
                                            --------------------------------
                                            53 Forest Avenue, Suite 202
                                            --------------------------------
                                            Old Greenwich, CT 06870
                                            --------------------------------
                                Telephone:  203-967-5700
                                            --------------------------------
                                Facsimile:  203-967-5701
                                            --------------------------------
                                SOC/EIN#:   XX-XXXXXXX

                                Number of Shares of Series D Preferred Stock

                                Purchased   1
                                           ---

                                Series D-1 Warrants Purchased 2,128
                                                              -----

                                Series D-2 Warrants Purchased 2,128
                                                              -----

                                Aggregate Purchase Price  $10,000
                                                          -------

                             OMNIBUS SIGNATURE PAGE
                                       OF
                                 AMENDMENT NO. 1
                                     OF THE
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                       AND
                          REGISTRATION RIGHTS AGREEMENT

         The undersigned hereby executes and delivers Amendment No. 1 of the
Preferred Stock and Warrant Purchase Agreement and Registration Rights
Agreement, to which this signature page is attached, which, together with all
counterparts of the Amendment and signature pages of the other parties named in
said Amendment, shall constitute one and the same document in accordance with
the terms of the Amendment.

                  Print Name: North Sound Legacy Institutional Fund LLC
                              -----------------------------------------

                  By:         /s/ Thomas McAuley
                              ---------------------------------------------
                  Name:       Thomas McAuley
                              ---------------------------------------------
                  Title:      Chief Investment Officer
                              ---------------------------------------------

                  Address:    c/o North Sound Capital LLC
                              ---------------------------------------------
                              53 Forest Avenue, Suite 202
                              ---------------------------------------------
                              Old Greenwich, CT 06870
                              ---------------------------------------------
                  Telephone:  203-967-5700
                              ---------------------------------------------
                  Facsimile:  203-967-5701
                              ---------------------------------------------
                  SOC/EIN#:   XX-XXXXXXX

                  Number of Shares of Series D Preferred Stock

                  Purchased    12
                             -----

                  Series D-1 Warrants Purchased 25,532
                                                ------

                  Series D-2 Warrants Purchased 25,532
                                                ------



                  Aggregate Purchase Price  $120,000
                                            --------

                             OMNIBUS SIGNATURE PAGE
                                       OF
                                 AMENDMENT NO. 1
                                     OF THE
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                       AND
                          REGISTRATION RIGHTS AGREEMENT

         The undersigned hereby executes and delivers Amendment No. 1 of the
Preferred Stock and Warrant Purchase Agreement and Registration Rights
Agreement, to which this signature page is attached, which, together with all
counterparts of the Amendment and signature pages of the other parties named in
said Amendment, shall constitute one and the same document in accordance with
the terms of the Amendment.

                         Print Name: North Sound Legacy International Ltd.
                                     ---------------------------------------
                         By:         /s/ Thomas McAuley
                                     ---------------------------------------
                         Name:       Thomas McAuley
                                     ---------------------------------------
                         Title:      Chief Investment Officer
                                     ---------------------------------------

                         Address:    c/o North Sound Capital LLC
                                     ---------------------------------------
                                     53 Forest Avenue, Suite 202
                                     ---------------------------------------
                                     Old Greenwich, CT 06870
                                     ---------------------------------------
                         Telephone:  203-967-5700
                                     ---------------------------------------
                         Facsimile:  203-967-5701
                                     ---------------------------------------
                         SOC/EIN#:   N.A. - Not U.S.
                                     --------------------

                         Number of Shares of Series D Preferred Stock

                         Purchased    12
                                    ------

                         Series D-1 Warrants Purchased 25,532
                                                       ------

                         Series D-2 Warrants Purchased 25,532
                                                       ------



                         Aggregate Purchase Price  $120,000
                                                   --------

                             OMNIBUS SIGNATURE PAGE
                                       OF
                                 AMENDMENT NO. 1
                                     OF THE
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                       AND
                          REGISTRATION RIGHTS AGREEMENT

         The undersigned hereby executes and delivers Amendment No. 1 of the
Preferred Stock and Warrant Purchase Agreement and Registration Rights
Agreement, to which this signature page is attached, which, together with all
counterparts of the Amendment and signature pages of the other parties named in
said Amendment, shall constitute one and the same document in accordance with
the terms of the Amendment.

