T
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the fiscal year ended December 31, 2016
|
|
or
|
|
£
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES
EXCHANGE ACT OF 1934
|
For the transition period from
to
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Delaware
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58-1642740
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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11726 San Vicente Blvd, Suite 650,
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|
Los Angeles, California
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90049
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of exchange on which registered
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Common Stock, $0.001 par value per share
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The NASDAQ Capital Market
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Series A Junior Participating Preferred Stock Purchase Rights
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The NASDAQ Capital Market
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Large accelerated filer
£
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Accelerated filer
R
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Non-accelerated filer
£
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Smaller reporting company
£
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(Do not check if a smaller reporting company)
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Page
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|
NOTE ON FORWARD-LOOKING STATEMENTS
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1 |
PART I
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|
Item 1. BUSINESS
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2 |
Item 1A. RISK FACTORS
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11 |
Item 1B. UNRESOLVED STAFF COMMENTS
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27 |
Item 2. PROPERTIES
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27 |
Item 3. LEGAL PROCEEDINGS
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28 |
Item 4. MINE SAFETY DISCLOSURES
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29 |
PART II
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|
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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30 |
Item 6. SELECTED FINANCIAL DATA
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31 |
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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33 |
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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41 |
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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41 |
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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41 |
Item 9A. CONTROLS AND PROCEDURES
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41 |
Item 9B. OTHER INFORMATION
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43 |
PART III
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|
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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44 |
Item 11. EXECUTIVE COMPENSATION
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47 |
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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65 |
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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66 |
Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
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67 |
PART IV
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Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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68 |
Item 16. SUMMARY
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71 |
SIGNATURES
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72 |
Technology
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Product candidate
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Indication(s)
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Stage of Development
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Doxorubicin conjugate
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Aldoxorubicin
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Soft Tissue Sarcoma
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Pivotal Global Phase 3 ongoing
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Small-Cell Lung Cancer
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Global Phase 2b ongoing
|
||
Glioblastoma Multiforme
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Phase 2 completed
|
||
Kaposi's Sarcoma
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Phase 2 completed
|
||
Combination with ifosfamide
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Phase 1b ongoing
|
||
Combination with gemcitabine
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Phase 1b completed
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||
LADR
TM
for high potency albumin-binding drug conjugates
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To be announced
|
To be announced
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Pre-clinical
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·
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after administration, aldoxorubicin rapidly forms a covalent bond to circulating albumin through an acid-sensitive linker;
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·
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circulating albumin preferentially accumulates in tumors, bypassing concentration in other non-tumor sites, including the heart, liver and gastrointestinal tract due to a mechanism called "Enhanced Permeability and Retention by Solid Tumors";
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·
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once albumin-bound aldoxorubicin is taken up by the tumor, the acidic environment within the tumor and in the cancer cells themselves causes cleavage of the acid-sensitive linker; and
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·
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free doxorubicin is then released in the tumor.
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·
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commercially reasonable royalties based on a percentage of net sales (as defined in the agreement);
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·
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a percentage of any non-royalty sub-licensing income (as defined in the agreement); and
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·
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milestones of $1 million for each additional final marketing approval that we obtain.
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· |
fund our clinical trials and pursue regulatory approval of aldoxorubicin and fund development of product candidates based on our LADR™ technology;
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· |
finance our general and administrative expenses;
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· |
acquire or license new technologies;
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· |
prepare, file, prosecute, maintain, enforce and defend our patent and other proprietary rights; and
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· |
develop and implement sales, marketing and distribution capabilities to successfully commercialize any product for which we obtain marketing approval and choose to market ourselves.
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· |
difficulty in enrolling patients in conformity with required protocols or projected timelines;
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· |
requirements for clinical trial design imposed by the FDA;
|
· |
unexpected adverse reactions by patients in trials;
|
· |
difficulty in obtaining clinical supplies of the product;
|
· |
changes in or our inability to comply with FDA or foreign governmental product testing, manufacturing or marketing requirements;
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· |
regulatory inspections of clinical trials or manufacturing facilities, which may, among other things, require us or our manufacturers or licensees to undertake corrective action or suspend or terminate the affected clinical trials if investigators find them not to be in compliance with applicable regulatory requirements;
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· |
inability to generate statistically significant data confirming the safety and efficacy of the product being tested;
|
· |
modification of the product during testing; and
|
· |
reallocation of our limited financial and other resources to other clinical programs.
|
· |
restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;
|
· |
fines, warning letters or holds on clinical trials;
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· |
refusal by the FDA to approve pending applications or supplements to approved applications filed by us or our strategic partners, or suspension or revocation of product license approvals;
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· |
product seizure or detention, or refusal to permit the import or export of products; and
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· |
injunctions or the imposition of civil or criminal penalties.
|
· |
obtaining regulatory approval to commence a trial;
|
· |
reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;
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· |
obtaining institutional review board approval at each clinical trial site;
|
· |
recruiting suitable patients to participate in a trial;
|
· |
having patients complete a trial or return for post-treatment follow-up;
|
· |
clinical trial sites deviating from trial protocol or dropping out of a trial;
|
· |
adding new clinical trial sites; or
|
· |
manufacturing sufficient quantities of product candidate for use in clinical trials.
|
· |
If our product candidates receive marketing approval, the FDA could require us to adopt a Risk Evaluation and Mitigation Strategy to ensure that the benefits of any approved product candidate outweigh its risks;
|
· |
regulatory authorities may withdraw approvals of such product;
|
· |
regulatory authorities may require additional warnings on the label;
|
· |
we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
|
· |
we could be sued and held liable for harm caused to patients; and
|
· |
our reputation may suffer.
|
· |
we may become involved in time-consuming and expensive litigation, even if the claim is without merit;
|
· |
we may become liable for substantial damages for past infringement if a court decides that our technology infringes a competitor's patent;
|
· |
a court may prohibit us from selling or licensing our product without a license from the patent holder, which may not be available on commercially acceptable terms, if at all, or which may require us to pay substantial royalties or grant cross licenses to our patents; and
|
· |
we may have to redesign our product candidates or technology so that it does not infringe patent rights of others, which may not be possible or commercially feasible.
|
· |
they are "incidental" to a physician's services;
|
· |
they are "reasonable and necessary" for the diagnosis or treatment of the illness or injury for which they are administered according to accepted standard of medical practice;
|
· |
they are not excluded as immunizations; and
|
· |
they have been approved by the FDA.
|
· |
the federal Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;
|
· |
the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government, and which may apply to entities that provide coding and billing advice to customers;
|
· |
federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
|
· |
the federal physician sunshine requirements under the Affordable Care Act, which requires manufacturers of drugs, devices, biologics, and medical supplies to report annually to the Centers for Medicare & Medicaid Services information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members;
|
· |
the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; and
|
· |
state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
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· |
succeed in developing competitive products sooner than us or our strategic partners or licensees;
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· |
obtain FDA or foreign governmental approvals for their products before we can obtain approval of any of our products;
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· |
obtain patents that block or otherwise inhibit the development and commercialization of our product candidate candidates;
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· |
develop products that are safer or more effective than our products;
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· |
devote greater resources than us to marketing or selling products;
|
· |
introduce or adapt more quickly than us to new technologies and other scientific advances;
|
· |
introduce products that render our products obsolete;
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· |
withstand price competition more successfully than us or our strategic partners or licensees;
|
· |
negotiate third-party strategic alliances or licensing arrangements more effectively than us; and
|
· |
take better advantage than us of other opportunities.
|
· |
commercially reasonable royalties based on a percentage of net sales (as defined in the agreement);
|
· |
a percentage of any non-royalty sub-licensing income (as defined in the agreement); and
|
· |
milestones of $1,000,000 for each additional final marketing approval that we might obtain.
|
· |
foreign regulatory requirements that could restrict or limit our ability to conduct our clinical trials;
|
· |
administrative burdens of conducting clinical trials under multiple foreign regulatory schema;
|
· |
foreign exchange fluctuations;
|
· |
diminished protection of intellectual property in some countries; and
|
· |
possible nationalization and expropriation.
|
· |
In addition, there may be changes to our business and political position if there is instability, disruption or destruction in a significant geographic region, regardless of cause, including war, terrorism, riot, civil insurrection or social unrest, and natural or man-made disasters, including famine, flood, fire, earthquake, storm or disease, which could seriously harm the development of our current operating strategy.
|
· |
difficulties, complications, delays and other unanticipated factors in connection with the development of new drugs;
|
· |
competition from companies that have substantially greater assets and financial resources than we have;
|
· |
our ability to anticipate and adapt to a competitive market and rapid technological developments;
|
· |
our need to rely on multiple levels of complex financing agreements with outside funding due to the length of drug development cycles and governmental approved protocols associated with the pharmaceutical industry; and
|
· |
our dependence upon key scientific personnel, including Felix Kratz, Ph.D., our Vice President of Drug Discovery.
|
· |
announcements of interim or final results of our clinical trials or our drug discovery activities;
|
· |
announcements of regulatory developments or technological innovations by us or our competitors;
|
· |
changes in our relationship with our licensors and other strategic partners;
|
· |
our quarterly operating results;
|
· |
litigation involving or affecting us;
|
· |
shortfalls in our actual financial results compared to our guidance or the forecasts of stock market analysts;
|
· |
developments in patent or other technology ownership rights;
|
· |
acquisitions or strategic alliances by us or our competitors;
|
· |
public concern regarding the safety of our products; and
|
· |
government regulation of drug pricing.
|
High
|
Low
|
|||||||
Fiscal Year 2016:
|
||||||||
Fourth Quarter
|
$
|
0.74
|
$
|
0.36
|
||||
Third Quarter
|
$
|
2.67
|
$
|
0.55
|
||||
Second Quarter
|
$
|
3.66
|
$
|
2.13
|
||||
First Quarter
|
$
|
3.08
|
$
|
1.55
|
||||
Fiscal Year 2015:
|
||||||||
Fourth Quarter
|
$
|
3.41
|
$
|
2.32
|
||||
Third Quarter
|
$
|
4.20
|
$
|
1.98
|
||||
Second Quarter
|
$
|
5.42
|
$
|
3.30
|
||||
First Quarter
|
$
|
3.88
|
$
|
2.51
|
||||
Plan Category
|
(a)
Number of Securities to be Issued Upon Exercise of Outstanding Options,
Warrants and Rights
|
(b)
Number of Issued Shares of
Restricted Stock
|
(c)
Weighted-Average Exercise Price of Outstanding Options, Restricted Stock,
Warrants and Rights
|
Number of Securities Remaining Available for issuance Under Equity Compensation Plans (Excluding Securities Reflected in
Columns (a) and (b)
|
||||||||||||
Equity compensation plans approved by our security holders:
|
||||||||||||||||
2000 Long-Term Incentive Plan
|
487,690
|
—
|
$
|
6.89
|
—
|
|||||||||||
2008 Stock Incentive Plan
|
16,992,080
|
2,325,581
|
2.14
|
12,112,719
|
||||||||||||
Equity compensation plans not approved by our security holders:
|
||||||||||||||||
Outstanding warrants (1)
|
32,502,790
|
—
|
0.68
|
—
|
||||||||||||
Total
|
49,982,560
|
2,325,581
|
$
|
1.23
|
12,112,719
|
December 31,
|
||||||||||||||||||||
2012
|
2013
|
2014
|
2015
|
2016
|
||||||||||||||||
CytRx Corporation
|
95.41
|
319.90
|
139.80
|
135.20
|
18.88
|
|||||||||||||||
The NASDAQ Stock Market Index
|
117.45
|
164.57
|
188.84
|
201.98
|
219.89
|
|||||||||||||||
The NASDAQ Pharmaceutical Index
|
133.05
|
219.35
|
286.31
|
302.95
|
236.32
|
2016
|
2015
|
2014
|
2013
|
2012
|
||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Revenue
|
||||||||||||||||||||
Licensing revenue
|
$
|
200,000
|
$
|
100,000
|
$
|
100,000
|
$
|
300,000
|
$
|
100,000
|
||||||||||
Total revenue
|
$
|
200,000
|
$
|
100,000
|
$
|
100,000
|
$
|
300,000
|
$
|
100,000
|
||||||||||
Net loss
|
$
|
(50,771,000
|
)
|
$
|
(58,587,000
|
)
|
$
|
(30,118,000
|
)
|
$
|
(47,485,000
|
)
|
$
|
(17,964,000
|
)
|
|||||
Basic and diluted loss per share applicable to common stock
|
$
|
(0.63
|
)
|
$
|
(0.97
|
)
|
$
|
(0.55
|
)
|
$
|
(1.44
|
)
|
$
|
(0.78
|
)
|
|||||
`
|
||||||||||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Cash, cash equivalents and short-term investments
|
$
|
56,959,000
|
$
|
57,297,000
|
$
|
77,840,000
|
$
|
38,568,000
|
$
|
38,344,000
|
||||||||||
Total assets
|
$
|
62,770,000
|
$
|
67,024,000
|
$
|
85,693,000
|
$
|
41,500,000
|
$
|
40,232,000
|
||||||||||
Total stockholders' equity
|
$
|
24,777,000
|
$
|
44,079,000
|
$
|
67,911,000
|
$
|
10,661,000
|
$
|
30,166,000
|
||||||||||
Payments due by periods as of December 31, 2016
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Year 1
|
Years 2 and 3
|
Years 4 and 5
|
Years 6 and beyond
|
|||||||||||||||
Operating lease obligations (1)
|
$
|
1,107
|
$
|
397
|
$
|
651
|
$
|
59
|
$
|
—
|
||||||||||
Employment obligations (2)
|
8,110
|
3,257
|
2,739
|
2,114
|
—
|
|||||||||||||||
Term loan obligation (3)
|
30,706
|
8,037
|
19,290
|
3,379
|
—
|
|||||||||||||||
R&D contract obligations (4)
|
19,409
|
19,325
|
84
|
—
|
—
|
|||||||||||||||
Total contractual obligations
|
$
|
59,332
|
$
|
31,016
|
$
|
22,764
|
$
|
5,552
|
$
|
—
|
(1) |
Operating leases are primarily our facility lease obligations, as well as equipment and software lease obligations with third party vendors.
