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

August 15, 2003 (August 13, 2003)
Date of Report (Date of earliest event reported)

SPECTRUM PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-28782	93-0979187
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)
157 Technology Drive
Irvine, California		92618
(Address of principal executive offices)		(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 4.1
EXHIBIT 4.2
EXHIBIT 10.1
EXHIBIT 99.1

Item 5. Other Events

     On August 13, 2003, Spectrum Pharmaceuticals, Inc. (“Spectrum”) completed a sale in a private placement transaction to certain institutional and individual investors of 737,040 shares of our common stock at a negotiated purchase price of $4.10 per share for gross cash proceeds of approximately $3.0 million. The investors also received five-year warrants to purchase up to 368,520 shares of our common stock at an exercise price of $4.75 per share. A placement agent received warrants to purchase up to a total of 39,304 shares of our common stock at an exercise price of $4.75 per share for its role in the transaction. Offering costs including cash commissions paid to two placement agents of this transaction are estimated to be $300,000.

     Attached hereto as Exhibits 10.1, 4.1 and 4.2 are copies of the Purchase Agreement, Registration Rights Agreement, form of Series D-1 Warrant and form of Series 2003-1 Warrant, respectively.

     Pursuant to the Registration Rights Agreement, Spectrum is required to register the resale of the shares of Spectrum common stock and shares of Spectrum common stock issuable upon exercise of the warrants.

     On August 14, 2003, Spectrum issued a press release announcing the completion of the offering. The text of the press release is set forth in Exhibit 99.1 attached to this report and incorporated herein by this reference.

Item 7. Exhibits

Exhibits:
4.1	Registration Rights Agreement dated as of August 13, 2003, by and among Spectrum and the persons listed on Schedule 1 attached thereto.
4.2	Form of Series 2003-1 Warrant
10.1	Common Stock and Warrant Purchase Agreement dated as of August 13, 2003, by and among Spectrum and the purchasers listed on Schedule 1 attached thereto.
99.1	Press Release dated August 14, 2003

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:	August 15, 2003	By:	/s/ Rajesh C. Shrotriya
		Name:	Rajesh C. Shrotriya, M.D.
		Title:	Chairman of the Board,
			Chief Executive Officer and President

2

EXHIBIT INDEX

Exhibits:
4.1	Registration Rights Agreement dated as of August 13, 2003, by and among Spectrum and the persons listed on Schedule 1 attached thereto.
4.2	Form of Series 2003-1 Warrant
10.1	Common Stock and Warrant Purchase Agreement dated as of August 13, 2003, by and among Spectrum and the purchasers listed on Schedule 1 attached thereto.
99.1	Press Release dated August 14, 2003

EX-4.1 3 a92522exv4w1.txt EXHIBIT 4.1 Exhibit 4.1 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into as of August 13, 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 Common 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, or such later date, if any, to which the Effectiveness Date is extended pursuant to Section 3(m)(i). 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, or such later date, if any, to which the Filing Date is extended pursuant to Section 3(m)(i). "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, on account of the purchase by the Purchasers of Common Stock and Series 2003-1 Warrants pursuant to the Purchase Agreement. "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. "Purchase Agreement" has the meaning set forth in the preamble to this Agreement. "Registrable Securities" means (i) the Purchased Shares and the Warrant Shares, and any shares issued upon any stock split, stock dividend, recapitalization or similar event with respect 2 to such Purchased 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. "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. "Series D Piggyback Rights" means the rights of holders of the Common Stock acquired or hereafter acquirable upon conversion or exercise of the Company's Series D Preferred Stock and Series D-1, D-2 and D-3 Common Stock Purchase Warrants to include such Common Stock in a registration statement by the Company, as such rights are set forth in Section 7 (d) of the Series D Registration Rights Agreement. "Series D Registration Rights Agreement" means that certain registration rights agreement dated as of May 7, 2003, by and among the Company and certain holders of the Company's Series D Preferred Stock, and certain other persons, as amended. "Special Counsel" means any one 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. 3 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 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 the shares of Common Stock held by or issuable to the persons specified in Section 7(c) hereof, 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) not later than 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, 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 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's 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 the 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 the Special Counsel shall reasonably object in writing within three (3) Business Days after their receipt thereof. 4 (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. (c) Notify the Holders of Registrable Securities to be sold and the 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. 5 (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 the 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 the 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 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 the 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 6 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, by giving five (5) business days' prior written notice (in accordance with Section 7(g) hereof) to each Holder, 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 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; the Company's notice as herein required shall not be given later than five (5) business days prior to the 90th day after the Closing Date. If a Holder does not furnish the information requested within five (5) days after delivery of the Company's written request, the Filing Date (if not already passed) and the Effectiveness Date shall be extended by one day for each day that a Holder fails to furnish such requested information; provided, however, that if the Company determines to exclude such Holder from the Registration Statement as herein permitted, no extension of the Effectiveness Date shall be made on account of such excluded Holder beyond extensions accrued before such determination by the Company. (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 7 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 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, 8 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 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 9 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. 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 10 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 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. 11 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 Purchased 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 Purchased 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 Purchased 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 Purchased 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 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 12 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 (i) up to 125,565 shares (the "LPL Shares") of Common Stock held by Lekar Pharma Limited ("LPL"), (ii) up to 538 shares of Common Stock acquirable under a warrant dated September 9, 1998, issued to Leasing Technologies International, Inc. (the ("LTII Warrant"), and (iii) any shares of Common Stock required to be included in the Registration Statement under the Series D Piggyback Rights, 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 (i) held by LPL and (ii) underlying the LTII Warrant, to be registered in the Registration Statement shall not be increased on account of any adjustments provided for (A) pursuant to any agreement, obligation or understanding with respect to the LPL Shares, or (B) in the LTII Warrant, other than on account of a stock split (including a stock split effected by means of a stock dividend) or other adjustment made with respect to all Common Stock as a class. No cut-back of the numbers of shares to be registered for the accounts of the Holders shall be made unless and until all LPL Shares and shares underlying the LTII Warrant have been cut back in full. (d) Piggy-Back Registrations. Subject to the limitations imposed under the Series D Registration Rights Agreement, 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, 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 13 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, Liquidated Damages. (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 (A) 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 (B) 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 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. 14 (iii) The Company and the Holders agree that the Holders will suffer damages if the Registration Statement is not filed on or prior to the Filing Date and not declared effective by the Commission on or prior to the Effectiveness Date and maintained in the manner contemplated herein during the Effectiveness Period. The Company and the Holders further agree that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, if (A) the Registration Statement is not filed on or prior to the Filing Date, or is not declared effective by the Commission on or prior to the 30th day after the Effectiveness Date (or in the event an additional Registration Statement is filed because the actual number of shares of Common Stock for which the Warrants are exercisable exceeds the number of shares of Common Stock initially registered is not filed and declared effective within the time periods set forth in Section 2), or (B) the Company fails to file with the Commission a request for acceleration in accordance with Rule 12dl-2 promulgated under the Exchange Act within 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 is not subject to further review, or (C) the Registration Statement is filed with and declared effective by the Commission but thereafter ceases to be effective as to all or any lesser portion of the Registrable Securities for a period of five (5) or more consecutive trading days (the "Non-Effectiveness Period") at any time prior to the expiration of the Effectiveness Period, without being succeeded by a subsequent Registration Statement filed and declared effective by the Commission within twenty-five (25) trading days after the commencement of the Non-Effectiveness Period, or (D) the exercise rights of a Holder under the Warrants are suspended for any reason other than by or through the fault of such Holder, or (E) the Company has breached Section 3(n) of this Agreement (any such failure or breach being referred to as an "Event"), then the Company shall pay in cash as liquidated damages for such failure and not as a penalty to each Holder (but as to clause (D), only to Holders for which such clause is applicable) an amount equal to one and one-half percent (1.5%) of such Holder's pro rata share of the aggregate purchase price paid by all Purchasers under the Purchase Agreement for each thirty (30) day period until the applicable Event has been cured, which shall be pro rated for such periods less than thirty (30) days (the "Periodic Amount"). Payments to be made pursuant to this Section 7(e) shall be due and payable immediately upon demand in immediately available cash funds. The parties agree that the Periodic Amount represents a reasonable estimate on the part of the parties, as of the date of this Agreement, of the amount of damages that may be incurred by the Holders if the Registration Statement is not filed on or prior to the Filing Date or has not been declared effective by the Commission on or prior to the 30th day after the Effectiveness Date and maintained in the manner contemplated herein during the Effectiveness Period or if any other Event as described herein has occurred. (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. 15 (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: Alan 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 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 Purchased Shares, 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 16 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. (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 17 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:] 18 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.

