CYTRX CORP, DEF 14A, 1998-04-30

CYTRX CORP
DEF 14A, 1998-04-30
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

CytRx Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials:

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:
<PAGE> 2

CYTRX CORPORATION
154 TECHNOLOGY PARKWAY
NORCROSS, GEORGIA 30092

May 11, 1998

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of
CytRx Corporation which will be held at the Hilton Hotel at Peachtree Corners,
5993 Peachtree Industrial Boulevard, Norcross, Georgia 30092, on Wednesday, June
10, 1998, at 10:00 a.m. local time.

We look forward to your attendance at the Annual Meeting so that you can
vote your shares in person and become better acquainted with members of the
Board of Directors and management team. Three items of business, which will be
considered and voted upon this year, are explained in the accompanying Proxy
Statement. Even if you are planning to attend, please complete the enclosed
proxy card and return it in the enclosed envelope so that your shares may be
voted. You will still be able to vote your shares in person if you attend the
Annual Meeting.

If you have any questions about the Proxy Statement or the 1997 Annual
Report, please contact Mark W. Reynolds at (770) 368-9500.

Sincerely,

/s/ JACK J. LUCHESE
Jack J. Luchese
President and
Chief Executive Officer
<PAGE> 3

CYTRX CORPORATION
154 TECHNOLOGY PARKWAY
NORCROSS, GEORGIA 30092

NOTICE TO THE HOLDERS OF COMMON STOCK
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 10, 1998

Notice is hereby given to the holders of the $.001 par value per share
Common Stock (the "Common Stock") of CytRx Corporation (the "Company") that the
Annual Meeting of Stockholders of the Company will be held at the Hilton Hotel
at Peachtree Corners, 5993 Peachtree Industrial Boulevard, Norcross, Georgia
30092, on Wednesday, June 10, 1998, at 10:00 a.m., local time (the "Annual
Meeting"), for the following purposes:

(i) To elect two Class I directors to serve until the 2001 Annual Meeting
of Stockholders;

(ii) To adopt the Company's 1998 Long-Term Incentive Plan;

(iii) To ratify the selection of Ernst & Young LLP as independent auditors
for the fiscal year ending December 31, 1998; and

(iv) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.

Only those stockholders of record at the close of business on April 13,
1998, are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. The transfer books will not be closed. A complete list of
stockholders entitled to vote at the Annual Meeting will be available at the
Annual Meeting.

By Order of the Board of Directors,

/s/ MARK W. REYNOLDS
Mark W. Reynolds
Secretary
May 11, 1998

WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS REPLY
ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING YOU MAY, IF YOU WISH, WITHDRAW YOUR
PROXY APPOINTMENT AND VOTE IN PERSON.
<PAGE> 4

CYTRX CORPORATION
154 TECHNOLOGY PARKWAY
NORCROSS, GEORGIA 30092

PROXY STATEMENT

May 11, 1998

INTRODUCTION

This Proxy Statement is furnished to holders of the $.001 par value per
share Common Stock ("Common Stock") of CytRx Corporation, a Delaware corporation
(the "Company" or "CytRx"), in connection with the solicitation of proxies by
the Company's Board of Directors from holders of the outstanding shares of
Common Stock for use at the Annual Meeting of Stockholders to be held at 10:00
a.m. local time at the Hilton Hotel at Peachtree Corners, 5993 Peachtree
Industrial Boulevard, Norcross, Georgia 30092, on Wednesday, June 10, 1998, and
at any adjournments thereof (the "Annual Meeting").

At the Annual Meeting, the stockholders of the Company will vote upon the
following matters: (i) a proposal to elect two Class I directors to the
Company's Board of Directors; (ii) a proposal to adopt the Company's 1998
Long-Term Incentive Plan; (iii) a proposal to ratify the selection of Ernst &
Young LLP as independent auditors for the fiscal year ending December 31, 1998;
and (iv) such other matters as may properly come before the Annual Meeting or
any adjournment thereof.

The Company's mailing address and the location of its principal executive
offices are 154 Technology Parkway, Norcross, Georgia 30092. This Proxy
Statement and the accompanying Proxy are first being mailed to stockholders of
the Company on or about May 11, 1998.

STOCKHOLDERS ENTITLED TO VOTE

Only stockholders of record of the Company at the close of business on
April 13, 1998 (the "Record Date") will be entitled to notice of, and to vote
at, the Annual Meeting. Notwithstanding the Record Date specified above, the
Company's stock transfer books will not be closed and shares may be transferred
subsequent to the Record Date. However, all votes must be cast in the names of
stockholders of record on the Record Date.

On the Record Date, there were 7,654,349 shares of the Common Stock issued
and outstanding held by approximately 1,500 stockholders of record. Holders of
Common Stock are entitled to one vote per share.

The Bylaws provide that the holders of shares of the Common Stock entitled
to cast a majority of the votes on the matters at issue at the Annual Meeting,
present in person or by proxy, shall constitute a quorum. For the purpose of
determining the presence of a quorum, abstentions will be counted as present,
but broker non-votes will not be counted.

The affirmative vote of a plurality of the votes of the shares present, in
person or represented by proxy, at the Annual Meeting will be required for
approval of Proposal I to elect two Class I directors to the Company's Board of
Directors. The affirmative vote of a majority of the votes of the shares
present, in person or represented by proxy, at the Annual Meeting will be
required for approval of Proposal II, to adopt the Company's Long-Term Incentive
Plan and Proposal III, to ratify Ernst & Young LLP as independent auditors for
the fiscal year ending December 31, 1998.

With regard to the election of directors: (i) votes that are withheld will
be excluded entirely from the vote and will have no effect and votes that are
withheld for a particular nominee will be excluded from the vote for that
nominee only; and (ii) abstentions and broker non-votes will have no effect
since approval by a percentage of the shares present or outstanding is not
required.

Abstentions may be specified on proposals other than the election of
directors. Abstentions will be considered present and entitled to vote at the
meeting but will not be counted as votes cast. Therefore,
<PAGE> 5

abstentions will have no effect on the adoption of Proposals II or III. Broker
non-votes are not considered entitled to vote and thus will have no effect the
adoption of any of the proposals.

PROXIES

If the enclosed Proxy is executed, returned in time and not revoked, the
shares represented thereby will be voted in accordance with the instructions
indicated in such Proxy. IF NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED
IN FAVOR OF ALL PROPOSALS DESCRIBED IN THIS PROXY STATEMENT AND IN THE BEST
JUDGMENT OF THE HOLDERS OF SUCH PROXIES AS TO ANY OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.

A stockholder who has given a Proxy may revoke it at any time prior to its
exercise at the Annual Meeting by either (i) giving written notice of revocation
to the Secretary of the Company, (ii) properly submitting to the Company a duly
executed Proxy bearing a later date, or (iii) appearing at the Annual Meeting
and voting in person. All written notices of revocation of Proxies should be
addressed as follows: CytRx Corporation, 154 Technology Parkway, Norcross,
Georgia 30092, Attention: Mark W. Reynolds, Secretary.

PROPOSAL I
ELECTION OF DIRECTORS

Pursuant to the Company's Bylaws, the Board of Directors has set the number
of directors of the Company at six and proxies cannot be voted for a greater
number of persons. The Restated Certificate of Incorporation and Bylaws of the
Company provide that the members of the Board of Directors shall be divided into
three classes, one class to be elected at each annual meeting of stockholders
and to serve for a term of three years.

CURRENT NOMINEES

The Board of Directors has nominated the following individuals for election
by the holders of Common Stock as Class I directors of the Company to serve
until the Company's 2001 annual meeting of stockholders or until their
successors are elected and qualified, or their earlier death, resignation or
removal.

Lyle A. Hohnke
Jack J. Luchese

The persons designated as proxies intend to vote the shares represented
thereby in favor of the election to the Board of Directors of the nominees whose
names appear above, unless either authority to vote for the nominees is withheld
or such proxy has previously been revoked. It is believed that the nominees will
be available and able to serve as directors. In the event that the nominees are
unable to serve (which is not anticipated), the persons designated as proxies
will cast votes for such other persons as they may select. It is anticipated
that management stockholders of the Company will vote for the election of the
nominees.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR ELECTION AS
DIRECTORS. IF A CHOICE IS SPECIFIED ON THE PROXY BY THE STOCKHOLDER, THE SHARES
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE
VOTED "FOR" THE NOMINEES. THE AFFIRMATIVE VOTE OF A PLURALITY OF THE VOTES OF
SHARES OF COMMON STOCK REPRESENTED AND ENTITLED TO VOTE IN THE ELECTION AT THE
ANNUAL MEETING AT WHICH A QUORUM IS PRESENT IS REQUIRED FOR THE ELECTION OF THE
NOMINEES.

CERTAIN INFORMATION CONCERNING NOMINEES AND CONTINUING DIRECTORS

The following table sets forth, for the nominees for election as directors,
and for those persons who were elected as directors of the Company at previous
annual meetings of stockholders, the names and ages of such persons, the year in
which each such person was first elected a director, all positions and offices
with the Company held by each such person, the business experience during at
least the last five years of each such
2
<PAGE> 6

person, and any other directorships held by such person in companies that are
subject to the reporting requirements of the Securities Exchange Act of 1934 or
any company registered as an investment company under the Investment Company Act
of 1940. None of the following persons serves as a director pursuant to any
arrangement or understanding between him and any other person. For information
concerning membership on Committees of the Board of Directors, see "Meetings of
the Board of Directors and Committees" below. For information concerning
directors' ownership of Common Stock, see "Beneficial Owners of More Than Five
Percent of the Company's Common Stock; Shares Held by Directors and Executive
Officers" below.