|
(4) |
Research and development obligations relate primarily to our clinical trials. All of these obligations are cancelable upon notice without liability to us.
|
Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
(In thousands)
|
||||||||||||
Research and development expenses
|
$
|
34,107
|
$
|
41,805
|
$
|
34,203
|
||||||
Non-cash research and development expenses
|
—
|
—
|
1,543
|
|||||||||
Employee stock and stock option expense
|
1,823
|
1,591
|
932
|
|||||||||
Total
|
$
|
35,930
|
$
|
43,396
|
$
|
36,678
|
Year Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
(In thousands)
|
||||||||||||
General and administrative expenses
|
$
|
11,078
|
$
|
13,871
|
$
|
8,724
|
||||||
Stock, stock option and warrant expenses to non-employees and consultants
|
236
|
226
|
1,737
|
|||||||||
Employee stock and stock option expense
|
4,677
|
5,568
|
2,384
|
|||||||||
Total
|
$
|
15,991
|
$
|
19,665
|
$
|
12,845
|
Name
|
Age
|
Class of
Director (1)
|
Position
|
||||||
Steven A. Kriegsman
|
75
|
II
|
Director, Chairman of the Board and Chief Executive Officer
|
||||||
Louis Ignarro, Ph.D.
|
75
|
I |
|
Lead Director (2) (3) (4) (5)
|
|||||
Eric Selter
|
59
|
III
|
Director (2)
|
||||||
Anita J. Chawla, Ph.D.
|
58
|
II
|
Director (3) (5)
|
||||||
Earl Brien. M.D.
|
56
|
III
|
Director (2) (3) (4)
|
||||||
John Y. Caloz
|
65
|
—
|
Chief Financial Officer
|
||||||
Daniel J. Levitt, M.D., Ph.D.
|
69
|
—
|
Chief Operating Officer and Chief Medical Officer
|
||||||
Scott Wieland, Ph.D.
|
57
|
—
|
Senior Vice President-Drug Development
|
(1) |
Our Class I director serves until the 2019 annual meeting of stockholders, our Class II directors serve until the 2017 annual meeting of stockholders, and our Class III directors serve until the 2018 annual meeting of stockholders.
|
(2) |
Members of our Audit Committee. Mr. Selter is Chairman of the Committee.
|
(3) |
Members of our Nominating and Corporate Governance Committee. Dr. Ignarro is Chairman of the Committee.
|
(4) |
Members of our Compensation Committee. Dr. Ignarro is Chairman of the Committee.
|
(5) |
Members of our Strategy Committee. Ms. Chawla is Chairwoman of the Committee
|
· |
Obtain results in the aldoxorubicin Phase 3 STS pivotal clinical trial;
|
· |
Complete enrollment in the Phase 2 SCLC clinical trial;
|
· |
Complete and report data from two Phase 1b combination studies;
|
· |
Publish results of the Phase 2 Kaposi's sarcoma study;
|
· |
Identify an in vivo proof of concept for one new drug candidate, focusing on high potency compounds in the pre-clinical laboratory in Freiburg, Germany;
|
· |
Completion of drug substance, drug product and diluent Registration batches for aldoxorubicin; and
|
· |
Raise additional capital.
|
· |
base salary;
|
· |
annual bonuses; and
|
· |
equity incentive compensation.
|
· |
the negotiated terms of each executive's employment agreement, if any;
|
· |
each executive's individual performance;
|
· |
an internal review of the executive's compensation, both individually and relative to other named executive officers; and
|
· |
to a lesser extent, base salaries paid by comparable companies.
|
· |
links the creation of stockholder value with executive compensation;
|
· |
provides increased equity ownership by executives;
|
· |
functions as a retention tool, because of the vesting features included in all options granted by the Compensation Committee; and
|
· |
helps us to maintain competitive levels of total compensation.
|
Louis Ignarro, Ph.D.
Chairman
|
Earl Brien, M.D.
Director
|
Name and Principal Position
|
Year
|
Salary
($)(1)
|
Bonus
($) (2)
|
Option
Awards
($) (3)
|
All Other
Compensation ($)(4)
|
Total
($)
|
||||||||||||||||
Steven A. Kriegsman
|
||||||||||||||||||||||
Chief Executive Officer
|
2016
|
850,000
|
150,000
|
1,388,750
|
13,700
|
2,402,450
|
||||||||||||||||
2015
|
850,000
|
150,000
|
1,593,000
|
13,700
|
2,606,700
|
|||||||||||||||||
2014
|
825,000
|
450,000
|
903,000
|
13,700
|
2,191,700
|
|||||||||||||||||
John Y. Caloz
|
||||||||||||||||||||||
Chief Financial Officer and Treasurer
|
2016
|
400,000
|
135,000
|
108,850
|
—
|
643,850
|
||||||||||||||||
2015
|
375,000
|
135,000
|
477,900
|
—
|
987,900
|
|||||||||||||||||
2014
|
350,000
|
100,000
|
301,000
|
—
|
751,000
|
|||||||||||||||||
Daniel Levitt, M.D., Ph.D.
|
||||||||||||||||||||||
Chief Operating Officer and Chief Medical Officer
|
2016
|
625,000
|
512,500
|
124,400
|
—
|
1,261,900
|
||||||||||||||||
|
2015
|
625,000
|
150,000
|
796,500
|
—
|
1,371,500
|
||||||||||||||||
2014
|
525,000
|
300,000
|
602,000
|
—
|
1,427,000
|
|||||||||||||||||
Scott Wieland, Ph.D.,
|
||||||||||||||||||||||
Senior Vice President –
|
2016
|
400,000
|
50,000
|
46,650
|
—
|
496,650
|
||||||||||||||||
Drug Development
|
2015
|
400,000
|
75,000
|
159,300
|
—
|
634,300
|
||||||||||||||||
2014
|
350,000
|
300,000
|
301,000
|
—
|
951,000
|
|||||||||||||||||
Benjamin S. Levin
|
||||||||||||||||||||||
General Counsel, Senior Vice-President and Secretary
|
||||||||||||||||||||||
2016
|
235,000
|
—
|
—
|
—
|
235,000
|
|||||||||||||||||
2015
|
365,000
|
135,000
|
477,900
|
—
|
977,900
|
|||||||||||||||||
2014
|
350,000
|
100,000
|
301,000
|
—
|
751,000
|
(1) |
Mr. Levin retired on May 31, 2016. Payments made to him include a Severance payment of $230,000.
|
(2) |
Bonuses to the named executive officers reported above were paid in December of the applicable year, except that in 2016, Dr. Levitt's received a $200,000 retention bonus in January upon entering into of his employment agreement, and in 2015, Dr. Levitt received $75,000 of his annual bonus in June, and Mr. Kriegsman received a retention bonus in connection with the extension of his employment agreement in March 2014.
|
(3) |
The values shown in this column represent the aggregate grant date fair value of equity-based awards granted during the fiscal year, inclusive of Mr. Kriegsman's restricted stock award, in accordance with ASC 718, "
Share Based-Payment."
The fair value of the stock options at the date of grant was estimated using the Black-Scholes option-pricing model, based on the assumptions described in Note 14 of the Notes to Financial Statements included in this Annual Report.
|
(4) |
Represents life insurance premiums.
|
Name
|
Grant Date
|
All Other
Option Awards
(# of CytRx
Shares)
|
Exercise Price of
Option Awards
($/Share)
|
Grant Date
Fair Value of Stock and
Option Awards
($)
|
|||||||||
Steven A. Kriegsman
|
12/15/2016
|
3,575,581(1
|
)(2)
|
$
|
0.43
|
$
|
1,388,750
|
||||||
Chief Executive Officer
|
|||||||||||||
John Y. Caloz
|
12/15/2016
|
350,000(1
|
)
|
$
|
0.43
|
$
|
108,850
|
||||||
Chief Financial Officer and Treasurer
|
|||||||||||||
Daniel Levitt, M.D., Ph.D.
|
12/15/2016
|
400,000(1
|
)
|
$
|
0.43
|
$
|
124,400
|
||||||
Executive Vice President and Chief Medical Officer
|
|||||||||||||
Scott Wieland, Ph.D.
|
12/15/2016
|
150,000(1
|
)
|
$
|
0.43
|
$
|
46,650
|
||||||
Senior Vice President – Drug Development
|
|||||||||||||
Benjamin S. Levin
General Counsel, Senior Vice-President and Secretary
|
—
|
—
|
—
|
—
|
(1)
|
Options vest in 36 equal monthly installments, subject to the named executive officer's remaining in our continuous employ through such dates, except that in the case of each of Mr. Kriegsman and Dr. Levitt, the unvested options will vest, in full, upon termination of his employment by us without "cause", upon FDA approval to market aldoxorubicin, or by reason of his "disability" or by him for "good reason" or upon his death.
|
(2)
|
Includes the award of 2,325,581 restricted shares of our common stock which will vest in three equal annual instalments.
|
· |
designate participants;
|
· |
determine the types of awards to grant to each participant and the number, terms and conditions of any award;
|
· |
establish, adopt or revise any rules and regulations as it may deem necessary or advisable to administer the Plan; and
|
· |
make all other decisions and determinations that may be required under, or as the Compensation Committee deems necessary or advisable to administer, the Plan.
|
Option Awards
|
||||||||||||||||||||
Number of
Securities
Underlying
Unexercised
Options
(#)
|
||||||||||||||||||||
Name
|
Exercisable
|
Unexercisable
|
Option Exercise
Price (2)
($)
|
Option
Expiration Date
|
||||||||||||||||
Steven A. Kriegsman
|
—
|
(1
|
)
|
1,250,000
|
0.43
|
12/14/26
|
||||||||||||||
President and Chief Executive Officer
|
333,333
|
(1
|
)
|
666,667
|
2.44
|
12/14/25
|
||||||||||||||
400,000
|
(1
|
)
|
200,000
|
2.15
|
12/09/24
|
|||||||||||||||
925,000
|
(2
|
)
|
—
|
4.66
|
12/09/2
|
|||||||||||||||
74,176
|
—
|
2.46
|
3/07/23
|
|||||||||||||||||
500,000
|
—
|
1.83
|
12/10/22
|
|||||||||||||||||
142,857
|
—
|
2.17
|
12/11/21
|
|||||||||||||||||
107,143
|
—
|
7.07
|
12/14/20
|
|||||||||||||||||
107,143
|
—
|
7.35
|
12/10/19
|
|||||||||||||||||
42,857
|
—
|
2.59
|
11/21/18
|
|||||||||||||||||
64,286
|
—
|
8.05
|
4/07/18
|
|||||||||||||||||
50,000
|
—
|
8.05
|
4/18/17
|
|||||||||||||||||
John Y. Caloz
|
—
|
(1
|
)
|
350,000
|
0.43
|
12/14/26
|
||||||||||||||
Chief Financial Officer and Treasurer
|
100,000
|
(1
|
)
|
200,000
|
2.44
|
12/14/25
|
||||||||||||||
133,333
|
(1
|
)
|
66,667
|
2.15
|
12/14/24
|
|||||||||||||||
150,000
|
(2
|
)
|
—
|
4.66
|
12/09/23
|
|||||||||||||||
100,000
|
—
|
1.83
|
12/10/22
|
|||||||||||||||||
28,571
|
—
|
2.17
|
12/11/21
|
|||||||||||||||||
7,143
|
—
|
7.07
|
12/14/20
|
|||||||||||||||||
17,857
|
—
|
7.35
|
12/10/19
|
|||||||||||||||||
7,143
|
—
|
2.10
|
01/02/19
|
|||||||||||||||||
7,143
|
—
|
2.59
|
11/21/18
|
|||||||||||||||||
3,571
|
—
|
8.05
|
04/07/18
|
|||||||||||||||||
3,571
|
—
|
8.05
|
12/06/17
|
|||||||||||||||||
10,714
|
—
|
8.05
|
10/26/17
|
|||||||||||||||||
Daniel Levitt, M.D., Ph.D.
|
—
|
(1
|
)
|
400,000
|
0.43
|
12/14/26
|
||||||||||||||
Executive Vice President and Chief
|
166,667
|
(1
|
)
|
333,333
|
2.44
|
12/14/25
|
||||||||||||||
Medical Officer
|
266,667
|
(1
|
)
|
133,333
|
2.15
|
12/14/24
|
||||||||||||||
44,521
|
(3
|
)
|
—
|
n/a
|
n/a
|
|||||||||||||||
500,000
|
—
|
2.39
|
12/09/23
|
|||||||||||||||||
46,751
|
(3
|
)
|
—
|
n/a
|
n/a
|
|||||||||||||||
71,429
|
—
|
2.17
|
12/11/21
|
|||||||||||||||||
35,714
|
—
|
7.07
|
12/14/20
|
|||||||||||||||||
71,429
|
—
|
7.42
|
10/11/19
|
|||||||||||||||||
Scott Wieland, Ph.D.
