Private Placement Agent Agreement - CytRx Corp. and Maxim Corp. LLC
[LETTERHEAD OF MAXIM GROUP]
September 16, 2003
Mr. Steve Kriegsman
Chairman
CytRx Corporation
11726 San Vicente Blvd, Suite 650
Los Angeles, CA 90049
RE: Private Placement of Securities for CytRx Corporation
Dear Steven:
This letter confirms our understanding that CytRx Corporation (together with its
affiliates and subsidiaries, "CytRx" or the "Company") has engaged Maxim Group,
LLC (together with its affiliates and subsidiaries, "Maxim") to act as a
placement agent of the Company ("Placement Agent") in connection with a best
efforts private placement offering of the Company's Common Stock and Warrants
(the "Placement"). This letter will confirm our acceptance and set forth the
terms of the engagement agreed to between Maxim and the Company. The Company has
entered into an engagement letter with Cappello Capital Corp. ("Cappello") under
which Cappello is to serve as the Company's exclusive placement agent for any
financing, including the Placement. Cappello has agreed to Maxim's participation
in the Placement on the terms set forth herein.
1. Information. In connection with the Placement Agent's activities
hereunder, the Company will furnish Maxim with all material and
information regarding the business and financial condition of the
Company (the "Information"). The Company represents and warrants that
all Information, including but not limited to the Company's financial
statements, will be complete and correct in all material repects and
will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein
not misleading. The Company recognizes and confirms that the Placement
Agent: (i) will use and rely primarily on the Information and on
information available from generally recognized public sources in
performing the services contemplated by this letter without having
independently verified the same; (ii) is authorized as the Company's
financial advisor and placement agent to transmit to any prospective
investor a copy or copies, forms of purchase agreements and any other
legal documentation supplied to the Placement Agent for transmission to
any prospective investor by or on behalf of the Company or by any of
the Company's officers, representatives or agents, in connection with
the performance of the Placement Agent's services hereunder or any
transaction contemplated hereby; (iii) does not assume responsibility
for the accuracy or completeness of the Information and such other
information; (iv) will not make an appraisal of any assets of the
Company; and (v) retains the right to continue to perform due diligence
during the course of the engagement. The Placement Agent agrees to keep
the Information confidential and will not make use thereof, except in
connection with services hereunder for the Company, unless; (i)
disclosure is required by law or requested by any government,
regulatory or self-regulatory agency or body in which event the
Placement Agent will provide the Company with reasonable advance notice
of such proposed disclosure; (ii) any Information is or becomes
generally available to the public; or (iii) any Information was or
becomes available to the Placement Agent on a non-confidential basis
from a source other than the Company or any of its representatives.
<PAGE>
2. Compensation. As compensation for services rendered and to be rendered
hereunder by Maxim, the Company agrees to pay Maxim as follows:
a) An amount in cash equal to five and one half percent (5 1/2%)
of the principal amount of any Placement placed and/or
committed by any of the investors listed in Exhibit A hereto,
payable at the time of each closing of the Financing
("Placement Fee").
b) The Company will issue to Maxim warrants to purchase shares of
the Company's Common Stock equal to five and one half percent
(5 1/2%) of the number of common shares ("Shares") issued in
the Placement. Such Warrants will be issued pursuant to a
Warrant Agreement to be signed by Maxim and the Company, which
agreement shall provide, among other things, that the Warrants
shall be exercisable at an exercise price equal to the price
at which the Shares are sold to investors in the Placement,
shall expire seven (7) years from the date of issuance,
include registration rights at the time that all shares issued
in this Placement are registered, and provisions for cashless
exercise, and such other terms as are normal and customary for
Warrants of this type.
c) The Company will reimburse Maxim in a timely manner for all
reasonable expenses relating to the Offering, including road
show expenses, travel, legal, and other related expenses. Any
expenses in excess of $500 shall be subject to prior approval
by the CEO and Company and all reimbursable expenses shall in
no event exceed in the aggregate $1,500. Such reimbursements
shall be made promptly upon submission by Maxim.
d) Notwithstanding any termination of this Agreement pursuant to
the terms hereof or otherwise, if on or before the twelve
month anniversary of the final closing of the Placement, the
Company enters into a definitive commitment relating to an
Placement (or any portion thereof), capital raise, or
consummates an Placement with any party, or the Company enters
into a definitive commitment relating to an Placement (or any
portion thereof) with any financing source listed in Exhibit A
hereto.
