Engagement Letter - CytRx Corp. and Cappello Capital Corp.
CAPPELLO CAPITAL CORP.
INVESTMENT BANKERS
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DRAFT
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CONFIDENTIAL
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May 16, 2003
Mr. Steve Kriegsman
President, CEO and Director
CytRx Corporation
11726 San Vicente Blvd.
Los Angeles, CA 90049
Dear Mr. Kriegsman,
This letter shall confirm the engagement of Cappello Capital Corp. ("Advisor")
as our exclusive financial advisor to CytRx Corporation ("Company") to perform
such corporate finance advisory services as the Company and the Advisor may
agree upon in writing. The Company, as defined herein, shall include CytRx
Corporation, its subsidiaries, affiliates and any entities it may form, merge
into, be acquired by, or invest in. The term of this agreement ("Agreement")
shall run from the date of receipt by Advisor of the Company's signed acceptance
of this letter, until twelve months thereafter, and may be extended by mutual
written consent of the parties or cancelled pursuant to the terms hereof
("Term"). This Agreement may be canceled by either party as provided in the
paragraph entitled "Termination of Agreement".
TRANSACTION:
The corporate finance advisory services that may be performed by the
Advisor are the following types of Transactions with an investor or entity
identified in writing by or on behalf of Advisor or who contacts Advisor or
Company during the term of the Agreement (individually or collectively a
"Covered Party"). Both the Company and the Advisor must agree on which of
the following activities to pursue. As used in this letter, the term
"Transaction" shall include, but not be limited to:
a) a private placement, conducted pursuant to Regulation D of the
U.S. Securities Act of 1933 with a Covered Party (a "Private
Placement") including, without limitation, of up to $25 million
of equity, debt, convertible securities, or such other amount as
the Company and the Advisor may agree upon ("Placement Amount");
b) a strategic alliance (a "Strategic Alliance") that involves an
agreement with a Covered Party that may, either directly or
indirectly, enter into any type of sales, marketing and/or
management agreement with the Company;
c) the sale of the Company (a "Sale" or "Merger"), whether by
merger, stock sale or sale in one or more transactions, of all or
substantially all of the assets of the Company to a Covered Party
or where the shareholders of the Company own less than a majority
of the surviving entity;
d) the sale of a portion of the Company (a "Divestiture"), whether
by merger, stock sale or sale in one or more transactions, of a
portion of the assets of the Company to a Covered Party;
100 Wilshire Boulevard, Suite 1200, Santa Monica, California 90401
Telephone 310.393.6632 Fax 310.393.4838
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 2
e) a recapitalization (a "Recapitalization") involving the issuance
of any indebtedness or equity securities by the Company to a
Covered Party which may involve, among other items, an
extraordinary dividend being paid or equity securities being
repurchased by the Company, whether as a stand alone Transaction
or in connection with a related Transaction;
f) a strategic acquisition (an "Acquisition") pursuant to which (i)
the Company consummates a merger, consolidation or other business
combination with a Covered Party, where the Company is the
surviving entity (or its shareholders own a majority of the
equity in the surviving entity) in such business combination, or
(ii) the Company acquires a majority of the total equity
ownership of a Covered Party, or all or substantially all of the
assets of a Covered Party.
DESCRIPTION OF SERVICES:
The Advisor will, to the extent requested by the Company, assist the
Company in analyzing potential Transactions according to the terms and
conditions of this letter. In this regard, the Advisor may undertake
certain activities on behalf of the Company, including the following:
a) analyzing Transaction options available to the Company;
b) counseling the Company as to strategy and tactics for effecting a
potential Transaction;
c) advising the Company as to the structure and form of a possible
Transaction, including the form of any agreements related
thereto;
d) assisting the Company in obtaining appropriate information and in
preparing due diligence presentations related to a potential
Transaction;
e) introducing the Company to institutional investors, accredited
individual investors, strategic or financial buyers,
distributors, licensees, and/or strategic partners, as may be
appropriate;
f) assisting in negotiations related to a potential Transaction, as
may be appropriate, on behalf of the Company;
g) rendering such other financial advisory and investment banking
services as may from time to time be agreed upon by the Company
and the Advisor.
