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                                                                         Ex 10.5

                              EMPLOYMENT AGREEMENT

      This Employment Agreement (this "Agreement") is made and entered into as
of July 12, 2004 (the "Effective Date") by and between CytRx Corporation, a
Delaware corporation ("Employer"), and Matthew Natalizio, an individual and
resident of the State of California ("Employee").

      WHEREAS, Employer desires to engage Employee as an employee, and Employee
is willing to be so engaged by Employer, on the terms set forth in this
Agreement.

      NOW, THEREFORE, upon the above premises, and in consideration of the
mutual covenants and agreements hereinafter contained, the parties hereto agree
as follows.

      1. Engagement. From the Effective Date through July 31, 2004, Employer
shall employ Employee as on the terms set forth herein. Commencing August 1,
2004, Employer shall employ Employee as Employer's Chief Financial Officer on
the terms set forth herein.

      2. Duties; Place of Employment. Employee shall perform in a professional
and business-like manner, and to the best of his ability, the duties described
on Schedule 1 to this Agreement and such other duties as are assigned to him
from time to time by Employer's Chief Executive Officer. Employee understands
and agrees that his duties, title and authority may be changed from time to time
in the discretion of Employer's Chief Executive Officer. Employee's services
hereunder shall be rendered at Employer's principal executive offices, except
for travel when and as required in the performance of Employee's duties
hereunder.

      3. Time and Efforts. Employee shall devote all of his business time,
efforts, attention and energies to Employer's business and the discharge his
duties hereunder.

      4. Term. The term (the "Term") of Employee's engagement hereunder shall
commence on the Effective Date and shall expire on the first anniversary
thereof, unless sooner terminated in accordance with Section 6. Neither Employer
nor Employee shall have any obligation to extend or renew this Agreement. In the
event this Agreement shall not be extended or renewed, Employer shall continue
to pay Employee his salary as provided for in Section 5.1 during the period
commencing on the date of the termination of Employee's employment with Employer
and ending on (a) October 12, 2005 or (b) the date of Employee's re-employment
with another employer, whichever is earlier.

      5. Compensation. As the total consideration for Employee's services
rendered hereunder, Employer shall pay or provide Employee the following
compensation and benefits:

            5.1. Salary. Employee shall be entitled to receive an annual salary
of One Hundred Seventy-Five Thousand Dollars ($175,000), payable in 24
semi-monthly

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installments on the 15th day and the last day of each calendar month during the
Term, with the first such installment due on July 31, 2004.

            5.2. Discretionary Bonus. Employee may be eligible for an annual
bonus for his services during the Term. Employee's eligibility to receive a
bonus, any determination to award Employee such a bonus and, if awarded, the
amount thereof shall be in Employer's sole discretion.

            5.3. Stock Options. Employer shall grant Employee as of the
Effective Date a nonqualified stock option under Employer's 2000 Long-Term
Incentive Plan (the "Plan") to purchase 100,000 shares of Employer's common
stock (the "Option"). The Option shall vest and become exercisable as to
one-third of the shares covered thereby on each of the first, second and third
annual anniversaries of the Effective Date, provided, in each case, that
Employee remains in the continuous employ of Employer through such anniversary
date. The Option shall (a) be exercisable at an exercise price equal to $1.11
per share, (b) have a term of ten years, and (c) be on such other terms as shall
be determined by Employer's Board of Directors (or the Compensation Committee of
the Board) and set forth in a customary form of stock option agreement under the
Plan evidencing the Option. Notwithstanding anything to the contrary in Section
6.2 or other provision of this Agreement or of the stock option agreement
evidencing the Option, upon the occurrence of a "Change in Control" (as defined
in the Plan), the Option shall thereupon vest and become exercisable as to all
of the shares covered thereby in accordance with the terms of the Plan.

            5.4. Expense Reimbursement. Employer shall reimburse Employee for
reasonable and necessary business expenses incurred by Employee in connection
with the performance of Employee's duties in accordance with Employer's usual
practices and policies in effect from time to time.

            5.5. Vacation. Employee shall be entitled to ten business days of
vacation each year during the Term in accordance with California law.

            5.6. Employee Benefits. Employee shall be eligible to participate in
any medical insurance and other employee benefits made available by Employer to
all of its employees under its group plans and employment policies in effect
during the Term. Schedule 2 hereto sets forth a summary of such plans and
policies as currently in effect. Employee acknowledges and agrees that, any such
plans or policies now or hereafter in effect may be modified or terminated by
Employer at any time in its discretion.

            5.7. Payroll Taxes. Employer shall have the right to deduct from the
compensation and benefits due to Employee hereunder any and all sums required
for social security and withholding taxes and for any other federal, state, or
local tax or charge which may be in effect or hereafter enacted or required as a
charge on the compensation or benefits of Employee.