|
—
|
(1
|
)
|
150,000
|
0.43
|
12/14/26
|
||||||||||||||
Senior Vice President – Drug Development
|
33,333
|
(1
|
)
|
66,667
|
2.44
|
12/14/25
|
||||||||||||||
133,333
|
(1
|
)
|
66,667
|
2.15
|
12/14/24
|
|||||||||||||||
150,000
|
—
|
2.39
|
12/09/23
|
|||||||||||||||||
100,000
|
—
|
1.83
|
12/10/22
|
|||||||||||||||||
28,571
|
—
|
2.17
|
12/11/21
|
|||||||||||||||||
14,286
|
—
|
7.07
|
12/14/20
|
|||||||||||||||||
14,286
|
—
|
7.35
|
12/10/19
|
|||||||||||||||||
4,286
|
—
|
3.99
|
7/01/18
|
|||||||||||||||||
7,143
|
—
|
2.59
|
11/21/18
|
|||||||||||||||||
14,286
|
—
|
8.05
|
4/18/17
|
|||||||||||||||||
3,571
|
—
|
8.05
|
12/06/17
|
|||||||||||||||||
Benjamin S. Levin
|
||||||||||||||||||||
General Counsel, Senior Vice-President and Secretary
|
100,000
|
(1
|
)
|
200,000
|
2.44
|
12/14/25
|
||||||||||||||
133,333
|
(1
|
)
|
66,667
|
2.39
|
12/14/24
|
|||||||||||||||
300,000
|
(1
|
)
|
—
|
4.66
|
12/09/23
|
|||||||||||||||
100,000
|
—
|
1.83
|
12/10/22
|
|||||||||||||||||
35,714
|
—
|
2.17
|
12/11/21
|
|||||||||||||||||
14,286
|
—
|
7.07
|
12/14/20
|
|||||||||||||||||
14,286
|
—
|
7.35
|
12/10/19
|
|||||||||||||||||
14,286
|
—
|
2.59
|
11/21/18
|
|||||||||||||||||
14,286
|
—
|
8.05
|
4/07/18
|
|||||||||||||||||
14,286
|
—
|
8.05
|
4/18/17
|
(1) |
These options vest in 36 equal monthly installments, subject to the named executive officer's remaining in our continuous employ through such dates. All stock options held by Mr. Kriegsman and Dr. Levitt provide for (a) vesting, in full, of the stock options in the event of, and upon, FDA approval to market aldoxorubicin and in the event of the termination of his employment by us without "cause" or due to his "disability," his resignation for "good reason" or his death and (b) the extended exercisability for their full term of all vested options in the event of the termination of his employment other than a termination by us with "cause" or his resignation without "good reason."
|
Termination w/o Cause or, for Mr. Kriegsman and Dr. Levitt, for Good Reason
|
|||||||||||||||||||||
Name
|
Benefit
|
Before Change in
Control ($)
|
After Change in
Control ($)
|
Death ($)
|
Disability ($)
|
Change in
Control ($)
|
|||||||||||||||
Steven A. Kriegsman
|
Severance Payment(4)
|
4,250,000
|
4,250,000
|
1,700,000
|
1,700,000
|
—
|
|||||||||||||||
Chief Executive Officer
|
Stock Options (1)
|
1,811,000
|
1,811,000
|
1,811,000
|
1,811,000
|
1,811,000
|
|||||||||||||||
|
Health Insurance (2)
|
84,400
|
126,500
|
84,400
|
84,400
|
—
|
|||||||||||||||
Life Insurance (2)
|
27,400
|
41,100
|
—
|
27,400
|
—
|
||||||||||||||||
Bonus
|
750,000
|
750,000
|
300,000
|
300,000
|
—
|
||||||||||||||||
Tax Gross Up (3)
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||
John Y. Caloz
|
Severance Payment(4)
|
200,000
|
400,000
|
—
|
—
|
—
|
|||||||||||||||
Chief Financial Officer
|
Stock Options (1)
|
—
|
554,000
|
554,000
|
554,000
|
554,000
|
|||||||||||||||
Health Insurance
|
—
|
—
|
23,300
|
23,300
|
—
|
||||||||||||||||
Daniel Levitt, M.D., Ph.D.
|
Severance Payment(4)
|
625,000
|
1,250,000
|
—
|
—
|
—
|
|||||||||||||||
Executive Vice President and Chief Medical Officer
|
Stock Options (1)
|
—
|
951,300
|
—
|
—
|
951,300
|
|||||||||||||||
|
Health Insurance
|
3,700
|
7,500
|
—
|
—
|
—
|
|||||||||||||||
Scott Wieland, Ph.D.
|
Severance Payment(4)
|
200,000
|
400,000
|
—
|
—
|
—
|
|||||||||||||||
Senior Vice President – Drug Development
|
Stock Options (1)
|
—
|
266,000
|
—
|
—
|
266,000
|
|||||||||||||||
|
(1) |
Represents the aggregate value of stock options that vest and become exercisable immediately upon each of the triggering events listed as if such events took place on December 31, 2016, determined by the aggregate difference between the stock price as of December 31, 2016 and the exercise prices of the underlying options.
|
(2) |
Represents the cost as of December 31, 2016 for benefits provided to Mr. Kriegsman for a period of two years, or in the event of a change in control, a period of three years.
|
(3) |
Each of Mr. Kriegsman's and Dr. Levitt's employment agreements provides that if a change in control (as defined in our 2000 Plan or our 2008 Plan) occurs during the term of the employment agreement, and if, during the term and within two years after the date on which the change in control occurs, Mr. Kriegsman's or Dr. Levitt's employment, respectively, is terminated by us without "cause" or by him for "good reason" (each as defined in their respective employment agreement), then, to the extent that any payment or distribution of any type by us to or for the benefit of Mr. Kriegsman or Dr. Levitt, respectively, resulting from the termination of their respective employment is or will be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended, we will pay Mr. Kriegsman or Dr. Levitt, respectively, prior to the time the excise tax is payable with respect to any such payment (through withholding or otherwise), an additional amount that, after the imposition of all income, employment, excise and other taxes, penalties and interest thereon, is equal to the sum of (i) the excise tax on such payments plus (ii) any penalty and interest assessments associated with such excise tax. Based on each of Mr. Kriegsman's and Dr. Levitt's past compensation and the estimated payment that would result from a termination of employment following a change in control, we have estimated that a gross-up payment would not be required. "Good reason" as defined in each of Mr. Kriegsman's and Dr. Levitt's employment agreement includes any change in Mr. Kriegsman's or Dr. Levitt's duties or title, as applicable, that are inconsistent with their respective positions. Mr. Kriegsman's employment agreement provides that, if the employment agreement is not renewed by us or by Mr. Kriegsman upon the expiration of its term on December 31, 2021, Mr. Kriegsman will be entitled to the termination payments and benefits described above.
|
(4) |
Severance payments are prescribed by our employment agreements with the named executive officers and represent a factor of their annual base compensation ranging from six months to two years, except for Mr. Kriegsman, which is the later of December 2021, the expiry of his agreement, or three years.
|
Name (1)
|
Fees Earned or Paid in Cash ($)
(2)
|
Option Awards
($) (3)
|
Total
($)
|
|||||||||
Joseph Rubinfeld, Ph.D., Lead Director (4)
|
136,000
|
66,420
|
202,420
|
|||||||||
Louis Ignarro, Ph.D., Director
|
85,750
|
66,420
|
152,170
|
|||||||||
Anita Chawla, Ph.D., Director
|
65,750
|
66,420
|
132,170
|
|||||||||
Eric Selter, Director
|
100,750
|
66,420
|
167,170
|
|||||||||
Cheryl Cohen, Director
|
77,750
|
—
|
77,750
|
|||||||||
Earl Brien, M.D., Director
|
7,750
|
146,520
|
154,270
|
(1)
|
Steven A. Kriegsman does not receive additional compensation for his role as Chairman of the Board. For information relating to Mr. Kriegsman's compensation as Chief Executive Officer, see the Summary Compensation Table above.
|
(2)
|
The amounts in this column represent cash payments made to Non-Employee Directors for annual retainer fees, committee and/or chairmanship fees and meeting fees during the year.
|
(3)
|
In December, 2016, respectively, we granted stock options to purchase 180,000 shares of our common stock to newly-appointed non-employee director, Earl Brien, M.D. at an exercise price equal to the current market value of our common stock on the date of grant, which had an aggregate grant date fair value respectively of $80,100, calculated in accordance with FASB ASC Topic 718.
|
(4)
|
Dr. Rubinfeld passed away in December 2016.
|
Shares of
Common Stock
|
||||||||
Name of Beneficial Owner
|
Number
|
Percent
|
||||||
Named Executive Officers and Directors
|
||||||||
Louis Ignarro, Ph.D. (1)
|
868,845
|
*
|
||||||
Steven A. Kriegsman (2)
|
5,906,987
|
5.0
|
%
|
|||||
Eric Selter (3)
|
772,266
|
*
|
||||||
Anita J. Chawla, Ph.D. (4)
|
540,000
|
*
|
||||||
Earl Brien, M.D. (5)
|
421,484
|
*
|
||||||
Daniel Levitt, M.D., Ph.D.(6)
|
1,325,797
|
1.1
|
%
|
|||||
John Y. Caloz (7)
|
644,422
|
*
|
||||||
Scott Wieland, Ph.D. (8)
|
540,596
|
*
|
||||||
All executive officers and directors as a group (eight persons) (9)
|
11,020,396
|
9.4
|
%
|
|||||
5% Beneficial Owners
|
||||||||
Gene Z. Salkind, M.D. (10)
|
6,124,467
|
5.2
|
%
|
|||||
(1) |
Includes 855,714 shares subject to options or warrants.
|
(2) |
Includes 2,984,295 shares subject to options or warrants.
|
(3) |
Includes 697,856 shares subject to options or warrants.
|
(4) |
Includes 540,000 shares subject to options or warrants.
|
(5) |
Includes 360,000 shares subject to options or warrants.
|
(6) |
Includes 1,220,239 shares subject to options or warrants.
|
(7) |
Includes 639,880 shares subject to options or warrants.
|
(8) |
Includes 540,596 shares subject to options or warrants.
|
(9) |
Includes 7,838,579 shares subject to options or warrants.
|
(10) |
According to his Schedule 13G filed with the SEC, of the shares shown, Dr. Salkind has sole voting and dispositive power over 53,000 shares and shares voting and dispositive power with his wife, Catherine Salkind, over 6,071,467 shares. Mrs. Salkind may be deemed to beneficially own the shares shown. Dr. and Mrs. Salkind's address is 727 Welsh Road, Suite 108, Huntingdon Valley, Pennsylvania 19006.
|
· |
that all related person transactions, all material terms of the transactions, and all the material facts as to the related person's direct or indirect interest in, or relationship to, the related person transaction must be communicated to the Audit Committee; and
|
· |
that all related person transactions, and any material amendment or modification to any related person transaction, be reviewed and approved or ratified by the Audit Committee, as required by NASDAQ Marketplace Rules.
|
· |
information provided by members of our board of directors in connection with the required annual evaluation of director independence;
|
· |
pertinent responses to the Directors' and Officers' Questionnaires submitted periodically by our officers and directors and provided to the Audit Committee by our management;
|
· |
background information on nominees for director provided by the Nominating and Corporate Governance Committee of our board of directors; and
|
· |
any other relevant information provided by any of our directors or officers.
|
· |
In connection with its review and approval or ratification, if appropriate, of any related person transaction, our Audit Committee is to consider whether the transaction will compromise standards included in our Code of Ethics. In the case of any related person transaction involving an outside director or nominee for director, the Audit Committee also is to consider whether the transaction will compromise the director's status as an independent director as prescribed in the NASDAQ Marketplace Rules.
|
· |
"related person" has the meaning given to such term in Item 404(a) of Securities and Exchange Commission Regulation S-K ("Item 404(a)"); and
|
· |
"related person transaction" means any transaction for which disclosure is required under the terms of Item 404(a) involving us and any related persons.
|
Exhibit
Number
|
Description
|
Footnote
|
2.1
|
Agreement and Plan of Merger, dated as of June 6, 2008, among CytRx Corporation, CytRx Merger Subsidiary, Inc., Innovive Pharmaceuticals, Inc., and Steven Kelly
|
(l)
|
3.1
|
Restated Certificate of Incorporation of CytRx Corporation, as amended
|
(r)
|
3.2
|
Certificate of Amendment of Restated Certificate of Incorporation
|
(t)
|
3.3
|
Restated By-Laws of CytRx Corporation, as amended
|
(a)
|
3.4
|
Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, Pursuant to Section 151 of the Delaware General Corporation Law
|
(dd)
|
4.1
|
Shareholder Protection Rights Agreement dated April 16, 1997 between CytRx Corporation and American Stock Transfer &Trust Company, as Rights Agent
|
(b)
|
4.2
|
Amendment No. 1 to Shareholder Protection Rights Agreement, dated February 11, 2002
|
(e)
|
4.3
|
Amendment No. 2 to Shareholder Protection Rights Agreement, dated March 30, 2007
|
(j)
|
4.4
|
Amendment No. 3 to Shareholders Protection Rights Agreement, dated July 12, 2016
|
(x)
|
4.5
|
Common Stock Purchase Warrant issued by CytRx Corporation to Alexander Capital, L.P.