                              Print Name: OTA LLC
                                          ----------------------------------

                              By:         /s/ Richard M. Cayne
                                          ----------------------------------
                              Name:       Richard M. Cayne
                                          ----------------------------------
                              Title:      General Counsel
                                          ----------------------------------

                              Address:    c/o OTA LLC
                                          ----------------------------------
                                          One Manhattanville Road
                                          ----------------------------------
                                          New York, NY 10577
                                          ----------------------------------
                              Telephone:  914-694-5857
                                          ----------------------------------
                              Facsimile:  914-694-6335
                                          ----------------------------------
                              SOC/EIN#:   XX-XXXXXXX

                              Number of Shares of Series D Preferred Stock

                              Purchased     15
                                         -------

                              Series D-1 Warrants Purchased 31,915
                                                            ------

                              Series D-2 Warrants Purchased 31,915
                                                            ------



                              Aggregate Purchase Price  $150,000
                                                        --------

                             OMNIBUS SIGNATURE PAGE
                                       OF
                                AMENDMENT NO. 1
                                     OF THE
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                      AND
                         REGISTRATION RIGHTS AGREEMENT

         The undersigned hereby executes and delivers Amendment No. 1 of the
Preferred Stock and Warrant Purchase Agreement and Registration Rights
Agreement, to which this signature page is attached, which, together with all
counterparts of the Amendment and signature pages of the other parties named in
said Amendment, shall constitute one and the same document in accordance with
the terms of the Amendment.

                             Print Name: ProMed Partners, L.P.
                                         -----------------------------------

                             By:         /s/ Barry Kurokawa
                                         -----------------------------------

                             Name:       Barry Kurokawa
                                         -----------------------------------
                             Title:      Managing Member
                                         -----------------------------------

                             Address:    237 Park Ave., 9th Floor
                                         -----------------------------------
                                         New York, NY 10017
                                         -----------------------------------
                             Telephone:  212-692-3626
                                         -----------------------------------
                             Facsimile:  212-692-3627
                                         -----------------------------------
                             SOC/EIN#:   XX-XXXXXXX

                             Number of Shares of Series D Preferred Stock

                             Purchased   5
                                        ---

                             Series D-1 Warrants Purchased 10,638
                                                           ------

                             Series D-2 Warrants Purchased 10,638
                                                           ------



                             Aggregate Purchase Price  $50,000
                                                       -------

                             OMNIBUS SIGNATURE PAGE
                                       OF
                                 AMENDMENT NO. 1
                                     OF THE
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                       AND
                          REGISTRATION RIGHTS AGREEMENT

         The undersigned hereby executes and delivers Amendment No. 1 of the
Preferred Stock and Warrant Purchase Agreement and Registration Rights
Agreement, to which this signature page is attached, which, together with all
counterparts of the Amendment and signature pages of the other parties named in
said Amendment, shall constitute one and the same document in accordance with
the terms of the Amendment.

                                  Print Name: SCO Capital Partners LLC
                                              ------------------------------

                                  By:         /s/ Steven H. Rouhandeh
                                              ------------------------------

                                  Name:       Steven H. Rouhandeh
                                              ------------------------------
                                  Title:      Chairman
                                              ------------------------------

                                  Address:    1285 Avenue of Americas
                                              ------------------------------
                                              35th Floor
                                              ------------------------------
                                              New York, NY 10019
                                              ------------------------------
                                  Telephone:  212-554-4158
                                              ------------------------------
                                  Facsimile:  212-554-4058
                                              ------------------------------
                                  SOC/EIN#:   XX-XXXXXXX

                                  Number of Shares of Series D Preferred Stock

                                  Purchased     61
                                             --------

                                  Series D-1 Warrants Purchased 129,787
                                                                -------

                                  Series D-2 Warrants Purchased 129,787
                                                                -------



                                  Aggregate Purchase Price  $610,000
                                                            --------

                             OMNIBUS SIGNATURE PAGE
                                       OF
                                AMENDMENT NO. 1
                                     OF THE
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                      AND
                         REGISTRATION RIGHTS AGREEMENT

         The undersigned hereby executes and delivers Amendment No. 1 of the
Preferred Stock and Warrant Purchase Agreement and Registration Rights
Agreement, to which this signature page is attached, which, together with all
counterparts of the Amendment and signature pages of the other parties named in
said Amendment, shall constitute one and the same document in accordance with
the terms of the Amendment.