EXCLUSIVITY:
The Company agrees that no other financial advisor is or will be authorized
by it during the Term of this Agreement to perform services on the
Company's behalf of the type which Advisor is authorized to perform
hereunder. No fee payable to any other financial advisor either by the
Company or any other entity shall reduce or otherwise affect the fees
payable hereunder to Advisor, except as otherwise agreed to in writing by
Advisor. Notwithstanding the foregoing, Advisor acknowledges that the
Company has existing investment banking relationships with J. P. Turner,
Rockwell Asset Management, Corporate Capital Group International Ltd. and
Rip Grossman & Associates (the "Existing Firms"). In the event of the
closing of a Transaction originated by any of the Existing Firms during the
Term of this Agreement, the Company and Advisor shall negotiate in good
faith the compensation to be paid to Advisor (based on such factors as the
overall fees payable to the Existing Firms on that Transaction and
Advisor's role, if any, in assisting to close that Transaction), but with
such compensation to in no event exceed 25% of the compensation payable to
the Existing Firms for that Transaction.
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 3
CONFIDENTIALITY:
The Company agrees that, without prior written consent, it will not
disclose, and will not include in any public announcement, the name or
names of any investor, buyer, or strategic partner, unless and until such
disclosure is required by law or applicable regulation, and then only to
the extent of such requirement, unless the Company has received approval
from the other party.
CLOSING:
The Closing of a Transaction shall occur on the earlier of execution of all
material legal documentation or the transfer (if applicable) of funds. Any
Closing is subject to mutually satisfactory documentation and approval by
the Company's Board of Directors. The Company has no obligation to Advisor
to accept or close any proposed Transaction.
INFORMATION FURNISHED BY THE COMPANY:
The Company will furnish Advisor with all financial and other information
and data as Advisor believes appropriate in connection with its activities
on the Company's behalf, and shall provide Advisor full access to its
officers, directors, employees and professional advisors. The Company
agrees that it and its counsel will be solely responsible for ensuring that
the Transaction complies in all respects with applicable law, provided that
in the case of a financing transaction, Advisor will not knowingly conduct
its activities on behalf of the Company in a manner so that the financing
fails to qualify for applicable private placement exemptions under federal
and state securities laws that the Company is relying upon. The Company
represents and warrants that any material delivered to Advisor at all times
through Closing, will not contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances
under which they were made, not misleading. The Company will promptly
notify Advisor if it learns of any material inaccuracy or misstatement in,
or material omission from, any information theretofore delivered to
Advisor. The Company recognizes and confirms that Advisor, in connection
with performing its services hereunder, (i) will be relying without
investigation upon all information that is available from public sources or
supplied to it by or on behalf of the Company or its advisors, (ii) will
not in any respect be responsible for the accuracy or completeness of, or
have any obligation to verify, the same and (iii) will not conduct any
appraisal of any assets of the Company. The Company will also cause to be
furnished to Advisor at the Closing copies of such agreements, opinions,
certificates and other documents delivered at the Closing as Advisor may
reasonably request.
WAIVER OF CONFLICTS:
The Company acknowledges that Advisor and its affiliates have and will
continue to have investment banking and other relationships with parties
other than the Company pursuant to which Advisor may acquire information of
interest to the Company. Advisor shall have no obligation to disclose such
information to the Company, or to use such information in connection with
any contemplated transaction. The Company recognizes that Advisor is being
engaged hereunder to provide the services described above only to the
Company and to all other parties, if any, who execute this Agreement in
specified other capacities and is not acting as an agent or a fiduciary of,
and shall have no duties or liability to, the equity holders of the Company
or any third party in connection with its engagement hereunder, all of
which are hereby expressly waived. No one other than the Company (and such
other parties in such capacities, if any) is authorized to rely upon the
engagement of Advisor hereunder or any statements, advice, opinions or
conduct by Advisor.