|
(n)
|
4.6
|
Form of Common Stock Purchase Warrant issued by CytRx Corporation, dated July 20, 2016
|
**
|
4.7
|
Contingent Common Stock Purchase Warrant Agreement dated as of December 5, 2016 issued by CytRx Corporation to Bristol Capital Advisors, LLC on February 10, 2017
|
**
|
4.8 | Common Stock Purchase Warrant issued by CytRx Corporation to Emmanuel Strategic Partners | ** |
4.9 | Common Stock Purchase Warrant Issued by CytRx Corporation to Emmanuel Strategic Partners | ** |
10.1*
|
CytRx Corporation 2000 Long-Term Incentive Plan
|
(c)
|
10.2*
|
Amendment No. 1 to CytRx Corporation 2000 Long-Term Incentive Plan
|
(f)
|
10.3*
|
Amendment No. 2 to CytRx Corporation 2000 Long-Term Incentive Plan
|
(f)
|
10.4*
|
Amendment No. 3 to CytRx Corporation 2000 Long-Term Incentive Plan
|
(g)(3)
|
10.5*
|
Amendment No. 4 to CytRx Corporation 2000 Long-Term Incentive Plan
|
(g)(4)
|
10.6*
|
CytRx Corporation Amended and Restated 2008 Stock Incentive Plan
|
(s)
|
10.7*
|
Fifth Amendment to Amended and Restated CytRx Corporation 2008 Stock Incentive Plan
|
(v)
|
10.8*
|
Sixth Amendment to Amended and Restated CytRx Corporation 2008 Stock Incentive Plan
|
(v)
|
10.9*
|
Seventh Amendment to Amended and Restated CytRx Corporation 2008 Stock Incentive Plan
|
(w)
|
10.10*
|
Eighth Amendment to Amended and Restated CytRx Corporation 2008 Stock Incentive Plan
|
(w)
|
10.11*
|
Form of Non-qualified Stock Option for grants to non-employee directors under Amended and Restated 2008 Stock Incentive Plan.
|
(ff)
|
10.12*
|
Form of Non-qualified Stock Option for grants to executive officers under Amended and Restated 2008 Stock Incentive Plan.
|
(gg)
|
10.13*
|
Form of Non-qualified Stock Option for grants to Steven A. Kriegsman and Daniel J. Levitt, M.D., Ph.D., under Amended and Restated 2008 Stock Incentive Plan.
|
(hh)
|
10.14*
|
Amendment No. 1 to Stock Option Agreements of Daniel J. Levitt, M.D., Ph.D., dated December 31, 2015.
|
(ii)(1)
|
10.15*
|
Amendment No. 1 to Stock Option Agreements (2000 Long-Term Incentive Plan) of Steven A. Kriegsman, dated March 8, 2016.
|
(ii)(2)
|
10.16*
|
Amendment No. 1 to Stock Option Agreements (2008 Stock Incentive Plan) of Steven A. Kriegsman, dated March 8, 2016
|
(ii)(3)
|
10.17†
|
License Agreement, dated December 7, 2001, by and between CytRx Corporation and Vical Incorporated
|
(d)
|
10.18
|
Office Lease between The Kriegsman Capital Group, LLC and Douglas Emmett Joint Venture, dated April 13, 2000
|
(g)(1)
|
10.19
|
Assignment, Assumption and Consent, effective July 1, 2003, by and among CytRx Corporation, The Kriegsman Capital Group, LLC and Douglas Emmett Joint Venture, concerning Office Lease dated April 13, 2000
|
(g)(2)
|
10.20
|
First Amendment to Office Lease dated October 14, 2005, by and between CytRx Corporation and Douglas Emmett 1993, LLC
|
(h)
|
10.21†
|
License Agreement dated April 17, 2006 between Innovive Pharmaceuticals, Inc. and KTB Tumorforschungs GmbH
|
(i)
|
10.22
|
Amendment dated March 14, 2014 to License Agreement between CytRx Corporation and KTB Tumorforschungs GmbH
|
(q)
|
10.23
|
Second Amendment to Office Lease dated June 30, 2008, by and between CytRx Corporation and Douglas Emmett 1993, LLC
|
(m)
|
10.24
|
Third Amendment to Office Lease dated December 1, 2009, by and between CytRx Corporation and Douglas Emmett 1993, LLC
|
(p)
|
10.25
|
Fourth Amendment to Office Lease dated February 10, 2014, by and between CytRx Corporation and Douglas Emmett 1993, LLC
|
(y)
|
10.26*
|
Employment Agreement dated January 1, 2017, between CytRx Corporation and Daniel J. Levitt, M.D., Ph.D.
|
** |
10.27*
|
Employment Agreement dated December 31, 2015, between CytRx Corporation and Benjamin S. Levin
|
(ee)
|
10.28*
|
Retirement Agreement and Mutual General Release between CytRx Corporation and Benjamin S. Levin
|
(jj)
|
10.29*
|
Employment Agreement dated January 1, 2017, between CytRx Corporation and Scott Wieland
|
**
|
10.30*
|
Employment Agreement dated January 10, 2017 , between CytRx Corporation and John Y. Caloz
|
**
|
10.31*
|
Employment Agreement dated January 11 , 2016 by and between CytRx Corporation and Olivia S. Ware
|
**
|
10.32†
|
Asset Purchase Agreement dated May 13, 2011 by and between CytRx Corporation and Orphazyme ApS
|
(o)
|
10.33
|
Letter Agreement dated February 9, 2016, between CytRx Corporation and Alexander Capital, L.P.
|
(kk)
|
10.34*
|
Fourth Amended and Restated Employment Agreement, dated May 10, 2012, by and between CytRx Corporation and Steven A. Kriegsman.
|
(z)
|
10.35*
|
First Amendment to Fourth Amended and Restated Employment Agreement by and between CytRx Corporation and Steven A. Kriegsman, dated March 4, 2014
|
(k)
|
10.36*
|
Second Amendment to Fourth Amended and Restated Employment Agreement by and between CytRx Corporation and Steven A. Kriegsman, dated January 1, 2015
|
(aa)
|
10.37*
|
Third Amendment to Fourth Amended and Restated Employment Agreement by and between CytRx Corporation and Steven A. Kriegsman, dated March 8, 2016
|
(ll)
|
10.38*
|
Fourth Amendment to Fourth Amended and Restated Employment Agreement by and between CytRx Corporation and Steven A. Kriegsman dated January 10, 2017
|
**
|
10.39*
|
Restricted Stock Purchase Agreement by and between CytRx Corporation and Steven A. Kriegsman, dated January 11, 2017
|
**
|
10.50
|
Loan and Security Agreement dated February 5, 2016 among CytRx Corporation, the Lender referred to therein, and Hercules Technology Growth Capital, Inc., as Agent
|
(bb)(1)
|
10.51
|
Warrant Agreement dated as of February 5, 2016 issued by CytRx Corporation to Hercules Technology Growth Capital, LLC
|
(bb)(2)
|
10.52
|
Warrant Agreement dated as of February 5, 2016 issued by CytRx Corporation to Hercules Technology III, L.P.
|
(cc)
|
10.53
|
Securities Purchase Agreement dated as of December 13, 2016 among CytRx Corporation and the Purchasers identified therein.
|
mm(1)
|
10.54
|
Engagement Letter, dated December 12, 2016, between CytRx Corporation and Rodman & Renshaw, a unit of H. C. Wainwright & Co., LLC
|
mm(2)
|
23.1
|
Consent of BDO USA, LLP
|
**
|
31.1
|
Certification of Chief Executive Officer Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
**
|
31.2
|
Certification of Chief Financial Officer Pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
**
|
32.1
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
**
|
32.2
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
**
|
101.INS++
|
XBRL Instance Document.
|
|
101.SCH++
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL++
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF++
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB++
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE++
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
* |
Indicates a management contract or compensatory plan or arrangement.
|
** |
Filed herewith.
|
† |
Confidential treatment has been requested or granted for certain portions which have been blanked out in the copy of the exhibit filed with the Securities and Exchange Commission. The omitted information has been filed separately with the Securities and Exchange Commission.
|
++ |
Pursuant to applicable securities laws and regulations, the Registrant is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Registrant has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. These interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.
|
(a)
|
Incorporated by reference to Exhibit 3.2 to the Registrant's Form 8-K filed on July 16, 2013
|
(b)
|
Incorporated by reference to Exhibit 99.1 the Registrant's Form 8-K filed on April 17, 1997
|
(c)
|
Incorporated by reference to Exhibit 10.11 to the Registrant's Form 10-K filed on March 27, 2001
|
(d)
|
Incorporated by reference to Exhibit 99 to the Registrant's Form 8-K filed on December 21, 2001
|
(e)
|
Incorporated by reference to Exhibit 4.2 to the Registrant's Form 10-K filed on April 1, 2002
|
(f)
|
Incorporated by reference to Annex C to the Registrant's Proxy Statement filed June 11, 2002
|
(g)(1)
|
Incorporated by reference to Exhibit 10.63 to the Registrant's Form 10-K filed on May 14, 2004
|
(g)(2)
|
Incorporated by reference to Exhibit 10.64 to the Registrant's Form 10-K filed on May 14, 2004
|
(g)(3)
|
Incorporated by reference to Exhibit 10.64 to the Registrant's Form 10-K filed on May 14, 2004
|
(g)(4)
|
Incorporated by reference to Exhibit 10.64 to the Registrant's Form 10-K filed on May 14, 2004
|
(h)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on October 20, 2005
|
(i)
|
Incorporated by reference to Exhibit 10.15 to the CytRx Oncology Corp (f/k/a Innovive Pharmaceuticals, Inc.) Form 10-Q filed on November 14, 2006
|
(j)
|
Incorporated by reference to Exhibit 4.3 to the Registrant's Form 10-K filed on April 2, 2007
|
(k)
|
Incorporated by reference to Exhibit 10.32 to the Registrant's Form 10-K filed on March 5, 2014
|
(l)
|
Incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K filed on June 9, 2008
|
(m)
|
Incorporated by reference to Exhibit 10.29 to the Registrant's Form 10-K filed on March 13, 2009
|
(n)
|
Incorporated by reference to Exhibit 4.5 to the Registrant's Form 10-K filed on March 11, 2016
|
(o)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 10-Q filed on August 9, 2011
|
(p)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 10-Q filed on December 4, 2009
|
(q)
|
Incorporated by reference to Exhibit 1.1 to the Registrant's Form 8-K filed on March 17, 2014
|
(r)
|
Incorporated by reference to Exhibit 3.1 to the Registrant's Form 10-K filed on March 13, 2012
|
(s)
|
Incorporated by reference to Exhibit 10.6 to the Registrant's Form 10-K filed on March 13, 2012
|
(t)
|
Incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K filed on May 15, 2012
|
(u)
|
Incorporated by reference to Annex B of the Registrant's Proxy Statement filed April 2, 2012
|
(v)
|
Incorporated by reference to the Registrant's Proxy Statement filed May 5, 2015
|
(w)
|
Incorporated by reference to the Registrant's Proxy Statement filed May 20, 2016
|
(x)
|
Incorporated by Reference to Exhibit 4.1 to the Registrant's Form 10-Q filed on November 9, 2016
|
(y)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on February 13, 2014
|
(z)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's 8-K filed on October 19, 2012
|
(aa)
|
Incorporated by reference to Exhibit 10.31 to the Registrant's Form 10-K filed on March 10, 2015
|
(bb)(1)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on February 9, 2016
|
(bb)(2)
|
Incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed on February 9, 2016
|
(cc)
|
Incorporated by Reference to Exhibit 10.3 to the Registrant's Form 8-K filed on February 9, 2016
|
(dd)
|
Incorporated by Reference to Exhibit 3.1 to the Registrant's Form 8-K filed on December 14, 2016
|
(ee)
|
Incorporated by Reference to Exhibit 10.27 to the Registrant's Form 10-K filed on March 11, 2016
|
(ff)
|
Incorporated by Reference to Exhibit 10.11 to the Registrant's Form 10-K filed on March 11, 2016
|
(gg)
|
Incorporated by Reference to Exhibit 10.12 to the Registrant's Form 10-K filed on March 11, 2016
|
(hh)
|
Incorporated by reference to Exhibit 10.13 to the Registrant's Form 10-K filed on March 11, 2016
|
(ii)(1)
|
Incorporated by reference to Exhibit 10.14 to the Registrant's Form 10-K filed on March 11, 2016
|
(ii)(2)
|
Incorporated by reference to Exhibit 10.15 to the Registrant's Form 10-K filed on March 11, 2016
|
(ii)(3)
|
Incorporated by reference to Exhibit 10.16 to the Registrant's Form 10-K filed on March 11, 2016
|
(jj)
|
Incorporated by reference to Exhibit 10.2 to the Registrant's Form 10-Q filed on July 29, 2016
|
(kk)
|
Incorporated by reference to Exhibit 10.32 to the Registrant's Form 10-K filed on March 11, 2016
|
(ll)
|
Incorporated by reference to Exhibit 10.36 to the Registrant's Form 10-K filed on March 11, 2016
|
(mm)(1)
|
Incorporated by Reference to Exhibit 10.1 to the Registrant's Form 8-K filed on December 14, 2016
|
(mm)(2) | Incorporated by Reference to Exhibit 10.2 to the Registrant's Form 8-K filed on December 14, 2016 |
CYTRX CORPORATION | |||
March 15, 2017
|
By:
|
/s/ STEVEN A. KRIEGSMAN | |
Steven A. Kriegsman | |||
Title: Chairman and Chief Executive Officer | |||
Signature
|
Title
|
Date
|
/s/ STEVEN A. KRIEGSMAN
|
Chairman of the Board and Chief Executive Officer
|
March 15, 2017
|
Steven A. Kriegsman |
(Principal Executive Officer)
|
|
/s/ JOHN Y. CALOZ
|
Chief Financial Officer
|
|
John Y. Caloz
|
(Principal Financial and Accounting Officer)
|
|
/s/ LOUIS IGNARRO
|
Director
|
March 15, 2017
|
Louis Ignarro, Ph.D.
|
||
/s/ ERIC J. SELTER
|
Director
|
March 15, 2017
|
Eric J. Selter
|
/s/ ANITA J. CHAWLA
|
Director
|
March 15, 2017
|
Anita J. Chawla, Ph.D.
|
/s/ EARL BRIEN
|
Director
|
March 15, 2017
|
Earl Brien, M.D.