                           Print Name: SDS Merchant Fund, L.P.
                                       -------------------------------------

                           By:         /s/ Scott E. Derby
                                       -------------------------------------

                           Name:       Scott E. Derby
                                       -------------------------------------
                           Title:      General Counsel
                                       -------------------------------------

                           Address:    c/o SDS Capital Partners, LLC
                                       -------------------------------------
                                       53 Forest Ave., Suite 202
                                       -------------------------------------
                                       Old Greenwich, CT 06870
                                       -------------------------------------
                           Telephone:  203-967-5850
                                       -------------------------------------
                           Facsimile:  203-967-5851
                                       -------------------------------------
                           SOC/EIN#:   XX-XXXXXXX

                           Number of Shares of Series D Preferred Stock

                           Purchased    25
                                      ------

                           Series D-1 Warrants Purchased 53,191
                                                         ------

                           Series D-2 Warrants Purchased 53,191
                                                         ------



                           Aggregate Purchase Price  $250,000
                                                     --------

                             OMNIBUS SIGNATURE PAGE
                                       OF
                                 AMENDMENT NO. 1
                                     OF THE
                         SPECTRUM PHARMACEUTICALS, INC.
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                       AND
                          REGISTRATION RIGHTS AGREEMENT

         The undersigned hereby executes and delivers Amendment No. 1 of the
Preferred Stock and Warrant Purchase Agreement and Registration Rights
Agreement, to which this signature page is attached, which, together with all
counterparts of the Amendment and signature pages of the other parties named in
said Amendment, shall constitute one and the same document in accordance with
the terms of the Amendment.

                                    Print Name: Xmark Fund, Ltd.
                                                ----------------------------

                                    By:         /s/ Mitchell D. Kaye
                                                ----------------------------

                                    Name:       Mitchell D. Kaye
                                                ----------------------------
                                    Title:      CIO
                                                ----------------------------

                                    Address:    152 West 57th Street
                                                ----------------------------
                                                21st Floor
                                                ----------------------------
                                                New York, NY 10019
                                                ----------------------------
                                    Telephone:  212-247-8200
                                                ----------------------------
                                    Facsimile:  212-247-1329
                                                ----------------------------
                                    SOC/EIN#:   XX-XXXXXXX

                                    Number of Shares of Series D Preferred Stock

                                    Purchased     25
                                               --------

                                    Series D-1 Warrants Purchased 53,191
                                                                  ------

                                    Series D-2 Warrants Purchased 53,191
                                                                  ------



                                    Aggregate Purchase Price      $250,000
                                                              ---------------


                                   SCHEDULE 1A
                                       TO
                                 AMENDMENT NO. 1
                                     OF THE
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                       AND
                          REGISTRATION RIGHTS AGREEMENT
         PURCHASERS AND SHARES OF PREFERRED STOCK AND WARRANTS PURCHASED



                                                                      Shares of         Shares of
                                                                      Common Stock      Common Stock
                                                     Shares of        Acquirable        Acquirable
                                                     Series D         under Series      under Series          Total
Name and Address of Purchase                         Preferred Stock  D-1 Warrants      D-2 Warrant      Purchase Price
- ----------------------------                         ---------------  ------------      -----------      --------------
                                                                                             
North Sound Legacy Fund LLC                                1               2,128            2,128             $10,000
North Sound Legacy International Ltd.                     12              25,532           25,532            $120,000
North Sound Legacy Institutional Fund LLC                 12              25,532           25,532            $120,000
OTA LLC                                                   15              31,915           31,915            $150,000
ProMed Partners, L.P.                                      5              10,638           10,638             $50,000
SCO Capital Partners LLC                                  61             129,787          129,787            $610,000
SDS Merchant Fund, L.P.                                   25              53,191           53,191            $250,000
Xmark Fund Ltd.                                           25              53,191           53,191            $250,000

