[LOGO]
J.P. TURNER & COMPANY, L.L.C.
INVESTMENT BANKING DIVISION
September 13, 2004
Steve Kriegsman
President and Chairman
CytRx Corporation
11726 San Vicente Blvd.
Los Angeles, CA 90049
Phone: (310) 826-5658
RE: INVESTMENT BANKING AGREEMENT WITH J. P. TURNER & COMPANY, LLC
Dear Mr. Kriegsman,
This letter (the "AGREEMENT") shall confirm the engagement of J.P.
Turner & Company, LLC ("TURNER") by CytRx Corporation [NasdaqSC: CYTR] (the
"COMPANY") for purposes of providing, on a non-exclusive basis, investor
awareness and business advisory services as set forth below in consideration for
the compensation described hereinafter. The Agreement shall be effective as of
the date set forth above.
The Company agrees to provide Turner such information, historical
financial data, projections, proformas, business plans, due diligence
documentation, and other information (collectively the "INFORMATION") in the
possession of the Company or its agents that Turner may reasonably request or
require to perform the Services (as hereinafter defined) set forth herein. The
Information provided by the Company to Turner shall be true, complete, accurate
and current in all respects and shall not set forth any untrue statements nor
omit any fact required or necessary to make the Information provided not
misleading. The Company acknowledges that Turner may rely on the accuracy and
completeness of all Information provided by the Company without independent
verification. The Company authorizes Turner to use such Information in
connection with its performance of the Services. Turner shall use its
commercially reasonable best efforts to preserve the confidentiality of
Information expressly designated as confidential by the Company.
Turner will use its best efforts to furnish ongoing investor awareness
and business advisory services (the "SERVICES") as the Company may from time to
time reasonably request. The Services may include without limitation the
following: preparation and assistance with investor presentations; introduction
to capital conferences; the identification and evaluation of financing
transactions; and introductions to broker dealers, research analysts, and
investment companies that Turner believes to be in the best interest of the
Company.
The term of this Agreement shall be 12 months from the execution date of
this Agreement (the "TERM"). In the event that the Company desires to terminate
this Agreement prior to the expiration date, it shall provide Turner with at
least thirty (30) days prior written notice of its intention to terminate this
CytRx Corporation
Investment Banking Agreement
09/13/04
Page 2 of 6
Agreement and this Agreement shall so terminate following the expiration of this
thirty (30) day period (the "TERMINATION DATE"), without any further
responsibility for either party; provided, however, that Turner shall be
entitled to receive all vested Warrants (as set forth below), and un-reimbursed
expenses, if any, outstanding as of the Termination Date.
In consideration for the services described herein, the Company shall
issue and deliver to Turner a non-refundable common stock purchase warrant (the
"INVESTMENT BANKING WARRANT") for the purchase of six hundred thousand (600,000)
shares of the Company's common stock. The Investment Banking Warrant shall have
an exercise price equal to the average closing price of the Company's common
stock for the twenty trading days up to and including September 9, 2004, and
upon issuance, shall be fully paid, non-assessable, and free of any restrictions
on transfer, but for those restrictions that are the result of state or federal
securities law. The Investment Banking Warrant shall immediately and completely
vest in favor of Turner, and shall become immediately exercisable, in the event
of the sale of the Company (or substantially all of the assets thereof) or the
acquisition (or merger) transaction of the Company by or into another entity.
The Warrant shall be issued to Turner in the form of a warrant agreement (the
"WARRANT AGREEMENT"), which shall be in form and content satisfactory to Turner
and its counsel.
The Warrant Agreement shall provide for, among other provisions, the above
terms and the following:
(i) Turner may exercise the Warrant at any time after signing the
Warrant Agreement. The Warrant shall expire three (3) years from
the date that the Warrant Agreement is issued.
(ii) anti-dilution provisions for stock dividends and splits. Upon a
merger or sale of substantially all of the Company's assets, the
Warrant will dilute in direct proportion with majority
shareholders.
(iii) in lieu of any cash payment required by Turner in connection
with the exercise of the Warrant, the holder(s) of the Warrant
shall have the right at any time and from time to time, to
exercise the Warrant in full or in part by surrendering the
Warrant Agreement as payment of the aggregated Strike Price
("Cashless Exercise").
