<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>dex99.txt
<DESCRIPTION>LICENSE AGREEMENT
<TEXT>
<PAGE>


                                                                      EXHIBIT 99

 CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
            BEEN REDACTED AND FILED SEPARATELY WITH THE COMMISSION.


                                LICENSE AGREEMENT
                                     between
                               VICAL INCORPORATED
                                       and
                                CYTRX CORPORATION

<PAGE>

                                LICENSE AGREEMENT

         THIS AGREEMENT (this "Agreement") effective as of December 7, 2001,
(the "Effective Date") between Vical Incorporated, a corporation organized and
existing under the laws of Delaware ("Vical") and CytRx Corporation, a
corporation organized and existing under the laws of Delaware ("CytRx")
collectively referred to hereinafter as the Parties.

                                   WITNESSETH:

         WHEREAS, CytRx has developed CytRx Know-How (as hereinafter defined)
and has rights to Patent Rights (as hereinafter defined), collectively referred
to as CytRx Poloxamer Intellectual Property (as hereinafter defined); and

         WHEREAS, CytRx has exclusively licensed to Merck & Co. ("Merck") CytRx
Poloxamer Intellectual Property in a certain field ("Merck License"), a copy of
which is attached hereto as Addendum 1.0; and

         WHEREAS, Vical desires to obtain a license under the CytRx Poloxamer
Intellectual Property, upon the terms and conditions set forth herein and CytRx
desires to grant such a license;

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the Parties hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS
                                   -----------

         Unless specifically set forth to the contrary herein, the following
         terms, whether used in the singular or plural, shall have the
         respective meanings set forth below:

1.1      The term "Affiliate" shall mean (i) any corporation or business entity
         of which fifty percent (50%) or more of the securities or other
         ownership interests representing the equity, the voting stock or
         general partnership interest are owned, controlled or held, directly or
         indirectly, by Vical or CytRx; or (ii) any corporation or business
         entity which, directly or indirectly, owns, controls or holds fifty
         percent (50%) (or the maximum ownership interest permitted by law) or
         more of the securities or other ownership interests representing the
         equity, the voting stock or, if applicable, the general partnership
         interest, of Vical or CytRx.

1.2      The term "Calendar Quarter" shall mean the respective periods of three
         (3) consecutive calendar months ending on March 31, June 30,
         September 30 and December 31.

1.3      The term "Calendar Year" shall mean each successive period of twelve
         (12) consecutive calendar months commencing on January 1 and ending
         on December 31.

1.4      The term "CytRx Know-How" shall mean information and materials,
         including but not limited to, discoveries, Improvements, processes,
         formulas, data, know-how and trade secrets, patentable or otherwise,
         which during the term of this Agreement (i) are in

                                       1

<PAGE>

         CytRx's possession or control, (ii) are not generally known, (iii) are
         necessary or useful to Vical in connection with the research,
         development, manufacture, marketing, use or sale of TranzFect and/or
         Licensed Products in the Field in the Territory including regulatory
         filings and/or any information necessary or useful for regulatory
         filings, and (iv) CytRx has the right to provide to Vical.

1.5      The term "CytRx Poloxamer Intellectual Property" shall mean (i) Patent
         Rights; and (ii) CytRx Know-How.

1.6      The term "Field" shall mean the use of CytRx Poloxamer Intellectual
         Property in polynucleotide-based therapeutics and prophylactics
         (including DNA, RNA, viral, and all other biologically active natural
         and synthetic polynucleotides such as antisense (including antisense
         polynucleotides containing phosphothioester moieties) and CpG
         materials) alone or in combination with a protein or peptide antigen as
         part of a prime / boost regime, for all human and animal health
         applications, except for the following:

         a)  those fields of use currently licensed to Merck,  as described in
             the Merck License,

         b)  DNA vaccines and / or therapeutics based on PSMA (as defined in
             Section 1.17 hereof),

         c)  sale of a non-regulated product for use as a non-clinical research
             reagent to increase transfection in vitro or in laboratory animals.

         For the avoidance of any doubt, CytRx shall be free to license the
         CytRx Poloxamer Intellectual Property in therapeutics and prophylactics
         (including prime-boost regimes) that do not include polynucleotides.

1.7      The term "First Commercial Sale" shall mean, with respect to any
         Licensed Product, the first sale for end use or consumption of such
         Licensed Product in a country after all required approvals, including
         marketing and pricing approvals, have been granted by the governing
         health authority of such country.

1.8      The term "Improvement" shall mean any enhancement by CytRx in the
         synthesis or manufacture of  TranzFect.

1.9      The term "Licensed Product(s)" shall mean preparations in final form
         (including all components used as part of a prime - boost regime) for
         sale by prescription, over-the-counter or any other method, for use in
         the Field, and which contain TranzFect.

1.10     The term "Major Pharmaceutical Markets" shall mean any of the
         United States, Canada, France, Germany, Italy, Spain, the
         United Kingdom or Japan.

1.11     The term "Net Sales" shall mean the gross invoice price of Licensed
         Product sold by Vical, its Affiliates or sublicensees (which term does
         not include distributors) to the first independent third party after
         deducting, if not previously deducted, in the amount invoiced or
         received:

                                       2

<PAGE>

         (a)     trade and quantity discounts;

         (b)     returns, rebates and allowances;

         (c)     chargebacks and other amounts paid on sale or dispensing of
                 Licensed Product;

         (d)     retroactive price reductions that are actually allowed or
                 granted;

         (e)     sales commissions paid to distributors and/or selling agents
                 but not the actual sales force;

         (f)     a fixed amount equal to five percent (5%) of the gross invoice
                 price to cover bad debt, sales or excise taxes, transportation
                 and insurance charges and additional special transportation,
                 custom duties, and other governmental charges;

         (g)     standard inventory cost of devices or delivery systems other
                 than syringes used for dispensing or administering Licensed
                 Product which accompany Licensed Product as it is sold.

1.12     The term "Parties" shall mean CytRx, Vical, and all successors arising
         from merger, consolidation, changes in control, reorganization, or
         similar transaction.

1.13     The terms "Patent Rights" shall mean (i) all US and foreign patents and
         patent applications owned by or licensed to CytRx during the term of
         this Agreement which claim or cover polyoxypropylene/polyoxyethylene
         copolymer compounds or compositions or preparations of such compounds
         which may be added to a Substance to enhance the performance of such
         Substance or the manufacture, purification, formulation and use of such
         compounds and materials comprising such compounds; or (ii) divisions,
         continuations, continuations-in-part, reissues, renewals, extensions,
         supplementary protection certificates, utility models and the like of
         any such patents and patent applications and foreign equivalents
         thereof.

1.14     The term "Phase I Study", "Phase IIb Study" , "Phase III Study", and
         Biologics or Product License Application (also referred to as a PLA)
         shall mean these terms as described in the laws and regulations of the
         U.S. Food and Drug Administration of the Department of Health and Human
         Services.

1.15     The term "PLA Approval" shall mean notification from a regulatory
         authority in a country that all approvals for the marketing of Licensed
         Product, including pricing approvals, have been granted.

1.16     The term "Proprietary Information" shall mean all Vical Know-How, CytRx
         Know-How, and all other scientific, clinical, regulatory, marketing,
         financial and commercial information or data, whether communicated in
         writing or orally or by sensory detection, which is provided by one
         party to the other party in connection with this Agreement.

                                       3

<PAGE>

1.17     The term "PSMA" shall mean any polypeptide derived from the
         prostate-specific membrane antigen which is a type II integral membrane
         glycoprotein that is highly expressed in prostate cancer.

1.18     The term "Substance" shall mean any polynucleotide-based therapeutic or
         prophylactic alone or in combination with a protein antigen as part of
         a prime / boost regime for use in the Field, wherein the Substance
         includes TranzFect.

1.19     The term "TranzFect" shall mean any polyoxypropylene/polyoxyethelene
         copolymer compound or compositions or preparations of such compounds
         claimed in or covered by CytRx Poloxamer Intellectual Property and/or
         CytRx Know-How which may be added to Substance to enhance performance
         of such Substance relative to use of the Substance without TranzFect.

1.20     The term "Territory" shall mean all of the countries in the world.

1.21     The term "Valid Patent Claim" shall mean a claim of an issued and
         unexpired patent included within the CytRx Poloxamer Intellectual
         Property, which has not been revoked or held unenforceable or invalid
         by a decision of a court or other governmental agency of competent
         jurisdiction, unappealable or unappealed within the time allowed for
         appeal, and which has not been disclaimed, denied or admitted to be
         invalid or unenforceable through reissue or disclaimer or otherwise.

1.22     The term "Vical Know-How" shall mean any Vical information and
         materials, including but not limited to, discoveries, improvements,
         processes, formulas, data, inventions, know-how and trade secrets,
         patentable or otherwise, which during the term of this Agreement are
         not generally known.

                                   ARTICLE II
                   LICENSE; DEVELOPMENT AND COMMERCIALIZATION
                   ------------------------------------------

2.1      License Grant - CytRx Poloxamer Intellectual Property. CytRx hereby
         -----------------------------------------------------
         grants to Vical an exclusive license in the Territory with the right to
         sublicense under CytRx Poloxamer Intellectual Property to research,
         develop, make, have made, use, sell, offer to sell or import: (i)
         TranzFect as it relates to use with Substance in the Field; and (ii)
         Licensed Product(s).

2.2      [*****]

2.3      Exchange of Information
         -----------------------

         a. Initial Data Transfer. Within 10 days of the Effective Date, (the
         ------------------------
         "Data Transfer Period") CytRx agrees to transfer to Vical the CytRx
         Know-How listed in Addendum 3.0 hereof. During the 10 day Data Transfer
         Period, Vical, but not CytRx, shall have the option to terminate this
         Agreement at its sole discretion. If Vical exercises this option to
         terminate, Vical agrees to return to CytRx all copies of CytRx Know-How
         and destroy all documents containing any part thereof, and
         notwithstanding other terms in this


[*****] Confidential portions of this page have been redacted and filed
        separately with the Commission.

                                        4

<PAGE>

         Agreement, Vical further agrees to maintain CytRx Know-How in
         confidence and to treat such CytRx Know-How as proprietary information
         as described in Section 3.1 hereof. CytRx agrees that it will not enter
         into any third party discussions pertaining to the license of TranzFect
         in the Field during the Data Transfer Period.

         b. Additional Data Transfer. During the term of this Agreement and so
            ------------------------
         long as Vical continues to have an obligation to pay royalties to CytRx
         under this Agreement, CytRx shall promptly disclose to Vical in
         English, and in writing on an ongoing basis all CytRx Know-How not
         previously disclosed.

         c. Reports. During the term of this Agreement, and upon written request
            -------
         from CytRx, but not more than once per Calendar Year, Vical agrees to
         provide CytRx with a written report summarizing research and
         development activities related to the use of TranzFect in the Field
         over the previous Calendar Year.

         d. Sublicense Agreements.  Vical shall provide to CytRx a copy of all
         -------------------------
         sublicense agreements pertaining to CytRx Intellectual Property within
         30 days of execution, with the financial terms redacted.

2.4      Development and Commercialization Vical shall use reasonable efforts,
         ---------------------------------
         at its own expense, to develop and commercialize a Licensed Product on
         a commercially reasonable basis in such countries in the Territory
         where in Vical's opinion it is commercially viable to do so.

2.5      Excused Performance. In addition to the provisions of Article VI
         -------------------
         hereof, the obligation of Vical with respect to any Licensed Product
         under Section 2.4 are expressly conditioned upon the continuing absence
         of any adverse condition or event relating to the safety or efficacy of
         the Licensed Product, and the obligation of Vical to develop or market
         any such Licensed Product shall be delayed or suspended so long as in
         Vical's opinion any such condition or event exists.

                                   ARTICLE III
                         CONFIDENTIALITY AND PUBLICATION
                         -------------------------------

3.1      Nondisclosure Obligation. All Proprietary Information disclosed by one
         ------------------------
         party to the other party hereunder shall be maintained in confidence by
         the receiving party and shall not be disclosed to a non-party or used
         for any purpose except as set forth herein without the prior written
         consent of the other party, except to the extent that such Proprietary
         Information:

         (a)  is known by recipient at the time of its receipt, and not
              through a prior disclosure by the disclosing party, as
              documented by business records;
         (b)  is properly in the public domain;
         (c)  is subsequently disclosed to a receiving party by a third
              party who may lawfully do so and is not under an obligation
              of confidentiality to the disclosing party;
         (d)  is developed by the receiving party independently of
              Proprietary Information received from the other party as
              documented by business records;

                                        5

<PAGE>

         (e)  is disclosed to governmental or other regulatory agencies in
              order to obtain patents or to gain approval to conduct
              clinical trials or to market Licensed Product, but such
              disclosure may be only to the extent reasonably necessary to
              obtain patents or authorizations;
         (f)  is deemed necessary or useful by Vical to be disclosed to
              sublicensees, agents, consultants, Affiliates and/or other
              third parties for the research and development, manufacturing
              and/or marketing of TranzFect, Substance, or Licensed Product
              (or for such parties to determine their interest in performing
              such activities) in accordance with this Agreement on the
              condition that such third parties agree to be bound by the
              confidentiality obligations contained this Agreement, provided
              the term of confidentiality for such third parties shall be no
              less than ten (10) years; or
         (g)  is required to be disclosed by law or court order, provided
              that notice is promptly delivered to the other party in order
              to provide an opportunity to challenge or limit the disclosure
              obligations.