3. Certain Placement Procedures. The Company and the Placement Agent each
represents to the other that it has not taken, and the Company and the
Placement Agent each agrees with the other that it will not take any
action, directly or indirectly, so as to cause the Placement to fail to
be entitled to rely upon the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended (the "Act"). In
effecting the Placement, the Company and the Placement Agent each
agrees to comply in all material respects with applicable provisions of
the Act and any regulations thereunder and any applicable state laws
and requirements. The Company agrees that any representations and
warranties made by it to any investor in the Placement shall be deemed
also to be made to the Placement Agent for its benefit. The Company
agrees that it shall cause any opinion of its counsel delivered to any
investors in the Placement also to be addressed and delivered to the
Placement Agent, or to cause such counsel to deliver to the Placement
Agent a letter authorizing it to rely upon such opinion. Upon
completion of the Placement, all shares placed by the Placement Agent
will be deposited into a Maxim client account for the benefit of each
investor.
<PAGE>
4. Indemnification. The Company agrees to indemnify Maxim and related
persons in accordance with the attached indemnification letter, the
provisions of which are incorporated herein in their entirety.
5. Termination: Survival of Provisions. This Agreement may be terminated
by the Placement Agent or the Company at any time upon thirty (30) days
prior written notice to the other party, provided, however, that: (a)
any termination or completion of Maxim's engagement hereunder shall not
affect the Company's obligation to indemnify Maxim as provided in the
separate letter agreement referred to above and (b) any termination by
the Company of Maxim's engagement hereunder shall not affect the
Company's obligation to pay fees to the extent provided for in Section
2(d) herein; and (c) any termination by Maxim of Maxim's engagement
hereunder shall not affect the Company's obligation to pay fees and
reimburse the expenses accruing prior to such termination to the extent
provided for herein. All such fees and reimbursements due the Placement
Agent, shall be paid to the Placement Agent on or before the
Termination Date (in the event such fees and reimbursements are earned
or owed as of the Termination Date) or upon the closing of the
Placement or any applicable portion thereof (in the event such fees are
due pursuant to the terms of Section 2 hereof).
6. Governing Law; Amendment; Headings. This Agreement and all
controversies arising from and relating to performance under this
agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to such state's
rules concerning conflicts of laws. This Agreement may not be modified
or amended except in writing duly executed by the parties hereto. The
section headings in this Agreement have been inserted as a matter of
convenience of reference and are not part of this Agreement.
7. Nondisclosure of Confidential Information. Maxim and the Company
mutually agree that they will not disclose any confidential information
received from the other party to others except with the written
permission of the other party or as such disclosure may be required by
law. Maxim has been retained under this agreement as an independent
contractor with duties owed solely to the Company. The advice, written
or oral, rendered by Maxim pursuant to this Agreement is intended
solely for the benefit and use of the Company in considering the
matters to which this agreement relates, and the Company agrees that
such advice may not be relied upon by any other person, used for any
other purpose, reproduced, disseminated, or referred to at any time, in
any manner or for any purpose, nor shall any public references to Maxim
be made by the Company, without the prior written consent of Maxim,
which consent shall not be unreasonably withheld.
8. Successors and Assigns. The benefits of this Agreement shall inure to
the parities hereto, their respective successors and assigns and to the
indemnified parties hereunder and their respective successors and
assigns, and the obligations and liabilities assumed in this Agreement
shall be binding upon the parties hereto and their respective
successors and assigns. Notwithstanding anything contained herein to
the contrary, neither the Placement Agent nor the Company shall assign
to an unaffiliated third party any of its obligations hereunder.
9. Press Announcements. The Company agrees that Maxim shall, upon a
successful transaction, have the right to place advertisements in
financial and other newspapers and journals at its own expense
describing its services to the Company hereunder, provided that Maxim
shall submit a copy of any such advertisement to the Company for its
approval by the CEO, such approval not to be unreasonably withheld.
<PAGE>
10. Counterparts. For the convenience of the parties, this Agreement may be
executed in any number of counterparts, each of which shall be, and
shall be deemed to be, an original instrument, but all of which taken
together shall constitute one and the same Agreement.
If the terms of our engagement as set forth in this letter are satisfactory to
you, please sign and date the enclosed copy of this letter and indemnification
form and send back to us. If this agreement is not executed by both parties
within five (5) days from its date, it shall cease to be a valid offer to assist
and represent the Company.
Very truly yours,
Maxim Group, LLC
By: Maxim Group, LLP
Managing Director - Investment Banking
By: /s/ Clifford A. Teller
---------------------------------------
Clifford A. Teller
Director
By: /s/ Anthony J. Sarkis
---------------------------------------
Anthony J. Sarkis
Managing Director
ACCEPTED AND AGREED TO: as of the date hereof: September 16, 2003
CytRx Corporation
By: /s/ Steven A. Kriegsman
-----------------------------
Steven A. Kriegsman
Chief Executive Officer
<PAGE>
Exhibit A
Visana
Weibol Gabor, Head of PM
Societe Babcaire Privee S.A.