         Total                                           156             331,914          331,914          $1,560,000


                                   SCHEDULE 1B
                                       TO
                                 AMENDMENT NO. 1
                                     OF THE
                 PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
                                       AND
                          REGISTRATION RIGHTS AGREEMENT


                                                                      Shares of       Shares of
                                                                      Common Stock    Common Stock
                                                     Shares of        Acquirable      Acquirable
                                                     Series D         under Series    under Series         Total
Name and Address of Purchaser                        Preferred Stock  D-1 Warrants    D-2 Warrant      Purchase Price
- -----------------------------                        ---------------  ------------    -----------      --------------
                                                                                           
North Sound Legacy Fund LLC                               1                2,128          2,128             $10,000
North Sound Legacy International Ltd.                    12               25,532         25,532            $120,000
North Sound Legacy Institutional Fund LLC                12               25,532         25,532            $120,000
OTA LLC                                                  15               31,915         31,915            $150,000
ProMed Partners, L.P.                                     5               10,638         10,638             $50,000
SCO Capital Partners LLC                                 61              129,787        129,787            $610,000
SDS Merchant Fund, L.P.                                  25               53,191         53,191            $250,000
Xmark Fund Ltd.                                          25               53,191         53,191            $250,000

         Total                                          156              331,914        331,914          $1,560,000




                                                                      Shares of
                                                                      Common Stock
                                                                      Acquirable
                                                                      under
                                                                      Placement
                                                                      Agent Warrants
                                                                      --------------
                                                                                                      
SCO Financial Group LLC                                   0               66,383              0                   0


                                    EXHIBIT E

                             CERTIFICATE OF INCREASE

                     [Filed as Exhibit 3.2 to this Form 8-K]

EX-10.3

                                                                    EXHIBIT 10.3

To:      Each of the Purchasers named on Schedule 1 attached hereto,
         and

         Spectrum Pharmaceuticals, Inc.
         157 Technology Drive
         Irvine, California 92618
         Att'n:  CEO

                  Re:      Lock-up Agreement - Preferred Stock and Warrant
                           Purchase Agreement

Dear Sirs/Madams:

         The undersigned, being an officer and/or director of Spectrum
Pharmaceuticals, Inc., a Delaware corporation (the "Seller") understands that
(i) the Seller and each of the Purchasers named on Schedule 1 attached hereto
proposes to enter into a preferred stock and warrant purchase agreement (the
"Purchase Agreement") and certain other agreements (together with the Purchase
Agreement, the "Transaction"), pursuant to which the Purchasers will acquire up
to 600 shares of the Seller's newly designated Series D 8% Cumulative
Convertible Voting Preferred Stock, which are convertible into up to 2,553,191
shares of Common Stock (subject to adjustment in certain circumstances), and
warrants, including certain warrants issuable to one of the Purchasers pursuant
to a financial advisory agreement between the Seller and such Purchaser (all
such warrants, the "Warrants") to purchase up to 2,808,511 shares of Common
Stock (subject to adjustment in certain circumstances). The undersigned
understands that each Purchaser is willing to proceed with this transaction only
if the undersigned and all other officers and directors of the Seller severally
agree to this form of Lock-up Agreement. As used herein, "Common Stock" includes
any securities convertible into or exchangeable for, with or without the payment
of additional consideration, Common Stock.

         The undersigned hereby warrants and represents as follows:

                  (i)      The undersigned is familiar with the terms of the
                           Transaction, and the undersigned has had the
                           opportunity to discuss in detail the terms of the
                           Transaction with the other directors and officers of
                           the Seller;

                  (ii)     The undersigned is beneficial owner of 5,750 shares
                           of Common Stock, including shares owned in any
                           individual retirement account; and

                  (iii)    The undersigned has the full authority and capacity
                           to enter into and carry out all the terms of this
                           Lock-up Agreement, and the undersigned is not subject
                           to or bound by any agreement or instrument, or the
                           order of any court or other governmental authority
                           which in any way restricts the undersigned's
                           authority or capacity to enter into and carry out all
                           the terms of this Lock-up Agreement.

