AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

dated as of

June 6, 2008

among

INNOVIVE PHARMACEUTICALS, INC.,

CYTRX CORPORATION,

CYTRX MERGER SUBSIDIARY, INC.

and

STEVEN KELLY
(As the Stockholder Representative)

TABLE OF CONTENTS

		Page
§ ARTICLE I THE MERGER; CLOSING			1
SECTION 1.01 The Merger			1
SECTION 1.02 Effective Time			1
SECTION 1.03 Effects of the Merger			2
SECTION 1.04 Conversion of Shares			2
SECTION 1.05 Dissenting Shares			2
SECTION 1.06 Payment of Merger Consideration			3
SECTION 1.07 Treatment of Company Stock Options			5
SECTION 1.08 Treatment of Company Warrants			6
SECTION 1.09 The Closing			6
ARTICLE II THE SURVIVING CORPORATION; DIRECTORS AND OFFICERS			6
SECTION 2.01 Certificate of Incorporation			6
SECTION 2.02 Bylaws			6
SECTION 2.03 Directors and Officers			6
ARTICLE III EARNOUT MERGER CONSIDERATION			7
SECTION 3.01 Net Sales; Determination of Earnout			7
SECTION 3.02 Payment			8
SECTION 3.03 Transfer of the Surviving Corporation			9
SECTION 3.04 Earnout Rights Not Transferable			9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CYTRX AND MERGER SUBSIDIARY			9
SECTION 4.01 Organization and Qualification			10
SECTION 4.02 Capitalization			10
SECTION 4.03 Authority; Non-Contravention; Approvals			11
SECTION 4.04 Reports and Financial Statements			12
SECTION 4.05 Proxy Statement/Prospectus			13
SECTION 4.06 No Violation of Law			13
SECTION 4.07 Material Contracts; Compliance with Contracts			13
SECTION 4.08 Brokers and Finders			13
SECTION 4.09 No Prior Activities of Merger Subsidiary			13
SECTION 4.10 Litigation; Government Investigations			14
SECTION 4.11 Taxes			14
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY			15
SECTION 5.01 Organization and Qualification			15
SECTION 5.02 Capitalization			15
SECTION 5.03 Authority; Non-Contravention; Approvals			16
SECTION 5.04 Reports and Financial Statements			17

		Page
SECTION 5.05 Sarbanes-Oxley Act; Internal Accounting Controls			18
SECTION 5.06 Liabilities			18
SECTION 5.07 Absence of Certain Changes or Events			19
SECTION 5.08 Litigation; Government Investigations			19
SECTION 5.09 Proxy Statement/Prospectus			19
SECTION 5.10 No Violation of Law			19
SECTION 5.11 Material Contracts; Compliance with Contracts			20
SECTION 5.12 Taxes			20
SECTION 5.13 Employee Benefit Plans; ERISA; Employment Agreements			21
SECTION 5.14 Labor Controversies			23
SECTION 5.15 Environmental Matters			23
SECTION 5.16 Title to Assets			23
SECTION 5.17 Company Stockholders’ Approval			23
SECTION 5.18 Intellectual Property			23
SECTION 5.19 Insurance			27
SECTION 5.20 Certain Payments			27
SECTION 5.21 Brokers and Finders			27
SECTION 5.22 Opinion of Financial Advisor			27
ARTICLE VI COVENANTS			28
SECTION 6.01 Conduct of Business by the Company Pending the Merger			28
SECTION 6.02 Conduct of Business by CytRx Pending the Merger			30
SECTION 6.03 Acquisition Proposals			31
SECTION 6.04 Access to Information; Confidentiality			33
SECTION 6.05 Notices of Certain Events			35
SECTION 6.06 Merger Subsidiary			35
SECTION 6.07 Meeting of the Company’s Stockholders			35
SECTION 6.08 Registration Statement			36
SECTION 6.09 Public Announcements			37
SECTION 6.10 Expenses and Fees			37
SECTION 6.11 Agreement to Cooperate			37
SECTION 6.12 Directors’ and Officers’ Indemnification			37
SECTION 6.13 Loan and Security Agreement			39
SECTION 6.14 Exemption From Liability Under Section 16(b)			39
SECTION 6.15 Resignation of Officers			39
SECTION 6.16 Office Lease			39
ARTICLE VII CONDITIONS TO THE MERGER			40
SECTION 7.01 Conditions to the Obligations of Each Party			40
SECTION 7.02 Conditions to Obligation of the Company to Effect the Merger			40

		Page
SECTION 7.03 Conditions to Obligations of CytRx and Subsidiary to Effect the Merger			41
ARTICLE VIII TERMINATION			42
SECTION 8.01 Termination			42
SECTION 8.02 Termination Fee			43
SECTION 8.03 Effect of Termination			43
ARTICLE IX OFFSET			44
SECTION 9.01 Survival			44
SECTION 9.02 Offset			44
SECTION 9.03 Offset Claims			45
SECTION 9.04 Resolution of Conflicts			45
SECTION 9.05 Stockholder Representative			46
ARTICLE X MISCELLANEOUS			47
SECTION 10.01 Non-Survival of Representations and Warranties			47
SECTION 10.02 Notices			47
SECTION 10.03 Interpretation			49
SECTION 10.04 Assignment; Governing Law; Forum			49
SECTION 10.05 Counterparts			50
SECTION 10.06 Amendments; No Waivers			50
SECTION 10.07 Entire Agreement			50
SECTION 10.08 Severability			50
SECTION 10.09 Specific Performance			50

AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) entered into on June 6, 2008, by and among INNOVIVE PHARMACEUTICALS, INC., a Delaware corporation (the “ Company ”), CYTRX CORPORATION, a Delaware corporation (“ CytRx ”), CYTRX MERGER SUBSIDIARY, INC., a Delaware corporation (“ Merger Subsidiary ”), and STEVEN KELLY, as the Stockholder Representative (as defined in Section 9.05).

     WHEREAS, the respective Boards of Directors of the Company, CytRx and Merger Subsidiary have determined that this Agreement and the transactions contemplated hereby, including the Merger (as defined below), are advisable and in the best interests of their respective stockholders, and have approved the merger of Merger Subsidiary with and into the Company on the terms and subject to the conditions set forth in this Agreement (the “ Merger ”); and

     WHEREAS, in connection with the Merger, the parties desire to make certain representations, warranties, covenants and agreements and prescribe certain conditions to the Merger, as provided herein; and

     WHEREAS, as an inducement to CytRx and Merger Subsidiary to enter into this Agreement, certain stockholders of the Company have concurrently herewith entered into a Support Agreement in substantially the form attached hereto as Exhibit A , pursuant to which, among other things, such stockholders have agreed to vote the shares of Company Common Stock (as defined below) owned by them in favor of the approval and adoption of this Agreement and the approval of the Merger;

     NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE I

     SECTION 1.01 The Merger . Upon the terms and subject to the conditions of this Agreement, at the Effective Time (as defined in Section 1.02) Merger Subsidiary shall be merged with and into the Company in accordance with the Delaware General Corporation Law (the “ DGCL ”). Upon the Merger, the separate existence of Merger Subsidiary shall cease and the Company shall continue as the surviving corporation (the “ Surviving Corporation ”) and shall continue its existence under the DGCL. CytRx, in its capacity as the sole stockholder of Merger Subsidiary, hereby approves of the Merger and this Agreement.

