Document:

<PAGE>   1

                                                                    EXHIBIT 10.4

           AMENDED AND RESTATED CHANGE IN CONTROL EMPLOYMENT AGREEMENT
                  BETWEEN CYTRX CORPORATION AND JACK J. LUCHESE

<PAGE>   2

                              AMENDED AND RESTATED
                     CHANGE IN CONTROL EMPLOYMENT AGREEMENT

         AGREEMENT by and between CytRx Corporation, a Delaware corporation (the
"Company") and Jack J. Luchese (the "Executive"), dated as of the 1st day of
September, 1999. This Agreement amends and restates that certain Change in
Control Employment Agreement, dated as of April 16, 1997, by and between the
Executive and the Company.

         The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.

         NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

         1.       Certain Definitions.

                  (a)      The "Effective Date" shall mean the first date during
the Change of Control Period (as defined in Section l(b)) on which a Change of
Control (as defined in Section 2) occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date on which the Change
of Control occurs, and if it is reasonably demonstrated by the Executive that
such termination of employment (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of Control, then
for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.

                  (b)      The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of the date
hereof; provided, however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company

                                      -1-
<PAGE>   3

shall give notice to the Executive that the Change of Control Period shall not
be so extended.

                  (c)      The "Employment Agreement" shall mean that certain
Amended and Restated Employment Agreement, dated as of September 1, 1999, as
amended from time to time, by and between the Company and the Executive.

         2.       Change of Control. For the purposes of this Agreement, a
"Change of Control" shall mean:

                  (a)      The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 25% or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by a Person who is on April
1, 1997 the beneficial owner of 25% or more of the Outstanding Company Voting
Securities, (ii) any acquisition directly from the Company, (iii) any
acquisition by the Company, (iv) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (v) any acquisition by any corporation pursuant to
a transaction which complies with clauses (i), (ii) and (iii) of subsection (c)
of this Section 2; or

                  (b)      Individuals who, as of April 1, 1997, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to April 1, 1997 whose election, or nomination for election
by the Company's stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

                  (c)      Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the

                                      -2-
<PAGE>   4

corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 25% or more of the combined voting power of the then
outstanding voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination, and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

                  (d)      Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company.

         3.       Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second anniversary of
such date (the "Employment Period").

         4.       Terms of Employment.

                  (a)      Position and Duties.

                           (i)      During the Employment Period, (A) the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Effective Date, and (B) the Executive's services shall be
performed at the location where the Executive was employed immediately preceding
the Effective Date or any office or location less than 35 miles from such
location.

                           (ii)     During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) engage in other business activities that do not

                                      -3-
<PAGE>   5

represent a conflict of interest with his duties to the Company, and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement. It is expressly understood and agreed
that to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive's responsibilities to the Company.

                  (b)      Compensation.

                           (i)      Base Salary. During the Employment Period,
the Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to 12 times the highest monthly
base salary paid or payable, including any base salary which has been earned but
deferred, to the Executive by the Company and its affiliated companies in
respect of the 12-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base Salary
shall be reviewed no more than 12 months after the last salary increase awarded
to the Executive prior to the Effective Date and thereafter at least annually.
Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.

                           (ii)     Annual Bonus. In addition to Annual Base
Salary, the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal
to the Executive's highest annual bonus for the last three full fiscal years
prior to the Effective Date (annualized in the event that the Executive was not
employed by the Company for the whole of such fiscal year). Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.

                           (iii)    Incentive, Savings and Retirement Plans.
During the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period

                                      -4-
<PAGE>   6

immediately preceding the Effective Date or if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies.

                           (iv)     Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case may be, shall
be eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.

                           (v)      Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Company and its affiliated companies
in effect for the Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.

                           (vi)     Fringe Benefits. During the Employment
Period, the Executive shall be entitled to fringe benefits in accordance with
the most favorable plans, practices, programs and policies of the Company and
its affiliated companies in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.

         5.       Termination of Employment.

                  (a)      Death or Disability. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 13(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall

                                      -5-
<PAGE>   7

mean the absence of the Executive from the Executive's duties with the Company
on a full-time basis for 180 consecutive days 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 Company or its insurers and acceptable to the
Executive or the Executive's legal representative.

                  (b)      Cause. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:

                           (i)      the willful and continued failure of the
Executive to perform substantially the Executive's duties with the Company or
one of its affiliates (other than any such failure resulting from incapacity due
to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in which the
Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive's duties, or

                           (ii)     the willful engaging by the Executive in
illegal conduct or gross misconduct which is materially and demonstrably
injurious to the Company.

For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.

                  (c)      Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:

                           (i)      the assignment to the Executive of any
duties inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this

                                      -6-
<PAGE>   8

Agreement, or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive;

                           (ii)     any failure by the Company to comply with
any of the provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by the
Executive;

                           (iii)    the Company's requiring the Executive to be
based at any office or location other than as provided in Section 4(a)(i)(B)
hereof or the Company's requiring the Executive to travel on Company business to
a substantially greater extent than required immediately prior to the Effective
Date;

                           (iv)     any purported termination by the Company of
the Executive's employment otherwise than as expressly permitted by this
Agreement; or

                           (v)      any failure by the Company to comply with
and satisfy Section 12(c) of this Agreement.

         For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in this
Agreement to the contrary notwithstanding, a termination by the Executive for
any reason during the 30-day period immediately following the first anniversary
of the Effective Date shall be deemed to be a termination for Good Reason for
all purposes of this Agreement.

                  (d)      Notice of Termination. Any termination by the Company
for Cause, or by the Executive for Good Reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section 13(b)
of this Agreement. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than 30 days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.

                  (e)      Date of Termination. "Date of Termination" means (i)
if the Executive's employment is terminated by the Company for Cause, or by the
Executive for

                                      -7-
<PAGE>   9

Good Reason, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination, and (iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the date of
death of the Executive or the Disability Effective Date, as the case may be.

         6.       Obligations of the Company upon Termination.

         (a)      Good Reason; Other Than for Cause, Death or Disability. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability, or the Executive shall terminate
employment for Good Reason:

                  (i)      the Company shall pay to the Executive in a lump sum
in cash within 30 days after the Date of Termination the aggregate of the
following amounts:

                                    A.       the sum of (1) the Executive's
Annual Base Salary through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the Annual Bonus paid or payable, including any
bonus or portion thereof which has been earned but deferred, for the most
recently completed fiscal year during the Employment Period, if any (such amount
being referred to as the "Most Recent Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365, and (3) any
compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid (the sum of the amounts described in clauses (1),
(2), and (3) shall be hereinafter referred to as the "Accrued Obligations"); and

                                    B.       the amount equal to two times the
sum of (1) the Executive's Annual Base Salary, and (2) the Most Recent Annual
Bonus; and

                                    C.       an amount equal to the excess of
(a) the actuarial equivalent of the benefit under the Company's qualified
retirement plan (the "Retirement Plan") (utilizing actuarial assumptions no less
favorable to the Executive than those in effect under the Company's Retirement
Plan immediately prior to the Effective Date), and any excess or supplemental
retirement plans in which the Executive participates (together, the "SERP")
which the Executive would receive if the Executive's employment continued for
two years after the Date of Termination, assuming for this purpose that all
accrued benefits are fully vested, and, assuming that the Executive's
compensation in each of such two years is the Annual Base Salary required by
Section 4(b)(i) plus the Most Recent Annual Bonus, over (b) the actuarial
equivalent of the Executive's actual benefit (paid or payable), if any, under
the Retirement Plan and the SERP as of the Date of Termination;

                                      -8-
<PAGE>   10

                           (ii)     for two years after the Executive's Date of
Termination, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(iv) of this Agreement if the
Executive's employment had not been terminated or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their families,
provided, however, that if the Executive becomes re-employed with another
employer and is eligible to receive medical or other welfare benefits under
another employer provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining eligibility (but
not the time of commencement of benefits) of the Executive for retiree benefits
pursuant to such plans, practices, programs and policies, the Executive shall be
considered to have remained employed until two years after the Date of
Termination and to have retired on the last day of such period;

                           (iii)    to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the Executive any other
amounts or benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").