                                       1



         To induce each of the Purchasers and the Seller to enter into the
Purchase Agreement and the other agreements constituting the Transaction, and to
carry out the Transaction, and in consideration of the consummation of the
Transaction, the undersigned irrevocably agrees that the undersigned will not,
directly or indirectly,

         (1)      offer for sale, sell, pledge, assign, hypothecate or otherwise
                  create any interest in or dispose of (or enter into any
                  transaction or device that is designed to, or could reasonably
                  be expected to, result in any of the foregoing) any shares of
                  Common Stock (including, without limitation, shares of Common
                  Stock that the undersigned "beneficially owns" as defined in
                  Section 13(d) of the Securities Exchange Act of 1934, as
                  amended, including the rules and regulations of the Securities
                  and Exchange Commission thereunder, and shares of Common Stock
                  that may be issued upon exercise of any option or warrant, or
                  upon the occurrence of any future contingency) or securities
                  convertible into or exchangeable for (with or without the
                  payment of any additional consideration) Common Stock during
                  the Lock-up Period (as defined below), or

         (2)      enter into any swap or other derivatives transaction that
                  transfers to another, in whole or in part, any of the economic
                  benefits or risks of ownership of such shares of Common Stock,
                  including, but not limited to, short sales, puts, calls or
                  other hedging transactions, including private hedging
                  transactions,

whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
during the Lock-up Period (as hereinafter defined).

         As used herein, the "Lock-up Period" shall mean the period commencing
on the date of the Closing of the Transaction ("Closing Date"), and ending 180
days thereafter.

         The Seller and its transfer agent are authorized to decline to make any
transfer of securities if such transfer would constitute a violation or breach
of this Lock-up Agreement.

         The undersigned understands that Seller will proceed with the
Transaction in reliance on this Lock-up Agreement. The undersigned understands
and agrees that any shares of Common Stock which the undersigned acquires
hereafter under any circumstances shall be, without the necessity the execution
of any further document or instrument or any further act, covered by this
Lock-up Agreement.

         Notwithstanding the foregoing, the undersigned may transfer any shares
of Common Stock or any securities convertible into or exchangeable or
exercisable for or deriving from shares of Common Stock during the undersigned's
lifetime or, upon the undersigned's death by will or intestacy, to the
undersigned's immediate family or trusts or other entities of which the
undersigned's immediate family are the only beneficiaries; provided, however,
that (i) prior to any transfer each transferee shall execute a copy of this
agreement and become bound thereby, and (ii) no such transfer, singly or in the
aggregate with other transfers, shall require the

                                       2



registration under the Securities Act of 1933, as amended, of the shares so
transferred. For the purposes of this paragraph, "immediate family" shall mean
the undersigned's spouse, lineal descendants, parents and siblings.

         The undersigned agrees that the undersigned will execute any additional
documents reasonably necessary or related to the enforcement of this Lock-up
Agreement. The undersigned's obligations under this Lock-up Agreement shall be
binding upon the undersigned's heirs, personal representatives, successors and
assigns. The undersigned agrees that this Lock-up Agreement shall be governed
and construed in accordance with the internal law of the State of New York,
without regard to choice-of-law principles.

Dated: May 7, 2003                               Very truly yours,

                                                 _______________________________
                                                 Signature

                                                 _______________________________
                                                 Print Name

EX-10.4

                                                                    EXHIBIT 10.4

                      [SCO Financial Group LLC Letterhead]

                                February 1, 2003

Spectrum Pharmaceuticals, Inc.
PO Box 5702
Irvine, California 92619

Attention:        Rajesh C. Shrotriya
Title:            Chairman, President & CEO

Dear Sirs:

         The purpose of this letter is to confirm the appointment of SCO
Financial Group LLC ("SCO" or the "Advisor") upon the terms and conditions set
forth herein as financial consultant and advisor to Spectrum Pharmaceuticals,
Inc. ("the Company") in connection with the Company's general corporate
financial advisory needs. In this connection, SCO, in its capacity as financial
advisor, will assist the Company by undertaking certain activities, at the
request of the Company and to the extent that such activities are required by
the status of a project, including the following:

         1)       Meet with appropriate Company management to discuss and help
                  the Company formulate an appropriate strategy, familiarization
                  of product and technology, milestones, etc.;

         2)       Advise the Company with respect to financial and traditional
                  investor relations, including development of presentation
                  materials, introduction to and scheduling of meetings with
                  investment managers, buyside analysts, and analysis of
                  ownership;

         3)       Advise the Company with respect to financing strategy,
                  including public and private equity and debt;

         4)       Advise the Company with respect to mergers and acquisitions
                  and strategic corporate partnerships, including identification
                  of counterparties, approach strategy and structure, and assist
                  in the negotiations;

         5)       Advise the Company with respect to financial and trade media
                  relations, with respect to both traditional print and
                  electronic media, and with new media principally relating to
                  use of the internet as a distribution mechanism; and

         6)       Assist in such other capacity as may be reasonably requested
                  by the Company to effect the foregoing.

         It is the practice of SCO to provide financial advice with respect to
corporate finance and investor relations partially on a retainer basis. Our
retainer for services to be rendered hereunder is $9,000 per month, payable at
the beginning of each month.

         In the event a corporate finance transaction contemplated in item 3)
above is completed with any party which SCO identified, approached or negotiated
with on behalf of the Company, the Company will pay SCO a success fee of 7%
(plus warrant coverage at the exercise price and in the form of any warrants
issued to the purchaser, of 10%, or at the sale price of the common stock or
equity-linked securities in the event no warrants are sold) of the Aggregate
Value of the transaction.



Spectrum Pharmaceuticals, Inc.
February 1, 2003
Page 2

Additionally, the Company agrees to reimburse the Advisor for its out-of-pocket
expenses incurred in connection with Advisor's role in the transaction in the
amount of 1% of the Aggregate Value of the transaction.

         For the purposes of this letter, the term Aggregate Value shall mean
the total amount of cash and the fair market value of all other property paid or
payable, directly or indirectly, to the Company and its security holders. In
addition, Aggregate Value shall include the net amount of any debt and/or
contingent liability repaid or assumed by the purchaser from the Company, both
directly or indirectly.

         In the event the Company completes a corporate finance transaction of
the type contemplated in item 4) above with any party identified, contacted
and/or negotiated with by SCO on behalf of the Company during the term of this
engagement, the Company will pay SCO a success fee for its advisory services of
5% of the Aggregate Value of the transaction. Additionally, the Company agrees
to reimburse the Advisor for its out-of-pocket expenses incurred in connection
with the Advisor's role in the transaction in the amount of 0.5% of the
Aggregate Value of the transaction.

         For purposes of this letter, a "transaction" shall mean any transaction
or series or combination of transactions, other than in the ordinary course of
trade or business, whereby, directly or indirectly, a significant portion of the
capital stock of the Company or a significant portion of its respective assets
is transferred for consideration, including without limitation, a sale or
exchange of capital stock or assets, a lease of assets with or without a
purchase option, a merger or consolidation, a tender or exchange offer, a
leveraged buy-out, the formation of a joint venture, minority investment or
partnership, a licensing deal or any similar transaction.

         In addition to any fees payable to SCO under the terms of this letter,
the Company agrees to reimburse the Advisor, upon a monthly basis, for its
out-of-pocket expenses incurred in connection with the Advisor's activities
under this letter.

         The Company agrees to indemnify SCO and each of its respective
affiliates and their respective directors, officers, employees, agents and
controlling persons (each such person being an "Indemnified Party") from and
against any and all losses, claims, damages and liabilities, joint or several,
to which such Indemnified Party may become subject under any applicable federal
or state law, or otherwise, related to or arising out of any transaction
contemplated by this letter or the engagement of the Advisor pursuant to, and
the performance by the Advisor of the services contemplated by, this letter and
will reimburse any Indemnified Party for all expenses (including counsel fees
and expenses, whether incurred in connection with third party claims or direct
claims against the Company) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or threatened claim
or any action or proceeding arising therefrom, whether or not such Indemnified
Party is a party. The Company will not be liable under the foregoing
indemnification provision to the extent that any loss, claim, damage, liability
or expense is found in a final judgment by a court of competent jurisdiction to
have resulted primarily from the Advisor's bad faith or gross negligence.