<TABLE>
<CAPTION>
CURRENT
DIRECTOR TERM POSITIONS WITH THE COMPANY, PRINCIPAL OCCUPATIONS
NAME AND AGE SINCE EXPIRES DURING AT LEAST THE PAST FIVE YEARS, AND OTHER DIRECTORSHIPS
- ------------ -------- ------- ------------------------------------------------------------
<S> <C> <C> <C>
Jack L. Bowman(65).......... 1994 2000 Prior to his retirement at the end of 1993, Mr. Bowman was
Company Group Chairman at Johnson & Johnson Company, a
position he held from 1987. From 1991 to 1993, Mr. Bowman
was responsible for Johnson & Johnson Company's
diagnostic, blood glucose monitoring, and certain
over-the-counter pharmaceutical businesses. Prior to that
assignment at Johnson & Johnson, he was responsible for a
major portion of Johnson & Johnson's global pharmaceutical
businesses. From 1983 to 1987, he was Executive Vice
President of American Cyanamid Company where he was
responsible for the pharmaceutical, medical device and
over the counter and toiletry businesses. Mr. Bowman has
also served as President, Lederle Laboratories Division
and Executive Vice President, CIBA-GEIGY Pharmaceutical
Division. Mr. Bowman also serves as a director of NeoRx
Corporation, Targeted Genetics, Inc., Cell Therapeutics,
Inc., Cellergy Pharmaceuticals, Inc., Osiris Therapeutics,
Inc. and Vaxcel, Inc.
Raymond C. Carnahan, 1991 1999 Mr. Carnahan has over 39 years of experience in cost
Jr.(72)................... controls and operational systems in a variety of
industries. Prior to his retirement in 1991, Mr. Carnahan
served as Manager, International Cost Analysis planning
for Johnson & Johnson International from 1974 to 1991. Mr.
Carnahan has provided consulting services to Waterford-
Wedgewood Corporation in England and to Torf
Pharmaceutical Corporation in Poland and serves as
President for the Morristown Memorial Hospital Chaplaincy
Service in Morristown, New Jersey.
</TABLE>

3
<PAGE> 7

<TABLE>
<CAPTION>
CURRENT
DIRECTOR TERM POSITIONS WITH THE COMPANY, PRINCIPAL OCCUPATIONS
NAME AND AGE SINCE EXPIRES DURING AT LEAST THE PAST FIVE YEARS, AND OTHER DIRECTORSHIPS
- ------------ -------- ------- ------------------------------------------------------------
<S> <C> <C> <C>
Lyle A. Hohnke(55).......... N/A N/A Dr. Hohnke served as a director of Zynaxis, Inc. from April
(Current Nominee) 1996 until its merger with Vaxcel, Inc. (a then
wholly-owned subsidiary of CytRx) in May 1997, at which
time he was elected to the Vaxcel, Inc. Board of
Directors. Since 1994, Dr. Hohnke has served as a member
of Javelin Capital Fund, LLC, a general partner of Javelin
Ventures, LP, a company engaged in venture capital
investments. From 1991 to 1994 Dr. Hohnke was General
Partner for Heart Land Seed Capital Fund. Dr. Hohnke also
serves as a director of Diamond Animal Health, Inc.,
Southern BioSystems, Inc. and Guidestar Health Systems,
Inc.
Max Link(57)................ 1996 2000 From May 1993 to June 1994, Dr. Link served as the Chief
Executive Officer of Corange U.S. Holdings, Inc. (the
holding company for Boehringer Mannheim Therapeutics,
Boehringer Mannheim Diagnostics and DePuy International).
From 1992 to 1993, Dr. Link was Chairman of Sandoz Pharma.
From 1987 to 1992, Dr. Link was the Chief Executive
Officer of Sandoz Pharma, Ltd. and a member of the
Executive Board of Sandoz, Ltd., Basel. Prior to 1987, Dr.
Link served in various capacities with the United States
operations of Sandoz, including President and Chief
Executive Officer. Dr. Link also serves as a director of
Protein Design Laboratories, Inc., Alexion
Pharmaceuticals, Inc., Human Genome Sciences, Inc.,
Procept, Inc. and Cell Therapeutics, Inc.
Jack J. Luchese(49)......... 1989 1998 Mr. Luchese was named President and Chief Executive Officer
(Current Nominee) of the Company in March 1989 and became Chairman of the
Board in June 1995. Prior to joining the Company, Mr.
Luchese served as Vice President and General Manager of
the Armour Pharmaceutical Corporation, and as Vice
President, Corporate Business Development and a member of
the Management Committee of Rorer Group, Inc. (now
Rhone-Poulenc Rorer). Prior to joining Rorer Group, Inc.,
Mr. Luchese was with Johnson & Johnson Company for 15
years where he held various positions in business
development, licensing, sales, new product marketing, and
finance. Mr. Luchese also serves as a director of Vaxcel,
Inc.
</TABLE>

4
<PAGE> 8

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES

Board of Directors. The property, affairs and business of the Company are
under the general management of its Board of Directors as provided by the laws
of Delaware and the Bylaws of the Company. The Company has standing Audit,
Compensation and Nominating Committees of the Board of Directors.

The Board of Directors held five meetings during 1997. Each director,
during the period he was a director, attended at least 75% of the meetings of
the Board of Directors. Each member of a committee, during the period he was a
committee member, attended at least 75% of the meetings of each committee on
which they served.

Audit Committee. The Audit Committee makes recommendations concerning the
engagement of independent public accountants, reviews with the independent
public accountants the plans and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of the Company's internal
accounting controls. The current members of the Audit Committee are Raymond C.
Carnahan, Jr. (Chairman), Jack L. Bowman and Max Link. The Audit Committee held
two meetings during 1997.

Compensation Committee. The Compensation Committee is authorized to review
annual salaries and bonuses and has the authority to determine the recipients of
options, the time or times at which options shall be granted, the exercise price
of each option, and the number of shares to be issuable upon the exercise of
each option. The Compensation Committee also is authorized to interpret the
CytRx Corporation 1986, 1994 and 1995 Stock Option Plans (collectively, "the
Plans"), to prescribe, amend and rescind rules and regulations relating to the
Plans, to determine the term and provisions of the respective option agreements,
and to make all other determinations deemed necessary or advisable for the
administration of the Plans. Its current members are Herbert H. McDade, Jr.
(Chairman), Raymond C. Carnahan, Jr. and Max Link. The Compensation Committee
held four meetings during 1997.

Nominating Committee. The Nominating Committee makes recommendations
concerning the nomination of persons to serve on the Board of Directors. While
the Committee will consider nominees recommended by stockholders, it has not
actively solicited recommendations nor established procedures for this purpose.
Its current members are Jack L. Bowman (Chairman), Raymond C. Carnahan, Jr., Max
Link and Herbert H. McDade, Jr. The Nominating Committee held no meetings during
1997.

COMPENSATION OF DIRECTORS

Directors who are employees of the Company receive no compensation for
their services as directors or as members of committees. Non-employee directors
receive a fee of $3,000 for each two-day Board meeting

5
<PAGE> 9

attended and $500 for each committee meeting attended. Non-employee directors
who chair a Board committee will receive an additional $250 for each committee
meeting attended.

Each non-employee director receives an initial stock option grant to
purchase 5,000 shares upon the date he or she first becomes a member of the
Board. Options to purchase 2,500 shares of Common Stock are granted to each
non-employee director annually. Stock option grants to directors contain the
same terms and provisions as stock option grants to employees, except that
options granted to directors are considered Non-Qualified Stock Options for
income tax reporting purposes. Non-employee directors who also serve as a
director of one of the Company's majority-owned subsidiaries receive an initial
stock option grant to purchase 5,000 shares of the subsidiary's common stock
upon the date he or she first becomes a member of the subsidiary Board and an
annual stock option grant to purchase 2,500 shares.

During 1997, Mr. Raymond C. Carnahan, Jr. performed certain consultation
services for the Company for which he received a fee of $2,000.

BENEFICIAL OWNERS OF MORE THAN FIVE PERCENT OF THE COMPANY'S COMMON STOCK;
SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS

Based solely upon information made available to the Company, the following
table sets forth certain information with respect to the beneficial ownership of
Common Stock as of April 13, 1998 by (i) each person who is known by the Company
to beneficially own more than five percent of the Common Stock; (ii) each
director and nominee for director of the Company; (iii) each of the Named
Executive Officers (as defined under "Executive Compensation" below); and (iv)
all officers and directors as a group. Except as otherwise indicated, the
holders listed below have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them.

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
-----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENTAGE(1)
- ------------------------------------ ------- -------------
<S> <C> <C>
NAMED EXECUTIVE OFFICERS AND DIRECTORS(2):
Jack L. Bowman(3)........................................... 6,628 *%
Raymond C. Carnahan, Jr.(4)................................. 5,534 *
R. Martin Emanuele(5)....................................... 97,342 1.3
William B. Fleck(6)......................................... 36,703 *
J. Michael Grindel.......................................... -- *
Max Link(7)................................................. 11,666 *
Jack J. Luchese(8).......................................... 711,666 8.5
Herbert H. McDade, Jr.(9)................................... 11,537 *
Mark W. Reynolds(10)........................................ 39,807 *
All executive officers and directors as a group (9
persons)(11).............................................. 920,883 10.9
OTHER 5% STOCKHOLDERS:
Robert L. Hunter, Jr........................................ 517,428 6.7
3640 Churchwell Court
Tucker, Georgia 30084
Dimensional Fund Advisors, Inc.(12)......................... 393,475 5.1
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>

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

* Less than 1%.
(1) Based on 7,654,349 shares of Common Stock outstanding on April 13, 1998.
(2) The business address of all such persons is: c/o CytRx Corporation, 154
Technology Parkway, Norcross, Georgia 30092.
(3) Includes options to purchase 5,903 shares of Common Stock exercisable
within 60 days.
(4) Includes options to purchase 5,284 shares of Common Stock exercisable
within 60 days.