      6. Termination. This Agreement may be terminated as set forth in this
Section 6.

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            6.1. Termination by Employer for Cause. Employer may terminate
Employee's employment hereunder for "Cause" upon notice to Employee. "Cause" for
this purpose shall mean any of the following:

                  (a) Employee's breach of any material term of this Agreement;
provided that the first occasion of any particular breach shall not constitute
such Cause unless Employee shall have previously received written notice from
Employer stating the nature of such breach and affording Employee at least ten
days to correct such breach;

                  (b) Employee's conviction of, or plea of guilty or nolo
contendere to, any misdemeanor, felony or other crime of moral turpitude;

                  (c) Employee's act of fraud or dishonesty injurious to
Employer or its reputation;

                  (d) Employee's continual failure or refusal to perform his
material duties as required under this Agreement after written notice from
Employer stating the nature of such failure or refusal and affording Employee at
least ten days to correct the same;

                  (e) Employee's act or omission that, in the reasonable
determination of Employer's Board of Directors (or a Committee of the Board),
indicates alcohol or drug abuse by Employee; or

                  (f) Employee's act or personal conduct that, in the judgment
of Employer's Board of Directors (or a Committee of the Board), gives rise to a
material risk of liability of Employee or Employer under federal or applicable
state law for discrimination, or sexual or other forms of harassment, or other
similar liabilities to subordinate employees.

      Upon termination of Employee's employment by Employer for Cause, all
compensation and benefits to Employee hereunder shall cease and Employee shall
be entitled only to payment, not later than three days after the date of
termination, of any accrued but unpaid salary and unused vacation as provided in
Sections 5.1 and 5.5 as of the date of such termination and any unpaid bonus
that may have been awarded Employee as provided in Section 5.2 prior to such
date.

            6.2. Termination by Employer without Cause. Employer may also
terminate Employee's employment without Cause upon five days notice to Employee.
Upon termination of Employee's employment by Employer without Cause, all
compensation and benefits to Employee hereunder shall cease and Employee shall
be entitled to payment of (a) any accrued but unpaid salary and unused vacation
as of the date of such termination as required by California law, which shall be
due and payable upon the effective date of such termination, and (b) an amount
(the "Severance Amount"), which shall be due and payable within ten days
following the effective date of such termination, equal to 1/360th of Employee's
salary provided for in Section 5.1 for each four days (prorated for any period
of less than four days) that Employee was employed hereunder prior to the date
of such termination of employment. By way of

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example, if Employer were to terminate Employee's employment without Cause 60
days after the date hereof, the Severance Amount payable to Employee would be
$7,292 (i.e., [60 / 4] / 360 multiplied by $175,000). Employer and Employee
agree that, if this Agreement is extended or renewed, unless Employer and
Employee agree otherwise, the Severance Amount under this Section 6.2 shall be
fixed at three months' salary provided for in Section 5.1.

            6.3. Death or Disability. Employee's employment will terminate
automatically in the event of Employee's death or upon notice from Employer in
event of his permanent disability. Employee's "permanent disability" shall have
the meaning ascribed to such term in any policy of disability insurance
maintained by Employer (or Employee, as the case may be) with respect to
Employee, or if no such policy is then in effect, shall mean Employee's
inability to fully perform his duties hereunder for any period of at least 75
consecutive days or for a total of 90 days, whether or not consecutive. Upon
termination of Employee's employment as aforesaid, all compensation and benefits
to Employee hereunder shall cease and Employer shall pay to the Employee's heirs
or personal representatives, not later than ten days after the date of
termination, any accrued but unpaid salary and unused vacation as of the date of
such termination as required by California law.

      7. Confidentiality. While this Agreement is in effect and for a period of
five years thereafter, Employee shall hold and keep secret and confidential all
"trade secrets" (within the meaning of applicable law) and other confidential or
proprietary information of Employer and shall use such information only in the
course of performing Employee's duties hereunder; provided, however, that with
respect to trade secrets, Employee shall hold and keep secret and confidential
such trade secrets for so long as they remain trade secrets under applicable
law. Employee shall maintain in trust all such trade secret or other
confidential or proprietary information, as Employer's property, including, but
not limited to, all documents concerning Employer's business, including
Employee's work papers, telephone directories, customer information and notes,
and any and all copies thereof in Employee's possession or under Employee's
control. Upon the expiration or earlier termination of Employee's employment
with Employer, or upon request by Employer, Employee shall deliver to Employer
all such documents belonging to Employer, including any and all copies in
Employee's possession or under Employee's control.