3.2      CytRx Know-How. CytRx agrees to keep all CytRx Know-How confidential
         --------------
         subject to exception (b), (e) and (g) in Section 3.1 above. In
         addition, CytRx may disclose CytRx Know-How to the extent such
         disclosure is deemed necessary or useful by CytRx to be disclosed to
         prospective and actual licensees, sublicensees, agents, consultants,
         Affiliates and/or other third parties for the research and development,
         manufacturing and/or marketing of [products other than] the Licensed
         Products.

                                   ARTICLE IV
                         PAYMENTS; ROYALTIES AND REPORTS
                         -------------------------------

4.1      Consideration for License. In consideration for the license granted
         -------------------------
         herein under the CytRx Poloxamer Intellectual Property upon the terms
         and conditions contained herein, Vical shall pay to CytRx the
         following:

                  Upon completion of the Initial Data Transfer as described in
                  Section 2.2, Three million seven hundred fifty thousand
                  dollars cash ($3,750,000) with such payment to be made by wire
                  transfer to the following:

                  [*****]

         If CytRx has not received confirmation of transfer of the full
         $3,750,000 by 5:00 PM E.S.T. on December 17, 2001, this license
         agreement will automatically terminate.

4.2      Milestone Payments.  Vical shall pay CytRx the following milestone
         ------------------
         payments on Licensed Products for human health applications only.


         (a)   [*****] upon commencement of the first Phase I Study for each of
               the first and second Licensed Products
         (b)   [*****] upon commencement of the first Phase IIb Study or
               Phase III Study for each of the first and second Licensed
               Products


[*****] Confidential portions of this page have been redacted and filed
        separately with the Commission.

                                        6

<PAGE>
         (c)   [*****] upon filing of the first Biologics or Product License
               Application for each of the first and second Licensed Products
         (d)   [*****] upon approval of the first Biologics or
               Product License Application for each of the first and second
               Licensed Products

4.3      [*****]

4.4      Royalties. Subject to the terms and conditions of this Agreement, Vical
         ---------
         shall pay CytRx the following royalties for each of the first two
         Licensed Products and / or bulk Substance (as set forth in Section
         4.4.4) for human health applications. In the event one or both of the
         first two Licensed Products (or bulk Substance) are used in a prime -
         boost regime, and such regime includes both polynucleotide and protein
         vaccines incorporating TranzFect, royalties will be owed to CytRx on
         sales of the combined regime, however, the complete prime - boost
         regime would be counted as one Licensed Product (or bulk Substance) for
         the purposed of royalties owed to CytRx. In the event one or both of
         the first two Licensed Products (or bulk Substance) are used in a
         prime-boost regime, and TranzFect is not incorporated into all
         pharmaceutically active components of the regime, (a "Combination
         Product"), the Net Sales of the Licensed Product shall be determined by
         multiplying the Net Sales of the Combination Product by the fraction,
         A/A+B where A is the average sale price of the Licensed Product when
         sold separately in finished form and B is the average sale price of the
         other pharmaceutically active product(s) sold separately in finished
         form. In the event that such average sale price cannot be determined
         for both the Licensed Product and other pharmaceutically active
         product(s) in combination, Net Sales for purposes of determining
         payments shall be calculated by multiplying the Net Sales of the
         Combination Products by the fraction C/C+D where C is Vical's cost of
         goods of the Licensed Product and D is Vical's cost of goods of the
         other pharmaceutically active product(s) determined in accordance with
         the method of accounting normally employed by Vical in computing cost
         of goods.

4.4.1    Royalties Payable By Vical.
         --------------------------

         (a)     For Net Sales by Vical, its Affiliates or sublicensees of
                 Licensed Products which would, but for the license hereunder,
                 infringe a Valid Patent Claim, royalties based on the
                 following annual Net Sales aggregated separately for each
                 Licensed Product:

                     (a) For that portion of annual Net Sales up to two hundred
                         fifty million dollars ($250,000,000) a royalty
                         of [*****];
                     (b) For that portion of annual Net Sales exceeding two
                         hundred fifty million dollars ($250,000,000) but less
                         than or equal to five hundred  million dollars
                         ($500,000,000) a royalty of [*****];
                     (c) For that portion of annual Net Sales exceeding five
                         hundred million dollars ($500,000,000) a royalty
                         of [*****].

         (b)     For Net Sales of Licensed Products by Vical, its Affiliates or
                 sublicensees other than those covered in Subsection 4.4.1 (a)
                 above, a royalty calculated as set forth


[*****] Confidential portions of this page have been redacted and filed
        separately with the Commission.


                                        7

<PAGE>

                 in Section 4.4.1 (a), but only for a period of [*****] from
                 First Commercial Sale of the respective Licensed Product in
                 each country of the Territory.

         (c)     Royalties on each Licensed Product at the rate set forth above
                 shall be effective as of the date of First Commercial Sale of
                 a Licensed Product in a country and shall continue until
                 either the longer of (i) the expiration of the last applicable
                 patent on such Licensed Product in such country in the case of
                 sales under Subsection 4.4.1(a) above or (ii) until the
                 [*****] anniversary of the First Commercial Sale in such
                 country in the case of sales of Licensed Product under
                 Subsection 4.4.1(b) above, subject to the following
                 conditions:

                     (x) that only one royalty shall be due with respect to the
                         same unit of Licensed Product;
                     (y) that no royalties shall be due upon the sale or other
                         transfer among Vical, its Affiliates or sublicensees,
                         but in such cases the royalty shall be due and
                         calculated upon Vical's or its Affiliate's or its
                         sublicensee's Net  Sales to the first independent third
                         party; and
                     (z) no royalties shall accrue on the disposition of
                         icensed Product in reasonable quantities by Vical,
                         ts Affiliates or sublicenses as samples (promotion
                         r otherwise) or as donations (for example, to
                         on-profit institutions or government agencies for a
                         on-commercial purpose).

4.4.2    Royalty Payable Under Managed Pharmaceutical Contract. It is understood
         -----------------------------------------------------
         by the Parties that Vical may sell Licensed Product(s) to an
         independent third party (such as a retailer or wholesaler) and may
         subsequently perform services relating to Licensed Product(s) and other
         products under a managed pharmaceutical benefits contract or other
         similar contract. In such cases, it is agreed by the Parties that Net
         Sales shall be based on the invoice price to an independent retailer or
         wholesaler, provided that such invoice price represents a fair market
         price for such Licensed Products, notwithstanding that Vical may
         receive compensation arising from the performance of such services.

4.4.3    Change in Sales Practices. The Parties acknowledge that during the term
         -------------------------
         of this Agreement, Vical's sales practices for the marketing and
         distribution of Licensed Product may change to the extent to which the
         calculation of the payment for royalties on Net Sales may become
         impractical or even impossible. In such event the Parties agree to meet
         and discuss in good faith new ways of compensating CytRx to the extent
         currently contemplated under Section 4.1.

4.4.4.   Royalties for Bulk Substance.  In those cases where Vical sells bulk
         Substance rather than Licensed Product in packaged form to an
         independent third party, the royalty obligations of this Article
         IV shall be applicable to the bulk Substance, provided that such
         independent third party does not, directly or indirectly, sell such
         bulk Substance back to Vical.

 4.4.5   Royalty Reduction. [*****]
         -----------------


[*****] Confidential portions of this page have been redacted and filed
        separately with the Commission.

                                        8

<PAGE>

4.4.6    Reports; Payment of Royalty. During the term of the Agreement following
         ---------------------------
         the First Commercial Sale of a Licensed Product, Vical shall furnish to
         CytRx a quarterly written report for the Calendar Quarter showing the
         sales of all Licensed Products subject to royalty payments sold by
         Vical, its Affiliates and its sublicensees in the Territory during the
         reporting period and the royalties payable under this Agreement.
         Reports shall be due on the sixtieth (60th) day following the close of
         each Calendar Quarter. Royalties shown to have accrued by each royalty
         report shall be due and payable on the date such royalty report is due.
         Vical shall keep complete and accurate records in sufficient detail to
         enable the royalties payable hereunder to be determined.

4.5      Audits.
         ------

         (a)  Upon the written request of CytRx and not more than once in
              each Calendar Year, Vical shall permit an independent
              certified public accounting firm of nationally recognized
              standing selected by CytRx and reasonably acceptable to Vical,
              at CytRx's expense, to have access during normal business
              hours to such of the records of Vical as may be reasonably
              necessary to verify the accuracy of the royalty reports
              hereunder for any year ending not more than twenty-four (24)
              months prior to the date of such request. The accounting firm
              shall disclose to CytRx only whether the royalty reports are
              correct or incorrect and the specific details concerning any
              discrepancies. No other information shall be provided to
              CytRx.
         (b)  If such accounting firm correctly concludes that additional
              royalties were owed during such period, Vical shall pay the
              additional royalties within thirty (30) days of the date CytRx
              delivers to Vical such accounting firm's written report so
              correctly concluding. The fees charged by such accounting firm
              shall be paid by CytRx. In the event the additional royalties
              owed by Vical for the period audited exceed[*****] of
              royalties due for said period and are at least one million
              dollars (U.S. $ 1,000,000) Vical will reimburse CytRx for the
              reasonable fees charged by the accounting firm.
         (c)  Vical shall include in each sublicense granted by it pursuant to
              this Agreement a provision requiring the sublicensee to make
              reports to Vical, to keep and maintain records of sales made
              pursuant to such sublicense and to grant access to such records by
              CytRx's independent accountant to the same extent required of
              Vical under this Agreement. Upon the expiration of twenty-four
              (24) months following the end of any Calendar Year, the
              calculation of royalties payable with respect to such year shall
              be binding and conclusive upon CytRx, and Vical and its
              sublicensees shall be released from any liability or
              accountability with respect to royalties for such Calendar Year.
         (d)  CytRx shall treat all financial information subject to review
              under this Section 4.5 or under any sublicense agreement in
              accordance with the confidentiality provisions of this Agreement,
              and shall cause its accounting firm to enter into an acceptable
              confidentiality agreement with Vical obligating it to retain all
              such financial information in confidence pursuant to such
              confidentiality agreement.


[*****] Confidential portions of this page have been redacted and filed
        separately with the Commission.

                                        9

<PAGE>

4.6      Payment Exchange Rate. All payments to be made by Vical to CytRx under
         ---------------------
         this Agreement shall be made in United States dollars and may be paid
         by check made to the order of CytRx or bank wire transfer in
         immediately available funds to such bank account in the United States
         designated in writing by CytRx from time to time. In the case of sales
         outside the United States, the rate of exchange to be used in computing
         the amount of currency equivalent in United States dollars shall be
         made at the rate of exchange for the country in which such sales
         occurred as published in the Wall Street Journal on the last business
         day of the month in which such sales are recorded by Vical.

4.7      Income Tax Withholding. If laws, rules or regulations require
         ----------------------
         withholding of income taxes or other taxes imposed upon payments set
         forth in this Article IV, Vical shall make such withholding payments as
         required and subtract such withholding payments from the payments set
         forth in this Article IV. Vical shall submit appropriate proof of
         payment of the withholding taxes to CytRx within a reasonable period of
         time.

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

5.1      Representation and Warranty. Except as disclosed to Vical prior to the
         ---------------------------
         date of this Agreement, CytRx represents and warrants to Vical that as
         of the date of this Agreement:

         (a)      to the best of CytRx's knowledge, the CytRx Poloxamer
                  Intellectual Property is owned by or licensed to CytRx and is
                  not invalid or unenforceable, in whole or in part;
         (b)      it has the full right, power and authority to enter into this
                  Agreement, and to grant the licenses granted under Article II
                  hereof;
         (c)      it has not previously assigned, transferred, conveyed or
                  otherwise encumbered its right, title and interest in CytRx
                  Poloxamer Intellectual Property in the Field;
         (d)      to the best of CytRx's knowledge, it is the sole and exclusive
                  owner or licensee of CytRx Poloxamer Intellectual Property in
                  the Field, all of which is free and clear of any liens,
                  charges and encumbrances, and no other person, corporate or
                  other private entity, or governmental entity or subdivision
                  thereof, has or shall have any claim of ownership with respect
                  to the CytRx Poloxamer Intellectual Property in the Field,
                  whatsoever;
         (e)      to the best of CytRx's knowledge, the licensed CytRx Poloxamer
                  Intellectual Property and the research, development,
                  manufacture, use, sale and/or import of TranzFect, do not
                  interfere with or infringe any intellectual property rights
                  owned or possessed by any third party;
         (f)      there are no claims, judgments or settlements against or owed
                  by CytRx or pending or threatened claims or litigation
                  relating to the CytRx Poloxamer Intellectual Property; and
         (g)      CytRx has disclosed to Vical all reasonably relevant
                  information regarding the CytRx Poloxamer Intellectual
                  Property licensed under this Agreement, including all patent
                  opinions obtained by CytRx related thereto.