         If a transaction is consummated by the Company with any party which the
Advisor identified, approached or negotiated with on behalf of the Company
within two years from the date of termination of this agreement, or any
amendment or extension thereto, the Company agrees to pay the Advisor a
transaction fee determined as provided in the foregoing paragraphs.

         The Advisor's engagement hereunder may be terminated by either the
Company or the Advisor upon the first day of any month upon thirty days written
notice to that effect to the other party, it being



Spectrum Pharmaceuticals, Inc.
February 1, 2003
Page 3

understood that the provisions relating to the payment of fees, expenses and
indemnification will survive any such termination. Provided, however, in the
event a transaction contemplated in items 3) or 4) is completed during the
engagement the terms of the engagement will extend 12 months from the closing
date of the transaction.

         This agreement shall be construed and interpreted in accordance with
the laws of the State of New York.

         If the foregoing is in accordance with your understanding, please
confirm acceptance by signing and returning to us the duplicate of this letter
attached herewith.

                                        SCO FINANCIAL GROUP LLC

                                        By:    /s/Steven H. Rouhandeh
                                            ------------------------------------
                                        Name:  Steven H. Rouhandeh
                                        Title: Chairman

                                        Spectrum Pharmaceuticals, Inc.

                                        By:    /s/Rajesh C. Shrotriya
                                            ------------------------------------
                                        Name:  Rajesh C. Shrotriya
                                        Title: Chairman, President & CEO
                                               Feb. 7, 2003

EX-99.1

                                                                    EXHIBIT 99.1


                   [Spectrum Pharmaceuticals, Inc. Letterhead]


Contacts:
John McManus
Spectrum Pharmaceuticals, Inc.
(949) 788-6700, ext. 247


                SPECTRUM PHARMACEUTICALS COMPLETES $4.44 MILLION
                     FINANCING WITH INSTITUTIONAL INVESTORS


      IRVINE, Calif., May 8, 2003 - Spectrum Pharmaceuticals, Inc. (NASDAQ:
SPPI) today announced that it has raised $4.44 million through the sale of newly
issued shares of Series D 8% Cumulative Convertible Preferred Stock to selected
institutional investors. The institutional investors are well known
biotechnology investors, such as SCO Capital Partners, SDS Merchant Fund, Xmark
Funds and ProMed Partners, L.P.

      The Company expects to use the net proceeds from this financing to advance
the clinical development of Eoquin(TM) for bladder cancer and elsamitrucin for
non-Hodgkin's lymphoma, to further the development of the Company's generic
business, and for general administrative expenses and working capital. All
development expenses for the upcoming phase 3 trial in prostate cancer for the
Company's lead drug, satraplatin, estimated to be as much as $30 million, are
being fully borne by our co-development partner GPC Biotech.

      "This financing marks an important step in our ongoing efforts to
strengthen Spectrum's balance sheet, and ensure that we have the resources
necessary to fund the development of our oncology products and build our generic
drug portfolio", stated Rajesh Shrotriya, M.D., Chairman, Chief Executive
Officer and President of Spectrum.

      The preferred stock is convertible into Spectrum common stock at a price
of $2.35 per share. Dividends on the preferred stock are payable quarterly
either in cash or common stock at the discretion of the Company. In addition,
purchasers of the preferred stock received warrants to purchase 944,681 shares
of common stock at $3.00 per share and 944,681 shares of common stock at $3.50
per share. If exercised, the warrants could generate up to an additional $6.1
million in proceeds to Spectrum. The common stock and warrants to purchase
common stock have not been registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States without a
registration statement or exemption from registration.


                                                                         more...