     SECTION 1.02 Effective Time . Unless this Agreement is earlier terminated pursuant to the terms hereof, the Merger shall become effective at or following the Closing (as defined in Section 1.09) upon the filing with the Secretary of State of the State of Delaware (the “ Secretary of State ”) of a certificate of merger in accordance with the requirements of the DGCL (the “ Certificate of Merger ”). When used in this Agreement, the term “ Effective Time ” means the date and time at which the Certificate of Merger is accepted by the Secretary of State for filing, or such later time as shall be set forth in the Certificate of Merger.

     SECTION 1.03 Effects of the Merger . The Merger shall have the effects provided for in this Agreement and in Section 259 of the DGCL.

     SECTION 1.04 Conversion of Shares . At the Effective Time, by virtue of the Merger and without any action on the part of the parties or the holders of any of the following securities:

     (a) each issued and outstanding share of capital stock of Merger Subsidiary shall be converted into one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation;

     (b) each issued and outstanding share of the common stock, par value $0.001 per share, of the Company (“ Company Common Stock ”) owned by the Company as treasury stock, or owned by any wholly owned subsidiary of the Company or by CytRx, Merger Subsidiary or any other subsidiary of CytRx, shall automatically be cancelled and retired and shall cease to exist, and no payment or consideration shall be made with respect thereto; and

     (c) each issued and outstanding share of Company Common Stock other than shares of Company Common Stock referred to in paragraph (b) above and other than any Dissenting Shares (as defined in Section 1.05) shall be converted into the right to receive, as provided herein, an amount equal to the quotient determined by dividing (i) the sum of (1) $3,000,000, less the consideration, if any, paid or payable upon the termination pursuant to Section 1.07 of all outstanding Company Options (as defined in Section 5.02) (the “ Initial Merger Consideration ”) and (2) the Earnout Merger Consideration (determined as provided in Section 3.01), if any, by (ii) the fully diluted shares (as defined below) of Company Common Stock immediately prior to the Effective Time (such amount per fully diluted share of Company Common Stock, the “ Merger Consideration ”). For purposes of this Agreement, the term “ fully diluted shares ” means the sum of (i) all issued and outstanding shares (including any Dissenting Shares) of Company Common Stock and (ii) all shares of Company Common Stock issuable upon the exercise, in full, of all outstanding Company Warrants (as defined in Section 5.02) that will remain outstanding following the Effective Time as provided in Section 5.02. At the Effective Time, all issued and outstanding shares of Company Common Stock shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate representing any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration, without interest. The holders of shares of Company Common Stock immediately prior to the Effective Time are sometimes collectively referred to herein as the “ Company Stockholders .”

     SECTION 1.05 Dissenting Shares .

     (a) For purposes of this Agreement, “ Dissenting Shares ” means shares of the Company Common Stock held immediately prior to the Effective Time by a stockholder who did not vote in favor of the Merger (or consent thereto in writing) and with respect to which demand to the Company for purchase of such shares is duly made and perfected in accordance with Section 262 of the DGCL and not subsequently and effectively withdrawn or forfeited. Notwithstanding the provisions of Section 1.04(c) or any other provision of this Agreement to the contrary, Dissenting Shares shall not be converted into or be exchangeable for the right to

receive the Merger Consideration at or after the Effective Time, but shall entitle the holder thereof to receive such consideration as may be determined to be due to holders pursuant to the DGCL, unless and until the holder of such Dissenting Shares withdraws his or her demand for such appraisal in accordance with the DGCL or becomes ineligible for such appraisal. If a holder of Dissenting Shares shall withdraw his or her demand for such appraisal or shall become ineligible for such appraisal (through failure to perfect or otherwise), then, as of the Effective Time or the occurrence of such event, whichever last occurs, such holder’s Dissenting Shares shall automatically be converted into and represent the right to receive the Merger Consideration, without interest, as provided in Section 1.04(c) and in accordance with the DGCL.

     (b) The Company shall give CytRx (i) prompt notice of any demands received by the Company for appraisal of shares of Company Common Stock and (ii) the opportunity to participate in and direct all negotiations and proceedings with respect to any such demands. The Company shall not, without the prior written consent of CytRx, make any payment with respect to, or settle, offer to settle or otherwise negotiate, any such demands.

     SECTION 1.06 Payment of Merger Consideration .

     (a) The Initial Merger Consideration shall be payable in fully paid and non-assessable shares of the common stock, $0.001 par value per share, of CytRx (“ CytRx Common Stock ”), which shall be valued for this purpose at $0.94 per share (the “ Initial Merger Consideration Price ”).

     (b) Prior to the Effective Time, CytRx shall appoint an agent reasonably satisfactory to the Company to act as agent (the “ Disbursing Agent ”) for the payment of the Initial Merger Consideration upon surrender of certificates representing shares of Company Common Stock. At or prior to the Effective Time, CytRx shall deposit or cause to be deposited with the Disbursing Agent in trust for the benefit of the Company Stockholders certificates representing shares of CytRx Common Stock sufficient to pay the Initial Merger Consideration.

     (c) The Earnout Merger Consideration, if any, shall be payable as provided in Section 3.02. The provisions of this Section 1.06 also shall apply to the payment of any Earnout Merger Consideration.