                                       10

<PAGE>

                                   ARTICLE VI
                                PATENT PROVISIONS
                                -----------------

6.1      Filing, Prosecution and Maintenance of Patents. CytRx agrees to file,
         ----------------------------------------------
         prosecute and maintain in the Major Pharmaceutical Markets, upon
         appropriate consultation with Vical, the Patent Rights owned in whole
         or in part by CytRx and licensed to Vical under this Agreement. In
         addition, and to the extent legally available CytRx shall, at Vical's
         request, file, prosecute and maintain such Patent Rights in other
         countries, which costs shall be reimbursed by Vical within sixty (60)
         days of receipt of invoices thereof and shall be creditable toward any
         future royalty payments owed by Vical pursuant to Section 4.4 hereof.
         These terms shall include the additional patent rights requested and
         agreed to by Vical as described in the November 16, 2001 agreement
         between CytRx and Vical and shall be included in this Agreement as
         Addendum 4.0. CytRx shall keep Vical advised of the status of the
         actual and prospective patent filings and shall provide advance copies
         of any papers related to the filing, prosecution and maintenance of
         such patent filings. Vical shall have the right to review and propose
         recommendations regarding any submission to be made by CytRx in
         connection with the filing, prosecution, and maintenance of the Patent
         Rights, wherein CytRx agrees to consider such recommendations and not
         unreasonably decide not to implement same, and Vical agrees to bear any
         additional expenses or fees resulting therefrom. With respect to all
         filings hereunder in the Major Pharmaceutical Markets, CytRx shall be
         responsible for payment for all costs and expenses related to such
         filings.

6.2      Option of Vical to Prosecute and Maintain Patents. CytRx shall give
         -------------------------------------------------
         notice to Vical of any desire by CytRx and to the extent applicable
         Merck to cease prosecution and/or maintenance of Patent Rights and, in
         such case, shall permit Vical, at its sole discretion, to continue
         prosecution or maintenance at its own expense. If Vical elects to
         continue prosecution or maintenance or file based on Company's election
         not to file pursuant to Section 6.1 above, CytRx shall execute such
         documents and perform such acts at CytRx's expense as may be reasonably
         necessary for Vical to perform such prosecution or maintenance or
         filing. All of the expenses and costs incurred by Vical to continue
         prosecution and maintenance of Patent Rights shall be fully creditable
         against royalties due under Article IV of this Agreement; provided
         however, no royalty payment when due, regardless of the number of such
         credits available to Vical in accordance with the terms of this
         Agreement, shall be reduced by more than fifty percent (50%). Unused
         credits may be carried over into subsequent royalty periods.

6.3.     Interference, Opposition, Reexamination and Reissue.
         ---------------------------------------------------

         (a)  CytRx shall, within ten (10) days of learning of such event,
              inform Vical of any request for, or filing or declaration of any
              interference, opposition, or reexamination relating to Patent
              Rights. Vical and CytRx and to the extent applicable Merck shall
              thereafter consult and cooperate fully to determine a course of
              action with respect to any such proceeding. To the extent
              applicable to the Field and the rights licensed hereunder, Vical
              shall have the right to review and approve any submission to be
              made in connection with such proceeding.

                                       11

<PAGE>

         (b)  CytRx shall not institute any reexamination, or reissue proceeding
              relating to Patent Rights without the prior written consent to
              Vical, which consent shall not be unreasonably withheld.
         (c)  In connection with any interference, opposition, reissue, or
              reexamination proceeding relating to Patent Rights, Vical and
              CytRx will cooperate fully and will provide each other with any
              information or assistance that either may reasonably request.
              CytRx shall keep Vical informed of developments in any such action
              or proceeding, including, to the extent permissible, the status of
              any settlement negotiations and the terms of any offer related
              thereto.
         (d)  So long as Vical continues to have an obligation to pay royalties
              under this Agreement, CytRx shall bear the expense of any
              interference, opposition, reexamination, or reissue proceeding
              relating to Patent Rights. Otherwise, such expenses shall be borne
              by Vical.

6.4      Enforcement and Defense Rights.  Subject to the Merck License and the
         ------------------------------
         rights granted to Merck and the obligations of CytRx thereunder,
         CytRx agrees as follows:

         (a)  CytRx shall give Vical notice of either (i) any infringement
              of Patent Rights, or (ii) any misappropriation or misuse of CytRx
              Know-How, that may come to CytRx's attention. Vical and CytRx
              shall thereafter consult and cooperate fully to determine a course
              of action, including but not limited to the commencement of legal
              action by either or any combination of Vical, Merck, and CytRx, to
              terminate any infringement of Patent Rights or any
              misappropriation or misuse of CytRx Know-How. However, CytRx, and
              / or Merck upon notice by CytRx to Vical, shall have the first
              right to initiate and prosecute such legal action at CytRx's and /
              or Merck's own expense and in the name of CytRx and, if necessary,
              Merck and / or Vical, or to control the defense of any declaratory
              judgment action relating to Patent Rights or CytRx Know-How. CytRx
              shall promptly inform Vical if both CytRx and Merck elect not to
              exercise such first right and Vical shall thereafter have the
              right to either initiate and prosecute such action or to control
              the defense of such declaratory judgment action in the name of
              Vical and, if necessary, CytRx.
         (b)  In the event that both CytRx and Merck elect not to initiate and
              prosecute an action as provided in paragraph (a), and Vical elects
              to do so, the costs of any course of action to terminate
              infringement of Patent Rights or misappropriation or misuse of
              CytRx Know-How, including the costs of any legal action commenced
              or the defense of any declaratory judgment, shall be shared
              equally by CytRx and Vical.
         (c)  For any action to terminate any infringement of Patent Rights or
              any misappropriation or misuse of CytRx Know-How, in the event
              that Vical is unable to initiate or prosecute such action solely
              in its own name, CytRx will join such action voluntarily and will
              execute and cause its Affiliates to execute all documents
              necessary for Vical to initiate litigation to prosecute and
              maintain such action. In connection with any action, Vical and
              CytRx will cooperate fully and will provide each other with any
              information or assistance that either may reasonably request. Each
              party shall keep the other informed of developments in any action
              or proceeding, including, to the extent permissible by law, the
              status of any settlement negotiations and the terms of any offer
              related thereto.

                                       12

<PAGE>

         (d)  Any recovery obtained by either or any combination of Vical,
              Merck, and CytRx in connection with or as a result of any action
              contemplated by this section, whether by settlement or otherwise,
              shall be shared in order as follows:

              i)  the party which initiated and prosecuted the action shall
                  recoup all of its costs and expenses incurred in connection
                  with the action;
              ii) the other party or parties shall then, to the extent possible,
                  recover its costs and expenses incurred in connection with the
                  action; and
              the amount of any recovery remaining shall then be allocated
              between the parties on a pro rata basis under which CytRx shall
              receive a proportion based on the royalties it lost and Vical and
              to the extent applicable Merck shall receive any remaining
              amounts.

         (e)  CytRx shall immediately give notice to Vical of any certification
              regarding any Patent Rights it has received pursuant to the United
              States "Drug Price Competition and Patent Term Restoration Act of
              1984" under either 21 U.S.C. ss.ss.355(b)(2)(A)(iv) or
              (j)(2)(A)(vii)(IV) or equivalent foreign provision and shall
              provide Vical with a copy of such certification within (5) days of
              receipt. CytRx's and Vical's rights with respect to the initiation
              and prosecution of any legal action as a result of such
              certification or any recovery obtained as a result of such legal
              action shall be defined in paragraphs (a)-(d) hereof, provided,
              however, if both CytRx and Merck decide not to bring infringement
              proceedings against the entity making such a certification, CytRx
              shall give notice to Vical of such decision not to bring suit
              within thirty (30) days after receipt of notice of such
              certification. Vical may then, but is not required to, bring suit
              against the party that filed the certification. Any such suit by
              Vical, Merck, or CytRx shall either be in the name of Vical, in
              the name of Merck, or in the name of CytRx, or jointly by any
              combination of Vical, Merck and CytRx. For this purpose, the party
              not bringing suit shall execute such legal papers necessary for
              the prosecution of such suit as may be reasonably requested by the
              party bringing suit.

6.5      Abandonment. CytRx shall promptly give notice to Vical of the grant,
         -----------
         lapse, revocation, surrender, invalidation or abandonment of any Patent
         Rights licensed to Vical for which CytRx is responsible for the filing,
         prosecution and maintenance.

6.6      Patent Term Restoration. The ability in this Agreement to obtain patent
         -----------------------
         term restoration or supplemental protection certificates is subject to
         the Merck License, Merck's election and availability or eligibility for
         the patent in question for patent term restoration or supplemental
         protection certificates for the Licensed Product in question. The
         Parties hereto shall cooperate with each other in obtaining patent term
         restoration or supplemental protection certificates or their
         equivalents in any country in the Territory where applicable to Patent
         Rights. Vical shall have the opportunity to make any election with
         respect to obtaining such patent term restoration to the extent
         possible and shall bear the cost thereof which shall be fully
         creditable toward any future royalty payments owed by Vical pursuant to
         Section 4.4 hereof.

                                       13

<PAGE>

6.7      Patent Marking. Vical agrees to mark the Licensed Products and
         --------------
         Substances sold in the United States with all applicable United States
         patent numbers. All Licensed Products and Substances shipped to or sold
         in other countries shall be marked in such a manner as to conform with
         the patent laws and practice of the country of manufacture or sale.

6.8      [*****]

                                   ARTICLE VII
                              TERM AND TERMINATION
                              --------------------

7.1      Term and Expiration. This Agreement shall be effective as of the
         -------------------
         Effective Date and unless terminated earlier pursuant to Sections 2.2,
         4.1, 7.2 or 7.3 below, the term of this Agreement shall continue in
         effect until expiration of all royalty obligations hereunder. Upon
         expiration of all royalty obligations hereunder, Vical's licenses
         pursuant to Article II shall become fully paid-up, perpetual licenses
         and CytRx's obligation to provide Improvements shall cease.

7.2      Termination by Vical. Notwithstanding anything contained herein to the
         --------------------
         contrary, Vical shall have the right to terminate this Agreement at any
         time in its sole discretion by giving ninety (90) days advance written
         notice to CytRx unless terminated pursuant to Section 2.2. In the event
         of such termination under this Section 7.2, the rights and obligations
         hereunder, including any licenses and any payment obligations not due
         and owing as of the termination date shall terminate.

7.3      Termination.
         -----------

7.3.1    Termination for Cause. This Agreement may be terminated by notice by
         ---------------------
         either party at any time during the term of this Agreement:

     (a) if the other party is in breach of its material obligations hereunder
         by causes and reasons within its control and has not cured such breach
         within ninety (90) days after notice requesting cure of the breach
         provided, however, in the event of a good faith dispute with respect to
         the existence of a material breach, the ninety (90) day cure period
         shall be tolled until such time as the dispute is resolved pursuant to
         Section 8.6 hereof; or
     (b) upon the filing or institution of bankruptcy, reorganization,
         liquidation, or receivership proceedings, or upon a general assignment
         of a substantial portion of all of its assets for the benefit of
         creditors, by the other party; provided, however, in the case of any
                                        -----------------
         involuntary bankruptcy proceeding such right to terminate shall only
         become effective if the party consents to the involuntary bankruptcy or
         such proceeding is not dismissed within ninety (90) days after the
         filing thereof.

7.3.2    Effect of Termination for Cause on License.
         ------------------------------------------

         (a)  In the event that Vical terminates this Agreement under
              Section 7.3.1(a), CytRx's obligation to provide Improvements
              shall cease and Vical's license pursuant to Section 2.1 shall
              become paid-up, perpetual license, except that Vical shall
              make


[*****] Confidential portions of this page have been redacted and filed
        separately with the Commission.

                                       14

<PAGE>

              [*****] of the royalty payments set forth in Section 4.4
              in such event. In the event that CytRx terminates this
              Agreement under Section 7.3.1(a), or Vical terminates this
              Agreement under Section 7.2, Vical's licenses pursuant to
              Section 2.1 shall terminate as of such termination date.
         (b)  In the event this Agreement is terminated due to the rejection
              of this Agreement by or on behalf of CytRx under Section 365
              of the United States Bankruptcy Code (the "Code"), all
              licenses and rights to licenses granted under or pursuant to
              this Agreement by CytRx to Vical are, and shall otherwise be
              deemed to be, for purposes of Section 365(n) of the Code,
              licenses of rights to "intellectual property" as defined under
              Section 101(35A) of the Code. In such a case, the rights of
              the parties shall be determined by the Code.

7.4      Effect of Termination. Expiration or termination of the Agreement shall
         ---------------------
         not relieve the Parties of any obligation accruing prior to such
         expiration or termination, and the provisions of Article III shall
         survive the expiration of the Agreement and shall continue in effect
         for five (5) years. Any expiration or early termination of this
         Agreement shall be without prejudice to the rights of either party
         against the other accrued or accruing under this Agreement prior to
         termination, including the obligation to pay royalties for Licensed
         Product(s) or Substance(s) sold prior to such termination.
         Notwithstanding the foregoing, any remedies set forth under this
         Article VII shall not limit any claim for damages either party may have
         against the other arising from material breach of the other party.