(iv) the Company shall reserve, and at all times have available, a
sufficient number of shares of its common stock to be issued
upon the exercise of the Warrant. Furthermore, the Company shall
accept, and shall so instruct its transfer agent to accept, an
appropriate Rule 144 opinion letter from any qualified
securities attorney (not just an opinion from the Company's
counsel) representing Turner or any of its employees or agents
that are holders of the Warrant.
(v) the Company shall grant unlimited "piggy back" registration
rights, at the Company's expense, to include the shares of the
Underlying Common Stock in any registration statement filed by
the Company under the Securities Act of 1933 relating to an
underwriting of the sale of shares of common stock or
CytRx Corporation
Investment Banking Agreement
09/13/04
Page 3 of 6
other security of the Company.
The Investment Banking Warrant shall be assigned to J.P. TURNER PARTNERS, LP and
forwarded to the following address:
J.P. Turner Partners, LP
Attention: Mr. Patrick J. Power
3060 Peachtree Road, 11th Floor
Atlanta, GA 30305
Phone: 404-479-8300
Fax: 888-704-7512
The Company shall use its best efforts to supply to Turner, on a timely
basis, with logos, trademarks, slogans, and similar designs of itself and all
subsidiaries and hereby authorizes Turner in perpetuity, to use such logos, etc.
in "Tombstones" that reflect Turner's role in the transaction pursuant to this
Agreement. This provision shall survive the expiration or termination of this
Agreement.
The Company represents and warrants that it has provided Turner access
to all Information available to the Company concerning its condition, financial
and otherwise, its management, its business, and its prospects (the "DISCLOSURE
DOCUMENTS"). The Company represents that it will continue to provide Turner with
any Information or documentation necessary to verify and update the accuracy of
the Information contained in the Disclosure Documents and will promptly notify
Turner in writing upon the filing of any registration statement or other
periodic reporting documents filed pursuant to the rules and regulations of the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended.
The Company recognizes that Turner now renders and may continue to render
financial consulting, management, investment banking and other services to other
companies that may or may not conduct business and activities similar to those
of the Company. Turner shall be free to render such advice and other services
and the Company hereby consents thereto. Turner shall not be required to devote
its full time and attention to the performance of its duties under this
Agreement, but shall devote only so much of its time and attention as it deems
reasonable or necessary to fulfill its obligation hereunder.
During the Term of this Agreement the Company covenants, promises and
agrees that:
(a) Company shall immediately notify Turner if it is
contacted by NASDAQ for failing to maintain certain
listing requirements or any other reason.
(b) Company shall furnish Turner with copies of its annual,
quarterly and proxy filings with the SEC, within thirty
(30) days of the Company's filing thereof.
(c) Company shall furnish Turner all press releases and any
copies of any communication to the general public and
its shareholders.
CytRx Corporation
Investment Banking Agreement
09/13/04
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(d) Company shall immediately notify Turner if it is the
subject of any investigation or material litigation.
(e) At least three (3) business days prior to the
dissemination of any public announcement regarding this
Agreement, including the fact of its existence, the
Company shall submit to Turner, for its review and
comment, the proposed public announcement. Turner shall
thereafter have three (3) business days within which to
submit its proposed amendments to the public
announcement for inclusion therein. The proposed
amendments shall be incorporated in the final version to
be disseminated by the Company, unless, in the
reasonable judgment of counsel to the Company, such
amendments should not be incorporated.
This Agreement shall be governed by and construed under the laws of the
State of Georgia without regard to principals of conflicts of laws provisions.
In the event of any dispute between the Company and Turner arising under or
pursuant to the terms of this Agreement, or any matters arising under the terms
of this Agreement, the same shall be settled only by arbitration through NASD
Dispute Resolution in Fulton County, City of Atlanta, State of Georgia, in
accordance with the Code of Arbitration Procedure published by NASD Dispute
Resolution. The determination of the arbitrators shall be final and binding upon
the Company and Turner and may be enforced in any court of appropriate
jurisdiction. This Agreement shall be construed by and governed exclusively
under the laws of the State of Georgia, without regard to its conflicts of law
provisions. The venue shall be in Fulton County, GA.
The Company shall reimburse Turner for all reasonable out of pocket
expenses including without limitation acceptable travel and lodging, printing,
legal, and mailing cost that Turner may incur in performance of the Services
under this Agreement. Turner shall submit expense statements to the Company from
time to time and the Company shall reimburse such expenses promptly thereafter.
The Company also agrees to prepay all roadshow expenses which may include, but
are not limited to; travel, lodging, catering, presentations, audio and video
equipment, dinners and/or lunches.
