Document:

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                                                                   EXHIBIT 10.35

                         EXECUTIVE EMPLOYMENT AGREEMENT

     THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
as of December 1, 2000 by and between, Dr. Rajesh C. Shrotriya, currently
residing at 24571 Santa Clara Avenue, Dana Point, California 92629 (hereinafter
referred to as "Executive"), and NeoTherapeutics, Inc. (hereinafter referred to
as "Corporation").

     WHEREAS:

     A.   The Corporation is a corporation organized under the laws of the State
          of Delaware, and is engaged in the business of developing and
          manufacturing pharmaceutical products and services; and

     B.   Executive is a person whose skills, experience and training are
          required by the Corporation; and

     C.   Executive wishes to accept the employment offered by the Corporation
          on the terms and conditions hereinafter set forth.

     NOW THEREFORE, the parties hereto, intending to be legally bound, do hereby
     agree as follows:

     1.   EMPLOYMENT

          1.1  Position and Duties

               The Corporation does hereby employ Executive and Executive hereby
          accepts such employment as President of Corporation upon the terms and
          provisions set forth in this Agreement. Executive shall report to the
          Chief Executive Officer of the Corporation subject to the directions
          of the Chief Executive Officer. Executive shall devote his full
          working time and effort to the business and affairs of the Corporation
          as necessary to faithfully discharge the duties and responsibilities
          of his office.

               Executive may participate in other business and act as a director
          of any profit or nonprofit corporation, so long as such activity is
          not competitive with the business of the Corporation in any material
          respect and does not materially detract from the performance of his
          duties as a full time executive of the Corporation.

     2.   TERM

          This Agreement shall continue in full force and effective for a period
     (the "Term") which shall commence as of December 1, 2000 (the "effective
     date") and shall continue until December 31, 2003 unless sooner terminated
     as hereafter provided. Thereafter, this Agreement will automatically renew
     for one (1) year periods, unless

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     either party gives to the other written notice at least ninety (90) days
     prior to the commencement of the next year, of such party's intent not to
     renew this Agreement.

     3.   COMPENSATION

          3.1  Base Salary

               As compensation for the services to be performed by Executive
          during the continuance of this Agreement, the Corporation shall pay
          Executive a base salary of not less than $260,000 per year for each
          year of his employment hereunder, payable in accordance with
          Corporation practices in effect from time to time, but not less often
          than monthly (the "Base Salary"). Base Salary shall be payable in
          substantially equal installments and reduced on a pro rata basis for
          any fraction of a year or month during which Executive is not so
          employed.

          3.2  Bonus

               The Board of Directors of the Corporation may, at its sole
          discretion, award bonuses of cash or stock from time to time. Any such
          Bonus earned by Executive shall be paid at least annually within
          ninety (90) days after the conclusion of the Corporation's fiscal year
          or, upon mutual agreement of the parties, in another fashion.

          3.3  Additional Benefits

               Executive shall be entitled to all rights and benefits for which
          Executive is otherwise entitled under any pension plan, profit sharing
          plan, life, medical, dental, or benefit the Corporation may provide
          for senior executives generally and for employees of the Corporation
          generally from time to time in effect during the term of this
          Agreement (collectively, "Additional Benefits"). Executive shall
          receive participation in the Executive Medical Plan and shall commence
          such participation immediately.

          3.4  Stock Options

               As an additional element of compensation to Executive in
          consideration of the services to be rendered hereunder, Employer shall
          grant to Executive options to acquire shares of Corporation's common
          stock at the sole discretion of the Board of Directors as follows:

                    (A) The specific terms of stock options awarded to
               Executives shall be as set forth in the separate option
               agreements. To the extent that Corporation does not have
               available options in its option plans to grant to Executive as
               contractually committed herein above, Corporation agrees to amend
               its plans and/or adopt new plans as promptly as possible to
               provide sufficient options for such option grants. Corporation
               shall use its best

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               efforts to prepare and submit for approval by its directors and
               its stockholders at the 2001 Annual Meeting of Stockholders a new
               option plan which would provide sufficient options to allow
               Corporation to meet its contractual obligations to Executive
               herein and to provide for potential grants of stock options to
               other key employees.