     (d) Promptly after the Effective Time, the Surviving Corporation shall cause the Disbursing Agent to mail to each individual, corporation, limited liability company, partnership, association, joint venture, unincorporated organization, trust or any other entity, including a governmental authority (each, a “ person ”), who was a record holder as of the Effective Time of an outstanding certificate or certificates which immediately prior to the Effective Time represented shares of Company Common Stock (the “ Certificates ”) or of uncertificated shares of Company Common Stock in book-entry form (“ Book-Entry Shares ”), and whose shares were converted into the right to receive the Initial Merger Consideration pursuant to Section 1.04(c), a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Disbursing Agent, and which shall be in such form and shall have such other customary provisions as CytRx may reasonably specify) and instructions for use in effecting the surrender of the Certificates or Book-Entry Shares in exchange for payment of the Initial Merger

Consideration. Upon surrender to the Disbursing Agent of a Certificate, together with such letter of transmittal duly executed and such other documents as may be reasonably required by the Disbursing Agent, the holder of such Certificate or Book-Entry Share shall be paid promptly in exchange therefor the Initial Merger Consideration and such Certificate or Book-Entry Share shall forthwith be canceled. If payment is to be made to a person other than the person in whose name the Certificate or Book-Entry Share surrendered is registered, it shall be a condition of payment that the Certificate so surrendered be properly endorsed or otherwise be in proper form for transfer and that the person requesting such payment pay any transfer or other taxes required by reason of the payment of the Initial Merger Consideration to a person other than the registered holder of the Certificate surrendered or establish to the satisfaction of the Surviving Corporation that such tax has been paid or is not applicable. Until surrendered in accordance with the provisions of this Section 1.06, each Certificate or Book-Entry Share (other than Certificates or Book-Entry Shares representing shares of Company Common Stock owned by any subsidiary of the Company, CytRx, Merger Subsidiary or any other subsidiary of CytRx and shares of Company Common Stock held in the treasury of the Company, which shall have been canceled as provided in Section 1.04(b), and other than Certificates or Book-Entry Shares representing Dissenting Shares) shall represent for all purposes only the right to receive, as and when payable hereunder, the Merger Consideration multiplied by the number of shares of Company Common Stock evidenced by such Certificate or the number of Book-Entry Shares, without any interest thereon.

     (e) From and after the Effective Time, there shall be no registration of transfers of shares of Company Common Stock which were outstanding immediately prior to the Effective Time on the stock transfer books of the Surviving Corporation. From and after the Effective Time, the holders of shares of Company Common Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares of Company Common Stock except as otherwise provided in this Agreement or by applicable law. All Merger Consideration paid upon the surrender of Certificates in accordance with the terms of this Article I shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock previously represented by such Certificates. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, such Certificates shall be cancelled and exchanged as provided in this Article I. At the close of business on the day of the Effective Time, the stock ledger of the Company shall be closed.

     (f) If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if reasonably required by the Surviving Corporation, the posting by such person of a bond, in such reasonable amount as CytRx may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Disbursing Agent will pay, in exchange for such lost, stolen or destroyed Certificate, the Initial Merger Consideration to be paid in respect of the shares of Company Common Stock formerly represented by such Certificate, as contemplated by this Article I.

     (g) No certificate or scrip representing fractional shares of CytRx Common Stock shall be issued as part of the Initial Merger Consideration upon the surrender of the Certificates. In lieu thereof, each Company Stockholder otherwise entitled to a fraction of a share of CytRx Common Stock shall be entitled to receive an amount of cash (without interest) determined by

multiplying the Initial Merger Consideration Price by the fractional share interest to which such holder would otherwise be entitled, less any applicable tax withholding. If a Company Stockholder surrenders more than one Certificate, any fractions of a share of CytRx Common Stock shall be aggregated for purposes of determining whether such Company Stockholder is entitled to a fraction of a share.

     (h) At any time after six months after the Effective Time, CytRx shall be entitled to require the Disbursing Agent to deliver to it any Merger Consideration which had been deposited by CytRx with the Disbursing Agent and not disbursed in exchange for Certificates (including all interest and other income received by the Disbursing Agent in respect of such Merger Consideration). Thereafter, holders of shares of Company Common Stock shall look only to CytRx (subject to the terms of this Agreement and abandoned property, escheat and other similar laws) as general creditors thereof with respect to any Merger Consideration that may be payable, without interest, upon surrender of the Certificates held by them. If any Certificates shall not have been surrendered prior to two years after the Effective Time (or immediately prior to such time on which any payment in respect thereof would otherwise escheat or become the property of any governmental unit or agency), the payment in respect of such Certificates shall, to the extent permitted by applicable law, become the property of CytRx, free and clear of all claims or interest of any person previously entitled thereto. Notwithstanding the foregoing, none of CytRx, the Company, the Surviving Corporation nor the Disbursing Agent shall be liable to any holder of a share of Company Common Stock for any Merger Consideration delivered in respect of such share of Company Common Stock to a public official pursuant to any abandoned property, escheat or other similar law.

     (i) CytRx, the Surviving Corporation and the Disbursing Agent shall be entitled to deduct and withhold from the Merger Consideration otherwise payable to a holder of shares of Company Common Stock pursuant to this Agreement such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the “ Code ”), or under any provision of state, local or foreign tax law. To the extent amounts are so withheld and paid over to the appropriate taxing authority, the withheld amounts shall be treated for all purposes of this Agreement as having been paid to the person in respect of which such deduction and withholding was made.

     SECTION 1.07 Treatment of Company Stock Options . At or prior to the Closing, the administrator of the Company Stock Plans (as defined below) shall have resolved under the Company Stock Plans to determine that each unexercised Company Option (as defined in Section 5.02) granted pursuant to the Company Stock Plans shall terminate immediately prior to the Effective Time, with any consideration due to the holders thereof being paid at such time, and the Company will take all necessary and appropriate action to effect the termination of all Company Options (including, but not limited to, the giving of any notice required under any agreement relating to Company Options). For purposes of this Agreement, the term “ Company Stock Plans ” means, collectively, the Company’s 2004 Stock Option Plan, 2007 Stock Option Plan and each other stock option, stock appreciation rights or other equity incentive plan maintained or assumed by the Company at any time.

     SECTION 1.08 Treatment of Company Warrants . Effective immediately prior to the Effective Time, all unexercised Company Warrants (as defined in Section 5.02) shall, by their terms and without any action of the Company, either (a) be canceled, without any consideration to the holders thereof, and be of no further force or effect or (b) remain outstanding in accordance with the terms thereof and the holders thereof shall thereafter have the right to purchase and receive (in lieu of the shares of Company Common Stock) the Merger Consideration payable with respect to or in exchange for the number of shares of Company Common Stock purchasable immediately prior to the Effective Time upon the exercise thereof. If and to the extent Company Warrants outstanding at the Effective Time are subsequently cancelled, or terminate, without being exercised in full, all Merger Consideration otherwise payable with respect to such cancelled or terminated Company Warrants shall thereupon become the property of CytRx. The holders of Company Warrants immediately prior to or at any time after the Effective Time are sometimes collectively referred to herein as the “ Company Warrant Holders .” CytRx shall cause the Surviving Corporation to comply with any provisions of Company Warrants regarding the issuance of replacement warrants in exchange for the surrender of Company Warrants that, by their terms, remain outstanding following the Effective Time.