                           (iv)     Notwithstanding any provision of this
Agreement to the contrary, the Executive shall forfeit his right to receive, or,
to the extent such amounts have previously been paid to the Executive, shall
repay in full to the Company with interest at 8% per annum within thirty (30)
days of a final determination of the Executive's liability therefor as set forth
below, the amount described in Section 6(a)(i)(B) of this Agreement if at any
time during the period of two years after the Date of Termination (the
"Restricted Period") he violates the restrictions on competition set forth in
Section 11 hereof. Any determination of whether the Executive has violated the
such non-competition restrictions shall be made by arbitration in Atlanta,
Georgia under the Rules of Commercial Arbitration (the "Rules") of the American
Arbitration Association, which Rules are deemed to be incorporated by reference
herein.

                  (b)      Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations and the timely payment or provision of Other Benefits. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
With respect to the provision of Other Benefits, the term Other Benefits as
utilized in this Section 6(b) shall include without limitation, and the
Executive's estate and/or beneficiaries shall be entitled to receive, benefits
at least equal to the most favorable of the following: (1) the death benefits
described in Section 7(c) of the

                                      -9-
<PAGE>   11

Employment Agreement (whether or not superseded by this Agreement), (2) benefits
provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date, or (3) similar benefits in effect on the date of the Executive's
death with respect to other peer executives of the Company and its affiliated
companies and their beneficiaries.

                  (c)      Disability. If the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period,
this Agreement shall terminate without further obligations to the Executive,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of the following: (1) the post-disability benefits
described in Section 7(c) of the Employment Agreement (whether or not superseded
by this Agreement), (2) disability and other benefits generally provided by the
Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 120-day period
immediately preceding the Effective Date, or (3) disability and other benefits
in effect at any time thereafter generally with respect to other peer executives
of the Company and its affiliated companies and their families.

                  (d)      Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive (x) his Annual Base Salary through
the Date of Termination, (y) the amount of any compensation previously deferred
by the Executive, and (z) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. With respect to the provision of Other Benefits, the
term Other Benefits as utilized in this Section 6(d) shall include, and the
Executive shall be entitled after his termination of employment to receive, the
post-termination benefits described in the first sentence of Section 7(a) of the
Employment Agreement (whether or not superseded by this Agreement).

         7.       Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or

                                      -10-
<PAGE>   12

practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor, subject to Section 13(f), shall anything
herein limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.

         8.       Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").

         9.       Certain Adjustments for Excise Tax.

                  (a)      Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code (the "Excise Tax"), then, prior to the making of any
Payment to the Executive, a calculation shall be made comparing (i) the net
benefit to the Executive of the Payment after payment of the Excise Tax and all
applicable federal, state and local income and other taxes, to (ii) the net
benefit to the Executive if the Payment had been limited to the extent necessary
to avoid being subject to the Excise Tax (but after payment of all other
applicable federal, state and local income and other taxes). If the amount
calculated under (i) above is less than the amount calculated under (ii) above,
then the Payment shall be limited to the extent necessary to avoid being subject
to the Excise Tax, and the Executive may select the component of the Payment to
which such limitation is to be applied.

                  (b)      The determination of whether an Excise Tax would be
imposed, the amount of such Excise Tax, and the calculation of the amounts
referred to in (i) and

                                      -11-
<PAGE>   13

(ii) above shall be made by Ernst & Young LLP or such other
nationally-recognized public accounting firm as may be designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any determination by the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Payments which the Executive was entitled to, but
did not receive pursuant to this Section 9, could have been made without the
imposition of the Excise Tax ("Underpayment"). In such event, the Accounting
Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for the benefit of
the Executive.

         10.      Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive in violation
of this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.

         11.      Restriction on Competition. In order to protect the Company's
investment, which includes but is not limited to, time, money and proprietary
information and in recognition of the unique character of the trade secrets and
other confidential information which are the basis of the Company's business and
future business opportunities, in recognition of the worldwide geographic scope
of the Company's business and/or potential business opportunities and the
Executive's contemplated role, responsibilities and knowledge therefor, for a
period of two years following the Date of Termination, regardless of the reason
therefor, the Executive agrees that he will not work as a consultant for or
directly or indirectly perform services anywhere in the world for himself or any
other person, firm or corporation in any capacity involving the study,
development, use, manufacture or marketing of all formulations and methods using
the surface-active copolymers described in U.S. Patent No. 4,801,452, U.S.
Patent

                                      -12-
<PAGE>   14

Application Serial No. 291,925, U.S. Patent Application Serial No. 107,358, U.S.
Patent Application Serial No. 208,335, and U.S. Patent Application Serial No.
150,731. The foregoing shall not preclude (i) the employment of the Executive,
whether as a director, officer, employee, consultant or otherwise, by a research
partner, joint venture partner, licensee or other person, or corporation or
entity that at such time is authorized by the Company to have rights in or to
restricted products, or (ii) the ownership by the Executive of investment
securities representing not more than three per cent of the outstanding voting
securities of company engaged in a pharmaceutical business, whose stock and/or
securities are traded on a national stock exchange or national quotations
system, provided that such investment is passive and not with the intention of
controlling such business.

         12.      Successors.

                  (a)      This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

                  (b)      This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.

                  (c)      The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

         13.      Miscellaneous.

                  (a)      This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than-by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

                  (b)      All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:

                  If to the Executive:

                  Mr. Jack J. Luchese
                  3915 River Hollow Run
                  Duluth, Georgia 30096

                                      -13-
<PAGE>   15

                  If to the Company:

                  CytRx Corporation
                  154 Technology Parkway
                  Norcross, Georgia 30092
                  Attention: Secretary

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

                  (c)      The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

                  (d)      The Company may withhold from any amounts payable
under this Agreement such federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

                  (e)      The Executive's or the Company's failure to insist
upon strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.

                  (f)      The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement between
the Executive and the Company, the employment of the Executive by the Company is
"at will" and, subject to Section 1(a) hereof, prior to the Effective Date, the
Executive's employment and/or this Agreement may be terminated by either the
Executive or the Company at any time prior to the Effective Date, in which case
the Executive shall have no further rights under this Agreement. From and after
the Effective Date, this Agreement shall supersede any other agreement between
the parties with respect to the subject matter hereof, including without
limitation the Employment Agreement; provided, however, that the following shall
expressly survive the Effective Date of this Agreement: (i) Paragraphs 6, 9,
10(a), 10(c), 10(d) and 11(a) of the Employment Agreement, and (ii) any and all
outstanding rights, options and/or warrants to purchase stock of the Company
held by the Executive on the Effective Date.

                         (signatures on following page)

                                      -14-
<PAGE>   16

         IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused this Agreement to be executed in its name on its behalf by its
undersigned officer thereunto, duly authorized, all as of the day and year first
above written.

                                  ----------------------------------
                                  Jack J. Luchese

Attest:                           CYTRX CORPORATION:

-------------------               ----------------------------
Corporate Secretary               By:    William B. Fleck
(CORPORATE SEAL)                  Title: Vice President, Human Resources

                                  ----------------------------
                                  By:    Herbert H. McDade, Jr.
                                         Chairman, CytRx Compensation Committee

                                      -15-<PAGE>   1
                                                                  EXHIBIT 10.12

                        COMMON STOCK PURCHASE AGREEMENT

                              DATED MARCH 24, 2000

      BY AND BETWEEN CYTRX CORPORATION AND THE INVESTORS SIGNATORY THERETO

<PAGE>   2

                        COMMON STOCK PURCHASE AGREEMENT

                                    BETWEEN

                               CYTRX CORPORATION

                                      AND

                         THE INVESTORS SIGNATORY HERETO

         COMMON STOCK PURCHASE AGREEMENT dated as of March 24, 2000 (the
"Agreement"), between the Investors signatory hereto (each an "Investor" and
together the "Investors"), and CytRx Corporation, a corporation organized and
existing under the laws of the State of Delaware (the "Company").

         WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investors,
and the Investors shall purchase 800,000 shares of Common Stock (as defined
below) and 330,891 Warrants (as defined below) and upon the Effective Date
shall purchase an additional 429,000 shares of Common Stock or 286,000 shares
of Common Stock and 143,000 Warrants.

         WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") and/or 4(6) of the United States Securities
Act and/or Regulation D ("Regulation D") and the other rules and regulations
promulgated thereunder (the "Securities Act"), and/or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments in securities to be made
hereunder.

         NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                              CERTAIN DEFINITIONS

Section 1.1.      "Bid Price" shall mean the closing bid price (as reported
by Bloomberg L.P.) of Common Stock on the Principal Market on the date in
question.

Section 1.2.      "Capital Shares" shall mean the Common Stock and any shares
of any other class of common stock whether now or hereafter authorized, having
the right to participate in the distribution of earnings and assets of the
Company.

Section 1.3.      "Capital Shares Equivalents" shall mean any securities,
rights, or obligations that are convertible into or exchangeable for or give
any right to subscribe for any Capital Shares of the Company or any warrants,
options or other rights to subscribe for or purchase Capital Shares or any such
convertible or exchangeable securities.

                                       1
<PAGE>   3

Section 1.4.      "Closing" shall mean each closing of the purchase and
sale of the Common Stock pursuant to Section 2.1.

Section 1.5.      "Closing Date" shall mean the date on which all conditions to
the applicable Closing have been satisfied (as defined in Section 2.1 (b)
hereto) and such Closing shall have occurred.

Section 1.6.      "Common Stock" shall mean the Company's common stock, $0.001
par value per share.

Section 1.7.      "Damages" shall mean any loss, claim, damage, judgment,
penalty, deficiency, liability, costs and expenses (including, without
limitation, reasonable attorney's fees and disbursements and reasonable costs
and expenses of expert witnesses and investigation).

Section 1.8.      "Effective Date" shall mean the date on which the SEC first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in the Registration Rights Agreement.

Section 1.9.      "Escrow Agent" shall have the meaning set forth in the
Escrow Agreement.

Section 1.10.     "Escrow Agreement" shall mean the Escrow Agreement in
substantially the form of Exhibit A hereto executed and delivered
contemporaneously with this Agreement.

Section 1.11.     "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.

Section 1.12.     "Legend" shall mean the legend set forth in Section 9.1.

Section 1.13.     "Market Price" shall mean seventy-five percent (75%) of the
average of the Bid Prices for the ten (10) Trading Days prior to the Effective
Date.

Section 1.14.     "Material Adverse Effect" shall mean any effect on the
business, operations, properties, prospects or financial condition of the
Company that is material and adverse to the Company and its subsidiaries and
affiliates, taken as a whole, and/or any condition, circumstance, or situation
that would prohibit or otherwise interfere with the ability of the Company to
enter into and perform any of its obligations under this Agreement, the
Registration Rights Agreement, the Escrow Agreement in any material respect.

Section 1.15.     "Outstanding" when used with reference to shares of Common
Stock or Capital Shares (collectively the "Shares"), shall mean, at any date as
of which the number of such Shares is to be determined, all issued and
outstanding Shares, and shall include all such Shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in such
Shares; provided, however, that "Outstanding" shall not mean any such Shares
then directly or indirectly owned or held by or for the account of the Company.

Section 1.16.     "Person" shall mean an individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.

                                       2
<PAGE>   4

Section 1.17.     "Principal Market" shall mean the American Stock Exchange,
the New York Stock Exchange, the NASDAQ National, SmallCap Markets or the OTC
Bulletin Board, whichever is at the time the principal trading exchange or
market for the Common Stock, based upon share volume.

Section 1.18.     "Purchase Price" shall mean $2.25 per share of Common Stock
for adjusted for any splits, reverse splits or Common Stock dividends declared
by the Company after the execution hereof.

Section 1.19.     "Registrable Securities" shall mean the Shares and the
Warrant Shares until (i) the Registration Statement has been declared effective
by the SEC, and all Shares and the Warrant Shares have been disposed of
pursuant to the Registration Statement, (ii) all Shares and the Warrant Shares
have been sold under circumstances under which all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
("Rule 144") are met, (iii) all Shares and the Warrant Shares have been
otherwise transferred to holders who may trade such shares without restriction
under the Securities Act, and the Company has delivered a new certificate or
other evidence of ownership for such securities not bearing a restrictive
legend or (iv) such time as, in the opinion of counsel to the Company, all
Shares and the Warrant Shares may be sold without any time, volume or manner
limitations pursuant to Rule 144(k) (or any similar provision then in effect)
under the Securities Act.

Section 1.20.     "Registration Rights Agreement" shall mean the agreement
regarding the filing of the Registration Statement for the resale of the
Registrable Securities, entered into between the Company and the Investors as
of the Closing Date in the form annexed hereto as Exhibit B.

Section 1.21.     "Registration Statement" shall mean a registration statement
on Form S-3 (or on such other form promulgated by the SEC for which the Company
then qualifies and which counsel for the Company shall deem appropriate, and
which form shall be available for the resale by the Investors of the
Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement, the Registration Rights Agreement and in
accordance with the intended method of distribution of such securities), for
the registration of the resale by the Investors of the Registrable Securities
under the Securities Act.

Section 1.22.     "Regulation D" shall have the meaning set forth in the
recitals of this Agreement.

Section 1.24.     "SEC" shall mean the Securities and Exchange Commission.

Section 1.25.     "Section 4(2)" and "Section 4(6)" shall have the meanings
set forth in the recitals of this Agreement.

Section 1.26.     "Securities Act" shall have the meaning set forth in the
recitals of this Agreement.

Section 1.27.     "SEC Documents" shall mean the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1998 and each report, proxy
statement or registration statement filed by the Company with the SEC pursuant
to the Exchange Act or the Securities Act since the filing of such Annual
Report through the date hereof.

                                       3
<PAGE>   5

Section 1.28.     "Shares" shall mean the shares of Common Stock purchased
pursuant to this Agreement.

Section 1.29.     "Trading Day" shall mean any day during which the Principal
Market shall be open for business.

Section 1.30.     "Warrants" shall mean the Common Stock purchase warrants in
the form of Exhibit C hereto.

Section 1.31.     "Warrant Shares" shall mean the shares of Common Stock
issuable upon exercise of the Warrants.

                                  ARTICLE II

                       PURCHASE AND SALE OF COMMON STOCK

Section 2.1.      Investment.

         (a)      Upon the terms and subject to the conditions set forth
herein, the Company agrees to sell, and the Investors, severally and not
jointly, agree to purchase the Shares as follows:

                  (i)      First Closing. Upon satisfaction by the Company of
                           the Closing conditions set forth in Section 2.1(b),
                           the Investors shall purchase Eight Hundred Thousand
                           (800,000) Shares of Common Stock at the Purchase
                           Price and Three Hundred Thirty Thousand Eight
                           Hundred Ninety One (330,891) Warrants. Upon
                           execution of this Agreement, the Investors shall
                           deliver to the Escrow Agent immediately available
                           funds in their proportionate amount of the Purchase
                           Price as set forth next on the signature pages
                           hereto and the Company shall deliver the Common
                           Stock certificates representing the shares of Common
                           Stock so purchased to the Escrow Agent, to be held
                           by the Escrow Agent pursuant to the Escrow
                           Agreement.

                  (ii)     Second Closing. The Company shall give the Investors
                           written notice of the Effective Date. Within five
                           (5) Trading Days of such notice, the Investors
                           shall, severally and not jointly, advise the Company
                           whether they will purchase their proportionate share
                           of (A) 429,000 Shares of Common Stock at the Market
                           Price or (B) 286,000 Shares of Common Stock at the
                           Purchase Price and 143,000 Warrants. The Investors
                           shall be obligated to purchase additional securities
                           under either (A) or (B) but not both. Within five
                           (5) Trading Days of the Effective Date, the
                           Investors shall purchase such securities as they
                           shall each have elected. The Investors shall deliver
                           to the Escrow Agent immediately available funds in
                           their proportionate amount of the aggregate purchase
                           price, and the

                                       4
<PAGE>   6

                           Company shall deliver the Common Stock certificates
                           representing the shares so purchased and the
                           Warrants to the Escrow Agent, to be held by the
                           Escrow Agent pursuant to the Escrow Agreement.

                  (iii)    Each Closing. Upon satisfaction of the conditions
                           set forth in Section 2.1(b), each Closing shall
                           occur at the offices of the Escrow Agent at which
                           the Escrow Agent (x) shall release the Common Stock
                           to the Investors and (y) shall release the purchase
                           price to the Company (after all fees have been paid
                           as set forth in the Escrow Agreement), pursuant to
                           the terms of the Escrow Agreement.