                                  ARTICLE VIII
                                  MISCELLANEOUS
                                  -------------

8.1.     Force Majeure. Neither party shall be held liable or responsible to the
         -------------
         other party nor be deemed to have defaulted under or breached the
         Agreement for failure or delay in fulfilling or performing any term of
         the Agreement when such failure or delay is caused by or results from
         causes beyond the reasonable control of the affected party including,
         but not limited to, fire, floods, embargoes, war, acts of war (whether
         war be declared or not), insurrections, riots, civil commotions,
         strikes, lockouts or other labor disturbances, acts of God or acts,
         omissions or delays in acting by any governmental authority or the
         other party. The affected party shall notify the other party of such
         force majeure circumstances as soon as reasonably practical.

8.2.     Assignment. The Agreement may not be assigned or otherwise transferred,
         ----------
         nor, except as expressly provided hereunder, may any right or
         obligations hereunder be assigned or transferred, by either party
         without the consent of the other party; provided, however, that Vical
         may, without such consent, assign the Agreement and its rights and
         obligations hereunder to an Affiliate or in connection with the
         transfer or sale of all or substantially all of its assets related to
         the Licensed Product or the business, or in the event of its merger or
         consolidation or change in control or similar transaction. Any
         permitted assignee shall assume all obligations of its assignor under
         the Agreement. An assignment by Vical permitted by this Section 8.2
         shall not relieve Vical of any of its obligations set forth in this
         Agreement.



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                                       15

<PAGE>

8.3.     Severability. In the event any one or more of the provisions contained
         ------------
         in this Agreement should be held invalid, illegal or unenforceable in
         any respect, the validity, legality and enforceability of the remaining
         provisions contained herein shall not in any way be affected or
         impaired thereby, unless the absence of the invalidated provision(s)
         adversely affect the substantive rights of the Parties. The Parties
         shall in such an instance use their best efforts to replace the
         invalid, illegal or unenforceable provision(s) with valid, legal and
         enforceable provision(s) which, insofar as practical, implement the
         purposes of this Agreement.

8.4.     Notices. All notices or other communications which are required or
         -------
         permitted hereunder shall be in writing and sufficient if delivered
         personally, sent by telecopier (and promptly confirmed by personal
         delivery, registered or certified mail or overnight courier), sent by
         nationally-recognized overnight courier or sent by registered or
         certified mail, postage prepaid, return receipt requested, addressed as
         follows:

                  if to CytRx, to:          CytRx Corporation
                                            154 Technology Parkway
                                            Technology Park/Atlanta
                                            Norcross, GA 30092
                                            Attention:
                                            President & CEO
                                            Telecopier No. (770) 448-3357

                  if to Vical, to:          Vical Incorporated
                                            9373 Towne Centre Drive
                                            Suite 100
                                            San Diego, CA  92121-3088
                                            Attention:
                                            President & CEO
                                            Telecopier No. (858) 646-1150

         or to such other address as the party to whom notice is to be given may
         have furnished to the other party in writing in accordance herewith.
         Any such communication shall be deemed to have been given when
         delivered if personally delivered or sent by telecopier on a business
         day, on the business day after dispatch if sent by
         nationally-recognized overnight courier and on the third business day
         following the date of mailing if sent by mail.

8.5      Applicable Law. The Agreement shall be governed by and construed in
         --------------
         accordance with the laws of the State of California and the United
         States of America without reference to any rules of conflict of laws.

8.6.     Dispute Resolution.  The Parties shall negotiate in good faith and use
         ------------------
         reasonable efforts to settle any dispute, controversy or claim arising
         from or related to this Agreement or the breach thereof. If the Parties
         do not fully settle, and a party wishes to pursue the matter,

                                       16

<PAGE>

         each such dispute, controversy or claim that is not an "Excluded Claim"
         shall be finally resolved by binding arbitration in accordance with the
         Commercial Arbitration Rules and Supplementary Procedures for Large
         Complex Disputes of the American Arbitration Association ("AAA"), and
         judgment on the arbitration award may be entered in any court having
         jurisdiction thereof. The arbitration shall be conducted by a panel of
         three persons experienced in the pharmaceutical business. Within 30
         days after initiation of arbitration, each party shall select one
         person to act as arbitrator and the two party-selected arbitrators
         shall select a third arbitrator within 30 days of their appointment. If
         the arbitrators selected by the Parties are unable or fail to agree
         upon the third arbitrator, the third arbitrator shall be appointed by
         the AAA. The place of arbitration shall be San Diego, California.
         Either party may apply to the arbitrators for interim injunctive relief
         until the arbitration award is rendered or the controversy is otherwise
         resolved. Either party also may, without waiving any remedy under this
         Agreement, seek from any court having jurisdiction any injunctive or
         provisional relief necessary to protect the rights or property of that
         party pending the arbitration award. The arbitrators shall have no
         authority to award punitive or any other type of damages not measured
         by a party's compensatory damages. Each party shall bear its own costs
         and expenses and attorneys' fees and an equal share of the arbitrators'
         and any administrative fees of arbitration. Except to the extent
         necessary to confirm an award or as may be required by law, neither a
         party nor an arbitrator may disclose the existence, content, or results
         of an arbitration without the prior written consent of both Parties. In
         no event shall an arbitration be initiated after the date when
         commencement of a legal or equitable proceeding based on the dispute,
         controversy or claim would be barred by the applicable California
         statute of limitations. As used in this Section, the term "Excluded
         Claim" shall mean a dispute, controversy or claim that concerns (a) the
         validity or infringement of a patent, trademark or copyright; or (b)
         any antitrust, anti-monopoly or competition law or regulation, whether
         or not statutory.

8.7.     Entire Agreement. The Agreement contains the entire understanding of
         ----------------
         the Parties with respect to the subject matter hereof. All express or
         implied agreements and understandings, either oral or written,
         heretofore made are expressly merged in and made a part of the
         Agreement. The Agreement may be amended, or any term hereof modified,
         only by a written instrument duly executed by both Parties hereto.

8.8.     Headings.  The captions to the several Articles and Sections hereof are
         --------
         not a part of the Agreement, but are merely guides or labels to assist
         in locating and reading the several Articles and Sections hereof.

8.9.     Independent Contractors. It is expressly agreed that CytRx and Vical
         -----------------------
         shall be independent contractors and that the relationship between the
         two Parties shall not constitute a partnership, joint venture or
         agency. Neither CytRx nor Vical shall have the authority to make any
         statements, representations or commitments of any kind, or to take any
         action, which shall be binding on the other, without the prior consent
         of the other party.

                                       17

<PAGE>

8.10.    Waiver. The waiver by either party hereto of any right hereunder or the
         ------
         failure to perform or of a breach by the other party shall not be
         deemed a waiver of any other right hereunder or of any other breach or
         failure by said other party whether of a similar nature or otherwise.

8.11.    Counterparts.  The Agreement may be executed in two or more
         ------------
         counterparts, each of which shall be deemed an original, but all of
         which together shall constitute one and the same instrument.

8.12.    Waiver of Rule of Construction. Each party has had the opportunity to
         ------------------------------
         consult with counsel in connection with the review, drafting and
         negotiation of this Agreement. Accordingly, the rule of construction
         that any ambiguity in this Agreement shall be construed against the
         drafting party shall not apply.

8.13.    Anouncements; Public Disclosure. Except as otherwise provided herein or
         -------------------------------
         as required by law, neither party shall originate any publication, news
         release or other public announcement, written or oral, whether in the
         public press, or stockholders' reports (if applicable) or otherwise,
         directly relating to the financial terms of this Agreement, without the
         prior written approval of the other party, which approval shall not be
         unreasonably withheld. In addition, there shall be no public
         announcement of this agreement by either party until $3.75 million is
         received by CytRx. Each party shall issue an initial press release each
         of which contain the text as presented in Addendum 5.0 and Addendum 6.0
         hereof.


                                       18



<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.

Vical Incorporated                                   CytRx Corporation

BY:  /s/ Vijay B. Samant                             BY:/s/ Jack Luchese
   ---------------------------------------------        ------------------------
      Vijay B. Samant                                        Jack Luchese
TITLE:  President and CEO                            TITLE:  President and CEO

DATE: December 6, 2001                               DATE: December 6, 2001
     -------------------------------------------           ---------------------

                                       19

<PAGE>


                                 SCHEDULE 1.0.0
                                 --------------
                                ROYALTY REDUCTION
                                -----------------
[*****] Confidential portions of this page have been redacted and filed
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                                        1

<PAGE>

                                  ADDENDUM 1.0
                                  ------------
                                 MERCK AGREEMENT
                                 ---------------

                                        1

<PAGE>

        CONFIDENTIAL TREATMENT HAS BEEN GRANTED FOR THE REDACTED PORTIONS
                                OF THIS DOCUMENT.

                                LICENSE AGREEMENT
                                     between
                                MERCK & CO., INC.
                                       and
                                CYTRX CORPORATION

                                LICENSE AGREEMENT

         THIS AGREEMENT (this "Agreement") effective as of November 1, 2000,
(the "Effective Date") between Merck & Co., Inc., a corporation organized and
existing under the laws of New Jersey ("Merck") and CytRx Corporation, a
corporation organized and existing under the laws of Delaware ("CytRx").

                                   WITNESSETH:

         WHEREAS, CytRx. has developed CytRx Know-How (as hereinafter defined)
and has rights to Patent Rights (as hereinafter defined); and

         WHEREAS, Merck desires to obtain a license under the Patent Rights and
CytRx Know-How, upon the terms and conditions set forth herein and CytRx desires
to grant such a license;

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Unless specifically set forth to the contrary herein, the following
terms, whether used in the singular or plural, shall have the respective
meanings set forth below:

         1.1      The term "Adjuvant" shall mean (i) any
                  polyoxypropylene/polyoxyethelene copolymer compounds or
                  compositions claimed in or covered by Patent Rights, including
                  any Improvements thereto, which may be added to a [*****] to
                  enhance immunogenicity.

         1.2      The term "Affiliate" shall mean (i) any corporation or
                  business entity of which fifty percent (50%) or more of the
                  securities or other ownership interests representing the
                  equity, the voting stock or general partnership interest are
                  owned, controlled or held, directly or indirectly, by Merck or
                  CytRx; or (ii) any corporation or business entity which,
                  directly or indirectly, owns, controls or holds fifty percent
                  (50%) (or the maximum ownership interest permitted by law)


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                                       1

<PAGE>

                  or more of the securities or other ownership interests
                  representing the equity, the voting stock or, if applicable,
                  the general partnership interest, of Merck or CytRx.

         1.3      The term "Calendar Quarter" shall mean the respective periods
                  of three (3) consecutive calendar months ending on March 31,
                  June 30, September 30 and December 31.

         1.4      The term "Calendar Year" shall mean each successive period of
                  twelve (12) consecutive calendar months commencing on
                  January I and ending on December 31.

         1.5      The term "Combination Product" shall mean a Licensed Product
                  containing Substance for use in the Target Field in
                  combination with Substance for use in the HIV Field.

         1.6      The term "Competitive Product" shall mean a product with
                  safety and efficacy equivalent or materially similar to a
                  Licensed Product which has attained a unit market share of
                  fifteen percent (15%) or more in a country of sale as measured
                  by prescriptions or other similar information in such country
                  of sale.

         1.7      The term "CytRx Know-How" shall mean all information and
                  materials, including but not limited to, discoveries,
                  Improvements, processes, formulas, data, inventions, know-how
                  and trade secrets, patentable or otherwise, which during the
                  term of this Agreement (i) are in CytRx's possession or
                  control, (ii) are not generally known and (iii) are necessary
                  or useful to Merck in connection with the research,
                  development, manufacture, marketing, use or sale of Adjuvants,
                  Substances or Licensed Product in the Field including but not
                  limited to any information in regulatory filings for the
                  manufacture and/or registration of Adjuvants.

         1.8      The term "Field" shall mean the HIV Field and the Target
                  Field.

         1.9      The term "First Commercial Sale" shall mean, with respect to
                  any Licensed Product, the first sale for end use or
                  consumption of such Licensed Product in a country after all
                  required approvals, including marketing and pricing approvals,
                  have been granted by the governing health authority of such
                  country.

         1.10     The term "HIV Field" shall mean the prevention and/or
                  treatment of infection by Human Immunodeficiency Virus (HIV).

         1.11     The term "Improvement" shall mean any enhancement by CytRx in
                  the synthesis or manufacture of Adjuvants, including but not
                  limited to any Adjuvants produced thereby.

         1.12     The term "Licensed Product(s)" shall mean preparations in
                  final form for sale by prescription, over-the counter or any
                  other method for use in humans which

                                       2

<PAGE>

                  contain Substance(s), specifically Licensed Target Products
                  and Licensed HIV Products.