6
<PAGE> 10

(5) Includes options to purchase 81,514 shares of Common Stock exercisable
within 60 days.
(6) Includes options to purchase 27,078 shares of Common Stock exercisable
within 60 days.
(7) Includes options to purchase 1,666 shares of Common Stock exercisable
within 60 days.
(8) Includes warrants to purchase 669,927 shares of Common Stock exercisable
within 60 days.
(9) Includes options to purchase 10,537 shares of Common Stock exercisable
within 60 days.
(10) Includes options to purchase 30,625 shares of Common Stock exercisable
within 60 days.
(11) Includes options and warrants to purchase 832,534 shares of Common Stock
exercisable within 60 days.
(12) Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 393,475 shares of Common
Stock as of December 31, 1997, all of which shares are held in portfolios
of DFA Investment Dimensions Group, Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional Fund Advisors, Inc. serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.

EXECUTIVE OFFICERS OF THE COMPANY

Except for Jack J. Luchese, discussed above under "Certain Information
Concerning Nominees and Continuing Directors", the following table sets forth
the names of the executive officers of the Company, their ages, their positions
with the Company and their principal occupations and employers for at least the
last five years. For information concerning executive officers' ownership of
Common Stock, see "Beneficial Owners of More Than Five Percent of the Company's
Common Stock; Shares Held by Directors and Executive Officers."

<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND PRINCIPAL OCCUPATIONS
NAME AGE DURING AT LEAST THE PAST FIVE YEARS
- ---- --- ----------------------------------------------------
<S> <C> <C>
R. Martin Emanuele, Ph.D............. 43 Dr. Emanuele joined CytRx in 1988 as the project
director for the Company's RheothRx(R) project (now
Flocor(TM)). Dr. Emanuele assumed the duties of Vice
President, Preclinical Development in June 1990 and
became Vice President, Research and Business
Development in October 1997. Before joining CytRx in
1988, he worked as a clinical research scientist at
DuPont Critical Care and as a visiting scientist at
Institute Choay.
William B. Fleck..................... 40 Mr. Fleck joined CytRx in April 1993 as Vice President,
Human Resources. From 1992 to 1993 Mr. Fleck served as
Director, Human Resources and Training for Central
Health Services (CHS). During 1991, he was Director,
Human Resources for Knowledgeware, Inc. Prior to
joining Knowledgeware, Mr. Fleck held senior human
resources management positions with MCI Communications
from 1989 to 1991 and Harris/3M from 1984 to 1989.
J. Michael Grindel, Ph.D............. 51 Dr. Grindel joined CytRx in October 1997 as Vice
President, Drug Development. From 1994 to 1997 Dr.
Grindel served as Vice President, Preclinical
Development for Hybridon, Inc. in Cambridge, MA. From
1989 to 1994 Dr. Grindel was Vice President for
Project Planning and Management at the R. W. Johnson
Pharmaceutical Research Institute (a subsidiary of
Johnson & Johnson) in Raritan, NJ. Prior to that Dr.
Grindel served in various research and development
management positions with McNeil Pharmaceutical from
1976 to 1989 and the Walter Reed Army Institute of
Research from 1973 to 1976.
</TABLE>

7
<PAGE> 11

<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND PRINCIPAL OCCUPATIONS
NAME AGE DURING AT LEAST THE PAST FIVE YEARS
- ---- --- ----------------------------------------------------
<S> <C> <C>
Mark W. Reynolds..................... 36 Mr. Reynolds joined CytRx in 1988 as Controller,
becoming Chief Financial Officer and Corporate Secretary
in 1996. Prior to joining CytRx, Mr. Reynolds was
employed as a certified public accountant with Arthur
Andersen LLP in Atlanta, Georgia.
</TABLE>

EXECUTIVE COMPENSATION

The following table presents certain summary information concerning
compensation paid or accrued by the Company for services rendered in all
capacities during the fiscal years ended December 31, 1995, 1996 and 1997 for
(i) the President and Chief Executive Officer of the Company; and (ii) each of
the four other most highly compensated executive officers of the Company whose
total salary and bonus exceeded $100,000 (determined as of December 31, 1997 and
collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(2)
- --------------------------- ---- --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Jack J. Luchese........................ 1997 $321,000 $75,000 50,000 $4,750
President and Chief Executive 1996 307,000 80,000 200,000 4,750
Officer 1995 295,000 75,000 132,427(1) 4,620
R. Martin Emanuele..................... 1997 $167,500 $ 7,500 5,000 $4,750
Vice President, Research & 1996 162,500 15,000 5,000 4,750
Business Development 1995 157,500 25,000 50,265(1) 4,620
William B. Fleck....................... 1997 $120,000 $50,000 7,500 $4,750
Vice President, Human Resources 1996 113,500 -- 20,000 4,750
1995 110,000 15,000 17,912(1) 4,620
J. Michael Grindel(3).................. 1997 $ 40,000 $20,000 100,000 $1,200
Vice President, Drug Development
Mark W. Reynolds....................... 1997 $ 94,000 $12,500 7,500 $4,750
Chief Financial Officer and 1996 82,333 25,000 25,000 4,750
Secretary 1995 76,000 8,000 36,877 4,620
</TABLE>

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

(1) Includes shares underlying options and warrants which were reissued and
repriced concurrent with the cancellation of previously issued options and
warrants.
(2) Amounts represent matching contributions by the Company under the Company's
401(k) Profit Sharing Plan.
(3) Dr. Grindel joined the Company in October 1997.

8
<PAGE> 12

OPTION GRANTS IN LAST FISCAL YEAR

The following table summarizes the stock options and warrants granted
during the fiscal year ended December 31, 1997 to each of the Company's
executive officers named in the Summary Compensation Table above.

<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT
ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPINIONS PRICE APPRECIATION
UNDERLYING GRANTED EXERCISE OR FOR OPTION TERMS($)
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION -------------------
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- -------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Jack J. Luchese.............. 50,000(1) 25.4% $4.125 6/5/07 $129,710 $328,709
R. Martin Emanuele........... 5,000(2) 2.5 4.063 12/3/07 12,774 32,373
William B. Fleck............. 7,500(2) 3.8 4.063 12/3/07 19,162 48,559
J. Michael Grindel........... 100,000(3) 50.8 4.813 10/20/07 302,656 766,989
Mark W. Reynolds............. 7,500(2) 3.8 4.063 12/3/07 19,162 48,559
</TABLE>

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

(1) Warrants granted to Mr. Luchese are subject to the terms as described under
"Employment Agreement."
(2) These options vest in equal annual installations over a three year period
and are exercisable for ten years from the date of grant. Exercise price is
based on the market price of CytRx Common Stock as of the date of grant.
(3) These options vest upon a combination of tenure and the achievement of
performance criteria specified in the option contract. As of December 31,
1997 none of these options have vested. Exercise price is based on the
market price of CytRx Common Stock as of the date of grant.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUE AT DECEMBER 31,
1997

The following table sets forth the number and total value of unexercised
in-the-money options at December 31, 1997 for each of the executive officers of
the Company named in the Summary Compensation Table above, using the price per
share of the Common Stock of $2.9375 on December 31, 1997. No stock options were
exercised during 1997 by any of the Company's Named Executive Officers.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1997(#) AT DECEMBER 31, 1997($)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jack J. Luchese.................................. 657,427 275,000 $ -- $ --
R. Martin Emanuele............................... 81,514 9,584 2,344 --
William B. Fleck................................. 27,078 22,087 -- --
J. Michael Grindel............................... -- 100,000 -- --
Mark W. Reynolds................................. 30,625 24,793 -- --
</TABLE>

EMPLOYMENT AGREEMENT

Jack J. Luchese was named President and Chief Executive Officer of the
Company in March 1989. Under his current employment agreement (the "Agreement")
which terminates on December 31, 1999, Mr. Luchese is paid an annual base salary
of $295,000 (effective January 1, 1995), adjusted annually in proportion to the
average annual merit increases for all other employees. In addition to his
annual base salary, Mr. Luchese is eligible to receive cash bonuses with respect
to each calendar year during the term of the Agreement as determined from time
to time by the Board of Directors of the Company in its sole discretion. The
Agreement also contains confidentiality and noncompetition provisions.

The Agreement also grants Mr. Luchese warrants to purchase an aggregate of
682,427 shares of CytRx Common Stock (the "Warrants") subject to the exercise
requirements set forth in the agreement. Warrants to purchase 50,000 shares at
$4.50 per share expire on February 22, 2001. Warrants to purchase 32,427 shares
at

9
<PAGE> 13

$7.00 per share expire on March 24, 2003. Warrants to purchase 100,000 shares at
$7.00 per share expire on December 31, 2004. Warrants to purchase 500,000 shares
at $4.50 per share expire on December 31, 2004. As of April 13, 1998, 657,427 of
the Warrants are vested. The remaining Warrants vest at the rate of 6,250 shares
at the beginning of each calendar quarter until October 1, 1998. All of the
Warrants that have vested on the termination of the Agreement may be exercised
by Mr. Luchese at any time until the expiration of the Warrants. In March 1996,
Mr. Luchese was granted additional warrants to purchase an aggregate of 200,000
shares at $3.69 per share (the "1996 Warrants") and in June 1997, he was granted
warrants to purchase an aggregate of 50,000 shares at $4.13 per share (the "1997
Warrants"). The 1996 Warrants will vest upon the achievement of certain
corporate financing milestones as set forth in the agreement. The 1997 Warrants
vest at the rate of 6,250 shares at the end of each calendar quarter from March
31, 1999 until December 31, 1999, as to 25,000 warrants, with the remaining
25,000 warrants to vest upon the achievement of price targets for the Common
Stock as specified in the agreement. As of April 13, 1998, none of the 1996
Warrants or the 1997 Warrants are vested. The shares of stock that may be
acquired upon exercise of the Warrants have been or will be registered by the
Company under the Securities Act of 1933, as amended. The Warrants contain
certain anti-dilution provisions and provide for accelerated vesting in the
event that Mr. Luchese's employment is terminated by the Board of Directors
without cause, in the event of his death or disability or in the event of a
change of control.