PURCHASERS/HOLDERS: COMPANY: - ------------------ ------- BAYSTAR CAPITAL II, L.P. SPECTRUM PHARMACEUTICALS, INC., a Delaware By: SDS Capital Partners, LLC corporation By: /s/ Steve Derby By: /s/ Rajesh C. Shrotriya ------------------------------------------ ------------------------------------------ Name: Steve Derby Name: Rajesh C. Shrotriya, M.D. Title Managing Member Title: CEO /s/ James T. Betts PURCHASERS/HOLDERS (CONT'D): ------------------------------------------ ------------------------------------------ JAMES BETTS /s/ Hetal Patel ------------------------------------------ HETAL PATEL /s/ Shanta Chawla /s/ Ashok Y. Gore ------------------------------------------ ------------------------------------------ SHANTA CHAWLA, M.D. ASHOK GORE, PH.D.

CRANSHIRE CAPITAL, LP OMNICRON CAPITAL, LP By: Downsview Capital , its general partner By: Bruce Bernstein, its general partner By: /s/ Mitchell D. Kopin By: /s/ Bruce Bernstein ------------------------------------------ -------------------------------------- Name: Mitchell D. Kopin Name: Bruce Bernstein Title: President - Downsview Capital Title: The General Partner CREATIVE INVESTORS GROUP, LLC By: /s/ Paresh Mital /s/ Paul Scharfer ------------------------------------------ -------------------------------------- Name: Paresh Mital PAUL SCHARFER Title: Managing Member NORTH SOUND LEGACY FUND LLC NORTH SOUND LEGACY INTERNATIONAL FUND LTD. By: /s/ Andrew Wilder By: /s/ Andrew Wilder ------------------------------------------ -------------------------------------- Name: Andrew Wilder Name: Andrew Wilder Title: Chief Financial Officer Title: Chief Financial Officer NORTH SOUND LEGACY FUND INSTITUTIONAL FUND LLC By: /s/ Andrew Wilder ------------------------------------------ Name: Andrew Wilder Title: Chief Financial Officer SCHEDULE 1 TO REGISTRATION RIGHTS AGREEMENT

Shares of Common Stock Acquirable Shares of Common under Series 2003-1 Total Purchase Name and Address of Purchaser Stock Warrants Price - ------------------------------------------ ---------------- ------------------- -------------- BayStar Capital II, L.P. 183,540 91,770 $752,514 XXXX XXXX XXXX James Betts 25,000 12,500 $102,500 XXXX XXXX XXXX Shanta Chawla, M.D. 12,500 6,250 $51,250 XXXX XXXX XXXX Cranshire Capital, LP 122,000 61,000 $500,200 XXXX XXXX XXXX Creative Investors Group, LLC 25,000 12,500 $102,500 XXXX XXXX XXXX Ashok Gore, Ph.D. 12,500 6,250 $51,250 XXXX XXXX XXXX North Sound Legacy Fund LLC 7,800 3,900 $31,980 XXXX XXXX XXXX Facsimile: xxx North Sound Legacy Institutional Fund LLC 78,800 39,400 $323,080 XXXX XXXX XXXX Att'n: Facsimile: xxx North Sound Legacy International Fund Ltd. 86,400 43,200 $354,240 XXXX XXXX XXXX Att'n: Facsimile:

Shares of Common Stock Acquirable Shares of Common under Series 2003-1 Total Purchase Name and Address of Purchaser Stock Warrants Price - ------------------------------------------ ---------------- ------------------- -------------- Omnicron Capital, LP 122,000 61,000 $500,200 XXXX XXXX Attn: XXXX Facsimile: XXXX Hetal Patel 25,000 12,500 $102,500 XXXX XXXX Facsimile: XXXX 36,500 18,250 $149,600 Paul Scharfer XXXX XXXX Facsimile: XXXX - ------------------------------------------ ---------------- ------------------- -------------- Total 737,040 368,520 $3,021,864 ========================================== ================ =================== ==============