The Company shall indemnify and hold harmless Turner and its directors,
officers, employees, agents, attorneys and assigns from and against any and all
losses, claims, costs, damages or liabilities (including the reasonable fees and
expenses of legal counsel) to which any of them may become subject in connection
with the investigation, defense or settlement of any actions or claims: (i)
caused by the Company's misstatement or alleged misstatement of a material fact
or omission or alleged omission of a material fact required to make any
statement not misleading; (ii) arising in any manner out of or in connection
with the rendering of Services by Turner hereunder; or (iii) otherwise in
connection with this Agreement.
The Company acknowledges that Turner has made no guarantees that its
performance hereunder will achieve any particular result with respect to the
Company's business, stock price, trading volume, market capitalization or
otherwise.
All notices hereunder shall be in writing and shall be validly given,
made or served if in writing and delivered in person or when received by
facsimile transmission, or five days after being sent first
CytRx Corporation
Investment Banking Agreement
09/13/04
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class certified or registered mail, postage prepaid, or one day after being sent
by nationally recognized overnight carrier to the party for whom intended at the
address set forth after each parties signatures.
If any clause or provision of this Agreement is illegal, invalid or
unenforceable under applicable present or future Laws effective during the Term,
the remainder of this Agreement shall not be affected. In lieu of each clause or
provision of this Agreement that is illegal, invalid or unenforceable, there
shall be added as a part of this Agreement a clause or provision as nearly
identical as may be possible and as may be legal, valid and enforceable. In the
event any clause or provision of this Agreement is illegal, invalid or
unenforceable as aforesaid and the effect of such illegality, invalidity or
unenforceability is that either party no longer has the substantial benefit of
its bargain under this Agreement and a clause or provision as nearly identical
as may be possible cannot be added, then, in such event, such party may in its
discretion cancel and terminate this entire Agreement provided such party
exercises such right within a reasonable time after such occurrence.
The parties agree and acknowledge that they have jointly participated in
the negotiation and drafting of this Agreement and that this Agreement has been
fully reviewed and negotiated by the parties and their respective counsel. In
the event of an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumptions or burdens of proof shall arise favoring any party by virtue of the
authorship of any of the provisions of this Agreement.
This Agreement may not be modified, amended, supplemented, canceled or
discharged, except by written instrument executed by all parties. No failure to
exercise, and no delay in exercising, any right, power or privilege under this
Agreement shall operate as a waiver, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude the exercise of any other
right, power or privilege. No waiver of any breach of any provision shall be
deemed to be a waiver of any preceding or succeeding breach of the same or any
other provision, nor shall any waiver be implied from any course of dealing
between the parties. To be effective, all waivers must be in writing, signed by
both parties. The rights and remedies of the parties under this Agreement are in
addition to all other rights and remedies, at law or equity, that they may have
against each other except as may be specifically limited herein.
This Agreement contains the entire understanding of the parties in
respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with respect to
such subject matter. The parties agree that prior drafts of this Agreement shall
not be deemed to provide any evidence as to the meaning of any provision hereof
or the intent of the parties with respect thereto. Any amendment or modification
to the Agreement shall be by written instrument only and must be executed by a
representative, with complete authority, from the Company and Turner.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one and
the same instrument. A telecopy signature of any party shall be considered to
have the same binding legal effect as an original signature.
In the event that any dispute among the parties to this Agreement should
result in litigation, the substantially prevailing party in such dispute shall
be entitled to recover from the losing party all fees, costs and expenses of
enforcing any right of such substantially prevailing party under or with respect
to this Agreement, including without limitation, such reasonable fees and
expenses of attorneys and
CytRx Corporation
Investment Banking Agreement
09/13/04
Page 6 of 6
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals and collection.
If the foregoing is in accordance with your understanding, kindly
confirm your acceptance and agreement by signing and returning the enclosed
duplicate of this Agreement that will thereupon constitute an agreement between
us.
Yours very truly,
/s/ PATRICK J. POWER
Patrick J. Power
Managing Director, Investment Banking
J. P. Turner & Company, LLC
Accepted and approved this 13th day of September, 2004.
By: /s/ STEVEN KRIEGSMAN
--------------------
Name: MR. STEVE KRIEGSMAN
Title: PRESIDENT AND CHAIRMAN
Company: CYTRX CORPORATION
Address: 11726 SAN VINCENTE BLVD.
LOS ANGELES, CA 90049
Phone: (310) 826-5658