Document:

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                               FIRST AMENDMENT TO
                              EMPLOYMENT AGREEMENT
                                                                   Exhibit 10.18
                                     BETWEEN

                            KRAUSE'S FURNITURE, INC.

                                       AND

                                PHILIP M. HAWLEY

        This First Amendment to Employment Agreement is effective as of February
13, 1998, between Krause's Furniture, Inc. ("KFI") and Philip M. Hawley, is
entered into to amend the Employment Agreement between the parties hereto dated
as of August 26, 1996 (the "Employment Agreement"), with reference to the
following facts:

A.      Mr. Hawley has served as the Chairman of the Board and Chief Executive
        Officer, the position of senior responsibility and authority within the
        KFI Organization since his appointment pursuant to the Employment
        Agreement.

B.      The purpose of this Agreement is to express the terms upon which KFI and
        Mr. Hawley agree to extend the term of employment of Mr. Hawley as
        Chairman of the Board and Chief Executive Officer of KFI.

C.      Mr. Hawley's services to KFI as Chief Executive are extremely valuable
        to KFI and the importance of his leadership and the extraordinary
        responsibilities and demands of his role in the affairs of KFI warrant
        contractual arrangements of the nature herein provided.

D.      Each of KFI and Mr. Hawley wishes to extend the term of Mr. Hawley's
        employment by KFI in his current capacity as Chairman of the Board and
        Chief Executive, subject to the provisions herein.

1.      Amendment to Employment Agreement. The Employment Agreement shall be and
        it hereby is amended as follows:

        1.1.   Extension of Employment Term. Section II.C. of the Employment
               Agreement is hereby amended and restated in its entirety to read
               as follows:

               "II.C. Term Mr. Hawley is hereby employed for a period commencing
               on August 26, 1996 and ending on January 28, 2001."

Other Termination. Section II.G. of the Employment Agreement is amended to
insert in the fourth line of the third paragraph thereof, in place of the date
"August 26, 1999", the date January 29, 2001".

2.      No Other Changes. Except as specifically modified and amended hereby,
        the Employment Agreement and all terms, covenants and conditions therein
        shall remain in

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        full force and effect in the form in which executed.

3.      References to Employment Agreement. From and after the date hereof any
        reference in the Employment Agreement or in other materials to the
        Employment Agreement and to any time from or after the date hereof shall
        mean and refer to the Employment Agreement as modified and amended
        hereby, unless otherwise specifically provided.

4.      Entire Agreement. With respect to the matters covered herein the
        Employment Agreement, as modified and amended by this Amendment,
        contains the entire agreement and understanding between Mr. Hawley and
        KFI and supersedes all prior or and written agreements, understandings,
        commitments and practices between the parties, including all prior
        employment agreements, whether or not fully performed by Mr. Hawley
        before the effective date hereof. No amendments to this Employment
        Agreement or this Amendment may be made except by a writing signed by
        both parties.

5.      Titles and Headings. Title and headings in this Amendment are for ease
        of reference and convenience and shall not be used to affect the meaning
        of any provision of this Amendment or the Employment Agreement.

        IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Employment Agreement as of the day and year first above written.

                                       /s/ Philip M. Hawley
                                       -----------------------------------------
                                       PHILIP M. HAWLEY

                                       KRAUSE'S FURNITURE, INC.

                                       By:  /s/ Thomas M. DeLitto____
                                       -----------------------------------------
                                       Name:    Thomas M. DeLitto
                                       Title:   Vice Chairman of the Board
                                       Date:    5/27/98<PAGE>   1
                                                                     EXHIBIT 4.1

        SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of February
25, 2000, among NeoTherapeutics Inc., a Delaware corporation (the "Company"),
and the investors signatory hereto on the date hereof (each such investor is a
"Purchaser" and all such investors are, collectively, the "Purchasers").

        WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell to the Purchasers and the
Purchasers, severally and not jointly, desire to purchase from the Company an
aggregate of 520,324 shares (the "Shares") of the Company's common stock, $.001
par value per share (the "Common Stock"), at a purchase price of $15.375 per
Share, and warrants to acquire during the five years following their date of
issue an aggregate of 104,000 additional Shares at an exercise price of $21.00
per Share (the "Warrants").

        NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy are hereby acknowledged, the Company and the Purchasers agree as
follows:

                                    ARTICLE I
                                PURCHASE AND SALE

        1.1    The Closing.

               (a)    The Closing.

                      (i) The closing of the purchase and sale of the Shares
(the "Closing") shall take place at the offices of Robinson Silverman Pearce
Aronsohn & Berman LLP ("Robinson Silverman"), 1290 Avenue of the Americas, New
York, New York 10104, immediately following the execution hereof or such later
date as the parties shall agree. The date of the Closing is hereinafter referred
to as the "Closing Date."

                      (ii) At the Closing, the parties shall deliver or shall
cause to be delivered the following: (A) the Company shall deliver to each
Purchaser (1) a stock certificate representing the number of Shares indicated
below such Purchaser's name on the signature page of this Agreement, (2)
Warrants, in the form of Exhibit A, to acquire the number of shares of Common
Stock indicated below such Purchaser's name on the signature page to this
Agreement, and (3) an executed Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of Exhibit B (the
"Registration Rights Agreement"); and (B) each Purchaser shall deliver to the
Company (1) the purchase price indicated below such Purchaser's name on the
signature page to this Agreement in United States dollars in immediately
available funds by wire transfer to an account designated for such purpose prior
to the Closing Date in writing by the Company, and (2) an executed Registration
Rights Agreement.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

        2.1 Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchasers:

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               (a) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of this Agreement, the Warrants and the Registration Rights
Agreement (the "Transaction Documents") and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of the Company and no further action is required by the Company.
Each of the Transaction Documents has been duly executed by the Company and,
when delivered (or filed, as the case may be) in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms. Neither the
Company nor any subsidiary is in violation of any of the provisions of its
respective certificate of incorporation, by-laws or other charter or
organizational documents.

               (b) Issuance of the Securities. The Shares, the Warrants and the
shares of Common Stock issuable upon exercise of the Warrants are duly
authorized, have been duly reserved for issuance to the Purchasers and, when
issued and paid for in accordance with the terms hereof, will be duly and
validly issued, fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of first refusal of any kind.

               (c) Restatement of the Company's Representation and Warranties
contained in Article II of the November Agreement. Except as set forth herein,
the representations and warranties of the Company contained in the Securities
Purchase Agreement dated as of November 19, 1999 among the Company and the
Purchasers (the "November Agreement")) are true and correct as of the Closing
Date as though first made on and as of the Closing Date (other than
representations and warranties which relate to a specific date (which shall not
include representations and warranties relating to the "date hereof") which
representations and warranties shall be true as of such specific date). For all
purposes of the November Agreement, the term "Transaction Documents" (as defined
herein) shall replace the term "Transaction Documents" (as defined therein) and
the term "Securities" shall refer to the Shares, the Warrants and the shares of
Common Stock issuable upon exercise thereof.

               (d) (i) Restatement of the Purchasers' Representation and
Warranties contained in Article II of the November Agreement. The
representations and warranties of each Purchaser contained in the November
Agreement are true and correct as of the Closing Date as though made on and as
of the Closing Date (other than representations and warranties which relate to a
specific date (which shall not include representations and warranties relating
to the "date hereof") which representations and warranties shall be true as of
such specific date).

                      (ii) Investment Intent. The Purchasers are acquiring the
Securities as principal for their own account for investment purposes only and
not with a view to or for distributing or reselling the Securities or any part
thereof, and that the Purchasers have no present intention of selling or
granting any participation in, or otherwise distributing the same. The
Purchasers are not party to any agreement or arrangement with any person to
distribute any of the Securities.

                      (iii) Each Purchasers hereby represents that it is a
Qualified Institutional Buyer as defined in Rule 144A under the Securities Act
of 1933.