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 Common Stock and Warrant Purchase Agreement (the "PURCHASE AGREEMENT") dated as of August ____, 2003 by and among the Company and the buyers named therein (collectively, the "HOLDERS") pursuant to which the Company issued to the Holders 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 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-4.2 4 a92522exv4w2.txt EXHIBIT 4.2 Exhibit 4.2 SERIES 2003-1 WARRANT 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 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. 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 $4.75 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 August 13, 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 (y) the book value per share of Common Stock on such date, and (z) 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 $4.75 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 August 13, 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 3 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. (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 4 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 9.95%* 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"); provided, however, that the Holder may acquire a number of Warrant Shares that would cause the Holder to exceed the Beneficial Ownership Cap upon 61 days' prior written notice of its intent thereof to the Company. 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 * 4.9% for the Warrant issued to Cranshire Capital 5 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 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." 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. 6 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 other poison pill, rights plan or similar arrangement (each, a "Rights Plan") shall be in effect: 8 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 consolidation 9 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 10 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 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 11 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 & Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa, California 92626, Att'n: Allan 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 Warrant to be executed by its duly authorized officer and attested by its Secretary. Dated: August 13, 2003 SPECTRUM PHARMACEUTICALS, INC. By: /s/ Rajesh C. Shrotriya -------------------------------- Name: Rajesh C. Shrotriya, M.D. Title: Chairman, Chief Executive Officer and President Attest: By: /s/ John L. McManus ------------------------------ Name: John L. McManus Title: Vice President Finance and Strategic Planning and Assistant Secretary See Schedule 1 to the Common Stock and Warrant Purchase Agreement dated as of August 13, 2003 (filed as Exhibit 10.1 to this Form 8-K) for name of each purchaser receiving warrants and the number of warrants issued to each Purchaser. 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-10.1 5 a92522exv10w1.txt EXHIBIT 10.1 Exhibit 10.1 ================================================================================ COMMON STOCK AND WARRANT PURCHASE AGREEMENT DATED AS OF AUGUST 13, 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 COMMON STOCK AND SERIES 2003-1 WARRANTS TO PURCHASE COMMON STOCK ================================================================================ TABLE OF EXHIBITS AND SCHEDULES Exhibit A Form of Series 2003-1 Common Stock Purchase Warrant Exhibit B Form of Registration Rights Agreement Schedule 1 Purchasers Schedule 3 Schedule of Representations and Warranties of Spectrum Pharmaceuticals, Inc. COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated as of August 13, 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 762,040 shares (the "Purchased Shares") of its common stock, $0.001 par value per share (the "Common Stock"), at a price per share of $4.10, and Series 2003-1 Common Stock Purchase Warrants (the "Series 2003-1 Warrants" or the "Warrants") entitling the holders thereof to purchase up to an aggregate of 381,020 shares of the Seller's Common Stock, at an exercise price of $4.75 per share (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 number of Purchased Shares set forth on Schedule 1 hereto, and (ii) the number of Warrants set forth on Schedule 1 hereto. The shares of Common Stock issuable upon exercise of the Warrants are referred to herein as the "Warrant Shares." The Purchased Shares, the Warrants and the Warrant Shares are collectively referred to as the "Securities." 1.2 TERMS OF THE WARRANTS. The terms and provisions of the Warrants are more fully set forth in the Form of Series 2003-1 Common Stock Purchase Warrant, in the form attached hereto as EXHIBIT A. 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 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 1 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 a legend in substantially the following form: "THE SECURITIES REPRESENTED BY, OR ACQUIRABLE UPON 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 Purchased Shares 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 the date hereof. The date on which the Closing occurs is herein called the "Closing Date." All proceedings to be taken and all documents to be 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 Purchased Shares, duly authorized, issued, fully paid and non-assessable, as is indicated on Schedule 1 for such Purchaser, registered in the name of 2 such Purchaser, in such denominations as is indicated on Schedule 1 for such Purchaser; (ii) One or more Warrants in the form of EXHIBIT A 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 B (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 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 all certificates of designation with respect to the preferred stock of the Seller; (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 hereby including, but not limited to, the authorization and issuance of the Purchased Shares, (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. 5. A wire transfer representing the Purchasers' reasonable legal fees and expenses as described in Section 7.2 hereof; such fee may, at the election of the Seller, be paid out of the funds due from the Purchasers at the Closing. 3 (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, 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 (including without limitation the Certificate of Designation and Certificate of Increase with respect to the Series D Preferred Stock (as hereinafter defined)), 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 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 Purchased Shares and the 4 Warrants, and the subsequent issuance of the Warrant Shares upon exercise of the Warrants) have been duly authorized, and no additional corporate action is required for the approval of this Agreement or the Related Documents. 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 rights of creditors, and except as enforceability of its obligations hereunder are subject to general principles of equity. (b) The Purchased Shares issued and delivered to the Purchasers at Closing are 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 exercise of the Warrants has been duly and validly reserved for issuance, and upon issuance in accordance with the terms of 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 Purchased Shares, the Warrants and the Warrant Shares, 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, and (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, 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 5 delivery of the Purchased Shares and Warrants and the subsequent issuance of the Warrant Shares upon exercise of the Warrants, as applicable) by 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 Warrant, and form of Registration Rights Agreement, to the Nasdaq SmallCap Market with respect to 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 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 or in the course of discussions and negotiations with respect hereto which is material to the Seller has been disclosed in the Recent Reports. 6 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 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. 7 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 and Certificate of Increase with respect to the Series D Preferred Stock; (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 (A) issuances or sales to directors, employees and consultants pursuant to existing equity compensation or stock purchase plans of the Seller in accordance with past business practices, and (B) the sale of an aggregate of 600 shares of Series D Preferred Stock, Series D-1 Warrants and Series D-2 Warrants, and the issuance of Series D-3 Warrants to certain persons in connection with such sales of Series D Preferred Stock, Series D-1 Warrants and Series D-2 Warrants; (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 (A) 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, and (B) the sale of an aggregate of 600 shares of Series D Preferred Stock, Series D-1 Warrants and Series D-2 Warrants, and the issuance of Series D-3 Warrants to certain persons in connection with such sales of Series D Preferred Stock, Series D-1 Warrants and Series D-2 Warrants; (iv) issuance or sale of any stock, bond or other corporate security other than (A) 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, and (B) the sale of an aggregate of 8 600 shares of Series D Preferred Stock, Series D-1 Warrants and Series D-2 Warrants, and the issuance of Series D-3 Warrants to certain persons in connection with such sales of Series D Preferred Stock, Series D-1 Warrants and Series D-2 Warrants; (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 other than with respect to the Series D Preferred Stock; (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; (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. 9 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 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 10 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. 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 Purchased Shares or the Warrant Shares to be issued to the Purchasers upon exercise of the Warrants. 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 11 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 3,357,436 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; 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; 600 shares have been designated Series D 8% Cumulative Convertible Voting Preferred Stock, all of which were issued on or about May 7 and May 13, 2003, of which 577 shares remain 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 12 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 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 pursuant to 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 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 13 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 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 14 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 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 15 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 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. 16 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 exercise of some or all of the Warrants and the issuance of the 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 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 Purchased Shares, the Warrants or the Warrant Shares. 3.32 NASDAQ COMPLIANCE. (a) 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 Purchased Shares, Warrants or Warrant Shares is in effect and no proceedings for such purpose are pending or, to the Seller's knowledge, threatened. (b) The staff of the Nasdaq Stock Market has verbally confirmed to the Seller that (i) it has reviewed this Agreement, the form of Series 2003-1 Warrant, and the 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 Purchased Shares, the Warrants 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. 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 17 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. 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, 18 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 Purchased Shares 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. 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 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. 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. 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 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. 5.3 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, 19 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. 5.4 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. 5.5 LISTING OF SHARES. The Seller shall use its best efforts to list the Purchased Shares and Warrant Shares on each securities exchange or quotation system 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. 5.6 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 exercise of all outstanding Warrants (without regard to any limitations on conversions or exercise). 5.7 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. 5.8 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. 5.9 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 5.9, 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 20 procedures set forth in Section 6.3 hereof. The indemnification provided for in this Section 5.9 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. ARTICLE VI - - INDEMNIFICATION 6.1 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. 6.2 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 6.2(b) shall not exceed the Purchase Price paid by such Purchaser hereunder. 6.3 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; 21 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. 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 VII - MISCELLANEOUS 7.1 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 22 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. 7.2 FEES AND EXPENSES. The Seller shall be responsible for the payment of reasonable legal fees and expenses of one counsel to the Purchasers relating to the preparation and negotiation of this Agreement, the Related Documents or the exercise of any Warrants. 7.3 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 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 & 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: Alan 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. 7.4 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. 23 7.5 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. 7.6 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. 7.7 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. 7.8 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. 7.9 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. 7.10 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 Purchased Shares. 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. 7.11 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. 7.12 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 24 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. 7.13 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. 7.14 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 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:] 25 IN WITNESS WHEREOF, the undersigned Purchasers and the Seller have caused this Common 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. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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: BayStar Capital II, L.P. ------------------------------- By: /s/ Steve Derby ------------------------------- Name: Steve Derby ------------------------------- Title: Managing Member ------------------------------- Address: c/o BayStar Capital Management, LLC ------------------------------- xxxxxxxx ------------------------------- xxxxxxxx ------------------------------- Telephone: (XXX)XXX-XXXX ------------------------------- Facsimile: (XXX)XXX-XXXX ------------------------------- SOC/EIN#: XX-XXXXXXX ------------------------------- Number of Shares of Common Stock to be Purchased 183,540 ------------------------------- Series 2003-1 Warrants to be Purchased 91,770 -------------------------------- Aggregate Purchase Price $ 752,514 --------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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: James T. Betts ------------------------------- By: /s/ James T. Betts ------------------------------- Name: James T. Betts ------------------------------- Title: ------------------------------- Address: c/o Shipman & Goodwin LLP ------------------------------- xxxxxxxx ------------------------------- xxxxxxxx ------------------------------- Telephone: (XXX) XXX-XXXX ------------------------------- Facsimile: (XXX) XXX-XXXX ------------------------------- SOC/EIN#: XXX-XX-XXXX ------------------------------- Number of Shares of Common Stock to be Purchased 25,000 ------------------------------- Series 2003-1 Warrants to be Purchased 12,500 ------------------------------- Aggregate Purchase Price $ 102,500 --------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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: Shanta Chawla ------------------------------- By: /s/ Shanta Chawla ------------------------------- Name: ------------------------------- Title: ------------------------------- Address: XXXXXXXX ------------------------------- XXXXXXXX ------------------------------- Telephone: (XXX) XXX-XXXX ------------------------------- Facsimile: (XXX) XXX-XXXX ------------------------------- SOC/EIN#: XXX-XX-XXXX ------------------------------- Number of Shares of Common Stock to be Purchased 12,500 ------------------------------- Series 2003-1 Warrants to be Purchased 6,250 -------------------------------- Aggregate Purchase Price $ 51,250 --------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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: Cranshire Capital, L.P. --------------------------------- By: /s/ Mitchell D. Kopin --------------------------------- Name: Mitchell D. Kopin --------------------------------- Title: President - Downsview Capital --------------------------------- Address: XXXXXXXX --------------------------------- XXXXXXXX Telephone: (XXX) XXX-XXXX --------------------------------- Facsimile: (XXX) XXX-XXXX --------------------------------- SOC/EIN#: XX-XXXXXXX --------------------------------- Number of Shares of Common Stock to be Purchased 122,000 --------------------------------- Series 2003-1 Warrants to be Purchased 61,000 --------------------------------- Aggregate Purchase Price $ 500,200 ----------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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: Creative Investors Group, LLC --------------------------------- By: /s/ Paresh Mital --------------------------------- Name: Paresh Mital --------------------------------- Title: Managing Member --------------------------------- Address: XXXXXXX --------------------------------- XXXXXXX --------------------------------- Telephone: (XXX) XXX-XXXX --------------------------------- Facsimile: (XXX) XXX-XXXX --------------------------------- SOC/EIN#: XX-XXXXXXX --------------------------------- Number of Shares of Common Stock to be Purchased 25,000 --------------------------------- Series 2003-1 Warrants to be Purchased 12,500 --------------------------------- Aggregate Purchase Price $ 102,500 ----------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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: Ashok Y. Gore ------------------------------- By: /ss Ashok Y. Gore ------------------------------- Name: ------------------------------- Title: ------------------------------- Address: XXXXXXX ------------------------------- XXXXXXX ------------------------------- Telephone: (XXX) XXX-XXXX ------------------------------- Facsimile: ------------------------------- SOC/EIN#: XXX-XX-XXXX ------------------------------- Number of Shares of Common Stock to be Purchased 12,500 ------------------------------- Series 2003-1 Warrants to be Purchased 6,250 ------------------------------- Aggregate Purchase Price $ 51,250 --------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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 --------------------------------- XXXXXXX --------------------------------- XXXXXXX --------------------------------- Telephone: (XXX) XXX-XXXX --------------------------------- Facsimile: (XXX) XXX-XXXX --------------------------------- SOC/EIN#: XX-XXXXXXX --------------------------------- Number of Shares of Common Stock to be Purchased 7,800 --------------------------------- Series 2003-1 Warrants to be Purchased 3,900 --------------------------------- Aggregate Purchase Price $ 31,980 ------------------ OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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 --------------------------------- XXXXXX --------------------------------- XXXXXX --------------------------------- Telephone: (XXX) XXX-XXXX --------------------------------- Facsimile: (XXX) XXX-XXXX --------------------------------- SOC/EIN#: XX-XXXXXXX --------------------------------- Number of Shares of Common Stock to be Purchased 86,400 ------------------------------- Series 2003-1 Warrants to be Purchased 43,200 --------------------------------- Aggregate Purchase Price $ 354,240 ----------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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 ------------------------------- XXXXXX ------------------------------- XXXXXX ------------------------------- Telephone: (XXX) XXX-XXXX ------------------------------- Facsimile: (XXX) XXX-XXXX ------------------------------- SOC/EIN#: XX-XXXXXXX ------------------------------- Number of Shares of Common Stock to be Purchased 78,800 ------------------------------- Series 2003-1 Warrants to be Purchased 39,400 ------------------------------- Aggregate Purchase Price $ 323,080 ----------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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: Omnicron Master Trust ------------------------------- By: /s Bruce Bernstein ------------------------------- Name: Bruce Bernstein ------------------------------- Title: Managing Member ------------------------------- Address: XXXXX ------------------------------- XXXXX ------------------------------- XXXXX ------------------------------- Telephone: (XXX) XXX-XXXX ------------------------------- Facsimile: (XXX) XXX-XXXX ------------------------------- SOC/EIN#: XX-XXXXXXX ------------------------------- Number of Shares of Common Stock to be Purchased 122,000 ------------------------------- Series 2003-1 Warrants to be Purchased 61,000 ------------------------------- Aggregate Purchase Price $ 500,200 --------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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: Hetal Patel ------------------------------- By: /s/ Hetal Patel ------------------------------- Name: ------------------------------- Title: ------------------------------- Address: XXXXX ------------------------------- XXXXX ------------------------------- XXXXX ------------------------------- Telephone: (XXX) XXX-XXXX ------------------------------- Facsimile: (XXX) XXX-XXXX ------------------------------- SOC/EIN#: XX-XXXXXXX ------------------------------- Number of Shares of Common Stock to be Purchased 25,000 ------------------------------- Series 2003-1 Warrants to be Purchased 12,500 ------------------------------- Aggregate Purchase Price $ 102,500 ----------------- OMNIBUS SIGNATURE PAGE TO SPECTRUM PHARMACEUTICALS, INC. COMMON STOCK AND WARRANT PURCHASE AGREEMENT The undersigned hereby executes and delivers the Common 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: Paul Scharfer ------------------------------- By: /s/ Paul Scharfer ------------------------------- Name: ------------------------------- Title: ------------------------------- Address: XXXXXXXXXX ------------------------------- XXXXXXXXXX ------------------------------- Telephone: (XXX) XXX-XXXX ------------------------------- Facsimile: ------------------------------- SOC/EIN#: XX-XXXXXXX ------------------------------- Number of Shares of Common Stock to be Purchased 36,500 ------------------------------- Series 2003-1 Warrants to be Purchased 18,250 ------------------------------- Aggregate Purchase Price $ 149,650 --------------- SCHEDULE 1 TO COMMON STOCK AND WARRANT PURCHASE AGREEMENT PURCHASERS AND SHARES OF COMMON STOCK AND WARRANTS PURCHASED