|
|
|
Report of Independent Registered Public Accounting Firm
|
F- 2
|
Balance Sheets
|
F- 3
|
Statements of Operations
|
F- 4
|
Statements of Stockholders' Equity
|
F- 5
|
Statements of Cash Flows
|
F- 6
|
Notes to Financial Statements
|
F- 7
|
Financial Statement Schedule II — Valuation and Qualifying Accounts
|
F- 22
|
December 31,
|
||||||||
2016
|
2015
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
56,959,485
|
$
|
22,261,372
|
||||
Short-term investments
|
—
|
35,035,420
|
||||||
Receivables
|
183,703
|
4,593,475
|
||||||
Interest receivable
|
—
|
28,130
|
||||||
Prepaid expenses and other current assets
|
3,434,238
|
2,373,708
|
||||||
Total current assets
|
60,577,426
|
64,292,105
|
||||||
Equipment and furnishings, net
|
1,959,667
|
1,467,681
|
||||||
Goodwill
|
183,780
|
183,780
|
||||||
Other assets
|
48,911
|
1,080,872
|
||||||
Total assets
|
$
|
62,769,784
|
$
|
67,024,438
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
6,406,445
|
$
|
8,058,624
|
||||
Accrued expenses and other current liabilities
|
3,830,498
|
9,693,359
|
||||||
Non-cash litigation settlement due in shares of common stock
|
—
|
4,500,000
|
||||||
Term loan, net - current
|
5,481,656
|
—
|
||||||
Warrant liabilities
|
3,789,391
|
693,457
|
||||||
Total current liabilities
|
19,507,990
|
22,945,440
|
||||||
Long term loan, net
|
18,484,510
|
—
|
||||||
Total liabilities
|
37,992,500
|
22,945,440
|
||||||
Commitment and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Preferred Stock, $.01 par value, 5,000,000 shares authorized, including 25,000 shares of Series A Junior Participating Preferred Stock; no shares issued and outstanding
|
—
|
—
|
||||||
Preferred Stock, $.01 par value, stated value $1,000, 3,900 shares authorized of Series B Convertible Preferred Shares at $0.42 per share, 3,300 issued, 3,108 outstanding at December 31, 2016, none outstanding at December 31, 2015
|
3,108,000
|
—
|
||||||
Common stock, $.001 par value, 250,000,000 shares authorized; 111,322,895 and 66,480,065 shares issued and outstanding at December 31, 2016 and 2015, respectively
|
111,321
|
66,480
|
||||||
Additional paid-in capital
|
437,423,958
|
409,107,292
|
||||||
Accumulated deficit
|
(415,865,995
|
)
|
(365,094,774
|
)
|
||||
Total stockholders' equity
|
24,777,284
|
44,078,998
|
||||||
Total liabilities and stockholders' equity
|
$
|
62,769,784
|
$
|
67,024,438
|
Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Revenue:
|
||||||||||||
Licensing revenue
|
$
|
200,000
|
$
|
100,000
|
$
|
100,000
|
||||||
Expenses:
|
||||||||||||
Research and development
|
35,930,212
|
43,395,574
|
36,677,706
|
|||||||||
General and administrative
|
15,990,789
|
19,664,904
|
12,845,231
|
|||||||||
Depreciation and amortization
|
536,631
|
317,649
|
182,927
|
|||||||||
52,457,632
|
63,378,127
|
49,705,864
|
||||||||||
Loss before other income (expense)
|
(52,257,632
|
)
|
(63,278,127
|
)
|
(49,605,864
|
)
|
||||||
Other income (expense):
|
||||||||||||
Interest income
|
255,123
|
233,958
|
305,331
|
|||||||||
Interest expense
|
(2,754,677
|
)
|
—
|
—
|
||||||||
Other income, net
|
159,148
|
20,151
|
132,114
|
|||||||||
Gain on warrant liabilities
|
3,827,617
|
4,437,628
|
19,051,239
|
|||||||||
Loss before provision for income taxes
|
(50,770,421
|
)
|
(58,586,390
|
)
|
(30,117,180
|
)
|
||||||
Provision for income taxes
|
(800
|
)
|
(800
|
)
|
(800
|
)
|
||||||
Net loss
|
$
|
(50,771,221
|
)
|
$
|
(58,587,190
|
)
|
$
|
(30,117,980
|
)
|
|||
Basic and diluted loss per share
|
$
|
(0.63
|
)
|
$
|
(0.97
|
)
|
$
|
(0.55
|
)
|
|||
Basic and diluted weighted average shares outstanding
|
81,063,772
|
60,483,151
|
54,371,151
|
Series B Preferred Shares Issued
|
Common Shares Issued
|
Preferred Stock Amount
|
Common Stock Amount
|
Additional
Paid-in
Capital
|
Accumulated Deficit
|
Treasury Stock
|
Total
|
|||||||||||||||||||||||||
Balance at January 1, 2014
|
—
|
42,116,964
|
$
|
—
|
$
|
42,118
|
$
|
289,426,100
|
$
|
(276,389,604
|
)
|
$
|
(2,417,247
|
)
|
$
|
10,661,367
|
||||||||||||||||
Issuance of stock options/warrants for compensation and services
|
—
|
—
|
—
|
—
|
5,139,348
|
—
|
—
|
5,139,348
|
||||||||||||||||||||||||
Common stock issued in connection with a public offering
|
—
|
13,225,000
|
—
|
13,225
|
80,522,176
|
—
|
—
|
80,535,401
|
||||||||||||||||||||||||
Issuance of restricted stock for compensation
|
—
|
100,000
|
—
|
100
|
626,900
|
—
|
—
|
627,000
|
||||||||||||||||||||||||
Issuance of common shares for compensation
|
—
|
200,000
|
—
|
200
|
829,800
|
—
|
—
|
830,000
|
||||||||||||||||||||||||
Options and warrants exercised
|
—
|
280,022
|
—
|
281
|
431,660
|
—
|
—
|
431,941
|
||||||||||||||||||||||||
Repurchase of common stock for treasury
|
—
|
—
|
—
|
—
|
—
|
—
|
(195,614
|
)
|
(195,614
|
)
|
||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(30,117,980
|
)
|
—
|
(30,117,980
|
)
|
||||||||||||||||||||||
Balance at December 31, 2014
|
—
|
55,921,986
|
55,924
|
376,975,984
|
(306,507,584
|
)
|
(2,612,861
|
)
|
67,911,463
|
|||||||||||||||||||||||
Issuance of stock options/warrants for compensation and services
|
—
|
—
|
—
|
—
|
7,384,656
|
—
|
—
|
7,384,656
|
||||||||||||||||||||||||
Common stock issued in connection with a public offering
|
—
|
10,465,000
|
—
|
10,465
|
26,769,603
|
—
|
—
|
26,780,068
|
||||||||||||||||||||||||
Options and warrants exercised
|
—
|
292,354
|
—
|
290
|
589,711
|
—
|
—
|
590,001
|
||||||||||||||||||||||||
Retirement of treasury stock
|
—
|
(199,275
|
)
|
—
|
(199
|
)
|
(2,612,662
|
)
|
—
|
2,612,861
|
—
|
|||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(58,587,190
|
)
|
—
|
(58,587,190
|
)
|
||||||||||||||||||||||
Balance at December 31, 2015
|
—
|
66,480,065
|
—
|
66,480
|
409,107,292
|
(365,094,774
|
)
|
—
|
44,078,998
|
|||||||||||||||||||||||
Issuance of stock options/warrants for compensation and services
|
—
|
—
|
—
|
—
|
6,735,576
|
—
|
—
|
6,735,576
|
||||||||||||||||||||||||
Warrants issued in connection with a public offering
|
—
|
—
|
—
|
—
|
(6,923,551
|
)
|
—
|
—
|
(6,923,551
|
)
|
||||||||||||||||||||||
Stock issued in connection with a public offering
|
3,300
|
40,112,170
|
3,300,000
|
40,112
|
22,437,145
|
—
|
—
|
25,777,257
|
||||||||||||||||||||||||
Preferred stock conversion
|
(192
|
)
|
457,143
|
(192,000
|
)
|
457
|
191,543
|
—
|
—
|
—
|
||||||||||||||||||||||
Issuance of restricted stock grant
|
—
|
2,325,581
|
—
|
2,325
|
—
|
—
|
—
|
2,325
|
||||||||||||||||||||||||
Warrants issued in connection with term loan
|
—
|
—
|
—
|
—
|
633,749
|
—
|
—
|
633,749
|
||||||||||||||||||||||||
Beneficial conversion feature –Series B preferred stock
|
—
|
—
|
(314,286
|
)
|
—
|
314,286
|
—
|
—
|
—
|
|||||||||||||||||||||||
Series B preferred stock deemed dividend
|
—
|
314,286
|
—
|
(314,286
|
)
|
—
|
—
|
—
|
||||||||||||||||||||||||
Options and warrants exercised
|
—
|
386,358
|
—
|
386
|
743,765
|
—
|
—
|
744,151
|
||||||||||||||||||||||||
Class action settlement share issuance
|
—
|
1,561,578
|
—
|
1,561
|
4,498,439
|
—
|
—
|
4,500,000
|
||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(50,771,221
|
)
|
—
|
(50,771,221
|
)
|
||||||||||||||||||||||
Balance at December 31, 2016
|
3,108
|
111,322,895
|
$
|
3,108,000
|
$
|
111,321
|
$
|
437,423,958
|
$
|
(415,865,995
|
)
|
$
|
—
|
$
|
24,777,284
|
Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net loss
|
$
|
(50,771,221
|
)
|
$
|
(58,587,190
|
)
|
$
|
(30,117,980
|
)
|
|||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Depreciation and amortization
|
536,631
|
317,649
|
182,927
|
|||||||||
Loss on retirement of equipment and furnishings
|
12,276
|
2,614
|
1,220
|
|||||||||
Gain on warrant liabilities
|
(3,827,617
|
)
|
(4,437,628
|
)
|
(19,051,239
|
)
|
||||||
Amortization of loan cost and discount
|
587,837
|
—
|
—
|
|||||||||
Unrealized foreign exchange gain
|
—
|
—
|
(125,659
|
)
|
||||||||
Stock-based compensation expense
|
6,735,576
|
7,384,656
|
6,596,248
|
|||||||||
Non-cash litigation settlement due in common stock
|
—
|
4,500,000
|
—
|
|||||||||
Changes in assets and liabilities:
|
||||||||||||
Receivable
|
4,412,097
|
(2,574,182
|
)
|
(1,901,766
|
)
|
|||||||
Interest receivable
|
28,130
|
76,497
|
(96,163
|
)
|
||||||||
Prepaid expenses and other current assets
|
(28,569
|
)
|
1,118,931
|
(2,126,771
|
)
|
|||||||
Accounts payable
|
(1,672,631
|
)
|
916,919
|
2,779,409
|
||||||||
Accrued expenses and other current liabilities
|
(5,862,861
|
)
|
3,699,287
|
3,303,967
|
||||||||
Net cash used in operating activities
|
(49,850,352
|
)
|
(47,582,447
|
)
|
(40,555,807
|
)
|
||||||
Cash flows from investing activities:
|
||||||||||||
Proceeds from matured short-term investments
|
35,035,420
|
76,544,319
|
38,584,980
|
|||||||||
Purchase of short-term investments
|
—
|
(65,958,146
|
)
|
(57,121,593
|
)
|
|||||||
Purchases of equipment and furnishings
|
(1,020,441
|
)
|
(331,328
|
)
|
(956,286
|
)
|
||||||
Net cash provided by (used in) investing activities
|
34,014,979
|
10,254,845
|
(19,492,899
|
)
|
||||||||
Cash flows from financing activities:
|
||||||||||||
Proceeds from common stock issued in public offering, net of fees
|
25,777,257
|
26,780,068
|
80,535,401
|
|||||||||
Proceeds from term loan, net
|
24,012,078
|
—
|
—
|
|||||||||
Proceeds from issuance of restricted stock to employee
|
—
|
—
|
100
|
|||||||||
Repurchase of Company's own stock for treasury
|
—
|
—
|
(182,943
|
)
|
||||||||
Net proceeds from exercise of stock options and warrants
|
744,151
|
590,001
|
431,941
|
|||||||||
Net cash provided by financing activities
|
50,533,486
|
27,370,069
|
80,784,499
|
|||||||||
Net increase (decrease) in cash and cash equivalents
|
34,698,113
|
(9,957,533
|
)
|
20,735,793
|
||||||||
Cash and cash equivalents at beginning of year
|
22,261,372
|
32,218,905
|
11,483,112
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
56,959,485
|
$
|
22,261,372
|
$
|
32,218,905
|
||||||
Supplemental disclosures of non-cash financing/investing activities:
|
||||||||||||
Cashless warrant exercises
|
$
|
—
|
$
|
3
|
$
|
133
|
||||||
Repurchase of Company's own stock for treasury
|
$
|
—
|
$
|
—
|
$
|
12,671
|
||||||
Receivable from issuance of restricted stock
|
$
|
2,325
|
$
|
—
|
$
|
—
|
||||||
Equipment and furnishings purchased but not paid
|
$
|
20,452
|
$
|
485,743
|
$
|
23,2825
|
||||||
Retirement of treasury stock
|
—
|
$
|
2,612,861
|
$
|
—
|
|||||||
Warrants issued in connection with the term loan
|
$
|
633,749
|
$
|
—
|
$
|
—
|
||||||
Shares issued in connection with the class action settlement
|
$
|
4,500,000
|
$
|
—
|
$
|
—
|
||||||
Series B Preferred stock beneficial conversion feature and deemed dividend
|
$
|
314,286
|
$
|
—
|
$
|
—
|
||||||
Warrants issued/amended in connection with the public offering
|
$
|
6,923,551
|
$
|
—
|
$
|
—
|
||||||
Series B Preferred stock conversion
|
$
|
457
|
$
|
—
|
$
|
—
|
||||||
Supplemental disclosure of Cash Flow Information:
|
||||||||||||
Cash paid during the year for income taxes
|
$
|
800
|
$
|
800
|
$
|
800
|
||||||
Cash paid during the year for interest
|
$
|
1,959,375
|
$
|
—
|
$
|
—
|
||||||
(In thousands)
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Cash equivalents
|
$
|
56,276
|
$
|
—
|
$
|
—
|
$
|
56,276
|
||||||||
Warrant liabilities
|
—
|
—
|
(3,789
|
)
|
(3,789
|
)
|
(In thousands)
|
Level I
|
Level II
|
Level III
|
Total
|
Cash equivalents
|
$ 20,673
|
$
—
|
$ —
|
$ 20,673
|
Short-term investments
|
35,035
|
—
|
—
|
35,035
|
Warrant liabilities
|
—
|
—
|
(693)
|
(693)
|
(In thousands)
|
2016
|
2015
|
||||||
Beginning balance
|
$
|
693
|
$
|
5,131
|
||||
Issued
|
6,933
|
—
|
||||||
Exercised
|
(9
|
)
|
—
|
|||||
Net changes in valuation
|
(3,828
|
)
|
(4,438
|
)
|
||||
Ending balance
|
$
|
3,789
|
$
|
693
|
2016
|
2015
|
|||||||
Equipment and furnishings
|
$
|
2,811
|
$
|
1,843
|
||||
Less — accumulated depreciation
|
(851
|
)
|
(375
|
)
|
||||
Equipment and furnishings, net
|
$
|
1,960
|
$
|
1,468
|
||||
2016
|
2015
|
|||||||
Professional fees
|
$
|
193
|
$
|
5,459
|
||||
Research and development costs
|
2,208
|
2,625
|
||||||
Litigation settlement
|
700
|
1,000
|
||||||
Wages, bonuses and employee benefits
|
487
|
527
|
||||||
Other
|
242
|
82
|
||||||
Total
|
$
|
3,830
|
$
|
9,693
|
December 31, 2016
|
||||
Term Loan Principal - Current
|
$
|
6,214
|
||
Loan Discount & Issuance Cost - Current
|
(732
|
)
|
||
Term Loan, Net - Current
|
$
|
5,482
|
||
Term Loan Principal
|
$
|
18,786
|
||
End Fee Payable
|
1,772
|
|||
Long Term Loan Discount & Issuance Cost
|
(2,073
|
)
|
||
Long Term Loan, Net
|
$
|
18,485
|
||
2017
|
$
|
6,214
|
||
2018
|
8,151
|
|||
2019
|
8,995
|
|||
2020
|
1,640
|
|||
Total term loan
|
$
|
25,000
|
Year Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Risk-free interest rate
|
0.90
|
%
|
0.57
|
%
|
0.46
|
%
|
||||||
Expected dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||
Expected lives
|
1.23
|
0.59
|
1.59
|
|||||||||
Expected volatility
|
119.1
|
%
|
61.7
|
%
|
89.7
|
%
|
||||||
Number of warrants classified as liabilities
|
28,515,071
|
6,371,854
|
6,371,854
|
|||||||||
Gain (Loss) on warrant liabilities
|
$
|
3,827,617
|
$
|
4,437,628
|
$
|
19,051,239
|
Operating Leases
(1)
|
Employment
Agreements
(2)
|
Research and
Development (3)
|
Total
|
|||||||||||||
2017
|
$
|
397
|
$
|
3,257
|
$
|
19,325
|
$
|
22,979
|
||||||||
2018
|
373
|
1,682
|
47
|
2,102
|
||||||||||||
2019
|
278
|
1,057
|
37
|
1,372
|
||||||||||||
2020
|
59
|
1,057
|
—
|
1,116
|
||||||||||||
2021
|
—
|
1,057
|
—
|
1,057
|
||||||||||||
Thereafter
|
—
|
—
|
—
|
—
|
||||||||||||
Total
|
$
|
1,107
|
$
|
8,110
|
$
|
19,409
|
$
|
8,626
|
(1)
|
Operating leases are primarily facility lease related obligations, as well as equipment lease obligations with third party vendors. The Company recognized rent expenses of $358,247, $351,075, and $335,991 in 2016, 2015 and 2014, respectively.