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 4
FEES AND EXPENSES:
With respect to the services rendered hereunder, the following describes
the fees and expense reimbursements that the Company agrees to pay the
Advisor:
a) A retainer fee of $20,000 per month, with the first installment
payable upon the execution of this letter. The Company may credit
the retainer amounts paid to the Advisor against any fees it
becomes obligated to pay Advisor under this Agreement. This
retainer may be cancelled by the Company, after giving the
Advisor 30 days written notice. Upon the closing of any
Transaction, the Company and the Advisor may enter into a
separate retainer agreement relative to the rendering by the
Advisor of post-Transaction or follow-on Transaction advisory
services.
b) In the event that the Company proceeds with a Private Placement
during the Term, the Advisor will assist the Company with
preparation of an investor presentation package, identify
potential investors, and negotiate on behalf of the Company the
terms and funding of the Transaction. At Closing of a Private
Placement, the Company will pay the Advisor a cash fee, or at the
Advisor's option, a percentage of the same security privately
placed, according to SCHEDULE A attached; provided, that at the
Advisor's option up to 50% of its cash fee may be paid to it
instead with the same securities that were privately placed, at
the same valuation for those securities paid by the investors.
c) In the event that the Company proceeds with a Strategic Alliance
during the Term, the Advisor will negotiate the terms and the
Closing of a Private Placement and / or a sales, marketing and/or
management agreement, as the Company may require. At Closing of
the Strategic Alliance, the Company will pay the Advisor a fee
based upon the value to the Company of the Strategic Alliance
("Transaction Value"). Such Transaction Value shall include any
revenues or revenue sharing fees, royalties, license fees or
milestone payments, and/or other items as may be mutually agreed
upon in good faith by the parties hereto, according to SCHEDULE B
attached. The Company and the Advisor shall in good faith agree
at Closing on the value of any such non-cash consideration that
is included in the value of a Strategic Alliance.
d) In the event that the Company proceeds with a Sale or Merger
during the Term, either as a separate Transaction or in
conjunction with another Transaction where financing is
necessary, the Advisor will assist the Company with preparation
of an investor presentation package, identify potential
Investors, and negotiate the terms and funding of the
Transaction. At the Closing of such Transaction, the Company will
pay the Advisor a Transaction fee equal to the value of all debt
or equity securities or other consideration that are issued or
exchanged in connection therewith, according to SCHEDULE B
attached. This fee shall be payable in consideration equivalent
to that of the Purchase Price. The Company and the Advisor shall
in good faith agree at Closing on the value of any such non-cash
consideration that is included in the value of a Sale or Merger.
e) In the event that the Company proceeds with a Divestiture during
the Term, either as a separate Transaction or in conjunction with
another Transaction where financing is necessary, the Advisor
will assist the Company with preparation of an investor
presentation package, identify potential Investors, and negotiate
the terms and funding of the Transaction. At the Closing of such
Transaction, the Company will pay the Advisor a Transaction fee
equal to the value of all debt or equity securities or other
consideration that are issued or exchanged in connection
therewith, according to SCHEDULE B attached. This fee shall be
payable in consideration equivalent to that of the Purchase
Price.
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 5
The Company and the Advisor shall in good faith agree at Closing
on the value of any such non-cash consideration that is included
in the value of a Divestiture.
f) In the event that the Company proceeds with a Recapitalization
during the Term, either as a separate Transaction or in
conjunction with another Transaction where financing is
necessary, the Advisor will assist the Company with preparation
of an investor presentation package, identify potential
Investors, and negotiate the terms and funding of the
Transaction. At the Closing of such Transaction, the Company will
pay the Advisor a Transaction fee equal to the value of all debt
or equity securities or other consideration that are issued or
exchanged in connection therewith, according to SCHEDULE B
attached. This fee shall be payable in consideration equivalent
to that of the Purchase Price. The Company and the Advisor shall
in good faith agree at Closing on the value of any such non-cash
consideration that is included in value of a Recapitalization.
g) In the event that the Company proceeds with an Acquisition during
the Term, the Advisor will assist the Company with due diligence
and negotiation of Acquisition terms. The Company will pay the
Advisor, immediately upon Closing of any Acquisition, a
Transaction fee according to SCHEDULE B attached. This fee shall
be payable in consideration equivalent to that of the Purchase
Price. The Company and the Advisor shall in good faith agree at
Closing on the value of any such non-cash consideration that is
included in the value of an Acquisition.
h) In the case of any Strategic Alliance, Sale or Merger, Divesture,
Recapitalization or Acquisition, where there are future payments
to be made as part of the Transaction Value (contingent or
otherwise) the Company shall be required to pay Advisor its fees
based on such additional Transaction Value only at such time as
those payments are made or received by the Company.