C. Pele/Senior Vice President
Interglobe Finance SA
Interglobe Finance SA
PTJD Partners L.P.
Anthony Braun/General Partner
Arthur Rabin
Philip M. Damashek
Lauren Solaner
<PAGE>
____________, 2003
Maxim Group LLC
405 Lexington Avenue
New York, NY 10174
Gentlemen:
This letter will confirm that we have engaged Maxim Group, LLC to advise and
assist us in connection with the matters referred to in our letter agreement
dated September 16, 2003 (the "Engagement Letter"). In consideration of your
agreement to act on our behalf in connection with such matters, we agree to
indemnify and hold harmless you and your affiliates and you and their respective
officers, directors, employees and agents and each other person, if any,
controlling you or any of your affiliates (you and each such other person being
an "Indemnified Person") from and against any losses, claims, damages or
liabilities related to, arising out of or in connection with the engagement (the
"Engagement") under the Engagement Letter, and will reimburse each Indemnified
Person for all expenses (including reasonable fees and expenses of counsel) as
they are incurred in connection with investigating, preparing, pursuing or
defending any action, claim, suit, investigation or proceeding related to,
arising out of or in connection with the Engagement, whether or not pending or
threatened and whether or not any Indemnified Person is a party. We will not,
however, be responsible for any losses, claims, damages or liabilities (or
expenses relating thereto) that are finally judicially determined to have
resulted from the bad faith or gross negligence of any Indemnified Person. We
also agree that no Indemnified Person shall have any liability (whether direct
or indirect, in contract or tort or otherwise) to us for or in connection with
the Engagement except for any such liability for losses, claims, damages or
liabilities incurred by us that are finally judicially determined to have
resulted from the bad faith or gross negligence of such Indemnified Person.
We will not, without your prior written consent, settle, compromise, consent to
the entry of any judgment in or otherwise seek to terminate any action, claim,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not any Indemnified Person is a party thereto) unless such
settlement, compromise, consent or termination includes a release of each
Indemnified Person from any liabilities without payment by such person arising
out of such action, claim, suit or proceeding. No Indemnified Person seeking
indemnification, reimbursement or contribution under this agreement will,
without our prior written consent, settle, compromise, consent to the entry of
any judgment in or otherwise seek to terminate any action, claim, suit,
investigation or proceeding referred to in the preceding paragraph.
If the indemnification provided for in the first paragraph of this agreement is
judicially determined to be unavailable (other than in accordance with the third
sentence of the first paragraph hereof) to an Indemnified Person in respect of
any losses, claims, damages or liabilities referred to herein, then, in lieu of
indemnifying such Indemnified Person hereunder, we shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities (and expense relating thereto) (i) in such
proportion as is appropriate to reflect the relative benefits to you, on the one
hand, and us, on the other hand, of the Engagement or (ii) if the allocation
provided by clause (i) above is not available, in such proportion as is
appropriate to reflect not only the relative benefits referred to in such clause
(i) but also the relative fault of each of you and us, as well as any other
relevant equitable considerations; provided, however, in no event shall your
aggregate contribution to the amount paid or payable exceed the aggregate amount
<PAGE>
of fees actually received by you under the Engagement Letter. For the purposes
of this agreement, the relative benefits to us and you of the Engagement shall
be deemed to be in the same proportion as (a) the total value paid or
contemplated to be paid or received or contemplated to be received by us or our
shareholders, as the case may be, in the transaction or transactions that are
the subject of the Engagement, whether or not any such transaction is
consummated, bears to (b) the fees paid to you in connection with the
Transaction.
The provisions of this agreement shall apply to the Engagement and any
modification thereof and shall remain in full force and effect regardless of any
termination or the completion of your services under the Engagement Letter.
This agreement and the Engagement Letter shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed and to be performed in that state.
Very truly yours,
CytRx Corporation
CytRx Corporation
By: /s/ Steven A. Kriegsman
------------------------------
Steven A. Kriegsman
Chief Executive Officer
ACCEPTED AND AGREED TO: as of the date hereof: September 16, 2003
Maxim Group, LLC
By: Maxim Group, LLC
Managing Director - Investment Banking
By: /s/ Clifford A. Teller
----------------------------------------
Clifford A. Teller
Director
By: /s/ Anthony J. Sarkis
----------------------------------------
Anthony J. Sarkis
Managing Director