Shares of Common Stock Acquirable Shares of under Series Total Name and Address of Purchaser Common Stock 2003-1 Warrants Purchase Price - ----------------------------- ------------ --------------- -------------- BayStar Capital II, L.P. 183,540 91,770 $ 752,514 XXXXX XXXXX Att'n: XXX Facsimile: XXX James Betts 25,000 12,500 $ 102,500 XXXXX XXXXX Att'n: XXX Facsimile: XXX Shanta Chawla, M.D 12,500 6,250 $ 51,250 XXXXX XXXXX Cranshire Capital, LP 122,000 61,000 $ 500,200 XXXXX XXXXX Style XXX Facsimile: XXX Creative Investors Group, LLC 25,000 12,500 $ 102,500 XXXXX XXXXX Att'n: XXX Ashok Gore, Ph.D 12,500 6,250 $ 51,250 XXXXX XXXXX North Sound Legacy Fund LLC 7,800 3,900 $ 31,980 XXXXX XXXXX Att'n: XXX Facsimile: XXX North Sound Legacy Institutional 78,800 39,400 $ 323,080 Fund LLC XXXXX XXXXX Att'n: XXX Facsimile: XXX North Sound Legacy International 86,400 43,200 $ 354,240 Fund Ltd. XXXXX XXXXX Att'n: XXX Facsimile: XXX

SCHEDULE 1 (CONT'D)

Shares of Common Stock Acquirable Shares of under Series Total Name and Address of Purchaser Common Stock 2003-1 Warrants Purchase Price - ----------------------------- ------------ --------------- -------------- Omnicron Capital, LP 122,000 61,000 $ 500,200 XXXXXXX XXXXXXX Attn: XXXXXXX Facsimile: XXXXXXX Hetal Patel 25,000 12,500 $ 102,500 XXXXXXX XXXXXXX Facsimile: XXXXXXX Paul Scharfer 36,500 18,250 $ 149,600 XXXXXXX XXXXXXX Facsimile: XXXXXXX ------- ------- ---------- Total 737,040 368,520 $3,021,864 ======= ======= ==========

EX-99.1 6 a92522exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 [Spectrum Pharmaceuticals, Inc. Letterhead] Contacts: John McManus Spectrum Pharmaceuticals, Inc. (949) 788-6700, ext. 247 SPECTRUM PHARMACEUTICALS COMPLETES $3 MILLION FINANCING LED BY BAYSTAR CAPITAL IRVINE, Calif., August 14, 2003 - Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) today announced that it has raised approximately $3.0 million through the sale of newly issued shares of common stock and warrants to selected institutional and accredited investors, led by Baystar Capital and North Sound Funds. The Company expects to use the net proceeds from this financing for working capital and general corporate expenses, including the development and potential acquisition of oncology drug candidates. "This financing furthers strengthens Spectrum's balance sheet, and enhances the resources available to fund the development of EOquin and elsamitrucin, acquire additional late stage oncology drugs and expand our generic drug portfolio", stated Rajesh Shrotriya, M.D., Chairman, Chief Executive Officer and President of Spectrum. "We are particularly pleased that this transaction was led by funds and affiliates of funds who are existing stockholders and have participated in previous offerings. Their continued support of our efforts to enhance the value of the Company is deeply appreciated." The Company issued 737,040 shares of common stock at a price of $4.10 per share. In addition, purchasers of the common stock received warrants to purchase up to 368,520 shares of common stock at $4.75 per share. If exercised, the warrants could generate up to an additional $1.8 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 an exemption from registration requirements. 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. more... 2 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 statements include but are not limited to statements that relate to the use of proceeds from the financing, our product development plans and any statements that relate to the intent, belief, plans or expectations of the company or its management, or that are not a statement of historical fact. Risks that could cause actual results to differ include our lack of revenues and need for additional financing, the possibility that our existing drug product candidates may not prove to be safe or effective, our limited experience in establishing strategic alliances, our limited experience with the generic drug industry and other risks that are described in further detail in the Company's reports filed with the Securities and Exchange Commission. -----END PRIVACY-ENHANCED MESSAGE-----

EX-4.1

                                                                     Exhibit 4.1

                          REGISTRATION RIGHTS AGREEMENT

            This Registration Rights Agreement (this "Agreement") is made and
entered into as of August 13, 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 Common 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, or such later date, if any,
to which the Effectiveness Date is extended pursuant to Section 3(m)(i).

                                       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, or such
later date, if any, to which the Filing Date is extended pursuant to Section
3(m)(i).

            "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, on account of the purchase by the Purchasers of
Common Stock and Series 2003-1 Warrants pursuant to the Purchase Agreement.

            "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.

            "Purchase Agreement" has the meaning set forth in the preamble to
this Agreement.

            "Registrable Securities" means (i) the Purchased Shares and the
Warrant Shares, and any shares issued upon any stock split, stock dividend,
recapitalization or similar event with respect


                                       2

to such Purchased 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.

            "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.

            "Series D Piggyback Rights" means the rights of holders of the
Common Stock acquired or hereafter acquirable upon conversion or exercise of the
Company's Series D Preferred Stock and Series D-1, D-2 and D-3 Common Stock
Purchase Warrants to include such Common Stock in a registration statement by
the Company, as such rights are set forth in Section 7 (d) of the Series D
Registration Rights Agreement.