         (b)      Each Closing is subject to the satisfaction or waiver by the
party sought to be benefited thereby of the following conditions:

                  (i)      acceptance and execution by the Company and by the
                           Investors, of this Agreement and all Exhibits
                           hereto;

                  (ii)     delivery into escrow by each Investor of immediately
                           available funds in the amount of the purchase price
                           of the Common Stock as applicable to each Closing
                           and as more fully set forth in the Escrow Agreement;

                  (iii)    all representations and warranties of the Investors
                           contained herein shall remain true and correct as of
                           each Closing Date (as a condition to the Company's
                           obligations);

                  (iv)     all representations and warranties of the Company
                           contained herein shall remain true and correct as of
                           each Closing Date (as a condition to the Investors'
                           obligations);

                  (v)      the Company shall have obtained all permits and
                           qualifications required by any state for the offer
                           and sale of the Common Stock and Warrants or shall
                           have the availability of exemptions therefrom;

                  (vi)     the sale and issuance of the Common Stock and
                           Warrants hereunder shall be legally permitted by all
                           laws and regulations to which the Investors and the
                           Company are subject and there shall be no ruling,
                           judgment or writ of any court prohibiting the
                           transactions contemplated by this Agreement;

                  (vii)    delivery of the applicable original fully executed
                           Common Stock certificates and Warrant certificates
                           to the Escrow Agent;

                  (viii)   as to the first Closing only, delivery to the Escrow
                           Agent of an opinion of Alston & Bird LLP, counsel to
                           the Company, in the form of Exhibit D;

                  (ix)     as to the first Closing, delivery to the Escrow
                           Agent of the Irrevocable Instructions to Transfer
                           Agent in the form attached hereto as Exhibit E; and

                                       5
<PAGE>   7

                  (x)      as to the first Closing only, delivery to the Escrow
                           Agent of the Registration Rights Agreement; and

                  (xi)     as to the second Closing only, the Registration
                           Statement shall have been declared effective, there
                           shall have been no Material Adverse Effect with
                           respect to the Company since the date of the first
                           Closing, the Common Stock shall continue to be
                           listed on the Nasdaq National or SmallCap Market and
                           the average daily trading volume of the Common Stock
                           on the Principal Market for the ten (10) consecutive
                           Trading Days ending on the Effective Date shall have
                           been at least 300,000.

Section 2.2.      Liquidated Damages. The parties hereto acknowledge and agree
that the sums payable pursuant to the Registration Rights Agreement shall
constitute liquidated damages and not penalties. The parties further
acknowledge that (a) the amount of loss or damages likely to be incurred is
incapable or is difficult to precisely estimate, (b) the amounts specified in
such Sections bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred by the Investors in
connection with the failure by the Company to timely cause the registration of
the Registrable Securities and (c) the parties are sophisticated business
parties and have been represented by sophisticated and able legal and financial
counsel and negotiated this Agreement at arm's length.

                                  ARTICLE III

                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

Each Investor, severally and not jointly, represents and warrants to the
Company that:

Section 3.1.      Restricted Securities; Intent.

                  (a)      The Investor acknowledges that the shares of Common
Stock and the Warrants and Warrant Shares delivered hereunder will not be
registered under the Securities Act, or any state securities act and the resale
of such securities will therefore be subject to certain restrictions. Investors
further acknowledge that the Company's reliance upon exemptions under the
Securities Act and under any state's blue sky laws is based in part upon
Investor's representations, warranties and agreements contained in this
Agreement.

                  (b)      The Investor is entering into this Agreement for its
own account and not with a view to or for sale in connection with any
distribution of the Common Stock, the Warrants or the Warrant Shares. The
Investor has no present arrangement (whether or not legally binding) at any
time to sell the securities to or through any person or entity; provided,
however, that by making the representations herein, the Investor does not agree
to hold such securities for any minimum or other specific term and reserves the
right to dispose of the securities at any time in accordance with federal and
state securities laws applicable to such disposition.

Section 3.2.      Sophisticated Investor. The Investor is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and Investor has such
experience in business and financial matters that it has the

                                       6
<PAGE>   8

capacity to protect its own interests in connection with this transaction and
is capable of evaluating the merits and risks of an investment in the
securities. The Investor acknowledges that an investment in the securities is
speculative and involves a high degree of risk.

Section 3.3.      Authority. This Agreement and each agreement attached as an
Exhibit hereto which is required to be executed by Investor has been duly
authorized and validly executed and delivered by the Investor and is a valid
and binding agreement of the Investor enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.

Section 3.4.      Not an  Affiliate.  The  Investor is not an officer,
director or "affiliate" (as that term is defined in Rule 405 of the Securities
Act) of the Company.

Section 3.5.      Absence of Conflicts. The execution and delivery of this
Agreement and each agreement which is attached as an Exhibit hereto and
executed by the Investor in connection herewith, and the consummation of the
transactions contemplated hereby and thereby, and compliance with the
requirements hereof and thereof by the Investor, will not violate any law,
rule, regulation, order, writ, judgment, injunction, decree or award binding on
Investor or (a) violate any provision of any indenture, instrument or agreement
to which Investor is a party or is subject, or by which Investor or any of its
assets is bound; (b) conflict with or constitute a material default thereunder;
(c) result in the creation or imposition of any lien pursuant to the terms of
any such indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by Investor to any third party; or (d) require the approval
of any third-party (which has not been obtained) pursuant to any material
contract, agreement, instrument, relationship or legal obligation to which
Investor is subject or to which any of its assets, operations or management may
be subject.

Section 3.6.      Disclosure; Access to Information. The Investor has received
all documents, records, books and other publicly available information
pertaining to Investor's investment in the Company that have been requested by
the Investor. The Company is subject to the periodic reporting requirements of
the Exchange Act, and the Investor has reviewed copies of all SEC Documents
deemed relevant by Investor.

Section 3.7.      Manner of Sale. At no time was Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising.

                                  ARTICLE IV

                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investors that, except as set forth
in the SEC Documents or the Disclosure Schedule prepared by the Company and
attached hereto:

Section 4.1.      Organization of the Company. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted.

                                       7
<PAGE>   9

The Company does not have any subsidiaries and does not own more that fifty
percent (50%) of or control any other business entity except as set forth in
the SEC Documents. The Company is duly qualified and is in good standing as a
foreign corporation to do business in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, other than those in which the failure so to qualify would not have a
Material Adverse Effect.

Section 4.2.      Authority. (i) The Company has the requisite corporate power
and corporate authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement, the Escrow Agreement and to issue
the Shares and the Warrants pursuant to their respective terms, (ii) the
execution, issuance and delivery of this Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Common Stock certificates and the Warrants
by the Company and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required, and (iii) this Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Common Stock certificates representing the
Shares and the Warrants have been duly executed and delivered by the Company
and at each Closing shall constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.

Section 4.3.      Capitalization. As of March 24, 2000, the authorized capital
stock of the Company consists of 18,750,000 shares of Common Stock, $0.001 par
value per share, of which 8,780,050 shares are issued and outstanding, 1,000
shares of preferred stock, $0.01 par value, of which none are issued or
outstanding. Except for (i) outstanding options and warrants as set forth in
the SEC Documents, and (ii) as set forth in the Disclosure Schedule, there are
no outstanding Capital Shares Equivalents nor any agreements or understandings
pursuant to which any Capital Shares Equivalents may become outstanding. The
Company is not a party to any agreement granting registration or anti-dilution
rights to any person with respect to any of its equity or debt securities. All
of the outstanding shares of Common Stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable.

Section 4.4.      Common Stock The Company has registered its Common Stock
pursuant to Section 12(b) or (g) of the Exchange Act and is in full compliance
with all reporting requirements of the Exchange Act, and the Company is in
compliance with all requirements for the continued listing or quotation of its
Common Stock, and such Common Stock is currently listed or quoted on, the
Principal Market. As of the date hereof, the Principal Market is the NASDAQ
National Market and the Company has not received any notice regarding, and to
its knowledge there is no threat, of the termination or discontinuance of the
eligibility of the Common Stock for such listing.