                    (B) Executive shall be considered for additional grants of
               options, SAR's, phantom stock rights and any similar option or
               securities compensation when and as such grants are considered
               for other executives or employees of the Corporation, but any
               grant is wholly at the discretion of the Board.

                    (C) For all purposes of this Agreement, a "change of
               control" shall mean and shall be deemed to have occurred if:

                         (1) There shall be consummated (x) any consolidation or
                    merger of the Corporation with another corporation or entity
                    and as a result of such consolidation or merger, a majority
                    of the outstanding voting securities of the surviving or
                    resulting corporation or entity shall be owned in the
                    aggregate by persons who were not stockholders of the
                    Corporation prior to the merger or consolidation (excluding
                    the affiliates of the acquiror who acquired their shares
                    within one hundred eighty (180) days prior to such merger or
                    transfer (or in one transaction or a series of related
                    transactions) of all, or substantially all, of the assets of
                    the Corporation, or

                         (2) The stockholders of the Corporation shall have
                    approved any plan or proposal for the liquidation or
                    dissolution of the Corporation; or

                         (3) Any "person" (as such term is used in the Sections
                    13(d) and 14 (d) (2) of the Securities Exchange Act of
                    1934), shall have become the beneficial owner (within the
                    meaning of Rule 13d-3 under the Exchange Act) of forty
                    percent (40%) or more of the Corporation's outstanding
                    common stock, without the prior approval of the Board, or

                         (4) During any period of two (2) consecutive years,
                    individuals who at the beginning of such period constituted
                    the entire Board of Directors shall have ceased for any
                    reason to constitute a majority thereof unless the election,
                    or the nomination for election by the Corporation's
                    stockholders, of each new Director was approved by vote of
                    the Directors then still in office who were Directors at the
                    beginning of the period.

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               (D) Retirement of Executive

                    Any options held by Executive will become fully vested at
               the time that Executive terminates employment due to his
               retirement. Retirement is defined as the voluntary termination of
               employment by the Executive as a result of the Executive having
               reached the retirement age as established by the Corporation or
               age 65, whichever occurs first or, subsequent to thereto,
               voluntarily terminates his employment.

          3.5  Periodic Review

               The Corporation shall review Executive's Base Salary bonus, Stock
          Options, and Additional Benefits then being provided to Executive not
          less frequently than every twelve (12) months. Following such review,
          the Corporation may, in its discretion, increase the Base Salary,
          award a Bonus, grant Stock Options and Additional Benefits.

          3.6  Reimbursements

                    3.6.1 General. Subject to approval of his/her superior,
               Executives shall be promptly reimbursed by the Corporation for
               amounts actually expended by Executive in the course of
               performing duties for the Corporation where Executive tenders
               receipts or other documentation reasonably substantiating the
               amounts as required by the Corporation. As a condition of
               employment hereunder, Executive shall entertain business
               prospects, provide and maintain an appropriate automobile,
               maintain and improve Executive's professional skills by
               participating in continuing education courses and seminars, and
               maintain memberships in civic groups and professional societies
               and Corporation agrees to reimburse Executive therefore
               consistent with criteria under the Internal Revenue Code, subject
               to approval by their superior.

                    3.6.2 Business Expenses. During the term of this Agreement
               to the extent that such expenditures satisfy the criteria under
               the Internal Revenue Code for deductibility by the Corporation
               (whether or not fully deductible by the Corporation) for federal
               income tax purposes as ordinary and necessary business expenses,
               Corporation agrees to and shall reimburse Executive promptly for
               all reasonable business expenditures including travel,
               entertainment, parking, business meetings, professional dues and
               the costs of and dues associated with maintaining club
               memberships and expenses of education, made or substantiated in
               accordance with policies, practices and procedures established
               from time to time by the Corporation generally with respect to
               other senior executives/managers and other employees of the
               Corporation and incurred in the pursuit and furtherance of the
               Corporation's business and good will.