In April 1997, the Company amended the Agreement in order to delete the
provisions relating to a change in control of the Company. In consideration of
that amendment, the Company has entered into a separate Change in Control
Agreement (the "Change in Control Agreement") with Mr. Luchese. The Change in
Control Agreement will become effective if and when a Change in Control (as
defined) occurs during the three-year period following the date of the Change in
Control Agreement or during any of the one-year annual renewal periods (the
"Change of Control Period"), or if Mr. Luchese's employment is terminated in
connection with or in anticipation of a Change of Control (in either case, the
"Effective Date").

A Change in Control is defined in the Change in Control Agreement to
include the following: (i) an acquisition (other than directly from the Company)
by an individual, entity or group (excluding the Company or an employee benefit
plan of the Company or a corporation controlled by the Company's stockholders)
of 25% or more of the Company's Common Stock or the Company's then outstanding
voting securities; (ii) a change in a majority of the current Board of Directors
(the "Incumbent Board") (excluding any persons approved by a vote of at least a
majority of the Incumbent Board other than in connection with an actual or
threatened proxy contest); (iii) consummation of a reorganization, merger,
consolidation or sale of all or substantially all of the Company's assets
(collectively, a "Business Combination") other than a Business Combination in
which all or substantially all of the shareholders of the Company prior to such
transaction own, in the same proportion, more than 60% of the voting power of
the entity resulting from the Business Combination, at least a majority of the
board of directors of the resulting entity were members of the Incumbent Board,
and after which no person (other than the resulting entity and certain
affiliates) beneficially owns 25% or more of the voting power of the resulting
entity, except to the extent such ownership existed prior to the Business
Combination; or (iv) the approval by the Company's stockholders of a complete
liquidation or dissolution of the Company.

Mr. Luchese's employment period under the Change in Control Agreement
begins on the Effective Date and continues for two years. During the employment
period, Mr. Luchese's position, authority, duties and responsibilities will be
at least commensurate in all material respects with those held by him during the
120-day period prior to the Change in Control and he will receive (i) a monthly
base salary equal to or greater than the highest monthly base salary paid to him
by the Company during the previous year; (ii) an annual cash bonus at least
equal to the highest bonus paid to him in any of the three fiscal years prior to
the Effective Date, and (iii) the ability to participate in all incentive,
savings, welfare benefit, fringe benefit and retirement plans of the Company.

If Mr. Luchese's employment terminates during the employment period he will
receive certain severance benefits under the Change in Control Agreement. If his
employment terminates by reason of his death or disability, he will receive
certain obligations accrued through the date of termination (e.g., salary
prorata bonus, deferred compensation and vacation pay) plus the normal death and
disability benefits, if any, to which
10
<PAGE> 14

he is otherwise entitled, including those under the Agreement. If he is
terminated by the Company for cause (as defined), or if he voluntarily resigns
without good reason (as defined) other than during the 30-day period beginning
on the first anniversary of the Effective Date, he will receive only his accrued
benefits through the termination date and any previously-deferred benefits, plus
any other post-termination benefits, if any, to which he is otherwise entitled,
including those under the Agreement. If he (i) is terminated by the Company
without cause, (ii) resigns voluntarily with good reason, or (iii) resigns for
any reason during the 30-day period beginning on the first anniversary of the
Effective Date, he will receive a lump sum cash payment equal to: (a) his base
salary through the date of termination, (b) a prorata bonus for the year of
termination, based upon his actual bonus earned in the prior year ("Most Recent
Bonus"), (c) an amount equal to two times the sum of his base salary and Most
Recent Bonus, and (d) any unpaid deferred compensation and vacation pay. In
addition, Mr. Luchese would be entitled to continued employee welfare benefits
for two years after the date of termination, and a lump sum payment equal to the
actuarial value of the service and compensation credit under the Company's
qualified and supplemental retirement plans that he would have received had he
remained employed for two years after the date of his termination. Mr. Luchese
will be required to repay to the Company, with interest, the lump-sum benefit
equal to two times the sum of his base salary and Most Recent Bonus if, during
the two-year employment period, he violates a certain non-competition covenant
in the Change in Control Agreement.

If the total payments to Mr. Luchese under the Change in Control Agreement
and from any other source would result in the imposition of an excise tax under
Section 4999 of the Code, the payments will be reduced to the extent necessary
to avoid the imposition of such excise tax, but only if such reduction would
result in a net after-tax benefit to Mr. Luchese. The Change in Control
Agreement further provides that Mr. Luchese has no obligation to mitigate
severance payments, the Company will reimburse Mr. Luchese for all legal fees
incurred in enforcing or contesting the Change in Control Agreement, and Mr.
Luchese will hold for the benefit of the Company all confidential information
concerning the Company obtained over the course of this employment. The Company
will require its successors to expressly assume its obligations under the Change
in Control Agreement.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

There are no "interlocks," as defined by the Securities and Exchange
Commission, with respect to any member of the Compensation Committee. From
January 1 to June 25, 1997, the Compensation Committee consisted of Messrs.
Bowman, Carnahan and McDade. Since June 26, 1997, the Compensation Committee has
consisted of Messrs. Carnahan, Link and McDade.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The following report shall not be deemed incorporated by reference into any
filing under the Securities Act of 1933 (the "1933 Act") or under the Securities
an Exchange Act of 1934 (the "1934 Act"), except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under either the 1933 Act or the 1934 Act.

The Compensation Committee of the Board of Directors (the "Committee")
establishes the general compensation practices of the Company, establishes the
compensation plans and specific compensation levels for executive officers and
administers the Company's stock option plans.

The Committee believes that the Chief Executive Officer's compensation
should be influenced by Company performance, although "performance" for a
company engaged in pharmaceutical research and development does not necessarily
correlate to profits. The Committee considers "performance" to include
achievement of product development targets and milestones, effective
fund-raising efforts, and effective management of personnel and capital
resources, among other criteria. The Committee also reviews the Chief Executive
Officer's compensation in light of the level of similar executive compensation
arrangements within the biopharmaceutical industry.

The specific terms of Mr. Luchese's employment agreement are discussed
under "Employment Agreement". Under his employment agreement, Mr. Luchese is
eligible for an annual salary increase based
11
<PAGE> 15

upon the overall company average merit increases. Mr. Luchese is also eligible
to be considered for an annual cash bonus, which is solely at the discretion of
the Committee based upon such factors as the Committee deems appropriate. Mr.
Luchese's performance period for purposes of this report is January 1, 1996
through December 31, 1997. Based on its assessment of Mr. Luchese's
effectiveness in attaining corporate objectives, the Committee awarded Mr.
Luchese cash bonuses of $75,000 for 1996 (paid in January 1997) and $37,500 for
1997 (paid in January 1998), or 25.4% and 11.7%, respectively, of base salary.

The Committee also believes that stock options should be granted to the
Chief Executive Officer, as well as to other executives, primarily based on the
executive's ability to influence the Company's long-term growth and
profitability. As such, Mr. Luchese's employment agreement includes warrants to
purchase 932,427 shares of CytRx Common Stock at prices ranging from $3.69 to
$7.00 per share. These warrants cover the period from Mr. Luchese's initial
employment (March 13, 1989) through December 31, 1998 and include a combination
of tenure-based vesting as well as vesting upon the achievement of corporate
objectives. The Committee believes that this arrangement provides Mr. Luchese
with the greatest incentive to accelerate achievement of corporate objectives
and thereby enhance long-term shareholder value.

The Committee has adopted similar practices with respect to compensation of
other executive officers of the Company. In establishing base salaries and cash
bonuses for executive officers, the Committee considers relative company
performance, the individual's past performance and future potential, and
compensation for persons holding similarly responsible positions at other
companies in the pharmaceutical and biotechnology industries. The relative
importance of these factors varies depending upon the individual's
responsibilities; all facts are considered in establishing both base salaries
and cash bonuses. When making comparison to other companies, the Committee
generally considers those companies included in the Nasdaq Pharmaceutical Index
(see "Company Performance").

The Committee, in conjunction with the Chief Executive Officer, has also
established a model composed of salary categories with specified percentages to
be applied to the overall level of employees' salaries (including executive
officers) to provide a guideline for annual cash bonuses and the number of stock
options to be granted. This model is used only as a guideline, as some
subjectivity must be applied in evaluating each individual's performance. As
with the Chief Executive Officer, the number of options granted is determined by
the evaluation of the Executive's ability to influence the Company's long-term
growth and profitability. The Committee also considers the aggregate number of
options granted in past years. All options are granted at the current market
price. Because the value of an option bears a direct relationship to the
Company's stock price, it is an effective incentive for executives to create
value for stockholders. The Committee therefore views stock options as an
important component of its long-term, performance-based compensation philosophy.

For 1997, the Committee considered Section 162(m), which limits tax
deductions of public companies on compensation to certain executive officers in
excess of $1 million dollars, along with other factors in determining executive
compensation. The committee will continue to consider the effect of Section
162(m) on its compensation decisions, but has no formal policy to structure
executive compensation so that it complies with the requirements of Section
162(m).

Respectfully submitted,

Compensation Committee:
Raymond C. Carnahan, Jr.
Max Link
Herbert H. McDade, Jr.

12
<PAGE> 16

STOCKHOLDER RETURN COMPARISON

The following line graph presentation compares cumulative total stockholder
returns of the Company with the Nasdaq Stock Market Index and the Nasdaq
Pharmaceutical Index (the "Peer Index") for the five year period from December
31, 1992 to December 31, 1997. The graph and table assume that $100 was invested
in each of the Company's Common Stock, the Nasdaq Stock Market Index and the
Peer Index on December 31, 1992, and that all dividends were reinvested. This
data was furnished by the Center for Research in Security Prices, The University
of Chicago.