Section 4.5.      SEC Documents. The Company has made available to the
Investors true and complete copies of the SEC Documents. The Company has not
provided to the Investors any information that, according to applicable law,
rule or regulation, should have been disclosed publicly prior to the date
hereof by the Company, but which has not been so disclosed. As of

                                       8
<PAGE>   10

their respective dates, the SEC Documents complied in all material respects
with the requirements of the Exchange Act, and rules and regulations of the SEC
promulgated thereunder and the SEC Documents did not 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 financial
statements of the Company included in the SEC Documents complied in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and regulations with
respect thereto at the time of such inclusion. Such financial statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii)
in the case of unaudited interim statements, to the extent they exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited interim statements, to normal year-end audit
adjustments). Neither the Company nor any of its subsidiaries has any material
indebtedness, obligations or liabilities of any kind (whether accrued,
absolute, contingent or otherwise, and whether due or to become due) that would
have been required to be reflected in, reserved against or otherwise described
in the financial statements or in the notes thereto in accordance with GAAP,
which was not fully reflected in, reserved against or otherwise described in
the financial statements or the notes thereto included in the SEC Documents or
was not incurred in the ordinary course of business consistent with the
Company's past practices since the last date of such financial statements.

Section 4.6.      Exemption from Registration; Valid Issuances. Subject to the
accuracy of the Investors' representations in Article III, the sale of the
Shares and the Warrants will not require registration under the Securities Act
and/or any applicable state securities law. Neither the sales of the Shares nor
the Company's performance of its obligations under this Agreement, the
Registration Rights Agreement, the Escrow Agreement or the Warrants will (i)
result in the creation or imposition by the Company of any liens, charges,
claims or other encumbrances upon the Shares or, except as contemplated herein,
any of the assets of the Company, or (ii) entitle the holders of Outstanding
Capital Shares to preemptive or other rights to subscribe for or acquire the
Capital Shares or other securities of the Company. The Shares shall not subject
the Investors to personal liability to the Company or its creditors by reason
of the possession thereof.

Section 4.7.      No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its affiliates nor, to the
knowledge of the Company, any person acting on its or their behalf (i) has
conducted or will conduct any general solicitation (as that term is used in
Rule 502(c) of Regulation D) or general advertising with respect to the sale of
the Shares or the Warrants, or (ii) made any offers or sales of any security or
solicited any offers to buy any security under any circumstances that would
require registration of the Shares or the Warrants under the Securities Act.

Section 4.8.      No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby, including without limitation the issuance of
the Shares and the Warrants, do not and will not (i) result in a violation of
the Company's Certificate of Incorporation or By-Laws or (ii) conflict

                                       9
<PAGE>   11

with, or constitute a material default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material
agreement, indenture or instrument, or any "lock-up" or similar provision of
any underwriting or similar agreement to which the Company is a party, or (iii)
result in a violation of any federal, state or local law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any material property or
asset of the Company is bound or affected, nor is the Company otherwise in
violation of, conflict with or default under any of the foregoing (except in
each case for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not have, individually or
in the aggregate, a Material Adverse Effect). The business of the Company is
not being conducted in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations that either singly or in
the aggregate would not have a Material Adverse Effect. The Company is not
required under any Federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or issue and sell the
Shares in accordance with the terms hereof (other than any SEC or state
securities filings that may be required to be made by the Company subsequent to
each Closing, any registration statement that may be filed pursuant hereto);
provided that, for purposes of the representation made in this sentence, the
Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Investors herein.

Section 4.9.      No Material  Adverse Change.  Since  September 30, 1999, no
Material Adverse Effect has occurred or exists with respect to the Company.

Section 4.10.     No Undisclosed Events or Circumstances. Since September 30,
1999, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, prospects, operations or financial
condition, that, under applicable law, rule or regulation, requires public
disclosure or announcement prior to the date hereof by the Company but which
has not been so publicly announced or disclosed in the SEC Documents.

Section 4.11.     No Integrated Offering. Other than pursuant to an effective
registration statement under the Securities Act, or pursuant to the issuance or
exercise of employee stock options, or pursuant to its discussion with the
Investors in connection with the transactions contemplated hereby, the Company
has not issued, offered or sold its Common Stock, or any securities convertible
into or exchangeable or exercisable for Common Stock within the six-month
period next preceding the date hereof, and the Company shall not permit any of
its directors, officers or affiliates directly or indirectly to take, any
action (including, without limitation, any offering or sale to any Person of
the Shares and Warrants), so as to make unavailable the exemption from
Securities Act registration being relied upon by the Company for the offer and
sale to Investors of the Shares and Warrants as contemplated by this Agreement.

Section 4.12.     Litigation and Other Proceedings. There are no lawsuits or
proceedings pending or, to the knowledge of the Company, threatened, against
the Company or any subsidiary, nor has the Company received any written or oral
notice of any such action, suit, proceeding or investigation, which could
reasonably be expected to have a Material Adverse Effect. No judgment, order,
writ, injunction or decree or award has been issued by or, to the knowledge of

                                      10
<PAGE>   12

the Company, requested of any court, arbitrator or governmental agency which
could result in a Material Adverse Effect.

Section 4.13.     No Misleading or Untrue Communication. The Company and, to
the knowledge of the Company, any person representing the Company, or any other
person selling or offering to sell the Shares and Warrants in connection with
the transaction contemplated by this Agreement, have not made, at any time, any
oral communication in connection with the offer or sale of the same which
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

Section 4.14.     Material Non-Public Information. The Company has not
disclosed to the Investors any material non-public information that (i) if
disclosed, would reasonably be expected to have a material effect on the price
of the Common Stock or (ii) according to applicable law, rule or regulation,
should have been disclosed publicly by the Company prior to the date hereof but
which has not been so disclosed.

Section 4.15.     Insurance. The Company and each subsidiary maintains
property and casualty, general liability, workers' compensation, environmental
hazard, personal injury and other similar types of insurance with financially
sound and reputable insurers that is adequate, consistent with industry
standards and the Company's historical claims experience. The Company has not
received notice from, and has no knowledge of any threat by, any insurer (that
has issued any insurance policy to the Company) that such insurer intends to
deny coverage under or cancel, discontinue or not renew any insurance policy
presently in force.

Section 4.16.     Tax Matters.

         (a)      The Company and each subsidiary has filed all Tax Returns
which it is required to file under applicable laws; all such Tax Returns are
true and accurate in all material respects and has been prepared in compliance
with all applicable laws in all material respects; the Company has paid all
Taxes due and owing by it or any subsidiary (whether or not such Taxes are
required to be shown on a Tax Return) and have withheld and paid over to the
appropriate taxing authorities all Taxes which it is required to withhold from
amounts paid or owing to any employee, stockholder, creditor or other third
parties; and since December 31, 1998, the charges, accruals and reserves for
Taxes with respect to the Company (including any provisions for deferred income
taxes) reflected on the books of the Company are to the knowledge of the
Company adequate to cover any Tax liabilities of the Company if its current tax
year were treated as ending on the date hereof.

         (b)      To the knowledge of the Company, no claim has been made by a
taxing authority in a jurisdiction where the Company does not file tax returns
that the Company or any subsidiary is or may be subject to taxation by that
jurisdiction. There are no foreign, federal, state or local tax audits or
administrative or judicial proceedings pending or being conducted with respect
to the Company or any subsidiary; no information related to Tax matters has
been requested by any foreign, federal, state or local taxing authority; and,
except as disclosed above, no written notice indicating an intent to open an
audit or other review has been received by the Company or any subsidiary from
any foreign, federal, state or local taxing authority. There are no material

                                      11
<PAGE>   13

unresolved questions or claims concerning the Company's Tax liability. The
Company (A) has not executed or entered into a closing agreement pursuant to
ss. 7121 of the Internal Revenue Code or any predecessor provision thereof or
any similar provision of state, local or foreign law; or (B) has not agreed to
or is required to make any adjustments pursuant to ss. 481 (a) of the Internal
Revenue Code or any similar provision of state, local or foreign law by reason
of a change in accounting method initiated by the Company or any of its
subsidiaries or has any knowledge that the IRS has proposed any such adjustment
or change in accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to the business or operations of the Company. The Company has not been a
United States real property holding corporation within the meaning of ss.
897(c)(2) of the Internal Revenue Code during the applicable period specified
in ss. 897(c)(1)(A)(ii) of the Internal Revenue Code.