         1.13     The term "Licensed HIV Product" shall mean a Licensed Product
                  for the HIV Field.

         1.14     The term "Licensed Target Product" shall mean a Licensed
                  Product for the Target Field.

         1.15     The term "Major Pharmaceutical Market" shall mean any of the
                  United States, Canada, France, Germany, Italy, Spain, the
                  United Kingdom or Japan.

         1.16     The term "Merck Know-How" shall mean any Merck information and
                  materials, including but not limited to, discoveries,
                  improvements, processes, formulas, data, inventions, know-how
                  and trade secrets, patentable or otherwise, which during the
                  term of this Agreement are not generally known.

         1.17     The term "Net Sales" shall mean the gross invoice price of
                  Licensed Product sold by Merck, its Affiliates or sublicensees
                  (which term does not include distributors) to the first
                  independent third party after deducting, if not previously
                  deducted, in the amount invoiced or received:

                           (a)      trade and quantity discounts;

                           (b)      returns, rebates and allowances;

                           (c)      chargebacks and other amounts paid on sale
                                    or dispensing of Licensed Product;

                           (d)      retroactive price reductions that are
                                    actually allowed or granted;

                           (e)      sales commissions paid to third party
                                    distributors and/or selling agents;

                           (f)      a fixed amount equal to five percent (5%) of
                                    the gross invoiced price to cover bad debt,
                                    sales or excise taxes, transportation and
                                    insurance charges and additional special
                                    transportation, custom duties, and other
                                    governmental charges; and

                           (g)      the standard inventory cost of devices or
                                    delivery systems other than syringes used
                                    for dispensing or administering Licensed
                                    Product which accompany Licensed Product as
                                    it is sold.

         1.18     The term " Target Field" shall mean the prevention of, and/or
                  treatment of infection by, [*****]


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        this page.


                                       3

<PAGE>

         1.19     The terms "Patent Rights" shall mean (i) the patents and
                  patent applications listed on Schedule 1. 19 and (ii) patents
                  owned by or licensed to CytRx during the term of this
                  Agreement which claim or cover
                  polyoxypropylene/polyoxyethylene copolymer compounds or
                  compositions which may be added to a Substance to enhance the
                  immunogenicity of such Substance; or (iii) are divisions,
                  continuations, continuations- in-part, reissues, renewals,
                  extensions, supplementary protection certificates, utility
                  models and the like of any such patents and patent
                  applications and foreign equivalents thereof.

         1.20     The term "Phase I Study", "Phase Ilb Study"(formal dose
                  ranging study) and "Phase III Study" shall mean these terms as
                  described in the laws and regulations of the U.S. Food and
                  Drug Administration of the Department of Health and Human
                  Services.

         1.21     The term "PLA Approval" shall mean notification from a
                  regulatory authority in a country that all approvals for the
                  marketing of Licensed Product, including pricing approvals,
                  have been granted.

         1.22     [*****]

         1.23     The term "Proprietary Information" shall mean all Merck
                  Know-How, CytRx Know-How, and all other scientific, clinical,
                  regulatory, marketing, financial and commercial information or
                  data, whether communicated in writing or orally or by sensory
                  detection, which is provided by one party to the other party
                  in connection with this Agreement.

         1.24     The term "Product License Application" shall mean a product
                  license application or biologics license application as
                  described in the laws and regulations of the U.S. Public
                  Health Service Act, 42 U.S.C. Section 262, et. seq.

         1.24     The term "Substance" shall mean [*****] for use in the Field
                  which contains one or more Adjuvants.

         1.25     The term "Target" shall mean [*****]

         1.26     The term "Territory" shall mean all of the countries in the
                  world.

         1.27     The term "Valid Patent Claim" shall mean a claim of an issued
                  and unexpired patent included within the Patent Rights, which
                  has not been revoked or held unenforceable or invalid by a
                  decision of a court or other governmental agency of competent
                  jurisdiction, unappealable or unappealed within the time
                  allowed for appeal, and which has not been disclaimed, denied
                  or admitted to be invalid or unenforceable through reissue or
                  disclaimer or otherwise.

                                   ARTICLE II

[*****] Confidential treatment has been granted for the redacted portions of
        this page.


                                       4

<PAGE>

                   LICENSE; DEVELOPMENT AND COMMERCIALIZATION

         2.1      License Grant.
                  -------------

                  (a)      CytRx hereby grants to Merck an exclusive license in
                           the Field in the Territory with the right to
                           sublicense under Patent Rights to research, develop,
                           make, have made, use, and/or import Adjuvant, to
                           [*****] research, develop, make, have made, use,
                           sell, offer to sell and/or import Substance and/or
                           Licensed Product(s).

                  (b)      CytRx hereby grants to Merck an exclusive license in
                           the Field and in the Territory with the right to
                           sublicense under CytRx Know-How to research, develop,
                           make, have made, use, and/or import Adjuvant,to
                           research, develop, make, have made, use, sell, offer
                           to sell and/or import Substance and/or Licensed
                           Product(s) and (ii) otherwise carry out the
                           activities contemplated under this Agreement.

         2.2      Exchange of Information. During the term of this Agreement,
                  -----------------------
                  CytRx shall promptly disclose to Merck in English and in
                  writing on an ongoing basis all CytRx Know-How not previously
                  disclosed. To the extent Merck, in its sole discretion,
                  provides CytRx with any information regarding Adjuvants, it is
                  understood that such information will be considered to be
                  Proprietary Information of Merck subject to Article III.

         2.3      Development and Commercialization. Merck shall use reasonable
                  ---------------------------------
                  efforts, consistent with the usual practice followed by Merck
                  in pursuing the commercialization and marketing of its other
                  similar pharmaceutical products, at its own expense, to
                  develop and commercialize a Licensed Product on a commercially
                  reasonable basis in such countries in the Territory where in
                  Merck's opinion it is commercially viable to do so.

         2.4      Excused Performance. In addition to the provisions of Article
                  -------------------
                  VI hereof, the obligation of Merck with respect to any
                  Licensed Product under Section 2.3 are expressly conditioned
                  upon the continuing absence of any adverse condition or event
                  relating to the safety or efficacy of the Licensed Product,
                  and the obligation of Merck to develop or market any such
                  Licensed Product shall be delayed or suspended so long as in
                  Merck's opinion any such condition or event exists.

                                   ARTICLE III

                         CONFIDENTIALITY AND PUBLICATION

         3.1      Nondisclosure Obligation.  All Proprietary Information
                  ------------------------
                  Disclosed by one party to the other party hereunder shall be
                  maintained in confidence by the receiving party and shall not
                  be disclosed to a non-party or used for any purpose except as
                  set


[*****] Confidential treatment has been granted for the redacted portions of
        this page.


                                       5

<PAGE>

                  forth herein without the prior written consent of the other
                  party, except to the extent that such Proprietary Information:

                  (a)      is known by recipient at the time of its receipt, and
                           not through a prior disclosure by the disclosing
                           party, as documented by business records;

                  (b)      is properly in the public domain;

                  (c)      is subsequently disclosed to a receiving party by a
                           third party who may lawfully do so and is not under
                           an obligation of confidentiality to the disclosing
                           party;

                  (d)      is developed by the receiving party independently of
                           Proprietary Information received from the other
                           party;

                  (e)      is disclosed to governmental or other regulatory
                           agencies in order to obtain patents or to gain
                           approval to conduct clinical trials or to market
                           Licensed Product, but such disclosure may be only to
                           the extent reasonably necessary to obtain patents or
                           authorizations;

                  (f)      is deemed necessary or useful by Merck to be
                           disclosed to sublicensees, agents, consultants,
                           Affiliates and/or other third parties for the
                           research and development, manufacturing and/or
                           marketing of the Adjuvant, Substances or Licensed
                           Product (or for such parties to determine their
                           interest in performing such activities) in accordance
                           with this Agreement on the condition that such third
                           parties agree to be bound by the confidentiality
                           obligations contained this Agreement, provided the
                           term of confidentiality for such third parties shall
                           be no less than ten (10) years; or

                  (g)      is required to be disclosed by law or court order,
                           provided that notice is promptly delivered to the
                           other party in order to provide an opportunity to
                           challenge or limit the disclosure obligations.

         3.2      CytRx Know-How. CytRx agrees to keep all CytRx Know-How
                  --------------
                  confidential subject to exception (b), (e) and (g) in Section
                  3.1 above. It is understood that CytRx may disclose CytRx
                  Know-How under confidentiality to prospective licensees,
                  sublicensees, agents, consultants, Affiliates and/or other
                  third parties for the research, development, manufacturing
                  and/or marketing of products.

                                   ARTICLE IV

                         PAYMENTS; ROYALTIES AND REPORTS

         4.1      Consideration for License. In partial consideration for the
                  -------------------------
                  licenses granted herein under the Patent Rights, upon the
                  terms and conditions contained herein, Merck shall pay to
                  CytRx the following amounts:

                                       6

<PAGE>

                  (a)      due within thirty (30) days of the Effective Date, a
                           signature payment of two million dollars
                           ($2,000,000);

                  (b)      due within thirty (30) days of commencement of the
                           first Phase I Study for the first Licensed HIV
                           Product, a payment of one million dollars
                           ($1,000,000);

                  (c)      due within thirty (30) days of commencement of the
                           earlier of the first Phase II(b) Study or Phase III
                           for the first Licensed HIV Product, a payment of one
                           million dollars ($1,000,000);

                  (d)      due within thirty (30) days of the filing of the
                           first Product License Application for the first
                           Licensed HIV Product in a Major Pharmaceutical
                           Market, a payment of one million dollars
                           ($1,000,000);

                  (e)      due within thirty (30) days of the first PLA Approval
                           in a Major Pharmaceutical Market for the first
                           Licensed HIV Product, a payment of one million
                           dollars ($1,000,000).

                           Merck shall notify CytRx in writing within thirty
                           (30) days upon the achievement of each milestone,
                           such notice to be accompanied by payment of the
                           appropriate milestone payment. The milestone payment
                           shall be payable only upon the initial achievement of
                           such milestone and no amounts shall be due hereunder
                           for subsequent or repeated achievement of such
                           milestone.

         4.2      Target Maintenance Payments. Merck will pay CytRx the
                  ---------------------------
                  following payments until the First PLA Approval for the first
                  Licensed Target Product, due within thirty days of the
                  Effective Date and thereafter within thirty (30) days of each
                  anniversary of the Effective Date:

                  (a)      Fifty thousand dollars ($50,000) for the first year
                           of the Agreement;

                  (b)      Seventy five thousand dollars ($75,000) for the
                           second year of the Agreement;

                  (c)      One hundred thousand dollars ($100,000) for the third
                           and any additional years of the Agreement until the
                           First PLA Approval for the first Licensed Target
                           Product.

         4.2.1    All payments made under this Article 4.2 shall be creditable
                  by Merck against any royalty payments made under Article 4.4,
                  provided, however that no royalties may be reduced as a result
                  of any such credit by more than fifty percent (50%). Unused
                  credits may be carried over into subsequent royalty periods.

                                       7

<PAGE>

         4.3      Milestone Payments.  Subject to the terms and conditions in
                  ------------------
                  this Agreement, Merck shall pay to CytRx the following
                  milestone payments for the first Licensed Target Product for
                  each Target:

                  (a)      One hundred thousand dollars ($100,000) for the
                           commencement of the first Phase I Study;

                  (b)      Two hundred fifty thousand dollars ($250,000) for the
                           commencement of the earlier of the first Phase IIb
                           Study or the first Phase III Study;

                  (c)      Five hundred thousand dollars ($500,000) upon the
                           first Product License Application filing in a Major
                           Pharmaceutical Market;

                  (d)      Two million dollars ($2,000,000) upon the first PLA
                           Approval in a Major Pharmaceutical Market. Merck
                           shall notify CytRx in writing within thirty (30) days
                           upon the achievement of each milestone, such notice
                           to be accompanied by payment of the appropriate
                           milestone payment.

                  The milestone payment shall be payable only upon the initial
                  achievement of such milestone and no amounts shall be due
                  hereunder for subsequent or repeated achievement of such
                  milestone.

         4.4      Royalties.
                  ---------

         4.4.1    Royalties Payable By Merck. Subject to the terms and
                  --------------------------
                  conditions of this Agreement, Merck shall pay to CytRx
                  royalties for Licensed Target Product(s) for each Target on a
                  country-by-country basis in an amount equal to:

                  (a)      For Net Sales by Merck, its Affiliates or
                           sublicensees of Licensed Target Products which would,
                           but for the license hereunder, infringe a Valid
                           Patent Claim in the country of manufacture or sale,
                           royalties based on the following annual Net Sales
                           aggregated separately for each Licensed Target
                           Product:

                           (a)      For annual Net Sales up to two hundred fifty
                                    million dollars ($250,000,000) a royalty of
                                    two percent (2%);

                           (b)      For that portion of annual Net Sales
                                    exceeding two hundred fifty million dollars
                                    ($250,000,000) but less than or equal to
                                    five hundred million dollars ($500,000,000)
                                    a royalty of three percent (3%);

                           (c)      For that portion of annual Net Sales
                                    exceeding five hundred million dollars
                                    ($500,000,000) a royalty of four percent
                                    (4%).