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                    3.6.3 Travel. In connection with any travel by Executive in
               the performance of his duties hereunder, Corporation shall
               advance to Executive an amount equivalent to the reasonable and
               necessary expenses of such travel and appropriate to Executive's
               position in Corporation pursuant to the policies and procedures
               established for this purpose by this Corporation.

                    3.6.4 Automobile Expenses. During the term of this
               Agreement, Corporation shall provide Executive with a monthly
               vehicle allowance. In addition, Corporation shall pay or
               reimburse Executive for reasonable and necessary costs of all
               automobile insurance (liability or otherwise), fuel, lubricants
               and automobile maintenance and repair incurred by Executive
               hereunder.

                    3.6.5 Entertainment. Executive shall be expected to
               entertain those with whom the Corporation conducts business both
               at Executives' home and at public restaurants, theatres, etc. The
               Corporation shall pay Executive for or promptly reimburse
               Executive for the reasonable and necessary costs of such
               entertainment.

                    3.6.6 Credit Cards. To Assist Executive in the performance
               of his duties, Corporation shall provide Executive with a
               Corporation credit card or cards for use in paying for any and
               all reimbursable expenses.

          3.7  Deductions

               There shall be deducted from Executive's gross compensation
          appropriate amounts for standard employee deductions (e.g., income tax
          withholding, social security and state disability insurance) and any
          other amounts authorized for deduction by Executive.

     4.   VACATION

          Executive shall be entitled to not less than four weeks per year of
     paid vacation for each twelve (12) month period of employment which shall
     accrue on a pro rata basis from the date employment commences under this
     Agreement. Subject to the foregoing minimum vacation, Executive shall be
     entitled to paid vacation, holidays and leave time in accordance with the
     plans, policies, programs and practices in effect generally with respect to
     other senior employees of the Corporation. Executive shall not forfeit or
     cease to accrue any paid vacation, if he is unable to or does not use it,
     in any year or period of years during the term hereof, or any extensions
     thereof.

     5.   INDEMNIFICATION

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          The Corporation shall, to the maximum extent permitted by law,
     indemnify and hold Executive harmless from and against any expenses,
     including reasonable attorney's fees, judgements, fines, settlements and
     other amounts actually and reasonably incurred in connection with any
     proceeding arising out of, or related to, Executive's employment by the
     Corporation. The Corporation shall advance to Executive any expenses,
     including reasonable attorneys' fees and costs of settlement, reasonably
     incurred in defending any such proceeding to the maximum extent permitted
     by law. The Corporation will include Executive under all directors' and
     officers' liability insurance policies and will use its best efforts to
     maintain existing coverage levels, assuming continuation of insurance
     availability at commercially reasonable rates.

     6.   TERMINATION OF EMPLOYMENT

          Employment shall terminate upon the occurrence of any of the following
     events:

          6.1  Expiration of Term

               Upon at least ninety (90) days prior written notice by
          Corporation to Executive terminating this Agreement prior to the
          expiration of the original term or an extended term as specified in
          Section 2; upon such termination, Executive shall be entitled to the
          compensation provided in paragraph 6.4 payable as provided therein.

          6.2  Mutual Agreement

               Whenever the Corporation and Executive mutually agree in writing
          to termination;

          6.3  Termination for Cause

               At any time for cause. For purposes of this Agreement,"cause"
          shall be defined as any of the following, provided however, that the
          board of directors of the Corporation by a duly adopted resolution has
          determined the presence of such cause in good faith: (i) Executive's
          material breach of any of his duties and responsibilities under this
          Agreement (other than as a result of incapacity due to disability);
          (ii) Executive's conviction by, or entry of a plea of guilty in, a
          court of competent jurisdiction for a felony; or, (iii) Executive's
          commission of an act of fraud or willful misconduct or gross
          negligence in the performance of his duties

               Notwithstanding the foregoing, Executive shall not be terminated
          for "cause pursuant to the clauses above, unless and until Executive
          has received notice of the proposed termination for cause including
          details on the bases for such termination and has had an opportunity
          to be heard before at least a majority of members of the board of
          directors of the Corporation. Executive shall be deemed to have had
          such an opportunity if written or telephonic notice is given at least
          ten (10) days in advance of a meeting.