         (c)      The Company has not made an election under ss. 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of another
person that is not a subsidiary of the Company (A) under Treas. Reg. ss.
1.1502-6 (or comparable provisions of state, local or foreign law), (B) as a
transferee or successor, (C) by contract or indemnity or (D) otherwise. The
Company is not a party to any tax sharing agreement. The Company has not made
any payments, is obligated to make payments or is a party to an agreement that
could obligate it to make any payments that would not be deductible under ss.
280G of the Internal Revenue Code.

         (d)      For purposes of this Section 4.16:

                           "IRS" means the United States Internal Revenue
                           Service.

                           "Tax" or "Taxes" means federal, state, county,
                           local, foreign, or other income, gross receipts, ad
                           valorem, franchise, profits, sales or use, transfer,
                           registration, excise, utility, environmental,
                           communications, real or personal property, capital
                           stock, license, payroll, wage or other withholding,
                           employment, social security, severance, stamp,
                           occupation, alternative or add-on minimum, estimated
                           and other taxes of any kind whatsoever (including,
                           without limitation, deficiencies, penalties,
                           additions to tax, and interest attributable thereto)
                           whether disputed or not.

                           "Tax Return" means any return, information report or
                           filing with respect to Taxes, including any
                           schedules attached thereto and including any
                           amendment thereof.

Section 4.17.     Property. Neither the Company nor any of its subsidiaries
owns any real property. Each of the Company and its subsidiaries has good and
marketable title to all personal property owned by it, free and clear of all
liens, encumbrances and defects except such as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company; and to the Company's
knowledge any real property, mineral or water rights, and buildings held under
lease by the Company as tenant are held by it under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and intended to be made of such property, mineral
or water rights, and buildings by the Company.

                                      12
<PAGE>   14

Section 4.18.     Intellectual Property. Each of the Company and its
subsidiaries owns or possesses adequate and enforceable rights to use all
patents, patent applications, trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, licenses, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures) and other similar rights
and proprietary knowledge (collectively, "Intangibles") necessary for the
conduct of its business as now being conducted. To the Company's knowledge,
neither the Company nor any of its subsidiaries is infringing upon or in
conflict with any right of any other person with respect to any Intangibles. To
the knowledge of the Company, no adverse claims have been asserted by any
person to the ownership or use of any Intangibles and the Company has no
knowledge of any basis for such claim.

Section 4.19.     Regulatory Compliance. The Company has all necessary FDA and
European Union permits and licenses and has made all filings to such regulatory
bodies to conduct its business as it is now being conducted, and is not in
material violation of any thereof.

Section 4.20.     Internal Controls and Procedures. The Company maintains books
and records and internal accounting controls which provide reasonable assurance
that (i) all transactions to which the Company or any subsidiary is a party or
by which its properties are bound are executed with management's authorization;
(ii) the recorded accounting of the Company's consolidated assets is compared
with existing assets at regular intervals; (iii) access to the Company's
consolidated assets is permitted only in accordance with management's
authorization; and (iv) all transactions to which the Company or any subsidiary
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance
with U.S. generally accepted accounting principles.

Section 4.21.     Payments and Contributions. Neither the Company, any
subsidiary, nor any of its directors, officers or, to its knowledge, other
employees has (i) used any Company funds for any unlawful contribution,
endorsement, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment of
Company funds to any foreign or domestic government official or employee; (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other similar payment to any person with respect to
Company matters.

Section 4.22.     No Misrepresentation. The representations and warranties of
the Company contained in this Agreement, any schedule, annex or exhibit hereto
and any agreement, instrument or certificate furnished by the Company to the
Investors pursuant to this Agreement, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

                                   ARTICLE V

                           COVENANTS OF THE INVESTORS

                                      13
<PAGE>   15

         Each Investor, severally and not jointly, covenants with the Company
that:

Section 5.1.      Compliance with Law. The Investor's trading activities with
respect to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed. If so required by the Company, the transfer of the Shares by the
Investor at any time prior to the Effective Date may be conditioned upon the
receipt by the Company of an opinion of competent counsel to the effect that
the proposed transfer will not result in any violation of the Securities Act or
the applicable securities laws of any other United States jurisdiction.

                                  ARTICLE VI

                            COVENANTS OF THE COMPANY

Section 6.1.      Registration Rights. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall
comply in all material respects with the terms thereof and shall use best
efforts to timely prepare and file the Registration Statement.

Section 6.2.      Reservation of Common Stock. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, shares of Common Stock for
the purpose of enabling the Company to issue the Shares at the second Closing
and to honor exercises of the Warrants.

Section 6.3.      Listing of Common Stock. The Company hereby agrees to
maintain the listing of the Common Stock on a Principal Market, and as soon as
reasonably practicable following the Closing to list the Shares on the
Principal Market. The Company further agrees, if the Company applies to have
the Common Stock traded on any other Principal Market, it will include in such
application the Shares. The Company will take all action to continue the
listing and trading of its Common Stock on a Principal Market and will comply
in all respects with the Company's reporting, filing and other obligations
under the bylaws or rules of the Principal Market and shall provide Investors
with copies of any correspondence to or from such Principal Market which
questions or threatens delisting of the Common Stock, within three (3) Trading
Days of the Company's receipt thereof, until the Investors have disposed of all
of their Registrable Securities.

Section 6.4.      Exchange Act Registration. The Company will cause its Common
Stock to continue to be registered under Section 12(b) or (g) of the Exchange
Act, will use its best efforts to comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any action or file
any document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under said Act until the Investors
have disposed of all of their Registrable Securities.

Section 6.5.      Legends. The certificates evidencing the Registrable
Securities shall be free of legends, except as set forth in Article IX.

                                      14
<PAGE>   16

Section 6.6.      Corporate Existence; Conflicting Agreements. The Company will
take all steps necessary to preserve and continue the corporate existence of
the Company. The Company shall not enter into any agreement, the terms of which
agreement would restrict or impair the right or ability of the Company to
perform any of its obligations under this Agreement or any of the other
agreements attached as exhibits hereto.

Section 6.7.      Consolidation; Merger. The Company shall not, at any time
after the date hereof, effect any merger or consolidation of the Company with
or into, or a transfer of all or substantially all of the assets of the Company
to, another entity (a "Consolidation Event") unless the resulting successor or
acquiring entity (if not the Company) assumes by written instrument or by
operation of law the obligation to deliver to the Investors such shares of
stock and/or securities as the Investors are entitled to receive pursuant to
this Agreement.

Section 6.8.      Issuance of Common Stock. The sale of the Shares shall be
made in accordance with the provisions and requirements of Section 4(2), 4(6)
or Regulation D and any applicable state securities law. The Company shall make
any necessary SEC and "blue sky" filings required to be made by the Company in
connection with the sale of the Securities to the Investors as required by all
applicable laws, and shall provide a copy thereof to the Investors promptly
after such filing.

Section 6.9.      Limitation on Future Financing. The Company agrees that it
will not enter into any sale of its securities for cash at a discount to its
then current Market Price until the earlier of (A) sixty (60) days after the
effective date of the Registration Statement or (B) the date on which the
Investors have in the aggregate disposed of more than 50% of the Shares
purchased at both Closings, except for any sales (i) pursuant to any placement
arranged through Ladenburg Thalmann & Co. Inc., (ii) pursuant to any presently
existing employee benefit plan which plan has been approved by the Company's
stockholders, (iii) pursuant to any compensatory plan for a full-time employee
or key consultant, or (iv) with the prior approval of a majority in interest of
the Investors, which will not be unreasonably withheld, in connection with a
strategic partnership or other business transaction, the principal purpose of
which is not simply to raise money.

                                  ARTICLE VII

                           SURVIVAL; INDEMNIFICATION

Section 7.1.      Survival. The representations, warranties and covenants made
by each of the Company and each Investor in this Agreement, the annexes,
schedules and exhibits hereto and in each instrument, agreement and certificate
entered into and delivered by them pursuant to this Agreement, shall survive
each Closing and the consummation of the transactions contemplated hereby. In
the event of a breach or violation of any of such representations, warranties
or covenants, the party to whom such representations, warranties or covenants
have been made shall have all rights and remedies for such breach or violation
available to it under the provisions of this Agreement, irrespective of any
investigation made by or on behalf of such party on or prior to the first
Closing Date.

