Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into
as of May 29, 2003, by and among CytRx Corporation, a Delaware corporation (the
“Company”), and the persons and entities listed on Exhibit A hereto (each, a
“Purchaser” and, collectively, the “Purchasers”).

 

WHEREAS, upon the terms and subject to the conditions of the Securities Purchase
Agreement, dated as of the date hereof (the “Purchase Agreement”), the Company
has agreed to issue and sell shares of its Common Stock and Warrants to purchase
shares of its Common Stock to the Purchasers; and

 

WHEREAS, to induce the Purchasers to execute and deliver the Purchase Agreement
and to purchase the Shares and the Warrants, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, with
respect to the Shares, the Warrants and the Warrant Shares (each as respectively
defined in the Purchase Agreement).

 

NOW, THEREFORE, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which are hereby acknowledged by the parties, the
Company and the Purchasers hereby agree as follows:

 

1. Definitions.

 

Capitalized terms used but not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly controls or is controlled by or under common control with such
Person. For the purposes of this definition, “control,” when used with respect
to any Person, means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms “affiliated,” “controlling” and “controlled” have meanings correlative to
the foregoing.

 

“Blackout Period” shall have the meaning set forth in Section 3(m).

 

“Board” shall have the meaning set forth in Section 3(m).

 

“Business Day” means any day except Saturday, Sunday and any day which is a
legal holiday or a day on which banking institutions in the state of California
generally are authorized or required by law or other government actions to
close.

 

“Commission” means the Securities and Exchange Commission.

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“Common Shares” shall have the meaning set forth in the definition of
“Registrable Securities.”

 

“Common Stock” means the Company’s Common Stock, $.001 par value.

 

“Effectiveness Date” means with respect to the Registration Statement the
earlier of (i) the 90th day following the Closing Date, before which the Company
will use its commercially reasonable best efforts to cause the Registration
Statement to become effective, and (ii) the date which is within five (5)
Business Days after the date on which the Commission informs the Company in
writing (a) that the Commission will not review the Registration Statement, or
(b) that the Company may request the acceleration of the effectiveness of the
Registration Statement.

 

“Effectiveness Period” shall have the meaning set forth in Section 2.

 

“Event” shall have the meaning set forth in Section 8(d).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Holder” means, collectively, each holder from time to time of Registrable
Securities including, without limitation, each Purchaser and its assignees. To
the extent this Agreement refers to an election, consent, waiver, request or
approval of or by the Holder, such reference shall mean an election, consent,
waiver, request or approval by the holders of a majority in interest of the
then-outstanding Registrable Securities (on an as exercised basis).

 

“Indemnified Party” shall have the meaning set forth in Section 6(c).

 

“Indemnifying Party” shall have the meaning set forth in Section 6(c).

 

“Liquidated Damages” shall have the meaning set forth in Section 8(d).

 

“Losses” shall have the meaning set forth in Section 6(a).

 

“NASDAQ” shall mean the NASDAQ Stock Market.

 

“Person” means an individual or a corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

“Prospectus” means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities

 

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covered by the Registration Statement, and all other amendments and supplements
to the Prospectus, including post-effective amendments, and all material
incorporated by reference in such Prospectus.

 

“Registrable Securities” means (i) the shares of Common Stock issued or issuable
pursuant to the Purchase Agreement, and upon any stock split, stock dividend,
recapitalization or similar event with respect to such shares of Common Stock
and any other securities issued in exchange of or replacement of such shares of
Common Stock (collectively, the “Common Shares”); until in the case of any of
the Common Shares (a) a Registration Statement covering such Common Share has
been declared effective by the Commission and continues to be effective during
the Effectiveness Period, or (b) such Common Share is sold in compliance with
Rule 144 or may be sold pursuant to Rule 144(k), after which time such Common
Share shall not be a Registrable Security; (ii) the Warrants issued or issuable
pursuant to the Purchase Agreement until in the case of any of the Warrants (a)
a Registration Statement covering such Warrant has been declared effective by
the Commission and continues to be effective during the Effectiveness Period,
(b) such Warrant is sold in compliance with Rule 144 or may be sold pursuant to
Rule 144(k), after which time such Warrant shall not be a Registrable Security,
or (c) such Warrant is fully exercised for shares of Common Stock, after which
time such Warrant shall not be a Registrable Security; and (iii) the shares of
Common Stock issued and issuable pursuant to the exercise of the Warrants, and
upon any stock split, stock dividend, recapitalization or similar event with
respect to such shares of Common Stock and any other securities issued in
exchange of or replacement of such shares of Common Stock (collectively, the
“Warrant Shares”); until in the case of any of the Warrant Shares (a) a
Registration Statement covering such Warrant Share has been declared effective
by the Commission and continues to be effective during the Effectiveness Period,
or (b) such Warrant Share is sold in compliance with Rule 144 or may be sold
pursuant to Rule 144(k), after which time such Warrant Share shall not be a
Registrable Security.