     SECTION 1.09 The Closing . The consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of TroyGould PC, 1801 Century Park East, 16th Floor, Los Angeles, California 90067, commencing at 9:00 A.M., local time, on the second business day following the satisfaction or waiver of all conditions set forth in Article VII or such other place and date as the parties may mutually determine (the “ Closing Date ”). As soon as practicable following the Closing, the Company and Merger Subsidiary shall file with the Secretary of State the duly executed Certificate of Merger and such other documents as may be required by the DGCL, and the parties shall take all such other and further actions as may be required by law to make the Merger effective.

ARTICLE II

     SECTION 2.01 Certificate of Incorporation . The Certificate of Incorporation of Merger Subsidiary in effect at the Effective Time shall be the certificate of incorporation of the Surviving Corporation, except that the name of the Surviving Corporation shall be changed to CytRx Oncology Corporation, unless and until amended in accordance with applicable law and the terms of this Agreement.

     SECTION 2.02 Bylaws . The Bylaws of Merger Subsidiary in effect at the Effective Time shall be the bylaws of the Surviving Corporation, unless and until amended in accordance with applicable law.

     SECTION 2.03 Directors and Officers . The directors of Merger Subsidiary immediately prior to the Effective Time shall be the directors of the Surviving Corporation as of the Effective Time. The officers identified in the Certificate of Merger shall be the officers of the Surviving Corporation as of the Effective Time, subject to the right of the Board of Directors of the Surviving Corporation to appoint or replace officers.

ARTICLE III

EARNOUT MERGER CONSIDERATION

     SECTION 3.01 Net Sales; Determination of Earnout .

     (a) For purposes of this Agreement, the following capitalized terms shall have the meanings indicated:

          (i) “ Company License Agreements ” has the meaning set forth in Section 3.01(a) of the Company Disclosure Schedule (as defined in Article V);

          (ii) “ Earnout Merger Consideration ” means the amounts set forth in the following table corresponding to the Surviving Corporation’s achievement of Net Sales (as defined below) indicated:

Net Sales						Earnout Merger Consideration
$	2,000,000					$	2,000,000
$	15,000,000					$	5,000,000
$	30,000,000					$	5,000,000
$	40,000,000					$	6,253,462

provided, that the final payment of the Earnout Merger Consideration ( i.e ., $6,253,462 payment corresponding to Net Sales of $40,000,000), shall be increased by the excess, if any, of (1) the Estimated Net Liabilities (as defined in Section 5.06(b)) of the Company as of the date of this Agreement over (2) the actual Net Liabilities (as defined in Section 5.06(b) but excluding up to $97,785 that may become due and payable to Davos Chemical Corporation) of the Company as of such date.

          (iii) “ Earnout Period ” means the period commencing upon the Effective Time and ending on the earlier of (1) the end of the first calendar year in which Net Sales equal or exceed $40,000,000 and (2) the expiration of the last of the patents licensed under the Company License Agreements;

          (iv) “ Net Sales ” means the sum of all “net sales” as defined in the Company License Agreements;

          (v) “ Market Price ” means, for any date: (i) if the CytRx Common Stock is then listed or quoted on a Trading Market (as defined below), the last sale price of the CytRx Common Stock on such date (or the nearest preceding Trading Day (as defined below) if such date is not a Trading Day) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P.; or (ii) if CytRx Common Stock is not then quoted for trading on a Trading Market and if prices for CytRx Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency

succeeding to its functions of reporting prices), the most recent bid price per share of CytRx Common Stock so reported; or (iii) in all other cases, the fair market value of a share of CytRx Common Stock as determined in good faith by the Board of Directors of CytRx;

          (vi) “ Trading Day ” means a day on which the principal Trading Market is open for business; and

          (vii) “ Trading Market ” means the following exchanges or markets on which the CytRx Common Stock is listed or quoted for trading on the date in question: The Nasdaq Capital Market; The Nasdaq Global Market; the Nasdaq Global Select Market; the American Stock Exchange; the New York Stock Exchange; or the OTC Bulletin Board.

     (b) Subject to the achievement of Net Sales as set forth in paragraph (a) above and to CytRx’s offset rights under Article IX, CytRx shall pay the related Earnout Merger Consideration as provided in Section 3.02.

     SECTION 3.02 Payment .

     (a) If, in a calendar year during the Earnout Period, the Surviving Corporation achieves Net Sales for such year in one or more of the amounts specified in Section 3.01(a), CytRx shall promptly, and in no event later than 90 days following the end of such year, pay and deliver to the Stockholder Representative, on behalf of the Company Stockholders, and reserve on behalf of the Company Warrant Holders the relevant Earnout Merger Consideration pursuant to Section 3.01(a). For clarity, the Earnout Merger Consideration shall be payable only with respect to the first year during the Earnout Period in which Net Sales as specified in Section 3.01(a) are achieved. For further clarity, the Relevant Earnout Merger Consideration shall be payable with respect to each level of Net Sales specified in Section 3.01(a) first achieved during such year. By way of example only, if, in the first calendar year during the Earnout Period for which Net Sales were at least $2,000,000, the Surviving Corporation achieves Net Sales of $17,000,000, the Earnout Merger Consideration payable by CytRx would be $7,000,000 ( i.e ., $2,000,000 + $5,000,000). In this example, no further Earnout Merger Consideration would be payable unless and until Net Sales for any calendar year equaled or exceeded $30,000,000.

     (b) Subject to the Equity Conditions (as defined below) and share limitation described below, the Earnout Merger Consideration, if any, shall be payable in shares of CytRx Common Stock valued for this purpose at the average of the daily Market Price during the ten-Trading Day period ending on the second Trading Day prior to CytRx’s payment of the Earnout Consideration or, in CytRx’s discretion, in cash, or by any combination of shares of CytRx Common Stock and cash. For purposes of this Agreement, the term “ Equity Conditions ” means, at the time of payment of any Earnout Merger Consideration, (i) CytRx Common Stock is listed for trading on a Trading Market and all of the shares issuable in payment of such Earnout Merger Consideration are listed or quoted for trading on such Trading Market, (ii) the shares of CytRx Common Stock comprising the Earnout Merger Consideration are registered, if necessary, under the Securities Act pursuant to an effective registration statement or otherwise will be freely tradeable upon issuance thereof, and (iii) there are sufficient authorized but unissued and otherwise unreserved shares of CytRx Common Stock for the issuance of all of the shares issuable in payment of such Earnout Merger Consideration. Notwithstanding the foregoing or

any other provision of this Agreement, the maximum number of shares of CytRx Common Stock issued in payment of the Merger Consideration shall not exceed 18,145,013 (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and like events with respect to CytRx Common Stock), unless such issuance shall have been approved by the requisite vote or consent of CytRx stockholders under applicable Trading Market listing standards. In the event that the Equity Conditions shall not have been satisfied, or if payment in shares of CytRx Common Stock of any Earnout Merger Consideration would cause such share limitation to be exceeded, CytRx shall, to the extent necessary, instead pay such Earnout Merger Consideration in cash.