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                                   ARTICLE III
                         OTHER AGREEMENTS OF THE PARTIES

        3.1 Restatement of the Parties' Agreements contained in Article III of
the November Agreement. Other than Sections 3.2, 3.5 and 3.6(b) of the November
Agreement, the agreements of the Company and each Purchaser contained in the
November Agreement are reiterated as of the Closing Date, mutatis mutandis.

                                   ARTICLE IV
                                  MISCELLANEOUS

        4.1 Fees and Expenses. At the Closing the Company shall reimburse the
Purchasers for their legal fees and expenses incurred in connection with the
preparation and negotiation of the Transaction Documents by paying to Robinson
Silverman $5,000 for the preparation and negotiation of the Transaction
Documents. The amount contemplated by the immediately preceding sentence shall
be retained by the Purchasers and shall not be delivered to the Company at the
Closing. Other than the amounts contemplated in the immediately preceding
sentence, and except as otherwise set forth in the Registration Rights
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Securities.

        4.2 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 (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 8:00 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 8:00 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) if sent other than by the methods
set forth in (i)-(iii) of this Section, upon actual receipt by the party to whom
such notice is required to be given. The address for such notices and
communications shall be as follows:

        If to the Company:   NeoTherapeutics, Inc.
                             157 Technology Drive
                             Irvine, CA 92618
                             Facsimile No.: (949) 788-6706
                             Attn:  Chief Financial Officer

        If to a Purchaser:   To the address set forth under such
                             Purchaser's name on the signature pages hereto.

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

        4.3 Governing Law. The corporate laws of the State of Delaware shall
govern all issues concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity,
enforcement and interpretation of the Transaction

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Documents shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of the any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
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 contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.

        4.4 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing, the delivery and exercise of the
Warrants.

        4.5 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document is several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such obligations or
the transactions contemplated by the Transaction Document. Each Purchaser shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the Transaction
Documents, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.

        4.6 Incorporation of November Agreement Sections. Sections of the
November Agreement relating to severability, entire agreement, assignment,
amendment, waiver, headings, counterparts and specific performance are hereby
incorporated in their entirety in this Agreement as if fully set forth herein
and shall be binding upon this Agreement and the transactions contemplated
herein.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGES FOLLOW]

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

                             NEOTHERAPEUTICS, INC.

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

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

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                        MONTROSE INVESTMENTS LTD.

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

                        Purchase Price:                          $4,000,000

                        Number of Shares Purchased:                 260,162

                        Number of Shares underlying Warrant:         52,000

                        Address for Notice:

                        Montrose Investments Ltd.
                        300 Crescent Court, Suite 700
                        Dallas, TX 75201
                        Facsimile: (214) 758-1221
                        Attn: Will Rose and Kim Rozman

                        With copies to:

                        Robinson Silverman Pearce Aronsohn & Berman LLP
                        1290 Avenue of the Americas
                        New York, NY  10104
                        Facsimile No.:  (212) 541-4630 and (212) 541-1432
                        Attn: Kenneth L. Henderson, Esq. and Eric L. Cohen, Esq.

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                       STRONG RIVER INVESTMENTS, INC.

                       By:
                          ------------------------------------------------------
                             Kenneth L. Henderson
                             Attorney-in-fact

                       Purchase Price:                                $4,000,000

                       Number of Shares Purchased:                       260,162

                       Number of Shares underlying Warrant:               52,000

                       Address for Notice:

                       Strong River Investments, Inc.
                       c/o Gonzalez-Ruiz 7 Aleman (BVI) Limited
                       Wickhams Cay I, Vanterpool Plaza
                       P.O. Box 873
                       Road Town, Tortolla, BVI

                       With copies to:

                       Robinson Silverman Pearce Aronsohn & Berman LLP
                       1290 Avenue of the Americas
                       New York, NY  10104
                       Facsimile No.:  (212) 541-4630 and (212) 541-1432
                       Attn: Kenneth L. Henderson, Esq. and Eric L. Cohen, Esq.

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

                          SECURITIES PURCHASE AGREEMENT

                                      Among

                              NEOTHERAPEUTICS INC.

                                       and

                         THE INVESTORS SIGNATORY HERETO

                          Dated as of February 25, 2000

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