COMPARISON OF CUMULATIVE TOTAL RETURNS

<TABLE>
<CAPTION>
THE NASDAQ
MEASUREMENT PERIOD CYTRX STOCK
(FISCAL YEAR COVERED) CORPORATION MARKET PEER INDEX
<S> <C> <C> <C>
1992 100 100 100
1993 119 115 89
1994 25 112 67
1995 21 159 123
1996 16 195 123
1997 14 240 127
</TABLE>

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
the Company's Common Stock, to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Directors, executive officers and
greater than ten percent stockholders are required by Securities and Exchange
Commission regulation to furnish the registrant with copies of all Section 16(a)
reports they file. To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, during the year ended December 31, 1997 all
Section 16(a) filing requirements applicable to directors, executive officers
and greater than ten percent beneficial owners were complied with by such
persons.

PROPOSAL II
APPROVAL OF THE 1998 LONG-TERM INCENTIVE PLAN

On April 9, 1998, the Board of Directors adopted the CytRx Corporation 1998
Long-Term Incentive Plan (the "Incentive Plan"). The Company has reserved
500,000 shares of its Common Stock for issuance in

13
<PAGE> 17

connection with options and awards under this plan. The Incentive Plan will be
effective as of its adoption by the Board. However, if the stockholders fail to
approve the Incentive Plan at the Annual Meeting, any incentive stock options
previously granted under the plan will be automatically converted to
non-qualified stock options.

A summary of the Incentive Plan is set forth below. The summary is
qualified in its entirety by reference to the full text of the Incentive Plan,
which is attached to this Proxy Statement as Appendix A.

GENERAL

The purpose of the Incentive Plan is to promote the success, and enhance
the value, of the Company by linking the personal interests of employees,
officers, consultants and directors to those of the stockholders, and by
providing such employees, officer, consultants and directors with an incentive
for outstanding performance. As of April 30, 1998, there were approximately 23
persons eligible to participate in the Incentive Plan.

The Incentive Plan authorizes the granting of awards ("Awards") to
employees, officers, consultants and directors of the Company or its
subsidiaries in the following forms: (i) options to purchase shares of Common
Stock ("Options"), which may be incentive stock options or non-qualified, (ii)
stock appreciation rights ("SARs"); (iii) performance units ("Performance
Units"); (iv) restricted stock ("Restricted Stock"); (v) dividend equivalents
("Dividend Equivalents"); (vi) other stock-based awards; or (vii) any other
right or interest relating to Common Stock or cash.

Pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the Company may not deduct compensation in excess of $1 million
paid to the Chief Executive Officer and the four next most highly compensated
executive officers of the Company. The Incentive Plan is designed to comply with
Code Section 162(m) so that the grant of Options and SARs under the plan, and
other Awards, such as Performance Units, that are conditioned on the performance
goals described in Section 13.11 of the plan, will be excluded from the
calculation of annual compensation for purposes of Code Section 162(m) and will
be fully deductible by the Company. The Board has approved the Incentive Plan
for submission to the stockholders in order to permit the grant of Awards
thereunder that will constitute deductible performance-based compensation for
purposes of Code Section 162(m).

Subject to adjustment as provided in the Incentive Plan, the aggregate
number of shares of Common Stock reserved and available for Awards or which may
be used to provide a basis of measurement for or to determine the value of an
Award (such as with a SAR or Performance Unit) is 500,000, of which not more
than 10% may be granted as Awards of Restricted Stock or unrestricted Stock
Awards. The maximum number of shares of Common Stock with respect to one or more
Options and/or SARs that may be granted during any one calendar year under the
Incentive Plan to any one participant is 175,000. The maximum fair market value
of any Awards (other than Options and SARs) that may be received by a
participant (less any consideration paid by the participant for such Award)
during any one calendar year under the Incentive Plan is $500,000.

ADMINISTRATION

The Incentive Plan will be administered by the Compensation Committee of
the Board of Directors of the Company (the "Committee"). The Committee has the
power, authority and discretion to designate participants; determine the type or
types of Awards to be granted to each participant and the number, terms and
conditions thereof; establish, adopt or revise any rules and regulations as it
may deem necessary or advisable to administer the Incentive Plan; and make all
other decisions and determinations that may be required under, or as the
Committee deems necessary or advisable to administer, the Incentive Plan.

AWARDS

Stock Options. The Committee is authorized to grant Options, which may be
incentive stock options ("ISOs") or nonqualified stock options ("NSOs"), to
participants. All Options will be evidenced by a written

14
<PAGE> 18

Award Agreement between the Company and the participant, which will include such
provisions as may be specified by the Committee. The terms of any ISO must meet
the requirements of Section 422 of the Code.

Stock Appreciation Rights. The Committee may grant SARs to participants.
Upon the exercise of a SAR, the participant has the right to receive the excess,
if any, of: the fair market value of one share of Common Stock on the date of
exercise, over the grant price of the SAR as determined by the Committee, which
will not be less than the fair market value of one share of Common Stock on the
date of grant. All awards of SARs will be evidenced by an Award Agreement,
reflecting the terms, methods of exercise, methods of settlement, form of
consideration payable in settlement, and any other terms and conditions of the
SAR, as determined by the Committee at the time of grant.

Performance Units. The Committee may grant Performance Units to
participants on such terms and conditions as may be selected by the Committee.
The Committee will have the complete discretion to determine the number of
Performance Units granted to each participant and to set performance goals and
other terms or conditions to payment of the Performance Units in its discretion
which, depending on the extent to which they are met, will determine the number
and value of Performance Units that will be paid to the participant.

Restricted Stock Awards. The Committee may make awards of Restricted Stock
to participants, which will be subject to such restrictions on transferability
and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to
receive dividends, if any, on the Restricted Stock).

Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to participants subject to such terms and conditions as may be
selected by the Committee. Dividend Equivalents entitle the participant to
receive payments equal to dividends with respect to all or a portion of the
number of shares of Common Stock subject to an Option Award or SAR Award, as
determined by the Committee. The Committee may provide that Dividend Equivalents
be paid or distributed when accrued or be deemed to have been reinvested in
additional shares of Common Stock, or otherwise reinvested.

Other Stock-Based Awards. The Committee may, subject to limitations under
applicable law, grant to participants such other Awards that are payable in,
valued in whole or in part by reference to, or otherwise based on or related to
shares of Common Stock, as deemed by the Committee to be consistent with the
purposes of the Incentive Plan, including without limitation shares of Common
Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Common Stock, and Awards valued by
reference to book value of shares of Common Stock or the value of securities of
or the performance of specified Parents or Subsidiaries of the Company. The
Committee will determine the terms and conditions of any such Awards.

Performance Goals. The Committee may determine that any Award will be
determined solely on the basis of (a) the achievement by the Corporation or a
Parent or Subsidiary of a specified target return, or target growth in return,
on equity or assets, (b) the Corporation's, Parent's or Subsidiary's stock
price, (c) the achievement by an individual or a business unit of the
Corporation, Parent or Subsidiary of a specified target, or target growth in,
revenues, net income or earnings per share, (d) the achievement of objectively
determinable goals with respect to (i) product development milestones, (ii)
corporate financings, (iii) merger and acquisition activities, (iv) licensing
transactions, (v) development of strategic partnerships or alliances, or (vi)
acquisition or development of new technologies, or (e) any combination of the
goals set forth in (a) through (d) above. Furthermore, the Committee reserves
the right for any reason to reduce (but not increase) any Award, notwithstanding
the achievement of a specified goal. If an Award is made on such basis, the
Committee must establish goals prior to the beginning of the period for which
such performance goal relates (or such later date as may be permitted under Code
Section 162(m)). Any payment of an Award granted with performance goals will be
conditioned on the written certification of the Committee in each case that the
performance goals and any other material conditions were satisfied.

Limitations on Transfer; Beneficiaries. No Award will be assignable or
transferable by a participant other than by will or the laws of descent and
distribution or, except in the case of an ISO, pursuant to a

15
<PAGE> 19

qualified domestic relations. However, a participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of
the participant and to receive any distribution with respect to any Award upon
the participant's death.

Acceleration Upon Certain Events. Upon the participant's death or
disability, all outstanding Options, SARs, and other Awards in the nature of
rights that may be exercised will become fully exercisable and all restrictions
on outstanding Awards will lapse. Any Options or SARs will thereafter continue
or lapse in accordance with the other provisions of the Incentive Plan and the
Award Agreement. In the event of a Change in Control of the Company (as defined
in the Incentive Plan), all outstanding Options, SARs, and other Awards in the
nature of rights that may be exercised will become fully vested and all
restrictions on all outstanding Awards will lapse. In the event of (i) the
commencement of a public tender offer for all or any portion of the Common
Stock, or (ii) a proposal to merge, consolidate or otherwise combine into and
with another corporation (in which transaction the Company would not survive) is
submitted to the stockholders of the Company for approval, the Committee may in
its sole discretion declare all outstanding Options, SARs, and other Awards in
the nature of rights that may be exercised to become fully vested, and/or all
restrictions on all outstanding Awards to lapse, in each case as of such date as
the Committee may, in its sole discretion, declare, which may be on or before
the consummation of such tender offer or other transaction or event.

TERMINATION AND AMENDMENT

The Board or the Committee may, at any time and from time to time,
terminate, amend or modify the Incentive Plan without stockholder approval;
provided, however, that the Committee may condition any amendment on the
approval of stockholders of the Company if such approval is necessary or deemed
advisable with respect to tax, securities or other applicable laws, policies or
regulations. No termination, amendment, or modification of the Incentive Plan
may adversely affect any Award previously granted under the Incentive Plan,
without the written consent of the participant.

CERTAIN FEDERAL INCOME TAX EFFECTS

Nonqualified Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted NSO. However, the participant
will realize ordinary income on the exercise of the NSO in an amount equal to
the excess of the fair market value of the Common Stock acquired upon the
exercise of such option over the exercise price, and the Company will receive a
corresponding deduction. The gain, if any, realized upon the subsequent
disposition by the participant of the Common Stock will constitute short-, mid-
or long-term capital gain, depending on the participant's holding period.