     (c) No certificate or scrip representing fractional shares of CytRx Common Stock shall be issued as part of the Earnout Merger Consideration. In lieu thereof, each Company Stockholder otherwise entitled to a fraction of a share of CytRx Common Stock shall be entitled to receive an amount of cash (without interest) determined by multiplying the Market Price for purposes of the payment of such Earnout Merger Consideration by the fractional share interest to which such holder would otherwise be entitled, less any applicable tax withholding. If a Company Stockholder surrenders more than one Certificate, any fractions of a share of CytRx Common Stock shall be aggregated for purposes of determining whether such Company Stockholder is entitled to a fraction of a share.

     (d) CytRx shall afford the Stockholder Representative and his advisers and representatives, upon request, reasonable access to the books and records of the Surviving Corporation for purposes relating to the determination of Net Sales, provided that such access shall be limited to that portion of the books and records that relate to the calculation of Net Sales and provided further that prior to granting such access, the Stockholder Representative shall have entered into a confidentiality agreement on terms and conditions reasonably satisfactory to CytRx. If the Stockholder Representative disputes any Net Sales determination by CytRx, either party may make a demand for formal resolution in the manner provided in Section 9.04.

     SECTION 3.03 Transfer of the Surviving Corporation . No sale or transfer by CytRx of any beneficial ownership in the Surviving Corporation shall relieve CytRx of its obligations with respect to this Agreement, unless the purchaser of such interest shall agree in writing to assume all of CytRx’s obligations hereunder and to be bound by all of the terms and conditions of this Agreement (in which event, the term “ CytRx ” shall thereafter include such purchaser).

     SECTION 3.04 Earnout Rights Not Transferable . No person may sell, exchange, transfer or otherwise dispose of his, her or its right to receive the Earnout Merger Consideration, if any, other than by operation of law. Any transfer or purported transfer in violation of this Section 3.04 shall be null and voice ab initio and shall not be recognized by CytRx.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF CYTRX AND MERGER SUBSIDIARY

     CytRx and Merger Subsidiary, jointly and severally, represent and warrant to the Company that, except as set forth in (i) the CytRx SEC Reports (as defined in Section 4.04) filed

with the Securities and Exchange Commission (the “ SEC ”) prior to the date hereof or (ii) the disclosure schedule delivered to the Company by CytRx concurrently herewith (the “ CytRx Disclosure Schedule ”), which shall be arranged in sections corresponding to the numbered sections of this Article IV, it being agreed that disclosure of any item on the CytRx Disclosure Schedule shall be deemed disclosure with respect to all Sections of this Agreement if the relevance of such item is reasonably apparent from the face of the CytRx Disclosure Schedule:

     SECTION 4.01 Organization and Qualification . Each of CytRx and Merger Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted. Each of CytRx and Merger Subsidiary is duly qualified and licensed to transact business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified, licensed and in good standing would not reasonably be expected to have a CytRx Material Adverse Effect (as hereinafter defined). In this Agreement, the term “ CytRx Material Adverse Effect ” means any change, event, circumstance, development or occurrence (other than an effect arising out of or resulting from the entering into or the public announcement or disclosure of this Agreement and the transactions contemplated hereby) that, individually or in the aggregate, (i) has a material adverse effect on the business, financial condition or ongoing operations of CytRx or (ii) has a material adverse effect on CytRx’s ability to consummate the Merger; provided, that no change, event, circumstance, development or occurrence regarding the clinical hold placed by the U.S. Food and Drug Administration on Cytrx’s Phase II clinical trial as described in the CytRx SEC reports shall constitute or be considered a material adverse effect. True, accurate and complete copies of CytRx’s Amended and Restated Certificate of Incorporation and Bylaws and Merger Subsidiary’s Certificate of Incorporation and Bylaws, in each case, as in effect on the date hereof, including all amendments thereto, have heretofore been made available to the Company.

     SECTION 4.02 Capitalization .

     (a) The authorized capital stock of CytRx consists of 150,000,000 shares of CytRx Common Stock and 5,000,000 shares of preferred stock, par value $0.01 per share (“ CytRx Preferred Stock ”). As of May 30, 2008, (i) 90,770,453 shares of CytRx Common Stock were issued and outstanding (exclusive of 633,816 shares held in treasury), all of which shares were duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights, (ii) 15,000 shares of CytRx Preferred Stock were designated as Series A Junior Participation Preferred Stock, (iii) no shares of CytRx Preferred Stock were issued and outstanding, and (iv) 17,583,203 shares of CytRx Common Stock were reserved for issuance upon exercise of outstanding stock options and warrants (the “ CytRx Options and Warrants ”).

     (b) The shares of CytRx Common Stock to be issued pursuant to the Merger, when issued and delivered in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable and issued in compliance with federal and state securities laws.

     (c) Except for the CytRx Options and Warrants, there are no outstanding subscriptions, options, calls, contracts, commitments, understandings, restrictions, arrangements,

rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or other agreement and also including any rights plan or other anti-takeover agreement, obligating CytRx or any subsidiary of CytRx to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of CytRx or obligating CytRx or any subsidiary of CytRx to grant, extend or enter into any such agreement or commitment. There are no outstanding stock appreciation rights or similar derivative securities or rights of CytRx or any of its subsidiaries. There are no voting trusts, irrevocable proxies or other agreements or understandings to which CytRx or any subsidiary of CytRx is a party or is bound with respect to the voting of any shares of CytRx Common Stock.

     SECTION 4.03 Authority; Non-Contravention; Approvals .

     (a) Each of CytRx and Merger Subsidiary has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized and approved by the respective Boards of Directors of CytRx and Merger Subsidiary. No other corporate proceedings on the part of CytRx or Merger Subsidiary are necessary to authorize the execution, delivery and performance of this Agreement or the consummation by CytRx and Merger Subsidiary of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of CytRx and Merger Subsidiary, and, assuming the due authorization, execution and delivery hereof by the Company, constitutes a valid and legally binding agreement of each of CytRx and Merger Subsidiary, enforceable against CytRx and Merger Subsidiary in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

     (b) The respective Boards of Directors of CytRx and Merger Subsidiary, at meetings duly called and held, have unanimously approved this Agreement and the Merger. CytRx, in its capacity as the sole stockholder of Merger Subsidiary, hereby approves of this Agreement and the Merger.