i) Notwithstanding the above, in the event Advisor receives
compensation from a third party in connection with the
consummation of a Transaction with the Company during the Term,
such compensation shall be credited against any fees due to
Advisor from Company per paragraphs (b), (c), (d), (e), (f), (g)
or (h) of the Fees and Expenses section of this Agreement.
j) Any securities payable to the Advisor under this Agreement shall
entitle the Advisor to full, unconditional piggyback registration
rights without any holdback obligations.
k) The Company agrees to immediately reimburse any out of pocket
expenses incurred by the Advisor during the Term of the
Agreement, whether or not a Transaction is consummated,
including, but not limited to legal, consulting, travel, lodging
and due diligence expenses. Individual Advisor expenses in excess
of $2,500 shall require the prior written approval of the
Company. On a month to month basis, the Company will immediately
reimburse the Advisor for all expenses related to arranging a
Transaction, or other services provided described heretofore,
including, but not limited to legal, consulting, travel, lodging
and due diligence expenses.
l) In the event that Advisor's fees, costs or other compensation,
including warrants or other equity securities, are not paid on
the due date, or the date of Advisor's invoice, if any, there
will be an additional charge at a monthly rate of one percent
(1%), or such lesser rate mandated by California law, upon the
unpaid balance or fair market value of such securities, as
applicable.
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 6
ADDITIONAL INVESTMENT OPTION:
Effective as of the Closing of any financing Transaction during the Term
with a Covered Party that involves a Private Placement, in lieu of an
over-allotment option, the Advisor or its designees shall have the right to
purchase from the Company for $100.00 an option to purchase ten percent
(10%) of the securities that are placed in this financing or a warrant to
acquire ten percent (10%) of the shares into which such securities are
convertible, at a price equal to the price paid by the investor(s) (or the
price of the shares at the time the merger is agreed upon) at Closing. For
example:
<TABLE>
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Placement Amount: $10,000,000
Additional Investment Option: 1,000,100
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Total Funds Raised: $11,000,100
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</TABLE>
The option shall expire ten (10) years from Closing. A cashless exercise
may be used for all related option or warrant transactions. The common
stock underlying these options or warrants will be subject to full,
unconditional piggyback registration rights without any holdback
obligations.
FUTURE INVESTMENTS:
Notwithstanding anything to the contrary herein, if any Covered Party or
underwriter (or their collective affiliates) consummates a Transaction with
the Company under the terms of this Agreement where Advisor is not the
placement agent, at any time within two years of the termination of the
Term, as extended, if extended, the Company agrees to promptly pay the
Advisor according to the Fees and Expenses and Additional Investment Option
sections of the Agreement. A Transaction shall be deemed consummated before
such date if any agreement in principle which includes material terms of
such Transaction is reached prior to such date even if the closing occurs
later (so long as the Transaction actually is consummated). Within thirty
(30) business days following the end or termination of the Term, Advisor
shall deliver to the Company a list of Covered Parties, which list, subject
to the reasonable concurrence of the Company, shall establish the basis for
compensation under the provisions of the Agreement following the expiration
of the Term.
TERMINATION OF AGREEMENT:
Except as otherwise provided for herein, this Agreement may be cancelled by
either party at any time prior to the end of the Term, effective upon
thirty (30) days prior written notice to either party.
ATTORNEY'S FEE PROVISION:
In the event of any legal dispute between the Company and the Advisor, all
reasonable attorney's fees and related expenses of the prevailing party
shall be paid by the other party (which shall include an award of interest
at 10% per annum and recovery of costs by the prevailing party).
GOVERNING LAW AND JURISDICTION:
California Law and California Courts. All lawsuits, hearings, arbitration
or other proceedings shall take place in Los Angeles County, State of
California. The parties irrevocably waive any objections they may have
based on improper venue or inconvenient forum in Los Angeles County, State
of California.
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 7
MISCELLANEOUS:
All payments and reimbursements of expenses payable hereunder shall be made
in U.S. dollars in immediately available funds. This Agreement contains all
of the understandings between the parties hereto with reference to the
subject matter hereof. No other understanding not specifically referred to
herein, oral or otherwise, shall be deemed to exist or bind any of the
parties hereto and any such understandings, oral or otherwise, not
specifically referred to herein shall be merged into this Agreement and
superseded by the provisions hereof. No officer or employee of any party
has any authority to make any representation or promise not contained
herein. Advisor has the right to publish a tombstone describing the
transaction upon closing at its own expense. This Agreement cannot be
modified or changed except by a written instrument signed by each party
hereto.