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          6.4  Termination Without Cause

               Without cause. Notwithstanding any other provision of this
          section, the Corporation shall have the right to terminate Executive's
          employment with the Corporation without cause at any time, but any
          such termination shall be without prejudice to Executive's rights to
          receive Base Salary and Additional Benefits provided; under this
          Agreement for the greater of two (2) years or the remaining term, as
          set forth in paragraph 2 above, of this Agreement and, except as
          provided in the proviso below, Executive shall be vested in all
          options granted to him, and shall have one (1) month for each month of
          Executive's tenure, with a minimum of six (6) months and a maximum of
          one (1) year, to exercise all vested options; provided, further, if
          the Board determines that Executive's employment is being terminated
          for the reason that the shared expectations of Executive and the Board
          are not being met; in the Board's judgement, then Executive's vesting
          as shall occur during a period following the date of termination of
          Executive's employment equal to the number of months of Executive's
          tenure with the Corporation, with a minimum of six (6) months and a
          maximum of one (1) year, with the right to exercise for the same
          period plus thirty (30) days. The continued vesting and exercise
          rights relative to all options granted to Executive shall be subject
          to the same limitations as set forth in the immediately preceding
          sentence. If Executive is terminated without cause, Executive may
          elect to receive a lump sum payment representing the aggregate cash
          compensation (including salary, bonus, auto allowance and any other
          cash or equivalent compensation, other than continued vacation
          accrual). Such lump sum payment shall be made not later than ten (10)
          days after Executive makes such election. In the event of such lump
          sum election, all insurance and other noncash benefits shall cease.

          6.5  Death/Disability

               The death or disability of Executive. For the purposes of this
          Agreement, disability shall mean the absence of Executive performing
          Executive's duties with the Corporation on a full time basis for a
          period of six (6) consecutive months, as a result of incapacity due to
          mental or physical illness which is determined to be total and
          permanent by a physician selected by the Corporation or its insurers
          and reasonably acceptable to Executive or Executive's legal
          representative. If Executive shall become disabled, Executive's
          employment may be terminated; by written notice to Executive. In the
          event of the death of Executive, all compensation hereunder shall be
          paid based on value at time of death.

          6.6  By Executive Without Cause

               By Executive at any time upon ninety (90) days' notice to
          Corporation. Executive shall not be entitled to any severance in the
          event of such a termination.

     7.   CHANGE OF CONTROL

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          If there should occur a "change of control" of the Corporation (or any
     successor), as defined in paragraph 3.4 (C) hereof, and Executive's
     employment is terminated (other than by Executive) or Executive is
     adversely affected in terms of overall compensation, benefits, title,
     authority, reports reporting relationships, location of employment or
     similar matters, then Executive, without limitation on any other rights
     hereunder, may, within six (6) months after receiving notice of such event,
     elect to resign from full time service to the Corporation. In the event of
     such election by Executive, Executive shall be provided with senior
     executive outplacement services at an outplacement or executive search firm
     of Executive's selection (and reasonably acceptable to Corporation), and
     the cash compensation and all benefits to which Executive is entitled
     hereunder shall be discontinued twenty-four (24) months after the date of
     election (or earlier, if a lump sum payment of cash compensation is
     specified). Executive, at his election, shall have the right to request
     and, if requested, shall be paid the full cash value of all amounts of cash
     compensation due for the 24-month period (including salary, approved bonus,
     auto allowance, and any other cash or equivalent compensation) in a lump
     sum, such lump sum payment shall be made not later than ten (10) days after
     Executive gives notice to the Corporation of his lump sum election. In the
     event of such election, all insurance and noncash benefits shall cease. All
     options granted to Executive shall vest to the extent provided in paragraph
     6.4 above. In addition, if an acquirer of 100% of the Corporation stock is
     itself a publicly held company, the Corporation shall make reasonable
     efforts to negotiate that Executive shall have the right, but not the
     obligation, to convert all his Corporation vested options into options on
     the acquirer's stock and shall have two (2) years to exercise those
     options, but Corporation shall have no obligation to Executive if it fails
     to secure such rights or concludes that pursuing such rights would
     materially prejudice the interest of the stockholders of the Corporation.