Incentive Stock Options. Under present federal income tax regulations,
there will be no federal income tax consequences to either the Company or the
participant upon the grant of a non-discounted ISO or the exercise thereof by
the participant. If the participant holds the shares of Common Stock for the
greater of two years after the date the Option was granted or one year after the
acquisition of such shares of Common Stock (the "required holding period"), the
difference between the aggregate option price and the amount realized upon
disposition of the shares of Common Stock will constitute mid- or long-term
capital gain or loss, and the Company will not be entitled to a federal income
tax deduction. If the shares of Common Stock are disposed of in a sale, exchange
or other "disqualifying disposition" during the required holding period, the
participant will realize taxable ordinary income in an amount equal to the
excess of the fair market value of the Common Stock purchased at the time of
exercise over the aggregate option price, and the Company will be entitled to a
federal income tax deduction equal to such amount.

SARs. Under present federal income tax regulations, a participant
receiving a non-discounted SAR will not recognize income, and the Company will
not be allowed a tax deduction, at the time the Award is granted. When a
participant exercises the SAR, the amount of cash and the fair market value of
any shares of Common Stock received will be ordinary income to the participant
and will be allowed as a deduction for federal income tax purposes to the
Company.

16
<PAGE> 20

Performance Units. Under present federal income tax regulations, a
participant receiving Performance Units will not recognize income and the
Company will not be allowed a tax deduction at the time the Award is granted.
When a participant receives payment of Performance Units, the amount of cash and
the fair market value of any shares of Common Stock received will be ordinary
income to the participant and will be allowed as a deduction for federal income
tax purposes to the Company.

Restricted Stock. Under present federal income tax regulations, and unless
the participant makes an election to accelerate recognition of the income to the
date of grant, a participant receiving a Restricted Stock Award will not
recognize income, and the Company will not be allowed a tax deduction, at the
time the Award is granted. When the restrictions lapse, the participant will
recognize ordinary income equal to the fair market value of the Common Stock,
and the Company will be entitled to a corresponding tax deduction at that time.

BENEFITS TO NAMED EXECUTIVE OFFICERS AND OTHERS

Any awards under the Incentive Plan will be made at the discretion of the
Committee. Consequently, it is not presently possible to determine, with respect
to (i) the executive officers named in the Summary Compensation Table, (ii) all
current executive officers as a group, (iii) all non-executive directors, as a
group, or (iv) all eligible participants, including all current officers who are
not executive officers, as a group, either the benefits or amounts that will be
received by such persons or groups pursuant to the Incentive Plan or the
benefits or amounts that would have been received by such persons or groups
under the Incentive Plan if it had been in effect during the last fiscal year.

ADDITIONAL INFORMATION

The closing price of the Common Stock, as reported by the Nasdaq National
Market on April 28, 1998, was $2.875. The affirmative vote of the holders of a
majority of the shares present or represented by proxy and entitled to vote at
the meeting on this proposal will constitute approval of the Incentive Plan.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE INCENTIVE
PLAN.

PROPOSAL III
RATIFICATION OF AUDITORS

The Company's Board of Directors has selected Ernst & Young LLP to conduct
the annual audit of the financial statements of the Company for the fiscal year
ending December 31, 1998. Ernst & Young LLP has no financial interest, direct or
indirect, in the Company, and does not have any connection with the Company
except in its professional capacity as an independent auditor.

The ratification by the holders of Common Stock of the selection of Ernst &
Young LLP as independent auditors is not required by law or by the Bylaws of the
Company. The Board of Directors, consistent with the practice of many publicly
held corporations, is nevertheless submitting this selection to the holders of
Common Stock. If this selection is not ratified at the Annual Meeting, the Board
of Directors intends to reconsider its selection of independent auditors for the
fiscal year ending December 31, 1998.

The Audit Committee, which is composed of directors who are not employees
of the Company, approves in advance all material non-audit services to be
provided by Ernst & Young LLP and believes that these services have no effect on
audit independence.

Representatives of Ernst & Young LLP will be present at the Annual Meeting
and will have an opportunity to make a statement, if they so desire, and will be
available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1998. IF A CHOICE IS SPECIFIED ON THE PROXY BY THE
STOCKHOLDER, THE SHARES WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE,
THE SHARES WILL BE VOTED FOR THE PROPOSAL. THE AFFIRMATIVE VOTE OF A MAJORITY OF
THE VOTES CAST IS REQUIRED FOR APPROVAL OF PROPOSAL III.
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STOCKHOLDER PROPOSALS

Any proposal which a Company stockholder intends to be presented at the
next annual meeting of stockholders to be held in 1999 must be received by the
Company on or before January 11, 1999. Only proper proposals which are timely
received will be included in the Proxy Statement and Proxy.

OTHER MATTERS

EXPENSES OF SOLICITATION

The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to the use of the mails, proxies may be solicited by
directors, officers or other employees of the Company, personally, by telephone
or by telegraph. The Company has engaged Beacon Hill Partners, Inc. to
distribute proxy materials to brokers and banks for distribution to beneficial
owners of the Company's Common Stock and to solicit proxies from brokerage
firms, banks and institutional holders of shares. Beacon Hill Partners, Inc.
will be paid a fee of $2,000 plus reimbursement of expenses for its services.

MISCELLANEOUS

Management does not know of any matters to be brought before the Annual
Meeting other than as described in this Proxy Statement. Should any other
matters properly come before the Annual Meeting, the persons designated as
proxies will vote in accordance with their best judgment on such matters.

AVAILABILITY OF ANNUAL REPORT

ACCOMPANYING THIS PROXY STATEMENT IS A COPY OF THE COMPANY'S ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1997. IN ADDITION, COPIES OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K, AS AMENDED, FOR THE YEAR ENDED DECEMBER 31, 1997
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ARE AVAILABLE WITHOUT CHARGE,
EXCEPT FOR EXHIBITS. STOCKHOLDERS WHO WOULD LIKE ADDITIONAL COPIES OF THE ANNUAL
REPORT OR THE COMPANY'S FORM 10-K, AS AMENDED, SHOULD DIRECT THEIR REQUESTS IN
WRITING TO: CYTRX CORPORATION, 154 TECHNOLOGY PARKWAY, NORCROSS, GEORGIA 30092,
ATTENTION: MARK W. REYNOLDS.

By Order of the Board of Directors

/s/ MARK W. REYNOLDS
Mark W. Reynolds
Secretary

May 11, 1998

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APPENDIX A

CYTRX CORPORATION
1998 LONG-TERM INCENTIVE PLAN

ARTICLE I

PURPOSE

1.1. General. The purpose of the CytRx Corporation 1998 Long-Term
Incentive Plan (the "Plan") is to promote the success, and enhance the value, of
CytRx Corporation (the "Corporation"), by linking the personal interests of its
employees, officers, consultants and directors to those of Corporation
shareholders and by providing such persons with an incentive for outstanding
performance. The Plan is further intended to provide flexibility to the
Corporation in its ability to motivate, attract, and retain the services of
employees, officers, consultants and directors upon whose judgment, interest,
and special effort the successful conduct of the Corporation's operation is
largely dependent. Accordingly, the Plan permits the grant of incentive awards
from time to time to selected employees, officers, consultants and directors.

ARTICLE 2

EFFECTIVE DATE

2.1. Effective Date. The Plan shall be effective as of the date upon which
it shall be approved by the Board. However, the Plan shall be submitted to the
shareholders of the Corporation for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options granted under the Plan may be
exercised prior to approval of the Plan by the shareholders and if the
shareholders fail to approve the Plan within 12 months of the Board's approval
thereof, any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any further act.
In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the shareholders
having approved the Plan.

ARTICLE 3

DEFINITIONS

3.1. Definitions. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:

(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Unit Award, Dividend Equivalent Award, or Other
Stock-Based Award, or any other right or interest relating to Stock or
cash, granted to a Participant under the Plan.

(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.

(d) "Change in Control" means and includes each of the following:

(1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of 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
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for purposes of this subsection (1), the following acquisitions shall
not constitute a Change of Control: (i) any acquisition by a Person who
is on April 1, 1998 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 (3) of
this definition; or

(2) Individuals who, as of April 1, 1998, 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, 1998 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

(3) 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 of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of
the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
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 Voting Securities, and (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

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

(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.

(f) "Committee" means the committee of the Board described in Article
4.

(g) "Corporation" means CytRx Corporation, a Delaware corporation.

(h) "Covered Employee" means a covered employee as defined in Code
Section 162(m)(3).

(i) "Disability" shall mean any illness or other physical or mental
condition of a Participant that renders the Participant incapable of
performing his customary and usual duties for the Corporation, or any
medically determinable illness or other physical or mental condition
resulting from a bodily injury, disease or mental disorder which, in the
judgment of the Committee, is permanent and continuous in nature. The
Committee may require such medical or other evidence as it deems necessary
to judge the nature and permanency of the Participant's condition.

(j) "Dividend Equivalent" means a right granted to a Participant under
Article 11.

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(k) "Effective Date" has the meaning assigned such term in Section
2.1.

(l) "Fair Market Value", on any date, means (i) if the Stock is listed
on a securities exchange or is traded over the Nasdaq National Market, the
closing sales price on such exchange or over such system on such date or,
in the absence of reported sales on such date, the closing sales price on
the immediately preceding date on which sales were reported, or (ii) if the
Stock is not listed on a securities exchange or traded over the Nasdaq
National Market, the mean between the bid and offered prices as quoted by
Nasdaq for such date, provided that if it is determined that the fair
market value is not properly reflected by such Nasdaq quotations, Fair
Market Value will be determined by such other method as the Committee
determines in good faith to be reasonable.

(m) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision
thereto.