                                      15
<PAGE>   17

Section 7.2.      Indemnity. (a) The Company hereby agrees to indemnify and
hold harmless the Investors, their respective Affiliates and their respective
officers, directors, partners and members (collectively, the "Investor
Indemnitees"), from and against any and all Damages, and agrees to reimburse
the Investor Indemnitees for all reasonable out-of-pocket expenses (including
the reasonable fees and expenses of legal counsel), in each case promptly as
incurred by the Investor Indemnitees and to the extent arising out of or in
connection with:

                  (i)      any misrepresentation, omission of fact or breach of
         any of the Company's representations or warranties contained in this
         Agreement, the annexes, schedules or exhibits hereto or any
         instrument, agreement or certificate entered into or delivered by the
         Company pursuant to this Agreement; or

                  (ii)     any failure by the Company to perform in any
         material respect any of its covenants, agreements, undertakings or
         obligations set forth in this Agreement, the annexes, schedules or
         exhibits hereto or any instrument, agreement or certificate entered
         into or delivered by the Company pursuant to this Agreement; or

                  (iii)    any action instituted against the Investors, or any
         of them, by any stockholder of the Company who is not an Affiliate of
         an Investor, with respect to any of the transactions contemplated by
         this Agreement.

         (b)      Each Investor, severally and not jointly, hereby agrees to
indemnify and hold harmless the Company, its Affiliates and their respective
officers, directors, partners and members (collectively, the "Company
Indemnitees"), from and against any and all Damages, and agrees to reimburse
the Company Indemnitees for reasonable all out-of-pocket expenses (including
the reasonable fees and expenses of legal counsel), in each case promptly as
incurred by the Company Indemnitees and to the extent arising out of or in
connection with any misrepresentation, omission of fact, or breach of any of
the Investor's representations or warranties contained in this Agreement, the
annexes, schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Investor pursuant to this
Agreement or (ii) any failure by the Investor to perform in any material
respect any of its covenants, agreements, undertakings or obligations set forth
in this Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by the Investor pursuant to
this Agreement. Notwithstanding anything to the contrary herein, the Investor
shall be liable under this Section 7.2(b) for only that amount as does not
exceed the net proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to the Registration Statement.

Section 7.3.      Notice. Promptly after receipt by either party hereto seeking
indemnification pursuant to Section 7.2 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party from whom indemnification pursuant to Section
7.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is actually prejudiced by such omission or
delay. In connection with any Claim as to which both

                                      16
<PAGE>   18

the Indemnifying Party and the Indemnified Party are parties, the Indemnifying
Party shall be entitled to assume the defense thereof. Notwithstanding the
assumption of the defense of any Claim by the Indemnifying Party, the
Indemnified Party shall have the right to employ separate legal counsel and to
participate in the defense of such Claim, and the Indemnifying Party shall bear
the reasonable fees, out-of-pocket costs and expenses of such separate legal
counsel to the Indemnified Party if (and only if): (x) the Indemnifying Party
shall have agreed to pay such fees, out-of-pocket costs and expenses, (y) the
Indemnified Party reasonably shall have concluded that representation of the
Indemnified Party and the Indemnifying Party by the same legal counsel would
not be appropriate due to actual or, as reasonably determined by legal counsel
to the Indemnified Party, potentially differing interests between such parties
in the conduct of the defense of such Claim, or if there may be legal defenses
available to the Indemnified Party that are in addition to or disparate from
those available to the Indemnifying Party, or (z) the Indemnifying Party shall
have failed to employ legal counsel reasonably satisfactory to the Indemnified
Party within a reasonable period of time after notice of the commencement of
such Claim. If the Indemnified Party employs separate legal counsel in
circumstances other than as described in clauses (x), (y) or (z) above, the
fees, costs and expenses of such legal counsel shall be borne exclusively by
the Indemnified Party. Except as provided above, the Indemnifying Party shall
not, in connection with any Claim in the same jurisdiction, be liable for the
fees and expenses of more than one firm of legal counsel for the Indemnified
Party (together with appropriate local counsel). Neither the Indemnifying Party
nor the Indemnified Party shall, without the prior written consent of the
Indemnified Party or the Indemnifying Party, as applicable (which consent shall
not unreasonably be withheld), settle or compromise any Claim or consent to the
entry of any judgment that does not include an unconditional release of the
Indemnified Party or the Indemnifying Party, as applicable, from all
liabilities with respect to such Claim or judgment.

                  All fees and expenses of the Indemnified Party (including
reasonable costs of defense and investigation in a manner not inconsistent with
this Section and all reasonable attorneys' fees and expenses) shall be paid to
the Indemnified Party, as incurred, within ten (10) Trading 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).

Section 7.4.      Direct Claims. In the event one party hereunder should have a
claim for indemnification that does not involve a claim or demand being
asserted by a third party, the Indemnified Party promptly shall deliver notice
of such claim to the Indemnifying Party. If the Indemnified Party disputes the
claim, such dispute shall be resolved by mutual agreement of the Indemnified
Party and the Indemnifying Party or by binding arbitration conducted in
accordance with the procedures and rules of the American Arbitration
Association as set forth in Article X. Judgment upon any award rendered by any
arbitrators may be entered in any court having competent jurisdiction thereof.

                                 ARTICLE VIII

                                      17
<PAGE>   19

        DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

Section 8.1.      Due Diligence Review. Subject to Section 8.2, the Company
shall make available for inspection and review by the Investors, advisors to
and representatives of the Investors (who may or may not be affiliated with the
Investors and who are reasonably acceptable to the Company), any underwriter
participating in any disposition of the Registrable Securities on behalf of the
Investors pursuant to the Registration Statement, any such registration
statement or amendment or supplement thereto or any blue sky, Nasdaq or other
filing, all SEC Documents and other filings with the SEC, and all other
publicly available corporate documents and properties of the Company as may be
reasonably necessary for the purpose of such review, and cause the Company's
officers, directors and employees to supply all such publicly available
information reasonably requested by the Investors or any such representative,
advisor or underwriter in connection with such Registration Statement
(including, without limitation, in response to all questions and other
inquiries reasonably made or submitted by any of them), prior to and from time
to time after the filing and effectiveness of the Registration Statement for
the sole purpose of enabling the Investors and such representatives, advisors
and underwriters and their respective accountants and attorneys to conduct
initial and ongoing due diligence with respect to the Company and the accuracy
of the Registration Statement.

Section 8.2.      Non-Disclosure of Non-Public Information.

         (a)      The Company shall not disclose material non-public
information to the Investors, advisors to or representatives of the Investors
unless prior to disclosure of such information the Company identifies such
information as being non-public information and provides the Investors, such
advisors and representatives with the opportunity to accept or refuse to accept
such non-public information for review. Other than disclosure of any comment
letters received from the SEC staff with respect to the Registration Statement,
the Company may, as a condition to disclosing any non-public information
hereunder, require the Investors' advisors and representatives to enter into a
confidentiality agreement in form and content reasonably satisfactory to the
Company and the Investors.

         (b)      Nothing herein shall require the Company to disclose material
non-public information to the Investors or their advisors or representatives,
and the Company represents that it does not disseminate material non-public
information to any Investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts, provided, however, that
notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, promptly notify the advisors and representatives of the
Investors and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting material non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein in light
of the circumstances in which they were made, not misleading. Nothing contained
in this Section 8.2 shall be construed to mean that such persons or entities
other than the Investors (without the written consent of the Investors prior to
disclosure of such

                                      18
<PAGE>   20

information as set forth in Section 8.2(a)) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of a material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.

                                  ARTICLE IX

                      LEGENDS; TRANSFER AGENT INSTRUCTIONS

Section 9.1.      Legends. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend or
equivalent (the "Legend"):

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED
OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM SUCH REGISTRATION.

Section 9.2.      Transfer Agent Instructions. Upon the execution and delivery
hereof, the Company is issuing to the transfer agent for its Common Stock (and
to any substitute or replacement transfer agent for its Common Stock upon the
Company's appointment of any such substitute or replacement transfer agent)
instructions substantially in the form of Exhibit E hereto. Such instructions
shall be irrevocable by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer
agent, as the case may be.