     8.   BREAKUP AND DISPOSITION OF CORPORATION ASSETS

          If within the first year of Executive's employment, the Board
     determines to maximize stockholder value through disposition of a
     significant amount of assets or business units of the Corporation,
     Executive shall assist Corporation through such disposition and shall
     thereafter be entitled to terminate this Agreement within six (6) months of
     such event (completion of such disposition) and receive all benefits
     provided under section 6.4 hereof. As used herein, the term "significant
     amount of assets or business units of the Corporation" shall mean either
     fifty percent (50%) or more of the gross revenues of Corporation or, in the
     absence of gross revenues, 50% of the gross assets of the Corporation
     including intellectual properties, as determined by an independent
     appraisal, or fifty percent (50%) or more of the operating income by
     excluding losses from business units of the Corporation which are operating
     at a loss.)

     9.   BUSINESS DISCLOSURES AND SOLICITATION OF EMPLOYEES

          Executive agrees during the term of his employment by the Corporation
     and thereafter that he will not disclose, other than to an authorized
     employee, officer, director or agent of the Corporation, any information
     relating to the Corporation's business, trade,

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     practices, trade secrets or know-how or proprietary information without the
     Corporation's prior express written consent. Following termination of
     Executive's employment, Executive shall be permitted to continue in his
     usual occupation and shall not be prohibited from competing with the
     Corporation except during the two (2) year severance period and in the
     specific industry market segments in which the Corporation competes and
     which represent twenty percent (20%) or more of its revenues. Executive
     agrees that for a period of one (1) year following the termination of
     Executive's employment with the Corporation for any reason, Executive shall
     not directly or indirectly solicit, induce, recruit or encourage any of the
     Corporation's employees to leave their employment or take away such
     employees to leave their employment or take away such employees or attempts
     to solicit, induce, recruit, encourage or take away employees of the
     Corporation.

     10.  MISCELLANEOUS

          10.1 Arbitration

               Any dispute, controversy or claim arising out of or in respect of
          this Agreement (or its validity, interpretation or enforcement), the
          employment relationship or the subject matter hereof shall, at the
          request of either party, be settled by binding arbitration in Orange
          County, California in accordance with the Commercial Arbitration Rules
          of the American Arbitration Association and judgement upon the award
          rendered by the arbitrator(s) may be entered in any court having
          jurisdiction thereof. The parties shall have rights to discovery as
          provided in section 1283.05 of the California Code of Civil Procedure.
          The prevailing party in any such matter shall recover all of its costs
          and expenses, including reasonable attorney's fees.

          10.2 No Third-Party Beneficiaries

               This Agreement shall not confer any rights or remedies upon any
          person other than the parties and their respective successors and
          permitted assigns.

          10.3 Entire Agreement

               This Agreement (including the documents referred to herein)
          constitutes the entire agreement between the parties and supersedes
          any prior understandings, agreements, or representations between the
          parties, written or oral, to the extent they have related in any way
          to the subject matter hereof.

          10.4 Succession and Assignment

               This Agreement shall be binding upon and inure to the benefit of
          the parties named herein and their respective successors and permitted
          assigns. No party may assign either the Agreement or any of his or its
          rights, interests, or obligations hereunder without the prior written
          approval of the Corporation and Executive; provided, however, that the
          Corporation may (i) assign any or all of its

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          rights and interests hereunder to one or more of its affiliates and
          (ii) designate one or more of its affiliates to perform its
          obligations hereunder (in any or all of which cases the Corporation
          nonetheless shall remain responsible for the performance of all of its
          obligations hereunder).

          10.5 Counterparts

               This Agreement may be executed in one or more Counterparts, each
          of which shall be deemed an original but all of which together will
          constitute one and the same instrument.