(n) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.

(o) "Option" means a right granted to a Participant under Article 7 of
the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.

(p) "Other Stock-Based Award" means a right, granted to a Participant
under Article 12, that relates to or is valued by reference to Stock or
other Awards relating to Stock.

(q) "Parent" means a corporation which owns or beneficially owns a
majority of the outstanding voting stock or voting power of the
Corporation. For Incentive Stock Options, the term shall have the same
meaning as set forth in Code Section 424(e).

(r) "Participant" means a person who, as an employee, officer,
consultant or director of the Corporation or any Subsidiary, has been
granted an Award under the Plan.

(s) "Performance Unit" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.

(t) "Plan" means the CytRx Corporation 1998 Long-Term Incentive Plan,
as amended from time to time.

(u) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.

(v) "Retirement" means a Participant's voluntary termination of
employment with the Corporation, Parent or Subsidiary after attaining age
55.

(w) "Stock" means the $0.001 par value common stock of the Corporation
and such other securities of the Corporation as may be substituted for
Stock pursuant to Article 14.

(x) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference
between the Fair Market Value of a share of Stock as of the date of
exercise of the SAR over the grant price of the SAR, all as determined
pursuant to Article 8.

(y) "Subsidiary" means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting
stock or voting power is beneficially owned directly or indirectly by the
Corporation. For Incentive Stock Options, the term shall have the meaning
set forth in Code Section 424(f).

(z) "1933 Act" means the Securities Act of 1933, as amended from time
to time.

(z) "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.

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ARTICLE 4

ADMINISTRATION

4.1. Committee. The Plan shall be administered by the Compensation
Committee of the Board or, at the discretion of the Board from time to time, by
the Board. The Committee shall consist of two or more members of the Board. It
is intended that the directors appointed to serve on the Committee shall be
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under the
1934 Act) and "outside directors" (within the meaning of Code Section 162(m) and
the regulations thereunder) to the extent that Rule 16b-3 and, if necessary for
relief from the limitation under Code Section 162(m) and such relief is sought
by the Company, Code Section 162(m), respectively, are applicable. However, the
mere fact that a Committee member shall fail to qualify under either of the
foregoing requirements shall not invalidate any Award made by the Committee
which Award is otherwise validly made under the Plan. The members of the
Committee shall be appointed by, and may be changed at any time and from time to
time in the discretion of, the Board. During any time that the Board is acting
as administrator of the Plan, it shall have all the powers of the Committee
hereunder, and any reference herein to the Committee (other than in this Section
4.1) shall include the Board.

4.2. Action by the Committee. For purposes of administering the Plan, the
following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Corporation or
any Parent or Subsidiary, the Corporation's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Corporation to assist in the administration of the Plan.

4.3. Authority of Committee. The Committee has the exclusive power,
authority and discretion to:

(a) Designate Participants;

(b) Determine the type or types of Awards to be granted to each
Participant;

(d) Determine the terms and conditions of any Award granted under the
Plan, including but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule
for lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, based in each case on
such considerations as the Committee in its sole discretion determines;

(e) Accelerate the vesting or lapse of restrictions of any outstanding
Award, based in each case on such considerations as the Committee in its
sole discretion determines;

(f) Determine whether, to what extent, and under what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in,
cash, Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;

(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;

(h) Decide all other matters that must be determined in connection
with an Award;

(i) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;

(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan; and

(k) Amend the Plan or any Award Agreement as provided herein.

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4.4. Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

ARTICLE 5

SHARES SUBJECT TO THE PLAN

5.1. Number of Shares. Subject to adjustment as provided in Section 14.1,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Unit
Award) shall be 500,000, of which not more than 10% may be granted as Awards of
Restricted Stock or unrestricted Stock Awards.

5.2. Lapsed Awards. To the extent that an Award is canceled, terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.

5.3. Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

5.4. Limitation on Awards. Notwithstanding any provision in the Plan to
the contrary, the maximum number of shares of Stock with respect to one or more
Options and/or SARs that may be granted during any one calendar year under the
Plan to any one Covered Employee shall be 175,000. The maximum fair market value
(measured as of the date of grant) of any Awards other than Options and SARs
that may be received by a Covered Employee (less any consideration paid by the
Participant for such Award) during any one calendar year under the Plan shall be
$500,000.

ARTICLE 6

ELIGIBILITY

6.1. General. Awards may be granted only to individuals who are employees,
officers, consultants or directors of the Corporation or a Parent or Subsidiary.

ARTICLE 7

STOCK OPTIONS

7.1. General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:

(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee, provided that the exercise
price for any Incentive Stock Option shall not be less than the Fair Market
Value as of the date of the grant.

(b) Time and Conditions of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part.
The Committee also shall determine the performance or other conditions, if
any, that must be satisfied before all or part of an Option may be
exercised. The Committee may waive any exercise provisions at any time in
whole or in part based upon factors as the Committee may determine in its
sole discretion so that the Option becomes exercisable at an earlier date.

(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants; provided that
if shares of Stock surrendered in

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payment of the exercise price were themselves acquired otherwise than on
the open market, such shares shall have been held by the Participant for at
least six months.

(d) Evidence of Grant. All Options shall be evidenced by a written
Award Agreement between the Corporation and the Participant. The Award
Agreement shall include such provisions, not inconsistent with the Plan, as
may be specified by the Committee.

7.2. Incentive Stock Options. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:

(a) Exercise Price. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive
Stock Option shall not be less than the Fair Market Value as of the date of
the grant.

(b) Exercise. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.

(c) Lapse of Option. An Incentive Stock Option shall lapse under the
earliest of the following circumstances; provided, however, that the
Committee may, prior to the lapse of the Incentive Stock Option under the
circumstances described in paragraphs (3), (4) and (5) below, provide in
writing that the Option will extend until a later date, but if Option is
exercised after the dates specified in paragraphs (3), (4) and (5) below,
it will automatically become a Non-Qualified Stock Option:

(1) The Incentive Stock Option shall lapse as of the option
expiration date set forth in the Award Agreement.

(2) The Incentive Stock Option shall lapse ten years after it is
granted, unless an earlier time is set in the Award Agreement.

(3) If the Participant terminates employment for any reason other
than as provided in paragraph (4) or (5) below, the Incentive Stock
Option shall lapse, unless it is previously exercised, three months
after the Participant's termination of employment; provided, however,
that if the Participant's employment is terminated by the Company for
cause or by the Participant without the consent of the Company, the
Incentive Stock Option shall (to the extent not previously exercised)
lapse immediately.

(4) If the Participant terminates employment by reason of his
Disability, the Incentive Stock Option shall lapse, unless it is
previously exercised, one year after the Participant's termination of
employment.

(5) If the Participant dies while employed, or during the
three-month period described in paragraph (3) or during the one-year
period described in paragraph (4) and before the Option otherwise
lapses, the Option shall lapse one year after the Participant's death.
Upon the Participant's death, any exercisable Incentive Stock Options
may be exercised by the Participant's beneficiary, determined in
accordance with Section 13.6.

If a Participant exercises an Option after termination of employment, the Option
may be exercised only with respect to the shares that were otherwise vested on
the Participant's termination of employment.

(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00.

(e) Ten Percent Owners. No Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more than
ten percent of the total combined voting power of all classes of stock of
the Corporation or any Parent or Subsidiary unless the exercise price per
share of such Option is at least 110% of the Fair Market Value per share of
Stock at the date of grant and the Option expires no later than five years
after the date of grant.

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(f) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the Effective Date.

(g) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant or, in the case of
the Participant's Disability, by the Participant's guardian or legal
representative.

(h) Directors. The Committee may not grant an Incentive Stock Option
to a non-employee director. The Committee may grant an Incentive Stock
Option to a director who is also an employee of the Corporation or Parent
or Subsidiary but only in that individual's position as an employee and not
as a director.

ARTICLE 8

STOCK APPRECIATION RIGHTS

8.1. Grant of SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:

(a) Right to Payment. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive the
excess, if any, of:

(1) The Fair Market Value of one share of Stock on the date of
exercise; over

(2) The grant price of the Stock Appreciation Right as determined
by the Committee, which shall not be less than the Fair Market Value of
one share of Stock on the date of grant.

(b) Other Terms. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods of
settlement, form of consideration payable in settlement, and any other
terms and conditions of any Stock Appreciation Right shall be determined by
the Committee at the time of the grant of the Award and shall be reflected
in the Award Agreement.

ARTICLE 9

PERFORMANCE UNITS

9.1. Grant of Performance Units. The Committee is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Units granted to each Participant. All
Awards of Performance Units shall be evidenced by an Award Agreement.

9.2. Right to Payment. A grant of Performance Units gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Units are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. The Committee
shall set performance goals and other terms or conditions to payment of the
Performance Units in its discretion which, depending on the extent to which they
are met, will determine the number and value of Performance Units that will be
paid to the Participant.

9.3. Other Terms. Performance Units may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.

ARTICLE 10

RESTRICTED STOCK AWARDS

10.1. Grant of Restricted Stock. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.

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10.2. Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.

10.3. Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Corporation; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.

10.4. Certificates for Restricted Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.

ARTICLE 11

DIVIDEND EQUIVALENTS

11.1. Grant of Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of shares of Stock subject to an Award, as determined by the Committee.
The Committee may provide that Dividend Equivalents be paid or distributed when
accrued or be deemed to have been reinvested in additional shares of Stock, or
otherwise reinvested.

ARTICLE 12

OTHER STOCK-BASED AWARDS

12.1. Grant of Other Stock-Based Awards. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Parents or Subsidiaries. The Committee shall determine
the terms and conditions of such Awards.

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ARTICLE 13

PROVISIONS APPLICABLE TO AWARDS

13.1. Stand-Alone, Tandem, and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.

13.2. Exchange Provisions. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award (subject to Section 14.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.

13.3. Term of Award. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant
(or, if Section 7.2(e) applies, five years from the date of its grant).