 

“Registration Statement” means the registration statement, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement, for
the Shares, the Warrants and the Warrant Shares required to be filed by the
Company with the Commission pursuant to this Agreement.

 

“Required Filing Date” means the thirtieth (30th) day immediately following the
Closing Date.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Rule 158” means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

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“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Special Counsel” means an attorney selected by and acting as special counsel to
Holder.

 

“Warrant Shares” shall have the meaning set forth in the definition of
“Registrable Securities.”

 

2. Registration. On or prior to the Required Filing Date, the Company shall
prepare and file with the Commission a Registration Statement covering the
resale of the Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance with the Securities Act and the rules
promulgated thereunder) and shall contain (except if otherwise directed by the
Purchasers) the “Plan of Distribution” attached hereto as Exhibit B. The Company
shall (i) use its commercially reasonable best efforts to cause the Registration
Statement to be declared effective under the Securities Act (including filing
with the Commission a request for acceleration of effectiveness within five (5)
Business Days of the date that the Company is notified in writing by the
Commission that the Registration Statement will not be “reviewed,” or not be
subject to further review) as soon as possible after the filing thereof, but in
any event prior to the Effectiveness Date, and (ii) keep such Registration
Statement continuously effective under the Securities Act for a period of two
years from the Effectiveness Date (the “Effectiveness Period”).

 

3. Registration Procedures; Company’s Obligations.

 

In connection with the registration of the Registrable Securities, the Company
shall:

 

(a) Prepare and file with the Commission on or prior to the Required Filing
Date, a Registration Statement on Form S-3 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3 such
registration shall be on another appropriate form in accordance with the
Securities Act and the Rules promulgated thereunder) in accordance with the
method or methods of distribution thereof as specified by the Holder (except if
otherwise directed by the Holder), and use its commercially reasonable best
efforts to cause the Registration Statement to become effective and remain
effective as provided herein; provided, however, that not less than three (3)
Business Days prior to the filing of the Registration Statement or any related
Prospectus or any amendment or supplement thereto (including any document that
would be incorporated therein by reference), the Company shall (i) furnish to
the Holder and any Special Counsel, copies of all such documents proposed to be
filed, which documents (other than those incorporated by reference) will be
subject to the timely review of and comment by such Special Counsel, and (ii) at
the request of the Holder cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as

 

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shall be necessary, in the reasonable opinion of such Special Counsel, to
conduct a reasonable investigation within the meaning of the Securities Act. The
Company shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holder or any Special Counsel
shall reasonably object in writing within three (3) Business Days of their
receipt thereof.

 

(b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement as may be necessary to
keep the Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) respond promptly to any comments received from the Commission with respect
to the Registration Statement or any amendment thereto and promptly provide the
Holder true and complete copies of all correspondence from and to the Commission
relating to the Registration Statement; and (iv) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the Holder set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.

 

(c) Notify the Holder of Registrable Securities to be sold and any Special
Counsel promptly (and, in the case of (i)(A) below, not less than three (3)
Business Days prior to such filing and, in the case of (i)(C) below, no later
than the first Business Day following the date on which the Registration
Statement becomes effective) and (if requested by any such Person) confirm such
notice in writing no later than three (3) Business Days following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed, (B) when the Commission
notifies the Company whether there will be a “review” of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event that makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

 

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The Company shall promptly furnish to the Special Counsel, without charge, (i)
any correspondence from the Commission or the Commission’s staff to the Company
or its representatives relating to any Registration Statement, and (ii) promptly
after the same is prepared and filed with the Commission, a copy of any written
response to the correspondence received from the Commission.

 

(d) Use its commercially reasonable best efforts to avoid the issuance of, or,
if issued, obtain the withdrawal of, (i) any order suspending the effectiveness
of the Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any U.S. jurisdiction, at the earliest practicable moment.

 

(e) If requested by the Holder, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to the Registration Statement such
information as the Company reasonably agrees should be included therein, and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.

 

(f) Furnish to the Holder and any Special Counsel, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the Commission.

 

(g) Promptly deliver to the Holder and any Special Counsel, without charge, as
many copies of the Registration Statement, Prospectus or Prospectuses (including
each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request; and the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by the selling Holder
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto.