|
(2)
|
Employment agreements include management contracts which have been revised from time to time. The employment agreement for the Company's executive officers provide for minimum salaries, which are adjusted annually at the discretion of the Company's Compensation Committee, and in some cases provide for minimum annual bonuses and employee benefits, as well. New employment agreements for the Company's other executive officers are usually entered into annually or biennially.
|
(3)
|
Research and development obligations relate primarily to clinical trials. All of these purchase obligations are cancelable.
|
|
|
2016
|
2015
|
2014
|
||||||||||
Risk-free interest rate
|
1.20% - 2.26
|
%
|
1.74% - 2.42
|
%
|
1.74% - 2.12
|
%
|
||||||
Expected volatility
|
74% - 88
|
%
|
74% - 85
|
%
|
82% - 90
|
%
|
||||||
Expected lives (years)
|
6 - 10
|
6 - 10
|
6 - 10
|
|||||||||
Expected dividend yield
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
Stock Options
|
Weighted Average
Exercise Price
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2016
|
2015
|
2014
|
|||||||||||||||||||
Outstanding — beginning of year
|
13,583,862
|
9,358,592
|
6,228,593
|
$
|
3.11
|
$
|
2.83
|
$
|
3.11
|
|||||||||||||||
Granted
|
4,857,500
|
4,590,000
|
3,190,000
|
0.59
|
2.61
|
2.47
|
||||||||||||||||||
Exercised
|
(330,000
|
)
|
(287,143
|
)
|
(1,667
|
)
|
2.14
|
2.05
|
1.83
|
|||||||||||||||
Forfeited
|
(1,176,737
|
)
|
—
|
(24,333
|
)
|
3.49
|
—
|
2.81
|
||||||||||||||||
Expired
|
(54,855
|
)
|
(77,587
|
)
|
(34,001
|
)
|
8.03
|
5.58
|
8.18
|
|||||||||||||||
Outstanding — end of year
|
16,879,770
|
13,583,862
|
9,358,592
|
2.36
|
3.11
|
2.83
|
||||||||||||||||||
Exercisable at end of year
|
10,867,920
|
8,020,162
|
4,901,511
|
$
|
2.95
|
$
|
3.45
|
$
|
3.22
|
|||||||||||||||
Weighted average fair value of stock options granted during the year:
|
$
|
0.43
|
$
|
1.88
|
$
|
1.80
|
Stock Options
|
Weighted Average
Exercise Price
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2016
|
2015
|
2014
|
|||||||||||||||||||
Outstanding — beginning of year
|
635,714
|
692,143
|
167,143
|
$
|
3.02
|
$
|
3.47
|
$
|
5.69
|
|||||||||||||||
Granted
|
—
|
—
|
550,000
|
—
|
—
|
2.76
|
||||||||||||||||||
Exercised
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Expired/Forfeited
|
(35,714
|
)
|
(56,429
|
)
|
(25,000
|
)
|
7.77
|
8.54
|
2.79
|
|||||||||||||||
Outstanding — end of year
|
600,000
|
635,714
|
692,143
|
2.73
|
3.02
|
3.47
|
||||||||||||||||||
Exercisable at end of year
|
600,000
|
635,714
|
692,143
|
$
|
2.73
|
$
|
3.02
|
$
|
3.47
|
|||||||||||||||
Weighted average fair value of stock options granted during the year:
|
$
|
—
|
$
|
—
|
$
|
1.98
|
2016
|
2015
|
2014
|
||||||||||
Risk-free interest rate
|
—
|
—
|
2.23
|
%
|
||||||||
Expected volatility
|
—
|
—
|
85.0
|
%
|
||||||||
Expected lives (years)
|
—
|
—
|
10
|
|||||||||
Expected dividend yield
|
—
|
—
|
0
|
%
|
Range of
Exercise Prices
|
Number of Options
|
Weighted Average
Remaining Contractual Life
(years)
|
Weighted Average
Exercise Price
|
Number of
Options
Exercisable
|
Weighted Average
Contractual Life
|
Weighted Average
Exercise Price
|
||||||||||||||||||||
$
|
0.43 — 1.50
|
4,432,498
|
9.95
|
$
|
0.44
|
1,086,696
|
9.95
|
$
|
0.45
|
|||||||||||||||||
$
|
1.51 — 2.50
|
8,932,606
|
7.85
|
2.26
|
6,293,224
|
7.49
|
2.22
|
|||||||||||||||||||
$
|
2.51 — 4.00
|
960,670
|
7.13
|
2.88
|
934,004
|
7.10
|
2.87
|
|||||||||||||||||||
$
|
4.01 — 32.55
|
3,153,996
|
6.17
|
5.24
|
3,153,996
|
6.17
|
5.24
|
|||||||||||||||||||
17,479,770
|
8.04
|
$
|
2.37
|
11,467,920
|
7.33
|
$
|
2.93
|
Years Ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Research and development - employee
|
$
|
1,822,508
|
$
|
1,590,267
|
$
|
932,482
|
||||||
General and administrative - employee
|
4,661,795
|
5,568,537
|
2,383,624
|
|||||||||
Total employee stock-based compensation
|
$
|
6,484,303
|
$
|
7,158,804
|
$
|
3,316,106
|
||||||
Research and development – non-employee
|
$
|
—
|
$
|
—
|
$
|
86,539
|
||||||
General and administrative – non-employee
|
235,764
|
225,852
|
1,736,703
|
|||||||||
Total non-employee stock-based compensation
|
$
|
235,764
|
$
|
225,852
|
$
|
1,823,242
|
Warrants
|
Weighted Average
Exercise Price
|
|||||||||||||||||||||||
2016
|
2015
|
2014
|
2016
|
2015
|
2014
|
|||||||||||||||||||
Outstanding — beginning of year
|
7,225,472
|
7,349,760
|
8,324,609
|
$
|
4.28
|
$
|
4.27
|
$
|
4.86
|
|||||||||||||||
Granted
|
31,705,575
|
—
|
25,000
|
0.62
|
—
|
5.60
|
||||||||||||||||||
Exercised
|
(56,358
|
)
|
(10,000
|
)
|
(340,527
|
)
|
0.70
|
2.50
|
2.56
|
|||||||||||||||
Forfeited
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Expired
|
(6,371,899
|
)
|
(114,288
|
)
|
(659,322
|
)
|
4.48
|
3.82
|
12.66
|
|||||||||||||||
Outstanding — end of year
|
32,502,790
|
7,225,472
|
7,349,760
|
0.68
|
4.28
|
4.27
|
||||||||||||||||||
Exercisable at end of year
|
30,190,290
|
7,225,472
|
7,149,760
|
$
|
0.67
|
$
|
4.28
|
$
|
4.32
|
|||||||||||||||
Weighted average fair value of warrants granted during the year:
|
$
|
0.26
|
$
|
—
|
$
|
3.46
|
Warrants
Outstanding
|
||||||||||||||||||||||||||
Range of
Exercise Prices
|
Number of Shares
|
Weighted Average
Remaining Contractual Life
(years)
|
Weighted Average
Exercise Price
|
Number of
Warrants
Exercisable
|
Weighted Average
Contractual Life
|
Weighted Average
Exercise Price
|
||||||||||||||||||||
$
|
0.43 — 1.50
|
31,015,071
|
1.29
|
$
|
0.60
|
28,702,571
|
1.25
|
$
|
0.58
|
|||||||||||||||||
$
|
1.51 — 2.50
|
1,337,719
|
2.69
|
2.30
|
1,337,719
|
2.30
|
2.30
|
|||||||||||||||||||
$
|
2.51 — 4.00
|
125,000
|
1.86
|
3.75
|
125,000
|
1.86
|
3.75
|
|||||||||||||||||||
$
|
4.01 — 32.55
|
25,000
|
7.21
|
5.60
|
25,000
|
7.21
|
5.60
|
|||||||||||||||||||
32,502,790
|
1.35
|
$
|
0.68
|
30,190,290
|
1.35
|
$
|
0.67
|
December 31,
|
||||||||
2016
|
2015
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards
|
$
|
126,244
|
$
|
105,661
|
||||
Tax credit carryforwards
|
29,970
|
27,671
|
||||||
Equipment, furnishings and other
|
9,297
|
10,547
|
||||||
Total deferred tax assets
|
165,511
|
143,879
|
||||||
Deferred tax liabilities
|
(301
|
)
|
(270
|
)
|
||||
Net deferred tax assets
|
165,210
|
143,609
|
||||||
Valuation allowance
|
(165,210
|
)
|
(143,609
|
)
|
||||
$
|
—
|
$
|
—
|
Years ended December 31,
|
||||||||||||
2016
|
2015
|
2014
|
||||||||||
Federal benefit at statutory rate
|
$
|
(17,262
|
)
|
$
|
(19,919
|
)
|
$
|
(10,240
|
)
|
|||
State income taxes, net of Federal taxes
|
(3,086
|
)
|
(3,556
|
)
|
(2,773
|
)
|
||||||
State credits
|
(1,031
|
)
|
(1,324
|
)
|
(990
|
)
|
||||||
Warrant liabilities
|
(1,301
|
)
|
(1,509
|
)
|
(6,477
|
)
|
||||||
Other permanent differences
|
40
|
16
|
37
|
|||||||||
Provision related to change in valuation allowance
|
21,601
|
20,142
|
23,440
|
|||||||||
Current year tax credit
|
(1,119
|
)
|
(2,050
|
)
|
(1,300
|
)
|
||||||
Return to provision
|
2,156
|
8,198
|
(1,504
|
)
|
||||||||
Other, net
|
3
|
3
|
(192
|
)
|
||||||||
$
|
1
|
$
|
1
|
$
|
1
|
Net loss
|
$
|
50,771
|
||
Add: Series B convertible preferred stock deemed dividends
|
314
|
|||
Net loss available to common shareholders – basic and diluted
|
51,085
|
|||
Weighted-average common shares outstanding – basic and diluted
|
81.1 million
|
|||
Basic and diluted loss per share – common shareholders
|
$
|
(0.63)
|
Quarters Ended
|
||||||||||||||||
March 31
|
June 30
|
September 30
|
December 31
|
|||||||||||||
(In thousands, except per share data)
|
||||||||||||||||
2016
|
||||||||||||||||
Total revenues
|
$
|
—
|
$
|
100
|
$
|
—
|
$
|
100
|
||||||||
Net loss
|
$
|
(12,643
|
)
|
$
|
(18,280
|
)
|
$
|
(12,175
|
)
|
$
|
(7,672
|
)
|
||||
Basic and diluted loss per share applicable to common stock
|
$
|
(0.19
|
)
|
$
|
(0.27
|
)
|
$
|
(0.13
|
)
|
$
|
(0.08
|
)
|
||||
2015
|
||||||||||||||||
Total revenues
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
100
|
||||||||
Net income (loss)
|
$
|
(17,525
|
)
|
$
|
(11,687
|
)
|
$
|
(7,073
|
)
|
$
|
(22,302
|
)
|
||||
Basic and diluted income (loss) per share applicable to common stock
|
$
|
(0.31
|
)
|
$
|
(0.21
|
)
|
$
|
(0.11
|
)
|
$
|
(0.34
|
)
|
Additions
|
||||||||||||||||||||
Description
|
Balance at
Beginning of
Year
|
Charged to Costs
and Expenses
|
Charged to
Other
Accounts
|
Deductions
|
Balance at
End of Year
|
|||||||||||||||
Reserve Deducted in the Balance Sheet from the Asset to Which it Applies:
|
||||||||||||||||||||
Allowance for Deferred Tax Assets
|
||||||||||||||||||||
Year ended December 31, 2016
|
$
|
143,609,000
|
$
|
—
|
$
|
21,601,000
|
$
|
—
|
$
|
165,210,000
|
||||||||||
Year ended December 31, 2015
|
$
|
123,466,000
|
$
|
—
|
$
|
20,143,000
|
$
|
—
|
$
|
143,609,000
|
||||||||||
Year ended December 31, 2014
|
$
|
100,026,000
|
$
|
—
|
$
|
23,440,000
|
$
|
—
|
$
|
123,466,000
|
a)
|
Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy (or e-mail attachment) of the Notice of Exercise in the form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier's check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise.