                                                                               2


      Spectrum Pharmaceuticals' primary focus is to develop in-licensed drugs
for the treatment and supportive care of cancer patients. The Company's lead
drug, satraplatin, is a phase 3 oral, anti-cancer drug being co-developed with
GPC Biotech AG. Elsamitrucin, a phase 2 drug, will initially target
non-Hodgkin's lymphoma. Eoquin(TM) is being studied in the treatment of
superficial bladder cancer, and may have applications as a radiation sensitizer.
The Company is actively working to develop, seek approval for and oversee the
marketing of generic drugs in the U.S. Spectrum also has a pipeline of
pre-clinical neurological drug candidates for disorders such as
attention-deficit hyperactivity disorder, schizophrenia, mild cognitive
impairment and pain, which it is actively seeking to out-license or co-develop.
For additional information about the Company, visit the Company's web site at
www.spectrumpharm.com.

      This press release may contain forward-looking statements regarding future
events and the future performance of Spectrum Pharmaceuticals that involve risks
and uncertainties that could cause actual results to differ materially. These
risks are described in further detail in the Company's reports filed with the
Securities and Exchange Commission.

EX-99.2

                                                                    EXHIBIT 99.2


                   [Spectrum Pharmaceuticals, Inc. Letterhead]


Contacts:
John McManus
Spectrum Pharmaceuticals, Inc.
(949) 788-6700, ext. 247


    SPECTRUM PHARMACEUTICALS RECEIVES ADDITIONAL $1.56 MILLION IN FINANCING
          TOTAL OF $6 MILLION RAISED DURING THE FIRST HALF OF MAY 2003

      IRVINE, Calif., May 14, 2003 - Spectrum Pharmaceuticals, Inc. (NASDAQ:
SPPI) today announced that it has raised an additional $1.56 million through the
sale of newly issued shares of Series D 8% Cumulative Convertible Preferred
Stock to the same group of investors who participated in the financing that
closed last week. The institutional investors are well known biotechnology
investors, such as SCO Capital Partners, SDS Merchant Fund, Xmark Funds and
ProMed Partners, L.P. This second closing brings total capital raised by
Spectrum this month to $6 million.

      "This additional investment by these investors reflects their confidence
in our Company," stated Rajesh Shrotriya, M.D., Chairman, Chief Executive
Officer and President of Spectrum. "Since we embarked on our oncology and
generic drug strategy last August, we have now raised more than $8.0 million
through the issuance of equity and received $2 million in licensing payments.
These cash sources have enabled us to greatly improve our balance sheet and
working capital and eliminate the "going concern" explanatory paragraph in the
report of our independent auditor for the year ended December 31, 2002. With the
additional milestone payments we expect from satraplatin and ciprofloxacin
advancements this year, we believe that we now have resources in place to
operate into the second half of next year."

      The preferred stock is convertible into Spectrum common stock at a price
of $2.35 per share. Dividends on the preferred stock are payable quarterly
either in cash or common stock at the discretion of the Company. In addition,
purchasers of the preferred stock in this second transaction received warrants
to purchase 331,914 shares of common stock at $3.00 per share and 331,914 shares
of common stock at $3.50 per share. If exercised, the warrants could generate up
to an additional $2.2 million in proceeds to Spectrum. The common stock and
warrants to purchase common stock have not been registered under the Securities
Act of 1933, as amended, and may not be offered or sold in the United States
without a registration statement or exemption from registration.


                                                                         more...

                                                                               2


      Spectrum Pharmaceuticals' primary focus is to develop in-licensed drugs
for the treatment and supportive care of cancer patients. The Company's lead
drug, satraplatin, is a phase 3 oral, anti-cancer drug being co-developed with
GPC Biotech AG. Elsamitrucin, a phase 2 drug, will initially target
non-Hodgkin's lymphoma. Eoquin(TM) is being studied in the treatment of
superficial bladder cancer, and may have applications as a radiation sensitizer.
The Company is actively working to develop, seek approval for and oversee the
marketing of generic drugs in the U.S. Spectrum also has a pipeline of
pre-clinical neurological drug candidates for disorders such as
attention-deficit hyperactivity disorder, schizophrenia, mild cognitive
impairment and pain, which it is actively seeking to out-license or co-develop.
For additional information about the Company, visit the Company's web site at
www.spectrumpharm.com.

This press release may contain forward-looking statements regarding future
events and the future performance of Spectrum Pharmaceuticals that involve risks
and uncertainties that could cause actual results to differ materially. These
risks are described in further detail in the Company's reports filed with the
Securities and Exchange Commission.