            "Series D Registration Rights Agreement" means that certain
registration rights agreement dated as of May 7, 2003, by and among the Company
and certain holders of the Company's Series D Preferred Stock, and certain other
persons, as amended.

            "Special Counsel" means any one 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.

                                       3

      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 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
the shares of Common Stock held by or issuable to the persons specified in
Section 7(c) hereof, 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) not later than 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, 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 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's 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 the 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 the Special Counsel shall reasonably object in writing within
three (3) Business Days after their receipt thereof.

                                       4

            (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.

            (c)   Notify the Holders of Registrable Securities to be sold and
the 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.

                                       5

            (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 the 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 the 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 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 the
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


                                       6

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, by giving five (5) business days' prior written
notice (in accordance with Section 7(g) hereof) to each Holder, 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 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; the Company's notice as herein
required shall not be given later than five (5) business days prior to the 90th
day after the Closing Date. If a Holder does not furnish the information
requested within five (5) days after delivery of the Company's written request,
the Filing Date (if not already passed) and the Effectiveness Date shall be
extended by one day for each day that a Holder fails to furnish such requested
information; provided, however, that if the Company determines to exclude such
Holder from the Registration Statement as herein permitted, no extension of the
Effectiveness Date shall be made on account of such excluded Holder beyond
extensions accrued before such determination by the Company.

                  (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


                                       7

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 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,


                                       8

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 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


                                       9

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.

            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


                                       10



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 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.

                                       11

                  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 Purchased 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 Purchased 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 Purchased 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 Purchased
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 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


                                       12

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 (i) up to 125,565 shares (the "LPL Shares") of Common Stock held
by Lekar Pharma Limited ("LPL"), (ii) up to 538 shares of Common Stock
acquirable under a warrant dated September 9, 1998, issued to Leasing
Technologies International, Inc. (the ("LTII Warrant"), and (iii) any shares of
Common Stock required to be included in the Registration Statement under the
Series D Piggyback Rights, 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 (i) held by LPL and (ii) underlying the LTII Warrant, to be registered in
the Registration Statement shall not be increased on account of any adjustments
provided for (A) pursuant to any agreement, obligation or understanding with
respect to the LPL Shares, or (B) in the LTII Warrant, other than on account of
a stock split (including a stock split effected by means of a stock dividend) or
other adjustment made with respect to all Common Stock as a class. No cut-back
of the numbers of shares to be registered for the accounts of the Holders shall
be made unless and until all LPL Shares and shares underlying the LTII Warrant
have been cut back in full.

                  (d)      Piggy-Back Registrations. Subject to the limitations
imposed under the Series D Registration Rights Agreement, 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, 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


                                       13

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,
Liquidated Damages.

                           (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 (A)
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 (B) 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 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.

                                       14

                           (iii)    The Company and the Holders agree that the
Holders will suffer damages if the Registration Statement is not filed on or
prior to the Filing Date and not declared effective by the Commission on or
prior to the Effectiveness Date and maintained in the manner contemplated herein
during the Effectiveness Period. The Company and the Holders further agree that
it would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (A) the Registration Statement is not filed on or prior to the
Filing Date, or is not declared effective by the Commission on or prior to the
30th day after the Effectiveness Date (or in the event an additional
Registration Statement is filed because the actual number of shares of Common
Stock for which the Warrants are exercisable exceeds the number of shares of
Common Stock initially registered is not filed and declared effective within the
time periods set forth in Section 2), or (B) the Company fails to file with the
Commission a request for acceleration in accordance with Rule 12dl-2 promulgated
under the Exchange Act within 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 is not
subject to further review, or (C) the Registration Statement is filed with and
declared effective by the Commission but thereafter ceases to be effective as to
all or any lesser portion of the Registrable Securities for a period of five (5)
or more consecutive trading days (the "Non-Effectiveness Period") at any time
prior to the expiration of the Effectiveness Period, without being succeeded by
a subsequent Registration Statement filed and declared effective by the
Commission within twenty-five (25) trading days after the commencement of the
Non-Effectiveness Period, or (D) the exercise rights of a Holder under the
Warrants are suspended for any reason other than by or through the fault of such
Holder, or (E) the Company has breached Section 3(n) of this Agreement (any such
failure or breach being referred to as an "Event"), then the Company shall pay
in cash as liquidated damages for such failure and not as a penalty to each
Holder (but as to clause (D), only to Holders for which such clause is
applicable) an amount equal to one and one-half percent (1.5%) of such Holder's
pro rata share of the aggregate purchase price paid by all Purchasers under the
Purchase Agreement for each thirty (30) day period until the applicable Event
has been cured, which shall be pro rated for such periods less than thirty (30)
days (the "Periodic Amount"). Payments to be made pursuant to this Section 7(e)
shall be due and payable immediately upon demand in immediately available cash
funds. The parties agree that the Periodic Amount represents a reasonable
estimate on the part of the parties, as of the date of this Agreement, of the
amount of damages that may be incurred by the Holders if the Registration
Statement is not filed on or prior to the Filing Date or has not been declared
effective by the Commission on or prior to the 30th day after the Effectiveness
Date and maintained in the manner contemplated herein during the Effectiveness
Period or if any other Event as described herein has occurred.

                  (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.

                                       15

                  (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: Alan 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 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 Purchased Shares, 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


                                       16

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.

                  (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


                                       17

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:]



                                       18

         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.




PURCHASERS/HOLDERS:                              COMPANY:
- ------------------                               -------
                                              
BAYSTAR CAPITAL II, L.P.                         SPECTRUM PHARMACEUTICALS, INC., a Delaware
By:  SDS Capital Partners, LLC                   corporation

By: /s/ Steve Derby                              By: /s/ Rajesh C. Shrotriya
    ------------------------------------------   ------------------------------------------
    Name:  Steve Derby                               Name: Rajesh C. Shrotriya, M.D.
    Title  Managing Member                           Title: CEO


    /s/ James T. Betts                           PURCHASERS/HOLDERS (CONT'D):
    ------------------------------------------   ------------------------------------------
JAMES BETTS


                                                     /s/ Hetal Patel
                                                 ------------------------------------------
                                                 HETAL PATEL


    /s/ Shanta Chawla                                /s/ Ashok Y. Gore
    ------------------------------------------   ------------------------------------------
SHANTA CHAWLA, M.D.                              ASHOK GORE, PH.D.


                                              
CRANSHIRE CAPITAL, LP                            OMNICRON CAPITAL, LP
By: Downsview Capital , its general partner      By: Bruce Bernstein, its general partner

By: /s/ Mitchell D. Kopin                        By: /s/ Bruce Bernstein
    ------------------------------------------       --------------------------------------
    Name:  Mitchell D. Kopin                         Name:  Bruce Bernstein
    Title: President - Downsview Capital             Title:
           The General Partner

CREATIVE INVESTORS GROUP, LLC

By: /s/ Paresh Mital                                 /s/ Paul Scharfer
    ------------------------------------------       --------------------------------------
    Name:  Paresh Mital                          PAUL SCHARFER
    Title: Managing Member

NORTH SOUND LEGACY FUND LLC                      NORTH SOUND LEGACY INTERNATIONAL FUND LTD.

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

NORTH SOUND LEGACY FUND INSTITUTIONAL FUND LLC

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



                   SCHEDULE 1 TO REGISTRATION RIGHTS AGREEMENT



                                                                    Shares of Common
                                                                    Stock Acquirable
                                               Shares of Common     under Series 2003-1     Total Purchase
Name and Address of Purchaser                  Stock                Warrants                Price
- ------------------------------------------     ----------------     -------------------     --------------
                                                                                   
BayStar Capital II, L.P.                                183,540                  91,770           $752,514
XXXX
XXXX
XXXX

James Betts                                              25,000                  12,500           $102,500
XXXX
XXXX
XXXX

Shanta Chawla, M.D.                                      12,500                   6,250            $51,250
XXXX
XXXX
XXXX

Cranshire Capital, LP                                   122,000                  61,000           $500,200
XXXX
XXXX
XXXX

Creative Investors Group, LLC                            25,000                  12,500           $102,500
XXXX
XXXX
XXXX

Ashok Gore, Ph.D.                                        12,500                   6,250            $51,250
XXXX
XXXX
XXXX

North Sound Legacy Fund LLC                               7,800                   3,900            $31,980
XXXX
XXXX
XXXX
Facsimile:  xxx