                                       8

<PAGE>

                  (b)      For Net Sales of Licensed Target Products by Merck,
                           its Affiliates or sublicensees other than those
                           covered in Subsection 4.4.1(a) above, a royalty
                           calculated as set forth in Article 4.4.1(a), for a
                           period of five (5) years from First Commercial Sale
                           in each country of the Territory.

                  (c)      In addition to the patent royalty payments set forth
                           in Article 4.4.1, Merck shall pay a one percent (1%)
                           royalty on Net Sales by Merck, its Affiliates or
                           sublicensees on any Licensed Product which would, but
                           for the license hereunder, infringe a Valid Patent
                           Claim in the country of manufacture or sale in the
                           event (i) no other patents owned by or licensed to
                           Merck, its Affiliates or sublicensees are infringed
                           by such sale, including but not limited to any
                           composition of matter patent and (ii) there is no
                           Competitive Product in the country of sale.

                  (d)      Royalties on each Licensed Product at the rate set
                           forth above shall be effective as of the date of
                           First Commercial Sale of a Licensed Product in a
                           country and shall continue until either (i) the
                           expiration of the last applicable patent on such
                           Licensed Product in such country in the case of sales
                           under Subsection 4.4.1(a) and 4.4.1(c) (if
                           applicable) above or (ii) until the fifth (5th)
                           anniversary of the First Commercial Sale in such
                           country in the case of sales of Licensed Product
                           under Subsection 4.4.1(b) above, subject to the
                           following conditions:

                           (x)      that only one royalty shall be due with
                                    respect to the same unit of Licensed
                                    Product;

                           (y)      that no royalties shall be due upon the sale
                                    or other transfer among Merck, its
                                    Affiliates or sublicensees, but in such
                                    cases the royalty shall be due and
                                    calculated upon Merck's or its Affiliate's
                                    or its sublicensee's Net Sales to the first
                                    independent third party; and

                           (z)      no royalties shall accrue on the disposition
                                    of Licensed Product in reasonable quantities
                                    by Merck, its Affiliates or sublicenses as
                                    samples (promotion or otherwise) or as
                                    donations (for example, to non-profit
                                    institutions or government agencies for a
                                    non- commercial purpose).

         4.4.2    Royalty Payable Under Managed Pharmaceutical Contract. It is
                  -----------------------------------------------------
                  understood by the parties that Merck may sell Licensed
                  Product(s) to an independent third party (such as a retailer
                  or wholesaler) and may subsequently perform services relating
                  to Licensed Product(s) and other products under a managed
                  pharmaceutical benefits contract or other similar contract. In
                  such cases, it is agreed by the parties that Net Sales shall
                  be based on the invoice price (negotiated at arms length and
                  not influenced by the provision of such services) to an
                  independent retailer or wholesaler, as set forth in Section
                  1.17, notwithstanding that Merck may receive compensation
                  arising from the performance of such services.

                                       9

<PAGE>

         4.4.3    Change in Sales Practices. The parties acknowledge that during
                  -------------------------
                  the term of this Agreement, Merck's sales practices for the
                  marketing and distribution of Licensed Product may change to
                  the extent to which the calculation of the payment for
                  royalties on Net Sales may become impractical or even
                  impossible. In such event the parties agree to meet and
                  discuss in good faith new ways of compensating CytRx to the
                  extent currently contemplated under Section 4.4.1.

         4.4.4    Royalties for Bulk Compound. In those cases where Merck sells
                  ---------------------------
                  bulk Substance rather than Licensed Product in packaged form
                  to an independent third party, the royalty obligations of this
                  Article IV shall be applicable to the bulk Substance, except
                  in the event the third party, directly or indirectly, sells
                  such Substance back to Merck.

         4.4.5    Royalty Reduction. If in any country Merck's or its
                  -----------------
                  Affiliates' or Sublicensees' total royalty payments on
                  Licensed Product (including royalties payable to CytRx) exceed
                  [*****], the royalty obligation to CytRx for such country
                  shall be reduced by the formula set forth in Schedule 4.4.5,
                  provided that in no event shall the royalty payable to CytRx
                  be reduced by more than [*****] on a country-by-country basis.
                  It is understood that royalty reductions are intended to be
                  equitably applied to Merck's licensors of technology related
                  to Licensed Products. If Merck concludes that a royalty
                  reduction formula is applicable, Merck shall inform CytRx of
                  the total amount of its royalty burden on Licensed Product.
                  Merck represents and warrants that, as of the Effective Date,
                  it has no reason to know that total royalty payments of
                  Licensed Products exceed [*****].

         4.4.6    Reports; Payment of Royalty. During the term of the Agreement
                  ---------------------------
                  following the First Commercial Sale of a Licensed Product,
                  Merck shall furnish to CytRx a quarterly written report for
                  the Calendar Quarter showing the sales of all Licensed
                  Products subject to royalty payments sold by Merck, its
                  Affiliates and its sublicensees in the Territory during the
                  reporting period and the royalties payable under this
                  Agreement. Reports shall be due on the sixtieth (60th) day
                  following the close of each Calendar Quarter. Royalties shown
                  to have accrued by each royalty report shall be due and
                  payable on the date such royalty report is due. Merck shall
                  keep complete and accurate records in sufficient detail to
                  enable the royalties payable hereunder to be determined.

         4.7      Audits.
                  ------

                  (a)      Upon the written request of CytRx and not more than
                           once in each Calendar Year, Merck shall permit an
                           independent certified public accounting firm of
                           nationally recognized standing selected by CytRx and
                           reasonably acceptable to Merck, at the CytRx's
                           expense, to have access during normal business hours
                           to such of the records of Merck as may be reasonably
                           necessary to verify the accuracy of the royalty
                           reports hereunder for any year ending not more than
                           twenty-four (24) months


[*****] Confidential treatment has been granted for the redacted portions of
        this page.

                                       10

<PAGE>

                           prior to the date of such request. The accounting
                           firm shall disclose to CytRx only whether the royalty
                           reports are correct or incorrect and the specific
                           details concerning any discrepancies. No other
                           information shall be provided to CytRx.

                  (b)      If such accounting firm correctly concludes that
                           additional royalties were owed during such period,
                           Merck shall pay the additional royalties within
                           thirty (30) days of the date CytRx delivers to Merck
                           such accounting firm's written report so correctly
                           concluding. The fees charged by such accounting firm
                           shall be paid by CytRx. In the event the additional
                           royalties owed by Merck for the period audited exceed
                           ten percent (10%) of royalties due for said period
                           and are at least one million dollars (U.S.
                           $1,000,000) Merck will reimburse CytRx for the
                           reasonable fees charged by the accounting firm.

                  (c)      Merck shall include in each sublicense granted by it
                           pursuant to this Agreement a provision requiring the
                           sublicensee to make reports to Merck, to keep and
                           maintain records of sales made pursuant to such
                           sublicense and to grant access to such records by
                           CytRx's independent accountant to the same extent
                           required of Merck under this Agreement. Upon the
                           expiration of twenty-four (24) months following the
                           end of any year, the calculation of royalties payable
                           with respect to such year shall be binding and
                           conclusive upon CytRx, and Merck and its sublicensees
                           shall be released from any liability or
                           accountability with respect to royalties for such
                           year.

                  (d)      CytRx. shall treat all financial information subject
                           to review under this Section 4.6 or under any
                           sublicense agreement in accordance with the
                           confidentiality provisions of this Agreement, and
                           shall cause its accounting firm to enter into an
                           acceptable confidentiality agreement with Merck
                           obligating it to retain all such financial
                           information in confidence pursuant to such
                           confidentiality agreement.

         4.8      Payment Exchange Rate. All payments to be made by Merck to
                  ---------------------
                  CytRx under this Agreement shall be made in United States
                  dollars and may be paid by check made to the order of CytRx.
                  or bank wire transfer in immediately available funds to such
                  bank account in the United States designated in writing by
                  CytRx from time to time. In the case of sales outside the
                  United States, the rate of exchange to be used in computing
                  the amount of currency equivalent in United States dollars
                  shall be made at the monthly rate of exchange utilized by
                  Merck in its worldwide accounting system, prevailing on the
                  third to the last business day of the month preceding the
                  month in which such sales are recorded by Merck.

         4.9      Income Tax Withholding. If laws, rules or regulations require
                  ----------------------
                  withholding of income taxes or other taxes imposed upon
                  payments set forth in this Article IV, Merck shall make such
                  withholding payments as required and subtract such

                                       11

<PAGE>

                  withholding payments from the payments set forth in this
                  Article IV. Merck shall submit appropriate proof of payment of
                  the withholding taxes to CytRx within a reasonable period of
                  time.

                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

         5.1      Representation and Warranty.  CytRx. represents and warrants
                  ---------------------------
                  to Merck that as of the date of this Agreement:

                  (a)      to the best of CytRx's knowledge, the Patent Rights
                           and CytRx Know-How are subsisting and are not invalid
                           or unenforceable, in whole or in part;

                  (b)      it has the full right, power and authority to enter
                           into this Agreement, and to grant the licenses
                           granted under Article Il hereof,

                  (c)      it has not previously assigned, transferred, conveyed
                           or otherwise encumbered its right, title and interest
                           in Patent Rights or CytRx Know-How in the Field;

                  (d)      to the best of CytRx's knowledge, it is the sole and
                           exclusive owner or licensee of the Patent Rights and
                           CytRx Know-How, all of which is free and clear of any
                           liens, charges and encumbrances, and no other person,
                           corporate or other private entity, or governmental
                           entity or subdivision thereof, has or shall have any
                           claim of ownership with respect to the Patent Rights
                           and CytRx. Know-How, whatsoever; that CytRX shall use
                           its best efforts to maintain any license related to
                           Patent Rights or CytRx Know-How in effect;

                  (e)      to the best of CytRx's knowledge, the licensed Patent
                           Rights and CytRx Know-How and the research,
                           development, manufacture, use, sale and/or import of
                           Adjuvants, Substances and Licensed Products do not
                           interfere with or infringe any intellectual property
                           rights owned or possessed by any third party; and

                  (f)      there are no claims, judgments or settlements against
                           or owed by the CytRx or pending or threatened claims
                           or litigation relating to the Patent Rights and
                           CytRx. Know-How.

                  (g)      CytRx has disclosed to Merck all reasonably relevant
                           information regarding the Patent Rights and CytRx
                           Know-How licensed under this Agreement, including all
                           patent opinions obtained by CytRx related thereto.

                                       12

<PAGE>

                                   ARTICLE VI

                                PATENT PROVISIONS

         6.1      Filing, Prosecution and Maintenance of Patents. CytRx agrees
                  ----------------------------------------------
                  to file, prosecute and maintain in the Major Markets, upon
                  appropriate consultation with Merck, the Patent Rights owned
                  in whole or in part by CytRx and licensed to Merck under this
                  Agreement. In addition, CytRx shall, at Merck's request, file,
                  prosecute and maintain such Patent Rights in other countries,
                  which costs shall be reimbursed by Merck within sixty (60)
                  days of receipt of invoices therefor. CytRx shall keep Merck
                  advised of the status of the actual and prospective patent
                  filings and upon the request of Merck, shall provide advance
                  copies of any papers related to the filing, prosecution and
                  maintenance of such patent filings. With respect to all
                  filings hereunder in Major Pharmaceutical Markets CytRx shall
                  be responsible for payment for all costs and expenses related
                  to such filings.

         6.2      Option of Merck to Prosecute and Maintain Patents. CytRx shall
                  -------------------------------------------------
                  give notice to Merck of any desire to cease prosecution and/or
                  maintenance of Patent Rights and, in such case, shall permit
                  Merck, at its sole discretion, to continue prosecution or
                  maintenance at its own expense. If Merck elects to continue
                  prosecution or maintenance or file based on CytRx's election
                  not to file pursuant to Section 6.1 above, CytRx shall execute
                  such documents and perform such acts at CytRx's expense as may
                  be reasonably necessary for Merck to perform such prosecution
                  or maintenance or filing. All of the expenses and costs
                  incurred by Merck to continue prosecution and maintenance of
                  Patent Rights shall be fully creditable against royalties due
                  under Article IV of this Agreement; provided however, no
                  royalty payment when due, regardless of the number of such
                  credits available to Merck in accordance with the terms of
                  this Agreement, shall be reduced by more than fifty percent
                  (50%). Unused credits may be carried over into subsequent
                  royalty periods.

         6.3.     Interference, Opposition, Reexamination and Reissue.
                  ---------------------------------------------------

                  (a)      CytRx shall, within ten (10) days of learning of such
                           event, inform Merck of any request for, or filing or
                           declaration of any interference, opposition, or
                           reexamination relating to Patent Rights, Merck and
                           CytRx shall thereafter consult and cooperate fully to
                           determine a course of action with respect to any such
                           proceeding. Merck shall have the right to review and
                           approve any submission to be made in connection with
                           such proceeding.

                  (b)      CytRx shall not institute any reexamination, or
                           reissue proceeding relating to Patent Rights without
                           the prior written consent to Merck, which consent
                           shall not be unreasonably withheld.