     (c) The execution, delivery and performance of this Agreement by each of CytRx and Merger Subsidiary and the consummation of the Merger and the transactions contemplated hereby do not and will not violate, conflict with or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, contractually require any offer to purchase or any prepayment of any debt, or result in the creation of any lien, security interest or encumbrance upon any of the properties or assets of CytRx or any subsidiary (as defined below) of CytRx under any of the terms, conditions or provisions of (i) the respective Certificates of Incorporation or the respective Bylaws of CytRx and Merger Subsidiary, (ii) any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit or license of any court or governmental authority applicable to CytRx or any CytRx subsidiary or any of their respective properties or assets, subject, in the case of consummation, to obtaining (prior to the Effective

Time) the CytRx Required Statutory Approvals (as defined in Section 4.03(d)), or (iii) any contract, agreement, commitment or understanding (each, a “ contract ”) to which CytRx or any CytRx subsidiary is now a party or by which CytRx or any CytRx subsidiary or any of their respective properties or assets may be bound or affected, other than, in the case of clauses (ii) and (iii) of this paragraph (c), such violations, conflicts, breaches, defaults, terminations, accelerations, contractual requirements or creations of liens, security interests or encumbrances that would not reasonably be expected, individually or in the aggregate, to have a CytRx Material Adverse Effect and would not prevent or materially delay the consummation of the Merger. For purposes of this Agreement, the term “subsidiary” means, with respect to any person, any corporation or other entity of which such person owns, directly or indirectly, more than 50% of the capital stock or other equity interests generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

     (d) Except for (i) the filing with the Securities and Exchange Commission (the “ SEC ”) of a Registration Statement on Form S-4 under the Securities Act by CytRx with respect to the Merger (the “ Registration Statement ”) and applicable filings pursuant to the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and (ii) the filing of the Certificate of Merger with the Secretary of State in connection with the Merger (collectively, the “ CytRx Required Statutory Approvals ”), no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for the execution and delivery of this Agreement by CytRx or Merger Subsidiary or the consummation by CytRx or Merger Subsidiary of the transactions contemplated hereby, other than such declarations, filings, registrations, notices, authorizations, consents or approvals which, if not made or obtained, as the case may be, would not reasonably be expected, individually or in the aggregate, to have a CytRx Material Adverse Effect and would not prevent or materially delay the consummation of the Merger.

     SECTION 4.04 Reports and Financial Statements .

     (a) Since January 1, 2007, CytRx has filed with the SEC all material forms, statements, reports and documents, including all exhibits, post-effective amendments and supplements thereto (the “ CytRx SEC Reports ”), required to be filed by it under each of the Securities Act of 1933, as amended (the “ Securities Act ”), the Exchange Act and the respective rules and regulations thereunder, all of which, as amended if applicable, complied when filed, or amended, in all material respects with all applicable requirements of the appropriate act and the rules and regulations thereunder. As of their respective dates, the CytRx SEC Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent corrected by a subsequent Company SEC Report filed with the SEC prior to the date hereof.

     (b) The financial statements of CytRx included in the CytRx SEC Reports (collectively, the “ CytRx Financial Statements ”) were prepared in accordance with generally accepted accounting principles (except, with respect to any unaudited financial statements, as permitted by applicable SEC rules or requirements) applied on a consistent basis (except as may be indicated therein or in the notes thereto) and fairly present in all material respects the financial position of CytRx as of the dates thereof and the results of operations and changes in financial

position of CytRx for the periods then ended (subject, in the case of any unaudited interim financial statements, to normal year-end adjustments).

     SECTION 4.05 Proxy Statement/Prospectus . None of the information to be supplied by CytRx or Merger Subsidiary for inclusion in the Proxy Statement/Prospectus (as defined in Section 5.03(d)) will, at the time of the mailing thereof or any amendments or supplements thereto, or at the time of the meeting of stockholders of the Company to be held in connection with the transactions contemplated by this Agreement, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Registration Statement will comply, as of its effective date, as to form in all material respects with all applicable laws, including the provisions of the Securities Act and the rules and regulations promulgated thereunder, except that no representation is made by CytRx with respect to information supplied by the Company for inclusion therein.

     SECTION 4.06 No Violation of Law . Neither CytRx nor Merger Subsidiary is in violation of or has been given written (or, to the knowledge of CytRx and Merger Subsidiary, oral) notice of any violation of any law, statute, order, rule, regulation, ordinance or judgment of any governmental or regulatory body or authority, except for violations which would not reasonably be expected, individually or in the aggregate, to have a CytRx Material Adverse Effect. Neither CytRx nor any CytRx subsidiary is in violation of the terms of any permits, licenses, franchises, variances, exemptions, orders and other governmental authorizations, consents and approvals necessary to conduct their businesses as presently conducted, except for delays in filing reports or violations which would not reasonably be expected, individually or in the aggregate, to have a CytRx Material Adverse Effect.

     SECTION 4.07 Material Contracts; Compliance with Contracts . The CytRx SEC Reports include a list of each contract to which CytRx or any CytRx subsidiary is a party or by which CytRx or any CytRx subsidiary or their respective assets are bound or affected as of the date hereof which is required to be disclosed in the CytRx SEC Reports (each, a “ CytRx Material Contract ”). With respect to each CytRx Material Contract (i) the CytRx Material Contract is legal, valid, binding and enforceable and in full force and effect with respect to CytRx or any CytRx subsidiary, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and (ii) neither CytRx nor any CytRx subsidiary is in material breach or violation of or in material default in the performance or observance of any term or provision of, and, to the knowledge of CytRx, no event has occurred which, with lapse of time or action by a third party, would result in a default under, the Material Contract.

     SECTION 4.08 Brokers and Finders . CytRx has not entered into any contract with any person that may result in the obligation of CytRx to pay any investment banking fees, finder’s fees or brokerage fees in connection with the transactions contemplated hereby.

     SECTION 4.09 No Prior Activities of Merger Subsidiary . Except for obligations incurred in connection with its incorporation or organization and the negotiation, execution and

consummation of this Agreement and the transactions contemplated hereby, Merger Subsidiary has neither incurred any obligation or liability nor engaged in any business or activity of any type or kind whatsoever or entered into any agreement or arrangement with any person.

     SECTION 4.10 Litigation; Government Investigations . There are no material claims, suits, actions, proceedings, arbitrations or other actions pending or, to the knowledge of CytRx, threatened against, relating to or affecting CytRx or any CytRx subsidiary, before any court, governmental department, commission, agency, instrumentality or authority, or any arbitrator. No material investigation or review by any governmental or regulatory body or authority is pending or, to the knowledge of CytRx, threatened, nor has any governmental or regulatory body or authority indicated an intention to conduct the same. Neither CytRx nor any CytRx subsidiary is subject to any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or authority, or any arbitrator, or any settlement agreement or stipulation, which as of the date hereof prohibits the consummation of the transactions contemplated hereby or would reasonably be expected, individually or in the aggregate, to have a CytRx Material Adverse Effect.