No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.
|
b)
|
The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice.
The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
|
c)
|
Exercise Price
. The exercise price per share of the Common Stock under this Warrant shall be
$0.70
, subject to adjustment hereunder (the "
Exercise Price
").
|
d)
|
Cashless Exercise
. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a "cashless exercise" in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
|
e)
|
Mechanics of Exercise
.
|
i.
|
Delivery of Warrant Shares Upon Exercise
. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder's or its designee's balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system ("
DWAC
") if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company's share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is one (1) Trading Day after the delivery to the Company of the Notice of Exercise (such date, the "
Warrant Share Delivery Date
"). Upon delivery of the Notice of Exercise the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares; provided payment of the aggregate Exercise Price (other than in the case of a Cashless Exercise) is received within three Trading Days of delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $5 per Trading Day (increasing to $10 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.
|
ii.
|
Delivery of New Warrants Upon Exercise
. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
|
iii.
|
Rescission Rights
. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
|
iv.
|
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise
. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder's brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a "
Buy-In
"), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to
|
v.
|
the Company's failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
|
vi.
|
No Fractional Shares or Scrip
. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
|
vii.
|
Charges, Taxes and Expenses
. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided
,
however
, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
|
viii.
|
Closing of Books
. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
|
f)
|
Holder's Exercise Limitations
. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder's Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder's Affiliates (such Persons, "
Attribution Parties
")), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion orexercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder's determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company's most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The "
Beneficial Ownership Limitation
" shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61
st
day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
|
a)
|
Stock Dividends and Splits
. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re‑classification.
|
b)
|
[Reserved].
|
c)
|
Subsequent Rights Offerings
.
In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the "
Purchase Rights
"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder's right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
|
d)
|
Pro Rata Distributions
. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "
Distribution
"), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (
provided
,
however
, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
|
e)
|
Fundamental Transaction
. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a "
Fundamental Transaction
"), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the "
Alternate Consideration
") receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction
.
The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the "
Successor Entity
") to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the "Company" shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.
|
f)
|
Calculations
. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
|
g)
|
Notice to Holder
.
|
i.
|
Adjustment to Exercise Price
. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
|
ii.
|
Notice to Allow Exercise by Holder
. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
|
iii.
|
Section 4
.
Transfer of Warrant
.
|
a)
|
Transferability
. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which cae, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
|
b)
|
New Warrants
. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
|
c)
|
Warrant Register
. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "
Warrant Register
"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
|
a)
|
No Rights as Stockholder Until Exercise
. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.
|
b)
|
Loss, Theft, Destruction or Mutilation of Warrant
. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
|
d)
|
Saturdays, Sundays, Holidays, etc
. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
|
e)
|
Authorized Shares
.
|
f)
|
Jurisdiction
. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.
|
g)
|
Restrictions
. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
|
h)
|
Nonwaiver and Expenses
. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder's rights, powers or remedies. Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
|
i)
|
Notices
. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.
|
j)
|
Limitation of Liability
. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
|
k)
|
Remedies
. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
|
l)
|
Successors and Assigns
. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.
|
m)
|
Amendment
. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company
and the Holder
.
|
n)
|
Severability
. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
|
o)
|
Headings
. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
|
CYTRX CORPORATION | |||
|
By:
|
/s/ STEVEN A. KRIEGSMAN | |
Steven A. Kriegsman | |||
Chairman and Chief Executive Officer | |||
Name:
|
|
(Please Print)
|
|
Address:
|
|
Phone Number:
Email Address:
|
(Please Print)
______________________________________
______________________________________
|
Dated: _______________ __, ______
|
|
Holder's Signature:
|
|
Holder's Address:
|
Dated:
December 5, 2016
|
CYTRX CORPORATION
|
By:
/s/ STEVEN A. KRIEGSMAN
|
|
Steven A. Kriegsman
|
|
Chairman and Chief Executive Officer
|
(a)
|
Exercise of Warrant
. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) and payment of the aggregate Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier's check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three Business Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one Business Day of receipt of such notice. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
|
(b)
|
Exercise Price
. The exercise price per share of the Common Stock under this Warrant shall be $3.00, subject to adjustment hereunder (the "
Exercise P
rice").
|
(c)
|
Mechanics of Exercise.
|
(i)
|
Delivery of Certificates Upon Exercise
. Certificates for shares purchased hereunder shall be transmitted by physical delivery to the address specified by the Holder in the Notice of Exercise within three Business Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above ("
Warrant Share Delivery Date
"). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 3(d)(vi) prior to the issuance of such shares, have been paid.
|
(ii)
|
Delivery of New Warrants Upon Exercise
. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or ce1tificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
|
(iii)
|
No Fractional Shares or Scrip
. No .fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up such final fraction to the next whole share.
|
(iv)
|
Charges, Taxes and Expenses
. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided,
however
, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
|
(v)
|
Closing of Books
. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
|
(a)
|
Stock Dividends and
S
plits.
If the Company, at any time while this Warrant is outstanding (i) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 4(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.
|
(b)
|
Fundamental Transaction
. If at any time while this Warrant is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, or (iii) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the
"
Alternate Consideration
") receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If
holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder's right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 4(b) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
|
(c)
|
Calculations
.
All calculations under this Section 4 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 4, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall exclude treasure shares, if any.
|
(d)
|
Notice to Holders
.
|
(i)
|
Adjustment to Exercise Price
.
Whenever the Exercise Price is adjusted pursuant to any provision of this Section 4, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
|
(ii)
|
Notice to Allow Exercise by Holder
. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the C01mnon Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Cotl11llon Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any right; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder shall be entitled to exercise this Warrant, to the extent it is then vested and exercisable as provided in Section 2, during the 20-day period commencing on the date of such notice to the effective date of the event triggering such notice.
|
(a)
|
Transferability
.
Subject to compliance with Section 5(d), this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in pmt, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the po1tion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
|
(b)
|
New Warrants
.
This Warrant may be divided upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 5(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or ·Warrants to be divided or combined in accordance with such notice.
|
(c)
|
Warrant Register
. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "
Warrant Register
"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
|
(a)
|
No Rights as Shareholder Until Exercise
. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 3(d)(i).
|
(b)
|
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock cetiificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate
|
(c)
|
Saturdays, Sundays, Holidays, etc
. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
|
(d)
|
Authorized Shares
. The Company covenants that, at all times prior to the Termination Date, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that the Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.
|
(e)
|
Jurisdiction
. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the internal laws of the State of Delaware, without regard to conflicts of law principles.
|
(f)
|
Nonwaiver
. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
|
(g)
|
Remedies
. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
|
(h)
|
Successors and Assigns
. Subject to Section 5, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder.
|
(i)
|
Amendment
. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
|
(2)
|
Payment shall take the form of (check applicable box) in lawftil money of the United States.
|
(3)
|
Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:
|
(a)
|
Exercise of Warrant
. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company) and payment of the aggregate Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier's check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three Business Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one Business Day of receipt of such notice. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
|
(b)
|
Exercise Price
. The exercise price per share of the Common Stock under this Warrant shall be $3.75, subject to adjustment hereunder (the "
Exercise P
rice").
|
(c)
|
Mechanics of Exercise.
|
(i)
|
Delivery of Certificates Upon Exercise
. Certificates for shares purchased hereunder shall be transmitted by physical delivery to the address specified by the Holder in the Notice of Exercise within three Business Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above ("
Warrant Share Delivery Date
"). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 3(d)(vi) prior to the issuance of such shares, have been paid.
|
(ii)
|
Delivery of New Warrants Upon Exercise
. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or ce1tificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
|
(iii)
|
No Fractional Shares or Scrip
. No .fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up such final fraction to the next whole share.
|
(iv)
|
Charges, Taxes and Expenses
. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided,
however
, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
|
(v)
|
Closing of Books
. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
|
(a)
|
Stock Dividends and
S
plits.
If the Company, at any time while this Warrant is outstanding (i) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 4(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.
|
(b)
|
Fundamental Transaction
. If at any time while this Warrant is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, or (iii) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the
"
Alternate Consideration
") receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.
If
holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder's right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 4(b) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.
|
(c)
|
Calculations
.
All calculations under this Section 4 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 4, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall exclude treasure shares, if any.
|
(d)
|
Notice to Holders
.
|
(i)
|
Adjustment to Exercise Price
.
Whenever the Exercise Price is adjusted pursuant to any provision of this Section 4, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
|
(ii)
|
Notice to Allow Exercise by Holder
. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the C01mnon Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Cotl11llon Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any right; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder shall be entitled to exercise this Warrant, to the extent it is then vested and exercisable as provided in Section 2, during the 20-day period commencing on the date of such notice to the effective date of the event triggering such notice.
|
(a)
|
Transferability
.
Subject to compliance with Section 5(d), this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in pmt, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the po1tion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
|
(b)
|
New Warrants
.
This Warrant may be divided upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 5(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or ·Warrants to be divided or combined in accordance with such notice.
|
(c)
|
Warrant Register
. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "
Warrant Register
"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
|
(a)
|
No Rights as Shareholder Until Exercise
. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 3(d)(i).
|
(b)
|
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock cetiificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate
|
(c)
|
Saturdays, Sundays, Holidays, etc
. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
|
(d)
|
Authorized Shares
. The Company covenants that, at all times prior to the Termination Date, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that the Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.
|
(e)
|
Jurisdiction
. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the internal laws of the State of Delaware, without regard to conflicts of law principles.
|
(f)
|
Nonwaiver
. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
|
(g)
|
Remedies
. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
|
(h)
|
Successors and Assigns
. Subject to Section 5, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder.
|
(i)
|
Amendment
. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
|
5.1
|
Promotion Bonus
. Employee shall be entitled to a one-time bonus as a result of his promotion to Chief Operating Officer and his continued responsibilities as Chief Medical Officer of SIX HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($625,000.00), which shall be paid by Employer on the first regular payroll in January 2017.
|
5.2
|
Salary; Bonus; Stock Options
.
|
5.3
|
Expense Reimbursement
. Employer shall reimburse Employee for all 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 including, but not limited to: meeting registration; ground transportation to and from airports; ground transportation selected by Employee to and from hotels, meeting sites, restaurants, and other destinations; lodging and meals; provided, however, that Employee shall be permitted to fly first class on all plane trips that are scheduled for more than two hours in duration. When Employee travels to and from Employer's corporate offices, Employer shall pay for (i) round-trip airfare and airport parking or other ground transportation to and from the airports, or, (ii) if driving, the cost of gas, tolls and meals, but shall not pay for any other food or other incidentals except as specifically set forth herein. During the Term, Employer shall provide Employee with (i) hotel, parking and meal accommodations while Employee is working at Employer's corporate offices in reasonable proximity to Employer's corporate offices as chosen by Employee, (ii) Employer-paid memberships to one airline club, and (iii) the use of a rental car with Employer-paid car rental insurance, or at Employee's election reimbursement for car services selected by Employee, while working in Los Angeles, California.
|
5.4
|
Tax Gross-Ups
.
|
5.5
|
Vacation
. Employee shall continue to accrue vacation days without loss of compensation in accordance with Employer's usual policies applicable to all employees at a rate of four weeks' vacation time for each 12-month period during the Term.
|
5.6
|
Employee Benefits
. Employee shall be eligible to participate in any employee benefits made available generally 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.