Section 9.3.      No Other Legend or Stock Transfer Restrictions. No legend
other than the one specified in Section 9.1 has been or shall be placed on the
share certificates representing the Registrable Securities and no instructions
or "stop transfer orders," "stock transfer restrictions," or other restrictions
have been or shall be given to the Company's transfer agent with respect
thereto other than as expressly set forth in this Article IX.

Section 9.4.      Investors' Compliance. Nothing in this Article shall affect
in any way each Investor's obligations to comply with all applicable securities
laws upon resale of the Common Stock.

                                      19
<PAGE>   21

                                   ARTICLE X

                           CHOICE OF LAW; ARBITRATION

Section 10.1.     Governing Law/Arbitration. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made in New York by persons domiciled in New York City
and without regard to its principles of conflicts of laws. Any dispute under
this Agreement shall be submitted to arbitration under the American Arbitration
Association (the "AAA") in New York City, New York, and shall be finally and
conclusively determined by the decision of a board of arbitration consisting of
three (3) members (hereinafter referred to as the "Board of Arbitration")
selected according to the rules governing the AAA. The Board of Arbitration
shall meet on consecutive business days in New York City, New York, and shall
reach and render a decision in writing (concurred in by a majority of the
members of the Board of Arbitration) with respect to the amount, if any, which
the losing party is required to pay to the other party in respect of a claim
filed. In connection with rendering its decisions, the Board of Arbitration
shall adopt and follow the laws of the State of New York unless the matter at
issue is the corporation law of the company's state of incorporation, in which
event the corporation law of such jurisdiction shall govern such issue. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) calendar days following commencement of proceedings with
respect thereto. The Board of Arbitration shall cause its written decision to
be delivered to all parties involved in the dispute. Any decision made by the
Board of Arbitration (either prior to or after the expiration of such thirty
(30) calendar day period) shall be final, binding and conclusive on the parties
to the dispute, and entitled to be enforced to the fullest extent permitted by
law and entered in any court of competent jurisdiction. The Board of
Arbitration shall be authorized and is hereby directed to enter a default
judgment against any party failing to participate in any proceeding hereunder
within the time periods set forth in the AAA rules. The prevailing party shall
be awarded its costs, including attorneys' fees, from the non-prevailing party
as part of the arbitration award. Any party shall have the right to seek
injunctive relief from any court of competent jurisdiction in any case where
such relief is available. The prevailing party in such injunctive action shall
be awarded its costs, including attorney's fees, from the non-prevailing party.

                                  ARTICLE XI

                                   ASSIGNMENT

Section 11.1.     Assignment. Neither this Agreement nor any rights of the
Investors or the Company hereunder may be assigned by either party to any other
person.

                                  ARTICLE XII

                                    NOTICES

Section 12.1.     Notices. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise

                                      20
<PAGE>   22

specified herein, shall be (i) hand delivered, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice
or other communication required or permitted to be given hereunder shall be
deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the first business day
following the date of sending by reputable courier service, fully prepaid,
addressed to such address, or (c) upon actual receipt of such mailing, if
mailed. The addresses for such communications shall be:

<TABLE>
<S>                                                  <C>
If to the Company:                                   154 Technology Parkway
                                                     Technology Park/Atlanta
                                                     Norcross, Georgia 30092
                                                     Attention:  Jack J. Luchese
                                                     Telephone: (770) 368-9500
                                                     Facsimile:  (770)

with a copy to (shall not constitute                 Alston & Bird LLP
                                                     One Atlantic Center
                                                     1201 West Peachtree Street
                                                     Atlanta, Georgia  30309-3424
                                                     Attention:George M. Maxwell, Jr.
                                                     Telephone: (404) 881-7000
                                                     Facsimile:  (404)

if to the Investors:                                 As set forth on the signature pages hereto

with a copy to:                                      Joseph A. Smith, Esq.
(shall not constitute notice)                        Epstein Becker & Green, P.C.

                                                     250 Park Avenue
                                                     New York, New York
                                                     Telephone: (212) 351-4500
                                                     Facsimile: (212) 661-0989
</TABLE>

Either party hereto may from time to time change its address or facsimile
number for notices under this Section 12.1 by giving written notice of such
changed address or facsimile number to the other party hereto as provided in
this Section 12.1.

                                 ARTICLE XIII

                                 MISCELLANEOUS

                                      21
<PAGE>   23

Section 13.1.     Counterparts/ Facsimile/ Amendments. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.

Section 13.2.     Entire Agreement. This Agreement, the agreements attached as
Exhibits hereto, which, include but are not limited the Escrow Agreement, and
the Registration Rights Agreement, set forth the entire agreement and
understanding of the parties relating to the subject matter hereof and
supersedes all prior and contemporaneous agreements, negotiations and
understandings between the parties, both oral and written relating to the
subject matter hereof. The terms and conditions of all Exhibits to this
Agreement are incorporated herein by this reference and shall constitute part
of this Agreement as is fully set forth herein.

Section 13.3.     Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.

Section 13.4.     Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting
this Agreement.

Section 13.5.     Number and Gender. There may be one or more Investors parties
to this Agreement, which Investors may be natural persons or entities. All
references to plural Investors shall apply equally to a single Investor if
there is only one Investor, and all references to an Investor as "it" shall
apply equally to a natural person.

Section 13.6.     Replacement of Certificates. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing the Shares and (ii) in the case of any
such loss, theft or destruction of such certificate, upon delivery of an
indemnity agreement or security reasonably satisfactory in form to the Company
(which shall not include the posting of any bond) or (iii) in the case of any
such mutilation, on surrender and cancellation of such certificate, the Company
at its expense will execute and deliver, in lieu thereof, a new certificate of
like tenor.

Section 13.7.     Fees and Expenses. Each of the Company and the Investors
agrees to pay its own expenses incident to the performance of its obligations
hereunder.

Section 13.8.     Brokerage. Each of the parties hereto represents that it has
had no dealings in connection with this transaction with any finder or broker
who will demand payment of any fee or commission from the other party, except
Ladenburg Thalmann & Co. Inc. whose fees shall be paid by the Company. The
Company on the one hand, and the Investors, on the other hand, agree to
indemnify the other against and hold the other harmless from any and all
liabilities to any person claiming brokerage commissions or finder's fees on
account of services purported to

                                      22
<PAGE>   24

have been rendered on behalf of the indemnifying party in connection with this
Agreement or the transactions contemplated hereby.

Section 13.9.     Publicity. The Company agrees that, except as required by law
or regulation, it will not issue any press release or other public announcement
of the transactions contemplated by this Agreement without the prior consent of
the Investors, which shall not be unreasonably withheld nor delayed by more
than two (2) Trading Days from their receipt of such proposed release. No
release shall name the Investors without their express consent.

Section 13.10.    No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party and their
respective successors or permitted assigns. It is not the intention of the
parties to confer third-party beneficiary rights and this Agreement does not
confer any such rights upon any other person other than a party to this
Agreement.

                                      23
<PAGE>   25

         IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.

                               CYTRX CORPORATION

                               By:
                                  ---------------------------------------------
                                  Jack J. Luchese, President and CEO

                               INVESTORS:
                               Celeste Trust Reg.

                               By:
                                  ---------------------------------------------

                                  Authorized Signatory

                               Amount subscribed for: 25% of total

                               Address for notices:

                               Fax:

                               AMRO International, S.A.

                               By:
                                  ---------------------------------------------
                                  H.U. Bachofem,
                                  Authorized Signatory

                               Amount subscribed for: 50% of total

                               Address for notices:
                               C/o Ultra Finanz AG
                               Grossmuensterplatz 6
                               Zurich CH-8022 Switzerland
                               Fax:  011-431-262-5515

                                      24
<PAGE>   26

                               [Cytrix Purchase Agreement, continued signature
                               page]

                               Balmore Funds, S.A.

                               By:
                                  ---------------------------------------------
                               Francois Morax, Authorized Signatory

                               Amount subscribed for: 25% of total

                               Trident Chambers
                               P.O. Box 146
                               Road Town
                               Tortola, BVI
                               Fax:

                                      25

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]