     SECTION 4.11 Taxes .

     (a) CytRx and each CytRx subsidiary has timely (i) filed with the appropriate governmental authorities all material Tax Returns (as defined in Section 5.12) required to be filed by it, and such Tax Returns are true, correct and complete in all material respects, and (ii) paid in full or reserved in accordance with generally accepted accounting principles on the CytRx Financial Statements all material Taxes (as defined in Section 5.12) required to be paid. Neither CytRx nor any CytRx subsidiary has requested an extension of time within which to file a material Tax Return, which has not been since filed, except that CytRx has requested an extension of time within which to file its federal and California and Massachusetts state income tax returns for 2007 and such Tax Returns have not yet been filed. There are no liens for Taxes upon any property or asset of CytRx or any CytRx subsidiary, other than liens for Taxes not yet due and payable or Taxes contested in good faith by appropriate proceedings or that are otherwise not material and reserved against in accordance with generally accepted accounting principles. No deficiency with respect to Taxes has been proposed, asserted or assessed in writing against CytRx or any CytRx subsidiary, which has not been fully paid or adequately reserved or reflected in the CytRx SEC Reports, and there are no material unresolved issues of law or fact arising out of a written notice of a deficiency, proposed deficiency or assessment from the Internal Revenue Service or any other governmental taxing authority with respect to Taxes of CytRx or any CytRx subsidiary. Neither CytRx nor any CytRx subsidiary has agreed to an extension of time with respect to a Tax deficiency, other than extensions which are no longer in effect. Neither CytRx nor any CytRx subsidiary is a party to any agreement providing for the allocation or sharing of Taxes with any entity other than agreements the consequences of which are fully and adequately reserved for in the CytRx Financial Statements. Neither CytRx nor any CytRx subsidiary has been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the five-year period ending on the date hereof.

     (b) CytRx and each CytRx subsidiary has withheld or collected and has paid over to the appropriate governmental entities (or are properly holding for such payment) all Taxes

required to be collected or withheld, including with respect to amounts paid or owed to any employee, independent contractor, stockholder, or other third party.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to CytRx and Merger Subsidiary that, except as set forth in (i) the Company SEC Reports (as defined in Section 5.04) filed with the SEC prior to the date hereof and (ii) the disclosure schedule delivered to CytRx by the Company concurrently herewith (the “ Company Disclosure Schedule ”), which shall be arranged in sections corresponding to the numbered sections of this Article V, it being agreed that disclosure of any item on the Company Disclosure Schedule shall be deemed disclosure with respect to all Sections of this Agreement if the relevance of such item is reasonably apparent from the face of the Company Disclosure Schedule:

     SECTION 5.01 Organization and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted. The Company is duly qualified and licensed to transact business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the properties owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so organized, existing, qualified, licensed and in good standing would not reasonably be expected to have a Company Material Adverse Effect (as hereinafter defined). In this Agreement, the term “ Company Material Adverse Effect ” means any change, event, circumstance, development or occurrence (other than an effect arising out of or resulting from the entering into or the public announcement or disclosure of this Agreement and the transactions contemplated hereby) that, individually or in the aggregate, (i) has a material adverse effect on the business, financial condition or ongoing operations of the Company, or (ii) has a material adverse effect on the Company’s ability to consummate the Merger. True, accurate and complete copies of the Company’s Certificate of Incorporation and Bylaws, in each case, as in effect on the date hereof, including all amendments thereto, have heretofore been made available to CytRx.

     SECTION 5.02 Capitalization .

     (a) The authorized capital stock of the Company consists of 75,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per share (“ Company Preferred Stock ”). As of May 30, 2008, (i) 14,610,003 shares of Company Common Stock were issued and outstanding, all of which shares were duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights, (ii) no shares of Company Preferred Stock were issued and outstanding, (iii) 1,689,101 shares of Company Common Stock were reserved for issuance upon exercise of outstanding stock options (the “ Company Options ”), and (iv) 3,559,309 shares of Company Common Stock were reserved for issuance upon exercise of outstanding Warrants (the “ Company Warrants ”). The outstanding shares of Company Common Stock, the Company Options and the Company Warrants were issued in compliance with all

applicable securities laws. Since May 30, 2008, except as permitted by this Agreement, (i) no shares of capital stock of the Company have been issued and (ii) no options, warrants or securities convertible into, or commitments with respect to the issuance of, shares of capital stock of the Company have been issued, granted or made.

     (b) Section 5.02(b) of the Company Disclosure Schedule sets forth a complete and accurate list of all Company Stock Plans and all holders of Company Options and Company Warrants, indicating with respect to each Company Option and Company Warrant, the number of shares of Company Common Stock subject to such Company Option and Company Warrant, the exercise price, the date of grant, and the expiration date thereof. The Company has delivered or made available to CytRx accurate and complete copies of all Company Stock Plans, the standard forms of stock option agreement and warrant agreement evidencing Company Options and Company Warrants, and any stock option agreements and warrant agreements evidencing a Company Option or a Company Warrant that deviates in any material manner from the Company’s standard forms of stock option agreement and warrant agreement.

     (c) Except for Company Options and Company Warrants, there are no outstanding subscriptions, options, calls, contracts, commitments, understandings, restrictions, arrangements, rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or other agreement and also including any rights plan or other anti-takeover agreement, obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of the Company or obligating the Company to grant, extend or enter into any such agreement or commitment. There are no outstanding stock appreciation rights or similar derivative securities or rights of the Company. There are no voting trusts, irrevocable proxies or other agreements or understandings to which the Company is a party or is bound with respect to the voting of any shares of capital stock of the Company.

     (d) The Company has no subsidiaries.

     SECTION 5.03 Authority; Non-Contravention; Approvals .

     (a) The Company has the requisite corporate power and authority to enter into this Agreement and, subject to the Company Stockholders’ Approval (as defined in Section 5.17), to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized and approved by the Board of Directors of the Company. No other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this Agreement or, except for the Company Stockholders’ Approval, the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company, and, assuming with respect to this Agreement the due authorization, execution and delivery hereof by CytRx and Merger Subsidiary, constitutes a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

     (b) The Company Board of Directors, at a meeting duly called and held, has unanimously (i) approved and declared advisable this Agreement and the Merger, and (ii) resolved to recommend that stockholders of the Company adopt this Agreement and approve the Merger.