      8. Equitable Remedies; Injunctive Relief. Employee hereby acknowledges and
agrees that monetary damages are inadequate to fully compensate Employer for the
damages that would result from a breach or threatened breach of Section 7 of
this Agreement and, accordingly, that Employer shall be entitled to equitable
remedies, including, without limitation, specific performance, temporary
restraining orders, and preliminary injunctions and permanent injunctions, to
enforce such Section without the necessity of proving actual damages in
connection therewith. This provision shall not, however, diminish Employer's
right to claim and recover damages or enforce any other of its legal or
equitable rights or defenses.

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      9. Indemnification; Insurance. Employer and Employee acknowledge that, as
the Chief Financial Officer of Employer, Employee shall be a corporate officer
of Employer and, as such, Employee shall be entitled to indemnification to the
full extent mandated by Employer to its officers, directors and agents under the
Employer's Certificate of Incorporation and Bylaws as in effect as of the date
of this Agreement. Subject to his insurability thereunder, effective the
Effective Date, Employer shall add Employee as an additional insured under its
current policy of directors and officers liability insurance and shall use
commercially reasonable efforts to continue to insure Employee thereunder, or
under any replacement policies in effect from time to time, during the Term.

      10. Severable Provisions. The provisions of this Agreement are severable
and if any one or more provisions is determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions, and any partially
unenforceable provisions to the extent enforceable, shall nevertheless be
binding and enforceable.

      11. Successors and Assigns. This Agreement shall inure to the benefit of
and shall be binding upon Employer, its successors and assigns and Employee and
his heirs and representatives; provided, however, that neither party may assign
this Agreement without the prior written consent of the other party.

      12. Entire Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof, and the parties hereto have made
no agreements, representations or warranties relating to the subject matter of
this Agreement that are not set forth otherwise herein. This Agreement
supersedes any and all prior or contemporaneous agreements, written or oral,
between Employee and Employer relating to the subject matter hereof. Any such
prior or contemporaneous agreements are hereby terminated and of no further
effect, and Employee, by the execution hereof, agrees that any compensation
provided for under any such agreements is specifically superseded and replaced
by the provisions of this Agreement.

      13. Amendment. No modification of this Agreement shall be valid unless
made in writing and signed by the parties hereto and unless such writing is made
by an executive officer of Employer (other than Employee). The parties hereto
agree that in no event shall an oral modification of this Agreement be
enforceable or valid.

      14. Governing Law. This Agreement is and shall be governed and construed
in accordance with the laws of the State of California without giving effect to
California's choice-of-law rules.

      15. Notice. All notices and other communications under this Agreement
shall be in writing and mailed, telecopied (in case of notice to Employer only)
or delivered by hand or by a nationally recognized courier service guaranteeing
overnight delivery to a party at the following address (or to such other address
as such party may have specified by notice given to the other party pursuant to
this provision):

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            If to Employer:

            CytRx Corporation
            11726 San Vicente Boulevard, Suite 650
            Los Angeles, California  90049
            Facsimile: (310) 826-5529
            Attention: Chief Executive Officer

            If to Employee:

            Mr. Matthew Natalizio
            3115 Brookhill Street
            La Crescenta, California 91214

      16. Survival. Sections 7 through 16 shall survive the expiration or
termination of this Agreement.

      17. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same agreement.

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      18. Attorney's Fees. In any action or proceeding to construe or enforce
any provision of this Agreement the prevailing party shall be entitled to
recover its or his reasonable attorneys' fees and other costs of suit in
addition to any other recoveries.

      IN WITNESS WHEREOF, this Agreement is executed as of the day and year
first above written.

                                              "EMPLOYER"

                                              CytRx Corporation

                                              By: STEVEN A. KRIESMAN
                                                  ------------------------------
                                                  Steven A. Kriegsman
                                                  Chief Executive Officer

                                              "EMPLOYEE"

                                              /s/ MATTHEW NATALIZIO
                                              ----------------------------------
                                              Matthew Natalizio

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                                   Schedule 1

                              Description of Duties

The Chief Financial Officer of CytRx Corporation (the "Company") shall be
responsible for, among other duties:

      -     Accounting and finance departments

      -     Budgeting

      -     Cash management

      -     Accounts payable and aging

      -     Accounts receivable and aging

      -     Posting of recurring accounting entries

      -     Bank reconciliations

      -     Vendor reconciliations

      -     Monthly closings of company books of account

      -     Monthly, quarterly and annual comparisons of actual vs. targeted
            results of operations

      -     Assisting in preparation of press releases regarding financial
            matters

      -     Assisting in capital-raising and other financing transactions

      -     Assisting in in-licensing, business acquisitions and other
            corporation transactions

      -     Coding of income and expenditures

      -     Payroll

      -     Assisting in establishing and maintaining SEC internal controls and
            procedures, including financial controls

                                     S1 - 1

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                                   Schedule 2

                  Summary of Group Plans and Employee Benefits

      1. See CytRx Corporation Employee Handbook, dated July 15, 2004, which is
incorporated herein by reference.

                                     S2 - 1