North Sound Legacy Institutional Fund LLC                78,800                  39,400           $323,080
XXXX
XXXX
XXXX
Att'n:
Facsimile:  xxx

North Sound Legacy International Fund Ltd.               86,400                  43,200           $354,240
XXXX
XXXX
XXXX
Att'n:
Facsimile:




                                                                    Shares of Common
                                                                    Stock Acquirable
                                               Shares of Common     under Series 2003-1     Total Purchase
Name and Address of Purchaser                  Stock                Warrants                Price
- ------------------------------------------     ----------------     -------------------     --------------
                                                                                   
Omnicron Capital, LP                                    122,000                  61,000           $500,200
XXXX
XXXX
Attn:  XXXX
Facsimile: XXXX

Hetal Patel                                              25,000                  12,500           $102,500
XXXX
XXXX
Facsimile: XXXX
                                                         36,500                  18,250           $149,600
Paul Scharfer
XXXX
XXXX
Facsimile: XXXX
- ------------------------------------------     ----------------     -------------------     --------------
         Total                                          737,040                 368,520         $3,021,864
==========================================     ================     ===================     ==============


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 Common Stock and Warrant Purchase Agreement (the "PURCHASE AGREEMENT")
dated as of August ____, 2003 by and among the Company and the buyers named
therein (collectively, the "HOLDERS") pursuant to which the Company issued to
the Holders 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 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-4.2

                                                                     Exhibit 4.2

                              SERIES 2003-1 WARRANT

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 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.

             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 $4.75 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 August 13, 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
(y) the book value per share of Common Stock on such date, and (z) 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 $4.75 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 August 13, 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


                                       3

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.

                  (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


                                       4

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
9.95%* 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"); provided, however, that the Holder may acquire a number of
Warrant Shares that would cause the Holder to exceed the Beneficial Ownership
Cap upon 61 days' prior written notice of its intent thereof to the Company. 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

* 4.9% for the Warrant issued to Cranshire Capital


                                       5

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 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."

            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.


                                       6

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


                                       8

                  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 consolidation


                                       9

      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


                                       10

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 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


                                       11

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 &
Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa, California 92626,
Att'n: Allan 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 Warrant to be
executed by its duly authorized officer and attested by its Secretary.

Dated: August 13, 2003

                                       SPECTRUM PHARMACEUTICALS, INC.



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

Attest:


By: /s/ John L. McManus
    ------------------------------
   Name:  John L. McManus
   Title: Vice President Finance and Strategic Planning and
          Assistant Secretary


See Schedule 1 to the Common Stock and Warrant Purchase Agreement dated as of
August 13, 2003 (filed as Exhibit 10.1 to this Form 8-K) for name of each
purchaser receiving warrants and the number of warrants issued to each
Purchaser.

                                    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-10.1

                                                                    Exhibit 10.1
















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

                   COMMON STOCK AND WARRANT PURCHASE AGREEMENT

                                   DATED AS OF

                                 AUGUST 13, 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

        COMMON STOCK AND SERIES 2003-1 WARRANTS TO PURCHASE COMMON STOCK

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

                         TABLE OF EXHIBITS AND SCHEDULES

                        
Exhibit A                  Form of Series 2003-1 Common Stock Purchase Warrant
Exhibit B                  Form of Registration Rights Agreement

Schedule 1                 Purchasers
Schedule 3                 Schedule of Representations and Warranties of
                                 Spectrum Pharmaceuticals, Inc.



         COMMON STOCK AND WARRANT PURCHASE AGREEMENT (the "Agreement") dated as
of August 13, 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 762,040 shares (the
"Purchased Shares") of its common stock, $0.001 par value per share (the "Common
Stock"), at a price per share of $4.10, and Series 2003-1 Common Stock Purchase
Warrants (the "Series 2003-1 Warrants" or the "Warrants") entitling the holders
thereof to purchase up to an aggregate of 381,020 shares of the Seller's Common
Stock, at an exercise price of $4.75 per share (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 number of
Purchased Shares set forth on Schedule 1 hereto, and (ii) the number of Warrants
set forth on Schedule 1 hereto. The shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the "Warrant Shares." The
Purchased Shares, the Warrants and the Warrant Shares are collectively referred
to as the "Securities."

         1.2      TERMS OF THE WARRANTS. The terms and provisions of the
Warrants are more fully set forth in the Form of Series 2003-1 Common Stock
Purchase Warrant, in the form attached hereto as EXHIBIT A.

         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
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


                                       1

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 a legend in substantially the following form:

                  "THE SECURITIES REPRESENTED BY, OR ACQUIRABLE UPON 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 Purchased
Shares 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
the date hereof. The date on which the Closing occurs is herein called the
"Closing Date." All proceedings to be taken and all documents to be 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 Purchased Shares, duly authorized, issued,
                           fully paid and non-assessable, as is indicated on
                           Schedule 1 for such Purchaser, registered in the name
                           of


                                       2

                           such Purchaser, in such denominations as is indicated
                           on Schedule 1 for such Purchaser;

                           (ii) One or more Warrants in the form of EXHIBIT A
                           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 B (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 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 all certificates
                                    of designation with respect to the preferred
                                    stock of the Seller;

                           (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
                                    hereby including, but not limited to, the
                                    authorization and issuance of the Purchased
                                    Shares,

                           (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.

                  5.       A wire transfer representing the Purchasers'
                           reasonable legal fees and expenses as described in
                           Section 7.2 hereof; such fee may, at the election of
                           the Seller, be paid out of the funds due from the
                           Purchasers at the Closing.

                                       3

                  (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, 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 (including without limitation the Certificate of
Designation and Certificate of Increase with respect to the Series D Preferred
Stock (as hereinafter defined)), 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 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 Purchased Shares and the


                                       4

Warrants, and the subsequent issuance of the Warrant Shares upon exercise of the
Warrants) have been duly authorized, and no additional corporate action is
required for the approval of this Agreement or the Related Documents. 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 rights of creditors, and
except as enforceability of its obligations hereunder are subject to general
principles of equity.

                  (b)      The Purchased Shares issued and delivered to the
Purchasers at Closing are 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 exercise of the
Warrants has been duly and validly reserved for issuance, and upon issuance in
accordance with the terms of 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 Purchased Shares, the Warrants
and the Warrant Shares, 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, and (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, 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


                                       5

delivery of the Purchased Shares and Warrants and the subsequent issuance of the
Warrant Shares upon exercise of the Warrants, as applicable) by 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 Warrant, and form of
Registration Rights Agreement, to the Nasdaq SmallCap Market with respect to 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 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 or in the course of discussions and negotiations with respect
hereto which is material to the Seller has been disclosed in the Recent Reports.

                                       6

         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 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.

                                       7

         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 and Certificate of Increase with respect to the
Series D Preferred Stock;

                  (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 (A)
                                    issuances or sales to directors, employees
                                    and consultants pursuant to existing equity
                                    compensation or stock purchase plans of the
                                    Seller in accordance with past business
                                    practices, and (B) the sale of an aggregate
                                    of 600 shares of Series D Preferred Stock,
                                    Series D-1 Warrants and Series D-2 Warrants,
                                    and the issuance of Series D-3 Warrants to
                                    certain persons in connection with such
                                    sales of Series D Preferred Stock, Series
                                    D-1 Warrants and Series D-2 Warrants;

                           (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 (A) 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,
                                    and (B) the sale of an aggregate of 600
                                    shares of Series D Preferred Stock, Series
                                    D-1 Warrants and Series D-2 Warrants, and
                                    the issuance of Series D-3 Warrants to
                                    certain persons in connection with such
                                    sales of Series D Preferred Stock, Series
                                    D-1 Warrants and Series D-2 Warrants;

                           (iv)     issuance or sale of any stock, bond or other
                                    corporate security other than (A) 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,
                                    and (B) the sale of an aggregate of


                                       8

                                    600 shares of Series D Preferred Stock,
                                    Series D-1 Warrants and Series D-2 Warrants,
                                    and the issuance of Series D-3 Warrants to
                                    certain persons in connection with such
                                    sales of Series D Preferred Stock, Series
                                    D-1 Warrants and Series D-2 Warrants;

                           (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 other than
                                    with respect to the Series D Preferred
                                    Stock;

                           (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;

                           (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.

                                       9

         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 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


                                       10

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.

         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 Purchased Shares
or the Warrant Shares to be issued to the Purchasers upon exercise of the
Warrants.

         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


                                       11

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 3,357,436 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;

                  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;

                  600 shares have been designated Series D 8% Cumulative
                           Convertible Voting Preferred Stock, all of which were
                           issued on or about May 7 and May 13, 2003, of which
                           577 shares remain 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


                                       12

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 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 pursuant to 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
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


                                       13

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 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


                                       14

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 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

                                       15

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 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.