          10.6 Headings

               The section headings contained in this Agreement are inserted for
          convenience only and shall not affect in any way the meaning or
          interpretation of this agreement.

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          10.7 Notices

               All notices, requests, demands, claims, and other communications
          required or permitted hereunder will be in writing. Any notice,
          request, demand, claim, or other communication hereunder shall be
          deemed duly given if (and then two business days after) it is sent by
          registered or certified mail, return receipt requested, postage
          prepaid, and addressed to the intended recipient as set forth below:

                    If to Corporation:

                    NEOTHERAPEUTICS, INC.
                    157 TECHNOLOGY DRIVE
                    IRVINE, CA 92618

                    If to Executive:

                    RAJESH SHORTRIYA, M.D.
                    24571 SANTA CLARA AVENUE
                    DANA POINT, CA 92629

               Any party may send any notice, request, demand, claim, or other
          communication hereunder to the intended recipient at the address set
          forth above using any other means (including personal delivery,
          expedited courier, messenger service, telecopy, telex, ordinary mail,
          or electronic mail), but no such notice, request, demand, claim, or
          other communication shall be deemed to have been duly given unless and
          until it actually is received by the intended recipient. Any party may
          change the address to which notices, requests, demands, claims, and
          other communications hereunder are to be delivered by giving notice in
          the manner herein set forth.

          10.8 Governing Law

               This Agreement shall be governed by, and construed and enforced
          in accordance with, the laws of the State of California without giving
          effect to any choice or conflict of law provision or rule (whether of
          the State of California or any other jurisdiction) that would cause
          the application of the laws of any jurisdiction other than the State
          of California.

          10.9 Amendments and Waivers

               No amendment of any provision of this Agreement shall be valid
          unless the same shall be in writing and signed by Corporation and the
          Executive. No waiver by any party of any default, misrepresentation,
          or breach of warranty or convenant hereunder, whether intentional or
          not, shall be deemed to extend to any prior or subsequent default,
          misrepresentation, or breach of warranty or convenant

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          hereunder or affect in any way any rights arising by virtue of any
          prior or subsequent such occurrence.

          10.10 Severability

               Any term or provision of this Agreement that is invalid or
          unenforceable in any situation in any jurisdiction shall not affect
          the validity or enforceability of the remaining terms and provisions
          hereof or the validity or enforceability of the offending term or
          provision in any other situation or in any other jurisdiction.

     IN WITNESS THEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                   "CORPORATION"

                                   By:   /s/ Alvin J. Glasky
                                       --------------------------------------
                                         Alvin J. Glasky

                                   Its:  CEO
                                       --------------------------------------

                                   "EXECUTIVE"

                                    By:      /s/ Rajesh Shrotriya
                                       --------------------------------------
                                             Rajesh Shrotriya, M.D.

                                    Title:   President
                                          -----------------------------------

                                       12<PAGE>
                                                                   EXHIBIT 10.39

August 10, 2001

Alvin J. Glasky, PhD
Chairman, Chief Executive Officer & Chief Scientific Officer
NeoTherapeutics, Inc.
157 Technology Drive
Irvine, CA   92618

Dear Dr. Glasky:

This letter acknowledges and confirms the terms of the corporate finance
agreement ("Agreement") between NeoTherapeutics, Inc. and its subsidiaries
(collectively, the "Company") and Gruntal & Co., L.L.C. ("Gruntal").

1. Gruntal shall act as investment banker and financial advisor for the Company
in connection with corporate finance and mergers and acquisition matters. As
such, Gruntal will provide the Company with advice on the most appropriate time
to access the capital markets and on the nature of the security to be sold, as
well as the appropriate investor base to approach.

2. The Company will furnish Gruntal with such information as Gruntal believes
appropriate to its assignment (the "Information"). The Company recognizes and
confirms that Gruntal (a) will use and rely primarily on the Information and on
information available from generally recognized public sources in performing the
duties contemplated by this Agreement without having independently verified the
same, (b) does not assume responsibility for the accuracy or completeness of the
Information and such other information and (c) will not make an appraisal of any
of the assets of the Company.