|
6.1
|
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:
|
6.2
|
Termination by Employer without Cause
. Employer may also terminate Employee's employment without Cause upon not less than ten days written notice to Employee. Upon the effective date of the termination of Employee's employment by Employer without Cause under this Section 6.2, all compensation and benefits to Employee hereunder shall cease and Employee shall be entitled to (a) a lump sum cash payment on the effective date of Employee's termination of employment of (1) 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, (2) any accrued and unpaid bonus as provided in Sections 5.1 and 5.2(b), and (3) such benefits, if any, to which Employee or his dependents or beneficiaries may then be entitled as a participant under the employee benefit plans referred to in Section 5.6; (b) as of the effective date of Employee's termination, full (100%) and immediate vesting of all of Employee's stock options and any other equity awards based on Employer securities, such as restricted stock units, stock appreciation rights, performance units, etc., and all stock options and other equity awards shall remain exercisable for their full term, (c) payment of any Tax Gross-Up or Parachute Tax Gross-Up payment as described in Section 5.4, (d) an amount, which shall be due and payable within ten days following the effective date of such termination, equal to Employee's salary as provided in Section 5.2(a) that would otherwise be payable for the period (the "
Severance Period
") commencing on the date of termination of Employee's employment and ending on the first anniversary of such termination date, provided that if the date of termination occurs following a Change of Control (as hereinafter defined), then the salary described in this clause shall instead be calculated using a 24-month "Severance Period" that commences on the date of termination and ends on the second anniversary of such termination date, (e) retain and have full ownership of all electronic devices provided to Employee (including, without limitation, a computer, telephone and tablet), provided that all Employer confidential information shall be deleted by Employer from such devices before releasing them to Employee, and (f) continued participation, at Employer's cost and expense, of Employee and his dependents, for a period of 12 months following such termination, in any Employer-sponsored group benefit plans in which Employee was participating as of the date of termination. Employee's rights to the benefits under clause (d) of this Section 6.2 shall be conditioned on Employee's prior execution and delivery to Employer of the General Release of All Claims in the form attached hereto as
Exhibit A
.
|
6.3
|
Death or Disability
. In the event of Employee's death or "Disability" (as defined below) during the Term, the Employee's employment shall automatically cease and terminate as of the date of Employee's death or the effective date of Employer's written notice to Employee of its decision to terminate his employment by reason of his Disability, as the case may be, and Employee or his heirs or personal representative shall be entitled to the same payments and benefits, at the same times, as described in Section 6.2 for a termination of employment by Employer without Cause. Likewise, as of the effective date of Employee's death or termination due to Disability, full (100%) and immediate vesting of all of Employee's stock options and any other equity awards based on Employer securities, such as restricted stock units, stock appreciation rights, performance units, etc., held by Employee at the time of his death or Disability and all stock options and other equity awards shall remain exercisable thereafter for their full term. In addition, Employee or his heirs or personal representative shall be entitled to retain and have full ownership of all electronic devices provided to Employee (including, without limitation, a computer, telephone and tablet); provided that all Employer confidential information shall be deleted by Employer from such devices before releasing them to Employee or such heirs or personal representatives. Notwithstanding the foregoing or any provision of Section 6.2, Employer's obligation to pay Employee the salary called for in Section 6.2 for the Severance Period following termination of his employment by reason of his Disability shall be subject to offset and shall be reduced by any and all amounts paid to Employee under any disability insurance policy paid or provided for by Employer as provided in Section 5.6 or otherwise. Employee's "
Disability
" shall have the meaning ascribed to such term in any policy of disability insurance maintained by Employer (or by 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.
|
6.4
|
Termination by Employee for Good Reason
. Employee may terminate his employment hereunder for "Good Reason," which shall mean any material breach by Employer of the terms hereof that is not corrected by Employer within five days after written notice by Employee to Employer, including, without limitation, (i) the assignment to Employee of any duties inconsistent in any respect with his position as Chief Operating Officer and Chief Medical Officer (including status, offices, titles, reporting requirements, authority, duties or responsibilities); (ii) any failure by Employer to comply with its compensation obligations under this Agreement; (iii) Employer's requiring Employee to relocate from San Francisco or report to any office or location more than ten miles of the current location of the Company's headquarters; or (iv) the failure of any purchaser of substantially all the assets of the Employer to assume or renew this Agreement. If Employee terminates his employment for Good Reason, subject to Employer's right to cure as set forth above, the termination shall take effect on the effective date (determined under Section 15) of the written notice to Employer, and Employee shall be entitled to the same payments and benefits, at the same times, described in Section 6.2 for a termination by Employer without Cause. Likewise, as of the effective date of Employee's termination for Good Reason, to the extent not otherwise vested, full (100%) and immediate vesting of all of Employee's stock options and any other equity awards based on Employer securities, such as restricted stock units, stock appreciation rights, performance units, etc., and all stock options and other equity awards shall remain exercisable thereafter for their full term. In addition, Employee shall be entitled to retain and have full ownership of all electronic devices provided to Employee (including, without limitation, a computer, telephone and tablet); provided that all Employer confidential information shall be deleted by Employer from such devices before releasing them to Employee.
|
6.7
|
No Mitigation; No Offset. Employee shall have no obligation to seek other employment or to otherwise mitigate Employer's obligations to him arising from the termination of his employment, and no amounts paid or payable to Employee by Employer under this Agreement shall be subject to offset for any remuneration to which Employee may become entitled from any other source after his employment with Employer terminates, whether attributable to subsequent employment, self-employment or otherwise.
|
"EMPLOYER"
|
|
CytRx Corporation
|
|
By:
/s/ STEVEN A. KRIEGSMAN
|
|
Steven A. Kriegsman
|
|
Chairman and Chief Executive Officer
|
|
"EMPLOYEE"
|
|
/s/ DANIEL LEVITT, M.D., PH.D.
|
|
Daniel Levitt, M.D., Ph.D.
|
|
Dated:
___________________, 20__
|
Daniel Levitt, M.D., Ph.D.
|
·
|
Develop primary goals, operating plans, and short and long-range objectives for the company. Together with other executive team members, the Company's Chief Executive Officer and the Company's Board of Directors, help set company clinical development priorities and goals and develop creative strategies to achieve them with the goal of leading to regulatory approval of products.
|
·
|
Direct, monitor and lead the clinical, regulatory and R&D staff in the implementation of the Company's strategies, including through development of clinical protocols, liaising with clinical investigators, study start-up, conduct and close-out activities, analyzing data, reviewing reports and FDA submissions, and representing the company at scientific and clinical meetings.
|
·
|
Together with other executive team members, help develop and oversee the Company's business plan and budget.
|
·
|
Oversee all aspects of clinical, regulatory and R&D staff administration, including hiring, terminations and performance evaluations.
|
·
|
Represent the Company on scientific and technical matters at internal and external functions, to the financial community, partners, stockholders, major customers, government agencies, and the general public.
|
·
|
Facilitate go/no go decisions on the development of products.
|
·
|
Support the business development team on the technical due diligence associated with investor relations, in-licensing, out-licensing, acquisitions, and co-development agreements.
|
·
|
Work with legal advisors on enriching and optimizing the Company's intellectual property portfolio.
|
·
|
Conduct briefings for senior management and the Board of Directors.
|
·
|
Ensure adherence to SOPs, Good Clinical Practice and FDA regulations.
|
·
|
Copy the Chief Executive Officer on all material email and written correspondence as determined by the Chief Operating Officer and Chief Medical Officer.
|
1. |
See
CytRx Corporation Employee Benefits Handbook, Part II dated January 1, 2017, which is incorporated herein by reference.
|
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:
Scott Wieland
[Residence Address]
|
"EMPLOYER"
CytRx Corporation
By: /s/ STEVEN A. KRIEGSMAN
Steven A. Kriegsman
Chairman of the Board and Chief Executive Officer
|
|
"EMPLOYEE"
/s/ SCOTT WIELAND
Scott Wieland
|
Dated:
___________________, 20__
|
Scott Wieland
|
1.
|
Clinical Operations Responsibilities
|
·
|
Assist CMO with protocol development
|
·
|
Clinical trial oversite, including documentation review and approval (statistical analysis plans, imaging plans and charters, CRFs, etc.)
|
·
|
Oversite of clinical study report development and finalization
|
·
|
Vendor selection, contract negotiations, oversite, conflict resolution
|
·
|
Oversite of clinical, regulatory, and pre-clinical record center
|
·
|
Hiring
|
2.
|
Regulatory Affairs Responsibilities
|
·
|
Communication with regulatory authorities oversite
|
·
|
Development and/or review of regulatory documentation (Investigator Brochure, annual reports, safety reports, etc.), submissions, strategy
|
·
|
Overseeing the New Drug Application for aldoxorubicin
|
·
|
Overseeing European Marketing Application for aldoxorubicin
|
·
|
Development of IND strategy for DK049
|
3.
|
Pre-clinical Responsibilities
|
·
|
Selection of vendors for pharmacology, toxicology, ADME, etc., studies
|
·
|
Oversite of pre-clinical animal studies for aldoxorubicin
|
·
|
Oversite of pre-clinical IND enabling studies for DK049
|
4.
|
Corporate Responsibilities
|
·
|
Poster presentation development
|
·
|
Manuscript oversite
|
·
|
Board of Directors presentations
|
·
|
Clinical trial updates
|
·
|
Working with finance on clinical, regulatory, and pre-clinical budgets
|
·
|
Review and approval of clinical, regulatory, and pre-clinical invoices
|
5.1.
|
Salary
. Employee shall be entitled to receive an annual salary of Four Hundred Thousand Dollars ($400,000), payable in accordance with Employer's normal payroll policies and procedures.
|
5.2.
|
Discretionary Bonus
. Employee also may be eligible for a bonus from time to time 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.
|
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.
|
5.4.
|
Vacation
. Employee shall continue to accrue vacation days without loss of compensation in accordance with Employer's usual policies applicable to all employees at a rate of four weeks' vacation time for each 12-month period during the Term.
|
5.5.
|
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.
|
5.6.
|
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.
|
6.1.
|
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:
|
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:
John Caloz
[Residence Address]`
|
"EMPLOYER"
|
|
CytRx Corporation
|
|
By:
/s/ STEVEN A. KRIEGSMAN
|
|
Steven A. Kriegsman
|
|
Chairman of the Board and Chief Executive Officer
|
|
"EMPLOYEE"
|
|
/s/ JOHN CALOZ
|
|
John Caloz
|
|
Dated:
___________________, 20__
|
John Caloz
|
·
|
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. budgeted 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 internal controls and procedures, including financial controls, and complying with the requirements of the Sarbanes-Oxley Act
|
·
|
Primary responsibility for audits of the company's financial statements and accounting-related disclosure in the company's SEC filings
|
·
|
|
Dated:
___________________, 20____
|
Olivia C. Ware
|
·
|
Lead the functional areas of marketing, sales and business development focused on achieving maximum commercial success with aldoxorubicin, including leading sales and marketing collaborations with other companies, if available on commercially reasonable terms, or overseeing the development of these capabilities on Employer's behalf.
|
·
|
Lead successful marketing execution for the launch of the Company's aldoxorubicin product line, including development of brand strategies to increase awareness and sales.
|
·
|
Be accountable for successful execution and delivery of marketing / sales tactics and systems to monitor and respond to market feedback.
|
·
|
Ensure all promotional efforts adhere to FDA regulations and requirements, and all other relevant federal, state and local laws and international laws, as applicable, as well as pharmaceutical guidelines and internal standard operating procedures.
|
·
|
Have profit and loss responsibility; evaluate, build and drive execution of all business activities and programs to ensure superior commercial performance.
|
·
|
Establish and maintain effective working relationships with key opinion leaders and thought leaders. Drive all brand functions, including but not limited to strategic and tactical planning; forecasting and commercial analytics; pricing; contracting and distribution; reimbursement and patient access; medical education; congress and event management, and patient advocacy.
|
·
|
Collaborate and coordinate across multiple functions, supporting internal groups.
|
·
|
Build, lead, develop and manage a team of sales and marketing professionals and inspire trust and confidence throughout the commercial organization.
|
·
|
As a member of the Employer's Executive leadership team work collaboratively with other senior leaders in Employer, including the Board Directors, to develop a long term vision for Employer's business and determine present and future business needs and opportunities.
|
·
|
Collaborate with CytRx's senior management team, to provide commercial guidance to expand the adoption of aldoxorubicin as well as to provide input into corporate partnerships and other opportunities to expand the domestic and global markets for aldoxorubicin.
|
EMPLOYER:
CytRx Corporation
By: /s/ DR. LOUIS IGNARRO
Dr. Louis Ignarro
Lead Director and Chairman of the Compensation Committee of the CytRx Corporation Board of Directors
|
EMPLOYEE:
By: /s/ STEVEN A. KRIEGSMAN
Steven A. Kriegsman
|
CYTRX CORPORATION
By:
/s/ LOUIS IGNARRO
Louis Ignarro
Title: Lead Director and Chairman of the Compensation Committee
|
|
/s/ STEVEN A. KRIEGSMAN
Steven A. Kriegsman
|
CYTRX CORPORATION | |||
March 15, 2017
|
By:
|
/s/ STEVEN A. KRIEGSMAN | |
Steven A. Kriegsman | |||
Chairman and Chief Executive Officer | |||
CYTRX CORPORATION | |||
March 15, 2017
|
By:
|
/s/ JOHN Y. CALOZ | |
John Y. Caloz | |||
Chief Financial Officer | |||
CYTRX CORPORATION | |||
March 15, 2017
|
By:
|
/s/ STEVEN A. KRIEGSMAN | |
Steven A. Kriegsman | |||
Chairman and Chief Executive Officer | |||
CYTRX CORPORATION | |||
March 15, 2017
|
By:
|
/s/ JOHN Y. CALOZ | |
John Y. Caloz | |||
Chief Financial Officer | |||