RESTRICTED TRADING:
Upon execution of this Agreement, Advisor shall inform its personnel that
the Company's publicly traded stock has been placed on its restricted
trading list.
INDEMNIFICATION:
Recognizing that Advisor, in providing the services contemplated hereby,
will be acting as representative of and relying on information provided by
the Company, the Company agrees to the provisions of Attachment A hereto.
The Company shall use its best efforts to cause any binding agreements with
acquirers or providers of capital or financing to include exculpation and
indemnification provisions in favor of Advisor which are equivalent to the
foregoing and are binding on such persons. It is specifically understood
and agreed that the indemnification provisions of Attachment A shall be
binding on the successors and assigns of the parties hereto and of the
indemnified parties, specifically including the continuing corporation
after any Transaction and any successor thereto whether by subsequent
merger, consolidation or transfer of all or substantial part of the assets
or business of the Company or such continuing corporation.
(signatures on following page)
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 8
If this Agreement meets with your approval, please indicate your acceptance of
the above by signing where indicated below and returning this Agreement by
facsimile and the original by mail to the undersigned.
Thank you for the opportunity to be of service.
Sincerely,
/s/ Gerard K. Cappello
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Gerard K. Cappello
President and C.E.O.
Cappello Capital Corp.
AGREED AND ACCEPTED:
The foregoing accurately sets forth our understanding and agreement with respect
to the matters set forth herein.
CytRx Corporation
By: /s/ Steve A. Kriegsman
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Title: CEO
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Date: 5-16-03
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 9
SCHEDULE A
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SCHEDULE A
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<S> <C>
For Amounts Raised (in millions) Fees(1)
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Up to $25.0 7.50%
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From $25.1 to $50.0 7.25%
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From $50.1 to $75.0 7.00%
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From $75.1 to $100.0 6.75%
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From $100.1 to $125.0 6.50%
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From $125.1 to $150.0 6.25%
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From $150.1 to $200.0 6.00%
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From $200.1 to $250.0 5.75%
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From $250.1 to $300.0 5.50%
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$300.1+ 5.25%
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</TABLE>
(1) As a percentage of amount raised for each Private Placement.
Example: the fee for a Private Placement valued at $75.0 million would be
calculated as follows: ($25.0 x 7.50%) + ($25.0 x 7.25%) + ($25.0 x 7.00%)
= $1.875 + $1.8125 + $1.750 = $5.4375 million.
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SCHEDULE B
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SCHEDULE B
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<S> <C>
For Transaction Value (in millions) Fees(1)
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Up to $25.0 4.50%
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From $25.1 to $50.0 4.25%
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From $50.1 to $75.0 4.00%
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From $75.1 to $100.0 3.75%
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From $100.1 to $125.0 3.50%
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From $125.1 to $150.0 3.25%
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$150.1+ 3.00%
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</TABLE>
(1) As a percentage of the total value of all cash and securities
consideration for each Transaction.
Example: the fee for a Transaction valued at $75.0 million would be
calculated as follows: ($25.0 x 4.50%) + ($25.0 x 4.25%) + ($25.0 x 4.00%)
= $1.125 + $1.0625 + $1.000 = $3.320 million.
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 10
INDEMNIFICATION - ATTACHMENT A
The Company shall indemnify and hold harmless the Advisor and its respective
directors, officers, agents, employees, affiliates and representatives
(collectively the "Indemnified Persons" and individually an "Indemnified
Person"), to the full extent lawful, from and against any losses, liabilities,
claims or damages, including reasonable fees and expenses of legal counsel,
related to or arising out of the Advisor's engagement hereunder or the Advisor's
role in the Transaction contemplated hereby, including any losses, liabilities,
claims or damages arising out of any statements or omissions made in connection
with the transaction contemplated hereby; provided, however, that such indemnity
shall not apply to claims which are determined by a final judgment of a court of
competent jurisdiction to have resulted directly from the fraud, gross
negligence or willful misconduct of an Indemnified Person. No Indemnified Person
shall have any liability to the Company for or in connection with this
engagement, except for any which are determined by a final judgment of a court
of competent jurisdiction to have resulted directly from the fraud, willful
misconduct or gross negligence of the Indemnified Person. Notwithstanding any
other provisions hereunder, in no event shall the Indemnified Persons be liable
to the Company for an amount greater, in the aggregate, than the cash fees
actually received by the Advisor hereunder. These indemnification provisions are
not exclusive, and shall be in addition to any other rights that any Indemnified
Person may have at common law or otherwise.