3. Either party shall have the right to terminate, in writing, this Agreement
after twenty-four (24) months from the signing hereof. Any termination of this
Agreement shall not affect the Company's obligation to pay Gruntal's fees and
expenses as set forth in paragraphs 4 and 6 below, and to indemnify Gruntal and
certain related entities as provided in paragraph 8.

4. The Company agrees to pay Gruntal, for its services, a monthly retainer of
five thousand dollars ($5,000) per month, payable upon the signing of this
agreement and thereafter on the first day of each month beginning September 1,
2001 through July 1, 2002 and seven thousand five hundred dollars ($7,500) per
month payable each month beginning August 1, 2002 through July 1, 2003.
Additionally, the Company agrees to issue to Gruntal warrants to acquire 125,000
shares of the Company's Common Stock at an exercise price of $3.80 per share.
The warrants will be exercisable at any time before the fifth anniversary of the
date of execution of this Agreement. The warrants shall, among other things: (i)
be transferable to officers, directors and employees of Gruntal, (ii) permit
exercise on a cashless basis, and (iii) contain such other terms as are
customarily included in warrants of this type. The Company shall register the
shares underlying the Warrants upon the earlier of the first anniversary of the
signing of this Agreement or the closing of a financing for which Gruntal has
acted as underwriter or placement agent.

<PAGE>
Alvin J. Glasky, PhD
August 10, 2001
Page 2

5. During the term of this Agreement, Gruntal shall have the right to
participate as a managing underwriter or placement agent with respect to any
offering or placement, by the Company or any of its subsidiaries, of equity or
equity-related securities for which the services of an investment banker are
required, for customary investment banking fees to be mutually negotiated.

6. The Company agrees to reimburse Gruntal for its reasonable out-of-pocket
expenses related to this engagement, including, without limitation, items such
as transportation, lodging, meals, postage, telephone expenses and legal fees
incurred in connection with Gruntal's services described herein. The Company's
responsibility to reimburse Gruntal for such fees shall be limited to $50,000.
The aforementioned expenses shall be billed and will be payable by the Company
as and when incurred.

7. Any financial advice or opinion rendered by Gruntal pursuant to this
Agreement may not be disclosed publicly in any manner without the prior
written approval of Gruntal.

8. The Company hereby agrees to indemnify and hold harmless Gruntal and its
affiliates, and the respective directors, officers, partners, controlling
persons (within the meaning of Section 15 of the Securities Act of 1933 or
Section 20 of the Securities Exchange Act of 1934), agents, counsel and
employees of Gruntal or any of its affiliates (Gruntal and each such other
person or entity being referred to individually as an "Indemnified Person" and,
collectively, as "Indemnified Persons"), to the full extent lawful, from and
against any and all claims, liabilities, losses, damages, penalties, judgments,
awards and expenses incurred by any Indemnified Person (including fees and
disbursements of counsel) which (a) relate to or arise out of (i) actions taken
or omitted to be taken (including any untrue statements made or alleged to have
been made or any statements omitted or alleged to have been omitted or any other
oral or written statements) by the Company, its affiliates, directors, employees
or agents, or (ii) actions taken or omitted to be taken by an Indemnified Person
with the Company's consent or in conformity with its instructions or its actions
or omissions, or (b) otherwise relate to or arise out of Gruntal's activities on
the Company's behalf in connection with the engagement. In addition, the Company
will reimburse Gruntal and any other Indemnified Person for all costs and
expenses, including counsel fees and disbursements, as they are incurred, in
connection with investigating, preparing and defending any action, formal or
informal claim, investigation, inquiry or other proceeding, whether or not in
connection with pending or threatened litigation, caused by or arising out of or
in connection with Gruntal Acting pursuant to the letter of intent whether or
not Gruntal or any Indemnified Person is named as a party thereto and whether or
not any liability results therefrom. The Company will not, however, be
responsible for any claim, liabilities, losses, damages or expenses pursuant to
clause (b) of the preceding sentence which are finally judicially determined by
a court of competent jurisdiction (not subject to further review) to have
resulted primarily from Gruntal's willful misconduct or gross negligence. The
Company also agrees that neither Gruntal nor any other Indemnified Person shall
have any liability to the Company for or in connection with such engagement
except for any such liability for claims, liabilities, losses, damages, or
expenses incurred by the Company which is finally judicially determined to have
resulted primarily from Gruntal's willful misconduct or gross negligence.