                  (c)      In connection with any interference, opposition,
                           reissue, or reexamination proceeding relating to
                           Patent Rights, Merck and CytRx will cooperate

                                       13

<PAGE>

                           fully and will provide each other with any
                           information or assistance that either may reasonably
                           request. CytRx shall keep Merck informed of
                           developments in any such action or proceeding,
                           including, to the extent permissible, the status of
                           any settlement negotiations and the tenris of any
                           offer related thereto.

                  (d)      CytRx shall bear the expense of any interference,
                           opposition, reexamination, or reissue proceeding
                           relating to Patent Rights.

         6.4      Enforcement and Defense Rights.
                  ------------------------------

                  (a)      CytRx shall give Merck notice of either (i) any
                           infringement of Patent Rights, or (ii) any
                           misappropriation or misuse of CytRx Know-How, that
                           may come to CytRx's attention. Merck and CytRx shall
                           thereafter consult and cooperate fully to determine a
                           course of action, including but not limited to the
                           commencement of legal action by either or both Merck
                           and CytRx, to terminate any infringement of Patent
                           Rights or any misappropriation or misuse of CytRx
                           Know-How. However, CytRx, upon notice to Merck, shall
                           have the first right to initiate and prosecute such
                           legal action at its own expense and in the name of
                           CytRx and Merck, or to control the defense of any
                           declaratory judgment action relating to Patent Rights
                           or CytRx Know-How. CytRx shall promptly inform Merck
                           if it elects not to exercise such first right and
                           Merck shall thereafter have the right to either
                           initiate and prosecute such action or to control the
                           defense of such declaratory judgment action in the
                           name of Merck and, if necessary, CytRx.

                  (b)      In the event that CytRx elects not to initiate and
                           prosecute an action as provided in paragraph (a), and
                           Merck elects to do so, the costs of any course of
                           action to terminate infringement of Patent Rights or
                           misappropriation or misuse of CytRx Know-How,
                           including the costs of any legal action commenced or
                           the defense of any declaratory judgment, shall be
                           shared equally by CytRx and Merck.

                  (c)      For any action to terminate any infringement of
                           Patent Rights or any misappropriation or misuse of
                           CytRx Know-How, in the event that Merck is unable to
                           initiate or prosecute such action solely in its own
                           name, CytRx will join such action voluntarily and
                           will execute and cause its Affiliates to execute all
                           documents necessary for Merck to initiate litigation
                           to prosecute and maintain such action. In connection
                           with any action, Merck and CytRx will cooperate fully
                           and will provide each other with any information or
                           assistance that either may reasonably request. Each
                           party shall keep the other informed of developments
                           in any action or proceeding, including, to the extent
                           permissible by law, the status of any settlement
                           negotiations and the terms of any offer related
                           thereto.


                                       14

<PAGE>

                  (d)      Any recovery obtained by either or both Merck and
                           CytRx in connection with or as a result of any action
                           contemplated by this section, whether by settlement
                           or otherwise, shall be shared in order as follows:

                           (i)      the party which initiated and prosecuted the
                                    action shall recoup all of its costs and
                                    expenses incurred in connection with the
                                    action;

                           (ii)     the other party shall then, to the extent
                                    possible, recover its costs and expenses
                                    incurred in connection with the action; and

                           (iii)    the amount of any recovery remaining shall
                                    then be allocated between the parties on a
                                    pro rata basis under which CytRx shall
                                    receive a proportion based on the royalties
                                    it lost and Merck shall receive a proportion
                                    based on its lost profits.

         6.5      Certification under Drug Price Competition and Patent
                  -----------------------------------------------------
                  Restoration Act. CytRx shall immediately give notice to Merck
                  ---------------
                  of any certification of which it becomes aware filed under the
                  United States "Drug Price Competition and Patent Term
                  Restoration Act of 1984" claiming that Patent Rights covering
                  Substance(s) or Licensed Product(s) are invalid or that
                  infringement will not arise from the manufacture, use or sale
                  of Substance(s) or Licensed Product(s) by a third party. If
                  CytRx decides not to bring infringement proceedings against
                  the entity making such a certification, it shall give notice
                  to Merck of its decision not to bring suit within twenty-one
                  (21) days after receipt of notice of such certification. Merck
                  may then, but is not required to, bring suit against the party
                  that filed the certification. Any such suit by Merck or CytRx
                  shall either be in the name of Merck or in the name of CytRx,
                  or jointly by Merck and CytRx. For this purpose, the party not
                  bringing suit shall execute such legal papers necessary for
                  the prosecution of such suit as may be reasonably requested by
                  the party bringing suit.

         6.6      Abandonment. CytRx shall promptly give notice to Merck of the
                  -----------
                  grant, lapse, revocation, surrender, invalidation or
                  abandonment of any Patent Rights licensed to Merck for which
                  CytRx is responsible for the filing, prosecution and
                  maintenance.

         6.7      Patent Term Restoration. The parties hereto shall cooperate
                  -----------------------
                  with each other in obtaining patent term restoration or
                  supplemental protection certificates or their equivalents in
                  any country in the Territory where applicable to Patent
                  Rights. In the event that elections with respect to obtaining
                  such patent term restoration are to be made, Merck shall have
                  the right to make the election and CytRx agrees to abide by
                  such election; provided it is understood that Merck shall be
                  responsible for the costs required for any such elections.

                                   ARTICLE VII


                                       15

<PAGE>

                              TERM AND TERMINATION

         7.1      Term and Expiration. This Agreement shall be effective as of
                  -------------------
                  the Effective Date and unless terminated earlier pursuant to
                  Sections 7.2 or 7.3 below, the term of this Agreement shall
                  continue in effect until expiration of all royalty obligations
                  hereunder. Upon expiration of all royalty obligations
                  hereunder, Merck's licenses pursuant to Article 2 shall become
                  fully paid-up, perpetual licenses.

         7.2      Termination by Merck. Notwithstanding anything contained
                  --------------------
                  herein to the contrary, Merck shall have the right to
                  terminate this Agreement at any time in its sole discretion by
                  giving ninety (90) days advance written notice to CytRx. In
                  the event of such termination, the rights and obligations
                  hereunder, including any licenses and any payment obligations
                  not due and owing as of the termination date shall terminate.
                  It is understood that Merck may terminate the Agreement for
                  one or more Targets or HIV while maintaining the Agreement in
                  effect for any Target not terminated (or HIV if not
                  terminated).

         7.3      Termination.
                  -----------

         7.3.1    Termination for Cause. This Agreement may be terminated by
                  ---------------------
                  notice by either party at any time during the term of this
                  Agreement:

                  (a)      if the other party is in breach of its material
                           obligations hereunder by causes and reasons within
                           its control and has not cured such breach within
                           ninety (90) days after notice requesting cure of the
                           breach provided, however, in the event of a good
                           faith dispute with respect to the existence of a
                           material breach, the ninety (90) day cure period
                           shall be followed until such time as the dispute is
                           resolved pursuant to Section 8.6 hereof, it is
                           understood, however, that any amounts not in dispute
                           between the parties will be paid during such tolled
                           period; or

                  (b)      upon the filing or institution of bankruptcy,
                           reorganization, liquidation or receivership
                           proceedings, or upon a general assignment of a
                           substantial portion of its assets for the benefit of
                           creditors by the other party; provided, however, in
                           the case of any involuntary bankruptcy proceeding
                           such right to terminate shall only become effective
                           if the party consents to the involuntary bankruptcy
                           or such proceeding is not dismissed within ninety
                           (90) days after the filing thereof.

         7.3.2    Effect of Termination for Cause on License.
                  ------------------------------------------

                  (a)      In the event Merck terminates this Agreement under
                           Section 7.3.1(a), Merck's license pursuant to Article
                           2.1 shall become paid- up, perpetual license, except
                           that Merck shall make fifty percent (50%) of the
                           royalty payments set forth in Article 4 in such
                           event. In the event that CytRx terminates this
                           Agreement under Section 7.3.1(a) or Merck terminates
                           this

                                       16

<PAGE>

                           Agreement under Article 7.2, Merck's licenses
                           pursuant to Section 2.1 shall terminate as of such
                           termination date.

                  (b)      In the event this Agreement is terminated due to the
                           rejection of this Agreement by or on behalf of CytRx
                           under Section 365 of the United States Bankruptcy
                           Code (the "Code"), all licenses and rights to
                           licenses granted under or pursuant to this Agreement
                           by CytRx to Merck are, and shall otherwise be deemed
                           to be, for purposes of Section 365(n) of the Code,
                           licenses of rights to "intellectual property" as
                           defined under Section 101(35A) of the Code. In such
                           case, Merck's rights will be determined by the Code.

         7.4      Effect of Termination. Expiration or termination of the
                  ---------------------
                  Agreement shall not relieve the parties of any ligation
                  accruing prior to such expiration or termination, and the
                  provisions of Article III shall survive the expiration of the
                  Agreement and shall continue in effect for five (5) years. Any
                  expiration or early termination of this Agreement shall be
                  without prejudice to the rights of either party against the
                  other accrued or accruing under this Agreement prior to
                  termination, including the obligation to pay royalties for
                  Licensed Product(s) or(Substance) sold prior to such
                  termination. Notwithstanding the foregoing, any remedies set
                  forth under this Article 7 shall not limit any claim for
                  damages either party may have against the other arising from
                  material breach of the other party.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         8.1.     Force Majeure. Neither party shall be held liable or
                  -------------
                  responsible to the other party nor be deemed to have defaulted
                  under or breached the Agreement for failure or delay in
                  fulfilling or performing any term of the agreement when such
                  failure or delay is caused by or results from causes beyond
                  the reasonable control of the affected party including, but
                  not limited to, fire, floods, embargoes, war, acts of war
                  (whether war be declared or not), insurrections, riots, civil
                  commotions, strikes, lockouts or other labor disturbances,
                  acts of God or acts, omissions or delays in acting by any
                  governmental authority or the other party. The affected party
                  shall notify the other party of such force majeure
                  circumstances as soon as reasonably practical.

         8.2.     Assignment. The Agreement may not be assigned or otherwise
                  ----------
                  transferred, nor, except as expressly provided hereunder, may
                  any right or obligations hereunder be assigned or transferred,
                  by either party without the consent of the other party;
                  provided, however, that Merck may, without such consent,
                  assign the Agreement and its rights and obligations hereunder
                  to an Affiliate or in connection with the transfer or sale of
                  all or substantially all of its assets related to the Licensed
                  Product or the business, or in the event of its merger or
                  consolidation or change in control or similar transaction. Any
                  permitted assignee shall assume all obligations

                                       17

<PAGE>

                  of its assignor under the Agreement. Any permitted assignment
                  hereunder shall not relieve the Assignor of any obligations
                  arising prior to the assignment.

         8.3.     Severability. In the event any one or more of the provisions
                  ------------
                  contained in this Agreement should be held invalid, illegal or
                  unenforceable in any respect, the validity, legality and
                  enforceability of the remaining provisions contained herein
                  shall not in any way be affected or impaired thereby, unless
                  the absence of the invalidated provision(s) adversely affect
                  the substantive rights of the parties. The parties shall in
                  such an instance use their best efforts to replace the
                  invalid, illegal or unenforceable provision(s) with valid,
                  legal and enforceable provision(s) which, insofar as
                  practical, implement the purposes of this Agreement.

         8.4.     Notices. All notices or other communications which are
                  -------
                  required or permitted hereunder shall be in writing and
                  sufficient if delivered personally, sent by telecopier (and
                  promptly confirmed by personal delivery, registered or
                  certified mail or overnight courier), sent by
                  nationally-recognized overnight courier or sent by registered
                  or certified mail, postage prepaid, return receipt requested,
                  addressed as follows:

                  if to CytRx, to:

                           CytRx Corporation
                           154 Technology Parkway
                           Technology Park/Atlanta
                           Norcross, GA 30092
                           Attention: President and CEO
                           Telecopier No. (770) 448-3357

                  with a copy to:

                           Attention: Office of Counsel

                  if to Merck, to:

                           Merck & Co., INC.
                           One Merck Drive
                           P.O. Box 100
                           Whitehouse Station, NJ 08889-0100
                           Attention: Vice President, Corporate Licensing
                           Telecopier No.: (908) 735-1202

                  with a copy to:

                           Attention: Office of Counsel
                           Telecopier No.: (908) 735-1370


                                       18

<PAGE>

                  or to such other address as the party to whom notice is to be
                  given may have furnished to the other party in writing in
                  accordance herewith. Any such communication shall be deemed to
                  have been given when delivered if personally delivered or sent
                  by telecopier on a business day, on the business day after
                  dispatch if sent by nationally-recognized overnight courier
                  and on the third business day following the date of mailing if
                  sent by mail.

         8.5      Applicable Law. The Agreement shall be governed by and
                  --------------
                  construed in accordance with the laws of the State of New
                  Jersey and the United States without reference to any rules of
                  conflict of laws or renvoi.