     (c) The execution, delivery and performance of this Agreement by the Company and the consummation of the Merger and the transactions contemplated hereby do not and will not violate, conflict with or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, contractually require any offer to purchase or any prepayment of any debt, or result in the creation of any lien, security interest or encumbrance upon any of the properties or assets of the Company under any of the terms, conditions or provisions of (i) the Certificate of Incorporation or the Bylaws of the Company, (ii) any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit or license of any court or governmental authority applicable to the Company or any of its properties or assets, subject, in the case of consummation, to obtaining (prior to the Effective Time) the Company Required Statutory Approvals (as defined in Section 5.03(d)) and the Company Stockholders’ Approval, or (iii) any Contract to which the Company is now a party or by which the Company or any of its properties or assets may be bound or affected, other than, in the case of clauses (ii) and (iii) of this paragraph (b), such violations, conflicts, breaches, defaults, terminations, accelerations, contractual requirements or creations of liens, security interests or encumbrances that would not reasonably be expected, individually or in the aggregate, to have a Company Material Adverse Effect and would not prevent or materially delay the consummation of the Merger.

     (d) Except for (i) the filing with the SEC of the Company’s proxy statement relating to the Company Stockholders’ Meeting (as defined in Section 6.07), which also shall constitute the prospectus of CytRx with respect to the shares of CytRx Common Stock to be issued as part of the Merger Consideration (the “ Proxy Statement/Prospectus ”), and other applicable filings pursuant to the Exchange Act, and) the filing of the Certificate of Merger with the Secretary of State in connection with the Merger (collectively, the “ Company Required Statutory Approvals ”), and no declaration, filing or registration with, or notice to, or authorization, consent or approval of, any governmental or regulatory body or authority is necessary for the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, other than such declarations, filings, registrations, notices, authorizations, consents or approvals which, if not made or obtained, as the case may be, would not reasonably be expected, individually or in the aggregate, to have a Company Material Adverse Effect and would not prevent or materially delay the consummation of the Merger.

     SECTION 5.04 Reports and Financial Statements .

     (a) Since January 1, 2007, the Company has filed with the SEC all material forms, statements, reports and documents, including all exhibits, post-effective amendments and supplements thereto (the “ Company SEC Reports ”), required to be filed by it under each of the Securities Act, the Exchange Act and the respective rules and regulations thereunder, all of which, as amended if applicable, complied when filed, or amended, in all material respects with all applicable requirements of the appropriate act and the rules and regulations thereunder. As of

their respective dates, the Company SEC Reports filed did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent corrected by a subsequently filed Company SEC Report filed with the SEC prior to the date hereof.

     (b) The financial statements of the Company included in the Company’s SEC Reports (collectively, the “ Company Financial Statements ”) were prepared in accordance with generally accepted accounting principles (except, with respect to any unaudited financial statements, as permitted by applicable SEC rules or requirements) applied on a consistent basis (except as may be indicated therein or in the notes thereto) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations and changes in financial position of the Company for the periods then ended (subject in the case of any unaudited interim financial statements, to normal year-end adjustments).

     SECTION 5.05 Sarbanes-Oxley Act; Internal Accounting Controls . The Company is in material compliance with all applicable provisions of the Sarbanes-Oxley Act of 2002. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iii) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company’s certifying officers have evaluated the effectiveness of its controls and procedures as of the date (such date, the “ Evaluation Date ”) prior to the filing date of the most recently filed periodic report under the Exchange Act. The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Company’s internal controls or, to the Company’s knowledge, in other factors that could adversely affect the Company’s internal controls.

     SECTION 5.06 Liabilities .

     (a) The Company had at March 31, 2008, and has incurred since that date and as of the date hereof, no liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature, except (a) liabilities, obligations or contingencies (i) which are accrued or reserved against in the Company Financial Statements or reflected in the notes thereto or (ii) which were incurred after March 31, 2008 in the ordinary course of business and consistent with past practices, (b) liabilities, obligations or contingencies which (i) would not reasonably be expected, individually or in the aggregate, to have a Company Material Adverse Effect, or (ii) have been discharged or paid in full prior to the date hereof in the ordinary course of business, and (c) liabilities, obligations and contingencies which are of a nature not required to be reflected in the financial statements of the Company prepared in accordance with generally accepted accounting principles consistently applied.

     (b) Section 5.06(b) of the Company Disclosure Schedule sets forth the Company’s best estimate of the Net Liabilities (as defined below) of the Company as of the date of this

Agreement (the “ Estimated Net Liabilities ”). For purposes of this Agreement, the term “ Net Liabilities ” means Liabilities (as defined below) less the sum of all cash and equivalents and deposits of the Company. For purposes of this Agreement, the term “ Liabilities ” means all direct and indirect liabilities, indebtedness, obligations, commitments, claims, deficiencies, expenses, deferred income, guaranties and endorsements of any type, whether known, unknown, accrued, absolute, contingent, matured or unmatured, of the sort which would be reflected on a balance sheet of the Company prepared in accordance with generally accepted accounting principles applied on a basis consistent with the Company Financial Statements.

     SECTION 5.07 Absence of Certain Changes or Events . Since December 31, 2007, (a) except with respect to the transactions contemplated by this Agreement, the Company has carried on and operated its businesses in all material respects in the ordinary course of business and (b) there have not been any changes, events, circumstances, developments or occurrences that would reasonably be expected to have a Company Material Adverse Effect.

     SECTION 5.08 Litigation; Government Investigations . There are no material claims, suits, actions, proceedings, arbitrations or other actions pending or, to the knowledge of the Company, threatened against, relating to or affecting the Company, before any court, governmental department, commission, agency, instrumentality or authority, or any arbitrator. No material investigation or review by any governmental or regulatory body or authority is pending or, to the knowledge of the Company, threatened, nor has any governmental or regulatory body or authority indicated an intention to conduct the same. The Company is not subject to any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or authority, or any arbitrator, or any settlement agreement or stipulation, which as of the date hereof prohibits the consummation of the transactions contemplated hereby or would reasonably be expected, individually or in the aggregate, to have a Company Material Adverse Effect.

     SECTION 5.09 Proxy Statement/Prospectus . None of the information to be supplied by the Company or its stockholders for inclusion in the Proxy Statement/Prospectus will, at the time of the mailing thereof or any amendments or supplements thereto, or at the time of the Company Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The Proxy Statement/Prospectus will comply, as of its mailing date, as to form in all material respects with all applicable laws, including the provisions of the Exchange Act and the rules and regulations promulgated thereunder, except that no representation is made by the Company with respect to information supplied by CytRx or Merger Subsidiary for inclusion therein.

     SECTION 5.10 No Violation of Law . The Company is not in violation of and has not been given written (or, to the knowledge of the Comp