<PAGE>
Alvin J. Glasky, PhD
August 10, 2001
Page 3

    In order to provide for just and equitable contribution, if a claim for
indemnification is made pursuant to these provisions but it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification is not available for any reason even though the
express provisions hereof provide for indemnification in such case, then the
Company, on the one hand, and Gruntal on the other hand, shall contribute to
such claim, liability, loss, damage or expense for which such indemnification or
reimbursement is held unavailable in such proportion as is appropriate to
reflect the relative benefits to the Company, on the one hand, and Gruntal on
the other hand, in connection with the actions contemplated by the engagement,
subject to the limitation that in any event the aggregate contribution of
Gruntal and all Indemnified Persons to all losses, claims, damages, liabilities
and expenses to which contribution is available hereunder shall not exceed the
amount of fees actually received by Gruntal pursuant to the Engagement Letter.

    The foregoing right to indemnity and contribution shall be in addition to
any rights that Gruntal or any other Indemnified Person may have at common law
or otherwise and shall remain in full force and effect following the completion
or any termination of Gruntal's engagement and shall be binding on and inure to
the benefit of the successors, assigns, heirs and personal representatives of
the Company and Gruntal and any other Indemnified Party. The Company hereby
consents to personal jurisdiction and to service and venue in any court in which
any claim which is subject to this is brought against Gruntal or any other
Indemnified Person and in any court in which Gruntal or another Indemnified
Person brings such a claim against the Company. Neither termination nor
completion of the engagement of Gruntal referred to above shall affect these
provisions, which shall remain operative and in full force and effect.

9. The Company and Gruntal acknowledge and agree that no brokers,
representatives or other persons have an interest in any of the fees to be paid
to Gruntal by the Company in connection with any Transaction or any other matter
contemplated herein.

10. This Agreement sets forth the entire understanding of the parties relating
to the subject matter hereof, and supersedes and cancels any prior
communications, understandings and agreements between the parties relating to
the subject matter hereof. This Agreement cannot be modified, or changed, nor
can any of its provisions be waived, except by written agreement signed by all
parties.

11. The benefits of this Agreement shall inure to the parties hereto and their
respective successors and assigns, and the obligations and liabilities assumed
in this Agreement shall be binding upon the parties hereto and their respective
successors and assigns.

12. Any dispute between the parties to this Agreement shall be settled by
arbitration before the facilities of the New York Stock Exchange, Inc. or the
National Association of Securities Dealers, Inc. in the City of New York and
will be conducted pursuant to applicable federal laws, the laws of the State of
New York, without regard to conflicts of laws, and the rules of the selected
arbitral facility. The parties understand that

<PAGE>
Alvin J. Glasky, PhD
August 10, 2001
Page 4

the award of the arbitrators, or of a majority of them, will be final and that a
judgment upon any award rendered may be entered in any court having
jurisdiction.

13. Each of the Company and Gruntal represents and warrants to the other that it
is authorized to execute the Agreement on its behalf.

    Please confirm that the foregoing correctly sets forth our understanding by
signing the enclosed copy of this letter where provided and returning it to us.

Very truly yours,

GRUNTAL & CO., L.L.C.

         /s/ Andrew M. Sadosky
------------------------------------
Andrew M. Sadosky
Managing Director

Agreed and accepted on the 13 day
of August 2001

NEOTHERAPEUTICS, INC.

By:      /s/ Alvin J. Glasky
    ---------------------------------------
    Alvin J. Glasky, Ph.D.
    Chairman, Chief Executive Officer &
    Chief Scientific Officer

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