If any action is brought against any Indemnified Person in respect to which
indemnity may be sought against the Company pursuant to this Agreement, or if
any Indemnified Person receives notice from any potential litigant of a claim
which such person reasonably believes will result in the commencement of any
action or proceeding, such Indemnified Person shall promptly notify the Company
in writing. Failure to notify the Company of any such action or proceeding shall
not, however, relieve the Company from any other obligation or liability which
it may have to any Indemnified Person under this Agreement or otherwise, except
to the extent that the Company demonstrates that defense of such action is
materially prejudiced by this failure. In case any such action or proceeding
shall be brought against any Indemnified Person, the Company shall be entitled
(at its own expense) to participate in such action or proceeding with counsel of
the Company's choice, or to compromise or settle the action or proceeding, at
its expense. Counsel selected by the Company under these circumstances must be
satisfactory to the Indemnified Person in the exercise of its reasonable
judgment. Notwithstanding the Company's election to assume the defense of any
action or proceeding, the Indemnified Person shall have the right to employ
separate counsel and to participate in the defense of any action or proceeding,
and the Company shall bear the reasonable fees, costs and expenses of this
separate counsel, if (a) the use of counsel chosen by the Company to represent
the Indemnified Person would, in the judgment of the Indemnified Person, create
a conflict of interest; (b) the defendants in, or targets of, any action or
proceeding include both an Indemnified Person and the Company, and the
Indemnified Person shall have reasonably concluded that a conflict of interest
exists between such Indemnified Person and the Company because, among other
matters, there may be legal defenses available to it or to other Indemnified
Persons which are different from or additional to those available to the Company
(in which case the Company shall not have the right to direct the defense of
such action or proceeding on behalf of the Indemnified Person; (c) the Company
shall not have employed counsel satisfactory to such Indemnified Person in the
exercise of the Indemnified Person's reasonable judgment to represent such
Indemnified Person within a reasonable time after notice of the institution of
such action or proceeding; or (d) the Company shall authorize such Indemnified
Person to employ separate counsel at the Company's expense. The Company shall
pay all reasonable fees, costs and expenses of any separate counsel retained
pursuant to this paragraph at least quarterly.
In order to provide for just and equitable contribution, if a claim for
indemnification is found unenforceable in a final, non-appealable judgment by a
court of competent jurisdiction, even though the
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CONFIDENTIAL
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CYTRX CORPOATION -- CAPPELLO CAPITAL CORP.
Engagement Letter -- May 16, 2003 -- Page 11
express provisions of this Agreement provide for indemnification in such case,
the Company and the Advisor shall contribute to the losses, claims, damages,
judgments, liability, expenses or costs for which the Indemnified Person may be
liable in accordance with the relative benefits received by, and the relative
fault of each respective party in connection with the statements, acts or
omissions which resulted in losses, claims, damages, judgments, liabilities, or
costs. The Company agrees that under these circumstances, a pro rata allocation
would be unfair. Under no circumstances, however, will the Advisor be obliged to
make any contribution to any expenses described in this paragraph which is
greater than the amount of cash previously received by Advisor for its services
to the Company. No person found liable for a fraudulent misrepresentation or
omission shall, however, be entitled to contribution from any person who is not
also found liable for such fraudulent misrepresentation of omission.
These indemnification provisions shall (i) remain operative and in full force
and effect regardless of any termination or completion of the engagement of the
Advisor; (ii) inure to the benefit of any successors, assigns, heirs or personal
representative of any Indemnified Person; and (iii) be in addition to any other
rights that any Indemnified Person may have at common law or otherwise.
AGREED AND ACCEPTED:
The foregoing accurately sets forth our understanding and agreement as pertains
to the Agreement dated May 16, 2003.
CYTRX CORPORATION
By: /s/ Steven A. Kriegsman
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Title: CEO
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Date: 5-16-03
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