         8.6.     Dispute Resolution. The parties shall negotiate in good faith
                  ------------------
                  and use reasonable efforts to settle any dispute, controversy
                  or claim arising from or related to this Agreement or the
                  breach thereof. If the parties do not fully settle, and a
                  party wishes to pursue the matter, each such dispute,
                  controversy or claim that is not an "Excluded Claim" shall be
                  finally resolved by binding arbitration in accordance with the
                  Commercial Arbitration Rules and Supplementary Procedures for
                  Large Complex Disputes of the American Arbitration Association
                  ("AAA"), and judgment on the arbitration award may be entered
                  in any court having jurisdiction thereof. The arbitration
                  shall be conducted by a panel of three persons experienced in
                  the pharmaceutical business. Within 30 days after initiation
                  of arbitration, each party shall select one person to act as
                  arbitrator and the two party-selected arbitrators shall select
                  a third arbitrator within 30 days of their appointment. If the
                  arbitrators selected by the parties are unable or fail to
                  agree upon the third arbitrator, the third arbitrator shall be
                  appointed by the AAA. The place of arbitration shall be New
                  York, New York. Either party may apply to the arbitrators for
                  interim injunctive relief until the arbitration award is
                  rendered or the controversy is other- wise resolved. Either
                  party also may, without waiving any remedy under this
                  Agreement, seek from any court having jurisdiction any
                  injunctive or provisional relief necessary to protect the
                  rights or property of that party pending the arbitration
                  award. The arbitrators shall have no authority to award
                  punitive or any other type of damages not measured by a
                  party's compensatory damages. Each party shall bear its own
                  costs and expenses and attorneys' fees and an equal share of
                  the arbitrators' and any administrative fees of arbitration.
                  Except to the extent necessary to confirm an award or as may
                  be required by law, neither a party nor an arbitrator may
                  disclose the existence, content, or results of an arbitration
                  without the prior written consent of both parties. In no event
                  shall an arbitration be initiated after the date when
                  commencement of a legal or equitable proceeding based on the
                  dispute, controversy or claim would be barred by the
                  applicable New Jersey statute of limitations. As used in this
                  Section, the term "Excluded Claim" shall mean a dispute,
                  controversy or claim that concerns (a) the validity or
                  infringement of a patent, trademark or copyright; or (b) any
                  antitrust, anti monopoly or competition law or regulation,
                  whether or not statutory.


                                       19

<PAGE>

         8.7.     Entire Agreement. The Agreement contains the entire
                  ----------------
                  understanding of the parties with respect to the subject
                  matter hereof. All express or implied agreements and
                  understandings, either oral or written, heretofore made are
                  expressly merged in and made a part of the Agreement. The
                  Agreement may be amended, or any term hereof modified, only by
                  a written instrument duly executed by both parties hereto. It
                  is understood that the Evaluation Agreement between the
                  parties dated January 18, 2000 and the Fee for Service
                  Agreement between the parties dated August 10, 2000, as they
                  relate to the delivery of GMP material, will continue to
                  remain in effect.

         8.8.     Headings. The captions to the several Articles and Sections
                  --------
                  hereof are not a part of the Agreement, but are merely guides
                  or labels to assist in locating and reading the several
                  Articles and Sections hereof.

         8.9.     Independent Contractors. It is expressly agreed that CytRx and
                  -----------------------
                  Merck shall be independent contractors and that the
                  relationship between the two parties shall not constitute a
                  partnership, joint venture or agency. Neither CytRx nor Merck
                  shall have the authority to make any statements,
                  representations or commitments of any kind, or to take any
                  action, which shall be binding on the other, without the prior
                  consent of the other party.

         8.10.    Waiver. The waiver by either party hereto of any right
                  ------
                  hereunder or the failure to perform or of a breach by the
                  other party shall not be deemed a waiver of any other right
                  hereunder or of any other breach or failure by said other
                  party whether of a similar nature or otherwise.

         8.11.    Counterparts. The Agreement may be executed in two or more
                  ------------
                  counterparts, each of which shall be deemed an original, but
                  all of which together shall constitute one and the same
                  instrument.

         8.12.    Waiver of Rule of Construction. Each party has had the
                  ------------------------------
                  opportunity to consult with counsel in connection with the
                  review, drafting and negotiation of this Agreement.
                  Accordingly, the rule of construction that any ambiguity in
                  this Agreement shall be construed against the drafting party
                  shall not apply.

         8.13     Announcements; Public Disclosure. Neither party may disclose
                  --------------------------------
                  the existence of or terms and conditions of this Agreement to
                  any third party, or in the public domain, without the prior
                  written approval of the other party, except as may be required
                  by law. In that case, the required party shall give the other
                  party an opportunity to comment on the disclosure and shall
                  limit disclosure to required information.

                                       20

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

         Merck & CO., INC.                           CytRx Corporation
         BY: /s/ Raymond V. Gilmartin                BY: /s/ Jack J. Luchese
         Raymond V. Gilmartin                        Jack J. Luchese
         TITLE: Chairman, President &                TITLE: President and CEO
         Chief Executive Officer
         DATE: November 1, 2000                      DATE: October 30, 2000

                                       21


<PAGE>

                                  SCHEDULE 1.19

                                     PATENTS

U.S. Patent
-----------

5,554,372 (subject to U.S. government regulations)
5,990,241
6,086,899
RE 36,665
5,567,859
5,696,298
5,824,322
Pending application 90/104,088

Foreign
-------

W096/04932
6,086,899


                                       1

<PAGE>
                                 SCHEDULE 4.4.5

                                ROYALTY REDUCTION

[*****]


[*****] Confidential treatment has been granted for the redacted portions of
        this page.





                                       1

<PAGE>

                                  ADDENDUM 2.0
                                  ------------
                              ORGANICHEM AGREEMENT
                              --------------------


[*****]



[*****] Confidential portions of this page have been redacted and filed
        separately with the Commission.


                                       1

<PAGE>


                                  ADDENDUM 3.0
                                  ------------
                CYTRX KNOW-HOW INCLUDED IN INITIAL DATA TRANSFER
                ------------------------------------------------

[*****]


[*****] Confidential portions of this page have been redacted and filed
        separately with the Commission.




                                       1

<PAGE>

                                  ADDENDUM 4.0
                                  ------------
                           PATENT REIMBURSEMENT LETTER
                           ---------------------------

[*****]



[*****] Confidential portions of this page have been redacted and filed
        separately with the Commission.


                                       1

<PAGE>

                                  ADDENDUM 5.0
                                  ------------
                               CYTRX PRESS RELEASE
                               -------------------

FOR IMMEDIATE RELEASE
December XX, 2001

Contact: Mark Reynolds
         Vice President, Finance
         CytRx Corporation
         (770) 453-0121

             CYTRX LICENSES TRANZFECT POLOXAMER TECHNOLOGY TO VICAL

ATLANTA--December XX, 2001--CytRx Corporation (Nasdaq:CYTR) announced today an
exclusive, worldwide license agreement granting Vical Incorporated (Nasdaq:VICL)
rights to use or sublicense CytRx's TranzFect poloxamer technology to enhance
viral or non-viral delivery of polynucleotides (such as DNA and RNA) in all
preventive and therapeutic human and animal health applications, except for four
infectious disease vaccine targets already licensed to Merck & Co., Inc.
(NYSE:MRK) and prostate-specific membrane antigen (PSMA). In addition, the
license agreement permits Vical to use TranzFect poloxamer technology to enhance
the delivery of proteins in prime-boost vaccine applications that involve the
use of polynucleotides. As part of the agreement, CytRx will receive an up-front
payment, and potentially, future milestone and royalty payments.

Jack Luchese, President and Chief Executive Officer of CytRx, said, "We are very
pleased to enter into our second major license for the TranzFect technology.
Vical is a leader in the field of gene therapy and well-positioned to apply our
TranzFect poloxamers in a broad range of product applications. We look forward
to continued development of this exciting combination of proprietary
technologies."

CytRx's patented TranzFect technology uses poloxamers (non-ionic block
co-polymers) to increase cellular uptake of genes and boost immunogenicity.
Vical's patented naked DNA technology is a biological method of delivering genes
into cells in the body to cause production of desired proteins.


                                       1

<PAGE>

About CytRx Corporation

CytRx Corporation is focused on the development and commercialization of
high-value human therapeutics. The Company's research and development activities
include CRL-5861, an intravenous agent for treatment of sickle cell disease and
other acute vaso-occlusive disorders, and TranzFect, a delivery enhancement
technology. CytRx has a research pipeline with opportunities in the areas of
muscular dystrophy, cancer, spinal cord injury, vaccine delivery, gene therapy
and food animal feed additives.

This press release may contain forward-looking statements that involve risks and
uncertainties. Actual results may differ materially from those discussed in this
release, due to, among other things, the research, development, and market risks
which could adversely affect the Company's timeline for clinical trials,
regulatory approval, and if such approval is received, time to market
thereafter. Additional uncertainties and risks are described in the Company's
most recently filed SEC documents, such as its Form 10-K and its most recent
10-Q.


                                       2

<PAGE>

                                  ADDENDUM 6.0
                                  ------------
                               VICAL PRESS RELEASE
                               -------------------

FOR IMMEDIATE RELEASE
December XX, 2001

Contact: Alan R. Engbring
         Director, Investor Relations
         Vical Incorporated
         (858) 646-1127

                 VICAL LICENSES POLOXAMER TECHNOLOGY FROM CYTRX

SAN DIEGO--December XX, 2001--Vical Incorporated (Nasdaq:VICL) announced today
an exclusive, worldwide license agreement with CytRx Corporation (Nasdaq:CYTR)
granting Vical rights to use or sublicense CytRx's TranzFect poloxamer
technology to enhance viral or non-viral delivery of polynucleotides (such as
DNA and RNA) in all preventive and therapeutic human and animal health
applications, except for four infectious disease vaccine targets already
licensed to Merck & Co., Inc. (NYSE:MRK) and prostate-specific membrane antigen
(PSMA). In addition, the license agreement permits Vical to use TranzFect
poloxamer technology to enhance the delivery of proteins in prime-boost vaccine
applications that involve the use of polynucleotides. As part of the agreement,
Vical will make an up-front payment, and potentially, future milestone and
royalty payments.

The exclusive license grants Vical rights under CytRx's extensive intellectual
property to operate independently or through sublicensing. Vical also gains
access to CytRx's know-how and large library of poloxamers, including CRL-1005,
which has been tested extensively in Merck's HIV vaccine development program.
Several poloxamers also have been safely tested in humans. Poloxamers are
non-ionic block copolymers that have been found to increase expression (protein
production) and immunogenicity (immune response against foreign proteins) when
delivered with plasmid DNA.

Vijay B. Samant, Vical's President and Chief Executive Officer, said, "We are
excited to add a complementary technology to leverage the potential of our gene
delivery technology. Preclinical safety and effectiveness of CRL-1005 has been
demonstrated as part of the Merck HIV vaccine program. Our own research with
other poloxamers, some showing even greater effect in animal models than
CRL-1005, has suggested a broad range of additional applications including DNA


                                       1

<PAGE>

vaccines for infectious diseases or cancer and gene-based delivery of
therapeutic proteins. Gaining exclusive access to the CytRx technology offers
Vical additional opportunities to advance research-stage programs into the
clinical product development pipeline." Mr. Samant also noted, "We are now
projecting a net cash burn rate of between $14 million and $16 million for
2001."

David C. Kaslow, M.D., Vical's Chief Scientific Officer, added, "Poloxamers
increase expression and immunogenicity, with no compromise in safety, and could
make the difference between a marginal vaccine and an effective one. We expect
to continue our testing of these poloxamers in both vaccine and therapeutic
protein models, and we look forward to advancing into clinical testing at the
first opportunity."

Vical Incorporated, The Naked DNA Company(TM), is focused on the development of
pharmaceutical product candidates based on its patented gene delivery
technology. A number of therapeutic and vaccine product candidates are currently
under development for the prevention or treatment of cancer, infectious diseases
and metabolic disorders by Vical and its collaborative partners, including Merck
& Co., Pfizer Inc., Aventis S.A., Human Genome Sciences, Centocor Inc., Merial
and Boston Scientific Corporation. Allovectin-7(R), which uses a lipid-DNA
complex to help the immune system recognize and attack cancer cells, is in Phase
II and Phase III testing in certain patients with metastatic melanoma and in
Phase II testing in patients with head and neck cancer. Leuvectin(TM), which
uses a lipid-DNA complex to stimulate an immune response against cancer cells,
is in Phase II testing in patients with prostate cancer. If you are interested
in any of Vical's clinical trials, please see our website at www.vical.com, or
                                                             -------------
contact Cherie Smith by phone at (858) 646-1177 or by e-mail at
csmith@vical.com.
----------------

This press release contains forward-looking statements subject to risks and
uncertainties that could cause actual results to differ materially from those
projected. Forward-looking statements include statements about the company's
focus, collaborative partners, product candidates, and developmental status.
Risks and uncertainties include whether any product candidates will be shown to
be safe and efficacious in clinical trials, the timing of clinical trials,
whether Vical or its collaborative partners will seek or gain approval to market
any product candidates, and additional risks set forth in the company's filings
with the Securities and Exchange Commission.


                                       2

<PAGE>

These forward-looking statements represent the company's judgment as of the date
of this release. The company disclaims, however, any intent or obligation to
update these forward-looking statements.

                                       3

</TEXT>
</DOCUMENT>