13.4. Form of Payment For Awards. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Corporation or a Parent or Subsidiary on the grant or exercise of an Award may
be made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.

13.5. Limits on Transfer. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Corporation or a Parent or Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Corporation or a Parent or Subsidiary. No
unexercised or restricted Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if such
Section applied to an Award under the Plan; provided, however, that the
Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated taxation,
(ii) does not cause any Option intended to be an incentive stock option to fail
to be described in Code Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any factors deemed relevant, including without
limitation, any state or federal tax or securities laws or regulations
applicable to transferable Awards.

13.6. Beneficiaries. Notwithstanding Section 13.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant's estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.

13.7. Stock Certificates. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock.

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13.8. Acceleration upon a Change in Control. Except as otherwise provided
in the Award Agreement, upon the occurrence of a Change in Control, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse; provided, however that such
acceleration will not occur if, in the opinion of the Company's accountants,
such acceleration would preclude the use of "pooling of interest" accounting
treatment for a Change in Control transaction that (a) would otherwise qualify
for such accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.

13.9. Acceleration upon Certain Events not Constituting a Change in
Control. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but which
the Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Company of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of the 1934 Act, the
Committee may in its sole discretion declare all outstanding Options, Stock
Appreciation Rights, and other Awards in the nature of rights that may be
exercised to be fully exercisable, and/or all restrictions on all outstanding
Awards to have lapsed, in each case, as of such date as the Committee may, in
its sole discretion, declare, which may be on or before the consummation of such
transaction or event. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.

13.10. Acceleration for any Other Reason. Regardless of whether an event
has occurred as described in Section 13.8 or 13.9 above, the Committee may in
its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully or partially exercisable,
and/or that all or a part of the restrictions on all or a portion of the
outstanding Awards shall lapse, in each case, as of such date as the Committee
may, in its sole discretion, declare. The Committee may discriminate among
Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 13.10.

13.11. Effect of Acceleration. If an Award is accelerated under Section
13.8 or 13.9, the Committee may, in its sole discretion, provide (i) that the
Award will expire after a designated period of time after such acceleration to
the extent not then exercised, (ii) that the Award will be settled in cash
rather than Stock, (iii) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (iv) any combination of the foregoing.
The Committee's determination need not be uniform and may be different for
different Participants whether or not such Participants are similarly situated.

13.12. Performance Goals. The Committee may (but need not) determine that
any Award granted pursuant to this Plan to a Participant (including, but not
limited to, Participants who are Covered Employees) shall be determined solely
on the basis of (a) the achievement by the Corporation or a Parent or Subsidiary
of a specified target return, or target growth in return, on equity or assets,
(b) the Corporation's, Parent's or Subsidiary's stock price, (c) the achievement
by an individual or a business unit of the Corporation, Parent or Subsidiary of
a specified target, or target growth in, revenues, net income or earnings per
share, (d) the achievement of objectively determinable goals with respect to (i)
product development milestones, (ii) corporate financings, (iii) merger and
acquisition activities, (iv) licensing transactions, (v) development of
strategic partnerships or alliances, or (vi) acquisition or development of new
technologies, or (e) any combination of the goals set forth in (a) through (d)
above. If an Award is made on such basis, the Committee shall establish goals
prior to the beginning of the period for which such performance goal relates (or
such later date as may be permitted under Code Section 162(m) or the regulations
thereunder) and the Committee may for any reason reduce (but not increase) any
Award, notwithstanding the achievement of a specified goal. Any payment of an
Award granted with performance goals shall be conditioned on the written
certification of the Committee in each case that the performance goals and any
other material conditions were satisfied.

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<PAGE> 32

13.13. Termination of Employment. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur in a circumstance in which a Participant transfers
from the Corporation to one of its Parents or Subsidiaries, transfers from a
Parent or Subsidiary to the Corporation, or transfers from one Parent or
Subsidiary to another Parent or Subsidiary.

ARTICLE 14

CHANGES IN CAPITAL STRUCTURE

14.1. General. In the event a stock dividend is declared upon the Stock,
the shares of Stock then subject to each Award shall be increased
proportionately without any change in the aggregate purchase price therefor. In
the event the Stock shall be changed into or exchanged for a different number or
class of shares of stock or securities of the Corporation or of another
corporation, whether through reorganization, recapitalization, reclassification,
stock split-up, combination of shares, merger or consolidation, there shall be
substituted for each such share of Stock then subject to each Award the number
and class of shares into which each outstanding share of Stock shall be so
exchanged, all without any change in the aggregate purchase price for the shares
then subject to each Award.

ARTICLE 15

AMENDMENT, MODIFICATION AND TERMINATION

15.1. Amendment, Modification and Termination. The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without shareholder approval; provided, however, that the Board or Committee may
condition any amendment or modification on the approval of shareholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or regulations.

15.2. Awards Previously Granted. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that such amendment, modification or
termination shall not, without the Participant's consent, reduce or diminish the
value of such Award determined as if the Award had been exercised, vested,
cashed in or otherwise settled on the date of such amendment or termination. No
termination, amendment, or modification of the Plan shall adversely affect any
Award previously granted under the Plan, without the written consent of the
Participant.

ARTICLE 16

GENERAL PROVISIONS

16.1. No Rights to Awards. No Participant or employee, officer, consultant
or director shall have any claim to be granted any Award under the Plan, and
neither the Corporation nor the Committee is obligated to treat Participants and
employees, officers, consultants or directors uniformly.

16.2. No Shareholder Rights. No Award gives the Participant any of the
rights of a shareholder of the Corporation unless and until shares of Stock are
in fact issued to such person in connection with such Award.

16.3. Withholding. The Corporation or any Parent or Subsidiary shall have
the authority and the right to deduct or withhold, or require a Participant to
remit to the Corporation, an amount sufficient to satisfy federal, state, and
local taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of the Plan. With
respect to withholding required upon any taxable event under the Plan, the
Committee may, at the time the Award is granted or thereafter, require that any
such withholding requirement be satisfied, in whole or in part, by withholding
shares of Stock having a Fair Market Value on the date of withholding equal to
the amount to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes.
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16.4. No Right to Employment or Other Status. Nothing in the Plan or any
Award Agreement shall interfere with or limit in any way the right of the
Corporation or any Parent or Subsidiary to terminate any Participant's
employment or status as a consultant or director at any time, nor confer upon
any Participant any right to continue as an employee, officer, consultant or
director of the Corporation or any Parent or Subsidiary.

16.5. Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Corporation or any Parent or Subsidiary.

16.6. Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the
Corporation or any Parent or Subsidiary unless provided otherwise in such other
plan.

16.7. Expenses. The expenses of administering the Plan shall be borne by
the Corporation and its Parents or Subsidiaries.

16.8. Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

16.9. Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

16.10. Fractional Shares. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.

16.11. Government and Other Regulations. The obligation of the Corporation
to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Corporation shall be under no obligation to
register under the 1933 Act, or any state securities act, any of the shares of
Stock paid under the Plan. The shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, and the
Corporation may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.

16.12. Governing Law. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Georgia.

16.13. Additional Provisions. Each Award Agreement may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of this Plan.

The foregoing is hereby acknowledged as being the CytRx Corporation 1998
Long-Term Incentive Plan as adopted by the Board of Directors of the Company on
[April 10, 1998] and approved by the shareholders of the Company on ,
1998.

CYTRX CORPORATION

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

Its:
--------------------------------------

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APPENDIX B

PROXY CYTRX CORPORATION
154 TECHNOLOGY PARKWAY
NORCROSS, GEORGIA 30092

ANNUAL MEETING OF STOCKHOLDERS

The undersigned stockholder of CytRx Corporation (the "Company"), Norcross,
Georgia, hereby constitutes and appoints Jack J. Luchese and Mark W. Reynolds or
either one of them, each with full power of substitution, to vote the number of
shares of Common Stock which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders to be held at the
Hilton Hotel at Peachtree Corners, 5993 Peachtree Industrial Boulevard,
Norcross, Georgia, on Wednesday, June 10, 1998, at 10:00 a.m., local time, or at
any adjournments thereof (the "Annual Meeting"), upon the proposals described in
the Notice of Annual Meeting of Stockholders and Proxy Statement, both dated May
11, 1998, the receipt of which is acknowledged, in the manner specified below.

1. ELECTION OF DIRECTORS. On the proposal to elect the following nominees for
Class I directors to serve until the 2001 Annual Meeting of Stockholders of
the Company and until their successors are elected and qualified:

Lyle A. Hohnke, Jack J. Luchese

For [ ] Withhold Authority [ ]

To withhold authority for the nominee, write the name of the nominee in the
space provided:

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

2. ADOPTION OF 1998 LONG-TERM INCENTIVE PLAN. On the proposal to adopt the 1998
Long-Term Incentive Plan:

For [ ] Against [ ] Abstain [ ]

3. SELECTION OF AUDITORS. On the proposal to ratify the selection of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
December 31, 1998:

For [ ] Against [ ] Abstain [ ]

(Continued on reverse side)

4. OTHER PROPOSALS. In their sole discretion, the Proxies are authorized to vote
upon such other business as may properly come before the Annual Meeting or
any adjournments thereof.

For [ ] Withhold Authority [ ]

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3 AND WITH DISCRETIONARY AUTHORITY ON ALL OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.

Please sign exactly as your name appears on your stock certificate and date.
Where shares are held jointly, each stockholder should sign. When signing as
executor, administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.

Shares Held:

------------------------------------------------
Signature of Stockholder

------------------------------------------------
Signature of Stockholder (if held Jointly)

Dated: , 1998
------------------------------------
Month Day

THIS PROXY IS SOLICITED ON BEHALF OF CYTRX CORPORATION'S BOARD OF DIRECTORS
AND MAY BE REVOKED BY THE STOCKHOLDER PRIOR TO ITS EXERCISE.