                                       16

         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 exercise of some or all of the
Warrants and the issuance of the 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 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 Purchased Shares, the Warrants
or the Warrant Shares.

         3.32     NASDAQ COMPLIANCE. (a) 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 Purchased Shares, Warrants or Warrant Shares is
in effect and no proceedings for such purpose are pending or, to the Seller's
knowledge, threatened.

                  (b)      The staff of the Nasdaq Stock Market has verbally
confirmed to the Seller that (i) it has reviewed this Agreement, the form of
Series 2003-1 Warrant, and the 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 Purchased Shares, the Warrants 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.

         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


                                       17

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.

          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,


                                       18

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 Purchased
Shares 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. 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 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.
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.

               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      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.

         5.3      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,


                                       19


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.

      5.4 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.

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

      5.6 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 exercise of all
outstanding Warrants (without regard to any limitations on conversions or
exercise).

      5.7 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.

      5.8 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.

      5.9 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 5.9, 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


                                       20

procedures set forth in Section 6.3 hereof. The indemnification provided for in
this Section 5.9 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.

                         ARTICLE VI - - INDEMNIFICATION

      6.1 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.

      6.2 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 6.2(b) shall not exceed the Purchase
Price paid by such Purchaser hereunder.

      6.3 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;


                                       21

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.

                  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 VII - MISCELLANEOUS

      7.1 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


                                       22

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.

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

      7.3 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 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 & 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: Alan 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.

      7.4 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.


                                       23

      7.5 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.

      7.6 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.

      7.7 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.

      7.8 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.

      7.9 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.

      7.10 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 Purchased Shares. 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.

      7.11 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.

      7.12 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


                                       24

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.

      7.13 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.

      7.14 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 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:]


                                       25

      IN WITNESS WHEREOF, the undersigned Purchasers and the Seller have caused
this Common 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.
                   COMMON STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Common 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:    BayStar Capital II, L.P.
                                         -------------------------------
                              By:            /s/ Steve Derby
                                         -------------------------------
                              Name:          Steve Derby
                                         -------------------------------
                              Title:         Managing Member
                                         -------------------------------
                              Address:       c/o BayStar Capital Management, LLC
                                         -------------------------------
                                             xxxxxxxx
                                         -------------------------------
                                             xxxxxxxx
                                         -------------------------------
                              Telephone:     (XXX)XXX-XXXX
                                         -------------------------------
                              Facsimile:     (XXX)XXX-XXXX
                                         -------------------------------
                              SOC/EIN#:      XX-XXXXXXX
                                         -------------------------------

                              Number of Shares of Common Stock to be

                              Purchased      183,540
                                         -------------------------------




                              Series 2003-1 Warrants to be

                              Purchased        91,770
                                        --------------------------------



                              Aggregate Purchase Price  $   752,514
                                                         ---------------

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

The undersigned hereby executes and delivers the Common 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:    James T. Betts
                                               -------------------------------
                                    By:            /s/ James T. Betts
                                               -------------------------------
                                    Name:          James T. Betts
                                               -------------------------------
                                    Title:
                                               -------------------------------
                                    Address:       c/o Shipman & Goodwin LLP
                                               -------------------------------
                                                   xxxxxxxx
                                               -------------------------------
                                                   xxxxxxxx
                                               -------------------------------
                                    Telephone:     (XXX) XXX-XXXX
                                               -------------------------------
                                    Facsimile:     (XXX) XXX-XXXX
                                               -------------------------------
                                    SOC/EIN#:      XXX-XX-XXXX
                                               -------------------------------

                                    Number of Shares of Common Stock to be

                                    Purchased      25,000
                                               -------------------------------




                                    Series 2003-1 Warrants to be

                                    Purchased       12,500
                                               -------------------------------



                                    Aggregate Purchase Price  $   102,500
                                                               ---------------

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

The undersigned hereby executes and delivers the Common 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:    Shanta Chawla
                                               -------------------------------
                                    By:            /s/ Shanta Chawla
                                               -------------------------------
                                    Name:
                                               -------------------------------
                                    Title:
                                               -------------------------------

                                    Address:       XXXXXXXX
                                               -------------------------------
                                                   XXXXXXXX
                                               -------------------------------
                                    Telephone:     (XXX) XXX-XXXX
                                               -------------------------------
                                    Facsimile:     (XXX) XXX-XXXX
                                               -------------------------------
                                    SOC/EIN#:      XXX-XX-XXXX
                                               -------------------------------

                                    Number of Shares of Common Stock to be

                                    Purchased      12,500
                                               -------------------------------




                                    Series 2003-1 Warrants to be

                                    Purchased       6,250
                                              --------------------------------



                                    Aggregate Purchase Price  $  51,250
                                                               ---------------

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

The undersigned hereby executes and delivers the Common 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:    Cranshire Capital, L.P.
                                               ---------------------------------
                                    By:            /s/ Mitchell D. Kopin
                                               ---------------------------------
                                    Name:          Mitchell D. Kopin
                                               ---------------------------------
                                    Title:         President - Downsview Capital
                                               ---------------------------------

                                    Address:       XXXXXXXX
                                               ---------------------------------
                                                   XXXXXXXX


                                    Telephone:     (XXX) XXX-XXXX
                                               ---------------------------------
                                    Facsimile:     (XXX) XXX-XXXX
                                               ---------------------------------
                                    SOC/EIN#:      XX-XXXXXXX
                                               ---------------------------------

                                    Number of Shares of Common Stock to be

                                    Purchased      122,000
                                               ---------------------------------




                                    Series 2003-1 Warrants to be

                                    Purchased      61,000
                                               ---------------------------------



                                    Aggregate Purchase Price  $     500,200
                                                               -----------------

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

The undersigned hereby executes and delivers the Common 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:    Creative Investors Group, LLC
                                               ---------------------------------
                                    By:            /s/ Paresh Mital
                                               ---------------------------------
                                    Name:          Paresh Mital
                                               ---------------------------------
                                    Title:         Managing Member
                                               ---------------------------------
                                    Address:       XXXXXXX
                                               ---------------------------------
                                                   XXXXXXX
                                               ---------------------------------
                                    Telephone:     (XXX) XXX-XXXX
                                               ---------------------------------
                                    Facsimile:     (XXX) XXX-XXXX
                                               ---------------------------------
                                    SOC/EIN#:      XX-XXXXXXX
                                               ---------------------------------

                                    Number of Shares of Common Stock to be

                                    Purchased      25,000
                                               ---------------------------------




                                    Series 2003-1 Warrants to be

                                    Purchased       12,500
                                               ---------------------------------



                                    Aggregate Purchase Price  $     102,500
                                                               -----------------

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

The undersigned hereby executes and delivers the Common 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:    Ashok Y. Gore
                                               -------------------------------
                                    By:            /ss Ashok Y. Gore
                                               -------------------------------
                                    Name:
                                               -------------------------------
                                    Title:
                                               -------------------------------

                                    Address:       XXXXXXX
                                               -------------------------------
                                                   XXXXXXX
                                               -------------------------------
                                    Telephone:     (XXX) XXX-XXXX
                                               -------------------------------
                                    Facsimile:
                                               -------------------------------
                                    SOC/EIN#:      XXX-XX-XXXX
                                               -------------------------------

                                    Number of Shares of Common Stock to be

                                    Purchased      12,500
                                               -------------------------------




                                    Series 2003-1 Warrants to be

                                    Purchased        6,250
                                               -------------------------------



                                    Aggregate Purchase Price  $    51,250
                                                               ---------------

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

The undersigned hereby executes and delivers the Common 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
                                               ---------------------------------
                                                   XXXXXXX
                                               ---------------------------------
                                                   XXXXXXX
                                               ---------------------------------
                                    Telephone:     (XXX) XXX-XXXX
                                               ---------------------------------
                                    Facsimile:     (XXX) XXX-XXXX
                                               ---------------------------------
                                    SOC/EIN#:      XX-XXXXXXX
                                               ---------------------------------

                                    Number of Shares of Common Stock to be

                                    Purchased      7,800
                                               ---------------------------------




                                    Series 2003-1 Warrants to be

                                    Purchased       3,900
                                               ---------------------------------



                                    Aggregate Purchase Price  $     31,980
                                                              ------------------

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

The undersigned hereby executes and delivers the Common 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
                                       ---------------------------------
                                           XXXXXX
                                       ---------------------------------
                                           XXXXXX
                                       ---------------------------------
                            Telephone:     (XXX) XXX-XXXX
                                       ---------------------------------
                            Facsimile:     (XXX) XXX-XXXX
                                       ---------------------------------
                            SOC/EIN#:      XX-XXXXXXX
                                       ---------------------------------

                            Number of Shares of Common Stock to be

                            Purchased      86,400
                                       -------------------------------



                            Series 2003-1 Warrants to be

                            Purchased      43,200
                                       ---------------------------------


                            Aggregate Purchase Price  $     354,240
                                                       -----------------

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

The undersigned hereby executes and delivers the Common 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
                                       -------------------------------
                                           XXXXXX
                                       -------------------------------
                                           XXXXXX
                                       -------------------------------
                          Telephone:       (XXX) XXX-XXXX
                                       -------------------------------
                          Facsimile:       (XXX) XXX-XXXX
                                       -------------------------------
                          SOC/EIN#:        XX-XXXXXXX
                                       -------------------------------

                          Number of Shares of Common Stock to be

                          Purchased        78,800
                                       -------------------------------




                          Series 2003-1 Warrants to be

                          Purchased        39,400
                                       -------------------------------



                          Aggregate Purchase Price  $     323,080
                                                     -----------------

                            OMNIBUS SIGNATURE PAGE TO

                         SPECTRUM PHARMACEUTICALS, INC.

                   COMMON STOCK AND WARRANT PURCHASE AGREEMENT

The undersigned hereby executes and delivers the Common 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:    Omnicron Master Trust
                                               -------------------------------
                                    By:            /s Bruce Bernstein
                                               -------------------------------
                                    Name:          Bruce Bernstein
                                               -------------------------------
                                    Title:         Managing Member
                                               -------------------------------
                                    Address:       XXXXX
                                               -------------------------------
                                                   XXXXX
                                               -------------------------------
                                                   XXXXX
                                               -------------------------------
                                    Telephone:     (XXX) XXX-XXXX
                                               -------------------------------
                                    Facsimile:     (XXX) XXX-XXXX
                                               -------------------------------
                                    SOC/EIN#:      XX-XXXXXXX
                                               -------------------------------

                                    Number of Shares of Common Stock to be

                                    Purchased      122,000
                                               -------------------------------




                                    Series 2003-1 Warrants to be

                                    Purchased       61,000
                                               -------------------------------



                                    Aggregate Purchase Price  $    500,200
                                                               ---------------

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

The undersigned hereby executes and delivers the Common 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:    Hetal Patel
                                               -------------------------------
                                    By:            /s/ Hetal Patel
                                               -------------------------------
                                    Name:
                                               -------------------------------
                                    Title:
                                               -------------------------------
                                    Address:       XXXXX
                                               -------------------------------
                                                   XXXXX
                                               -------------------------------
                                                   XXXXX
                                               -------------------------------
                                    Telephone:     (XXX) XXX-XXXX
                                               -------------------------------
                                    Facsimile:     (XXX) XXX-XXXX
                                               -------------------------------
                                    SOC/EIN#:      XX-XXXXXXX
                                               -------------------------------

                                    Number of Shares of Common Stock to be

                                    Purchased      25,000
                                               -------------------------------




                                    Series 2003-1 Warrants to be

                                    Purchased       12,500
                                               -------------------------------



                                    Aggregate Purchase Price  $     102,500
                                                               -----------------

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

The undersigned hereby executes and delivers the Common 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:    Paul Scharfer
                                               -------------------------------
                                    By:            /s/ Paul Scharfer
                                               -------------------------------
                                    Name:
                                               -------------------------------
                                    Title:
                                               -------------------------------

                                    Address:       XXXXXXXXXX
                                               -------------------------------
                                                   XXXXXXXXXX
                                               -------------------------------
                                    Telephone:     (XXX) XXX-XXXX
                                               -------------------------------
                                    Facsimile:
                                               -------------------------------
                                    SOC/EIN#:      XX-XXXXXXX
                                               -------------------------------

                                    Number of Shares of Common Stock to be

                                    Purchased      36,500
                                               -------------------------------




                                    Series 2003-1 Warrants to be

                                    Purchased       18,250
                                               -------------------------------



                                    Aggregate Purchase Price  $    149,650
                                                               ---------------


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



                                                             Shares of
                                                             Common Stock
                                                             Acquirable
                                          Shares of          under Series        Total
Name and Address of Purchaser             Common Stock       2003-1 Warrants     Purchase Price
- -----------------------------             ------------       ---------------     --------------
                                                                        
BayStar Capital II, L.P.                    183,540              91,770            $  752,514
XXXXX
XXXXX
Att'n:  XXX
Facsimile: XXX

James Betts                                  25,000              12,500            $  102,500
XXXXX
XXXXX
Att'n:  XXX
Facsimile: XXX

Shanta Chawla, M.D                           12,500               6,250            $   51,250
XXXXX
XXXXX

Cranshire Capital, LP                       122,000              61,000            $  500,200
XXXXX
XXXXX
Style  XXX
Facsimile: XXX

Creative Investors Group, LLC                25,000              12,500            $  102,500
XXXXX
XXXXX
Att'n: XXX

Ashok Gore, Ph.D                             12,500               6,250            $   51,250
XXXXX
XXXXX

North Sound Legacy Fund LLC                   7,800               3,900            $   31,980
XXXXX
XXXXX
Att'n:  XXX
Facsimile: XXX

North Sound Legacy Institutional             78,800              39,400            $  323,080
Fund LLC
XXXXX
XXXXX
Att'n:  XXX
Facsimile: XXX

North Sound Legacy International             86,400              43,200            $  354,240
Fund Ltd.
XXXXX
XXXXX
Att'n:  XXX
Facsimile: XXX


SCHEDULE 1 (CONT'D)



                                                             Shares of
                                                             Common Stock
                                                             Acquirable
                                          Shares of          under Series        Total
Name and Address of Purchaser             Common Stock       2003-1 Warrants     Purchase Price
- -----------------------------             ------------       ---------------     --------------
                                                                        
Omnicron Capital, LP                        122,000              61,000            $  500,200
XXXXXXX
XXXXXXX
Attn:  XXXXXXX
Facsimile: XXXXXXX

Hetal Patel                                  25,000              12,500            $  102,500
XXXXXXX
XXXXXXX
Facsimile: XXXXXXX

Paul Scharfer                                36,500              18,250            $  149,600
XXXXXXX
XXXXXXX
Facsimile: XXXXXXX
                                            -------             -------            ----------
      Total                                 737,040             368,520            $3,021,864
                                            =======             =======            ==========

EX-99.1

                                                                    EXHIBIT 99.1

                   [Spectrum Pharmaceuticals, Inc. Letterhead]


Contacts:
John McManus
Spectrum Pharmaceuticals, Inc.
(949) 788-6700, ext. 247

            SPECTRUM PHARMACEUTICALS COMPLETES $3 MILLION FINANCING
                             LED BY BAYSTAR CAPITAL

      IRVINE, Calif., August 14, 2003 - Spectrum Pharmaceuticals, Inc. (NASDAQ:
SPPI) today announced that it has raised approximately $3.0 million through the
sale of newly issued shares of common stock and warrants to selected
institutional and accredited investors, led by Baystar Capital and North Sound
Funds. The Company expects to use the net proceeds from this financing for
working capital and general corporate expenses, including the development and
potential acquisition of oncology drug candidates.

      "This financing furthers strengthens Spectrum's balance sheet, and
enhances the resources available to fund the development of EOquin and
elsamitrucin, acquire additional late stage oncology drugs and expand our
generic drug portfolio", stated Rajesh Shrotriya, M.D., Chairman, Chief
Executive Officer and President of Spectrum. "We are particularly pleased that
this transaction was led by funds and affiliates of funds who are existing
stockholders and have participated in previous offerings. Their continued
support of our efforts to enhance the value of the Company is deeply
appreciated."

      The Company issued 737,040 shares of common stock at a price of $4.10 per
share. In addition, purchasers of the common stock received warrants to purchase
up to 368,520 shares of common stock at $4.75 per share. If exercised, the
warrants could generate up to an additional $1.8 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 an exemption
from registration requirements.

      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.



                                                                         more...





                                                                               2



      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
statements include but are not limited to statements that relate to the use of
proceeds from the financing, our product development plans and any statements
that relate to the intent, belief, plans or expectations of the company or its
management, or that are not a statement of historical fact. Risks that could
cause actual results to differ include our lack of revenues and need for
additional financing, the possibility that our existing drug product candidates
may not prove to be safe or effective, our limited experience in establishing
strategic alliances, our limited experience with the generic drug industry and
other risks that are described in further detail in the Company's reports filed
with the Securities and Exchange Commission.