 

(h) Prior to any public offering of Registrable Securities, use its commercially
reasonable best efforts to register or qualify or cooperate with the selling
Holder and any Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as the Holder reasonably requests
in writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any tax
in any such jurisdiction where it is not then so subject.

 

(i) Cooperate with the Holder to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold pursuant to a
Registration Statement

 

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and to enable such Registrable Securities to be in such denominations and
registered in such names as the Holder may request at least two (2) Business
Days prior to any sale of Registrable Securities.

 

(j) Upon the occurrence of any event contemplated by Section 3(c)(v), promptly
prepare a supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

 

(k) Use its commercially reasonable best efforts to cause all Registrable
Securities relating to such Registration Statement to be quoted by NASDAQ and
any other securities exchange, quotation system, market or over-the-counter
bulletin board, if any, on which the same securities issued by the Company are
then listed as and when required pursuant to the Purchase Agreement.

 

(l) Comply in all material respects with all applicable rules and regulations of
the Commission and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 not later than forty-five (45) days after the end of any twelve (12)
month period (or ninety (90) days after the end of any twelve (12) month period
if such period is a fiscal year) commencing on the first day of the first fiscal
quarter of the Company after the effective date of the Registration Statement,
which statement shall conform to the requirements of Rule 158.

 

(m) If (i) there is material non-public information regarding the Company which
the Company’s Board of Directors (the “Board”) reasonably determines not to be
in the Company’s best interest to disclose and which the Company is not
otherwise required to disclose, or (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Board reasonably determines not to be in the Company’s best
interest to disclose and which the Company would be required to disclose under
the Registration Statement, then the Company may suspend effectiveness of a
Registration Statement and suspend the sale of Registrable Securities under a
Registration Statement one (1) time every three (3) months or three (3) times in
any twelve month period, provided that the Company may not suspend its
obligation for more than thirty (30) days in the aggregate in any twelve month
period if suspension is for any of the reasons listed above or sixty (60) days
in the aggregate in any twelve month period for any other reason (each, a
“Blackout Period”); provided, however, that no such suspension shall be
permitted for more than twenty (20) consecutive days, arising out of the same
set of facts, circumstances or transactions.

 

(n) Within two (2) Business Days after the Registration Statement which includes
the Registrable Securities is ordered effective by the Commission, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such

 

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Registrable Securities (with copies to the Holder whose Registrable Securities
are included in such Registration Statement) confirmation that the Registration
Statement has been declared effective by the Commission in the form attached
hereto as Exhibit C.

 

4. Registration Procedures; Holder’s Obligations

 

In connection with the registration of the Registrable Securities, the Holder
shall:

 

(a) If the Registration Statement refers to the Holder by name or otherwise as
the holder of any securities of the Company, have the right to require (if such
reference to the Holder by name or otherwise is not required by the Securities
Act or any similar federal statute then in force) the deletion of the reference
to the Holder in any amendment or supplement to the Registration Statement filed
or prepared subsequent to the time that such reference ceases to be required.

 

(b) (i) not sell any Registrable Securities under the Registration Statement
until it has received copies of the Prospectus as then amended or supplemented
as contemplated in Section 3(g) and notice from the Company that such
Registration Statement and any post-effective amendments thereto have become
effective as contemplated by Section 3(c), (ii) comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection
with sales of Registrable Securities pursuant to the Registration Statement, and
(iii) furnish to the Company information regarding such Holder and the
distribution of such Registrable Securities as is required by law to be
disclosed in the Registration Statement, and the Company may exclude from such
registration the Registrable Securities of the Holder if it fails to furnish
such information within a reasonable time prior to the filing of each
Registration Statement, supplemented Prospectus and/or amended Registration
Statement.

 

(c) upon receipt of a notice from the Company of the occurrence of any event of
the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(m),
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until the Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(j), or until it is advised in writing by the Company that the use of
the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration Statement.

 

5. Registration Expenses

 

All reasonable fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or not
the Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, the following: (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with NASDAQ and each securities exchange or other market on which
Registrable Securities are required hereunder to be listed, (B) with respect to
filings required to be made with the Commission, and (C) in compliance with
state securities or Blue Sky laws); (ii) printing

 

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expenses (including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the holders of a majority of the Registrable
Securities included in the Registration Statement); (iii) messenger, telephone
and delivery expenses; (iv) fees and disbursements of counsel for the Company;
and (v) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement, including, without limitation, the Company’s independent public
accountants (including the expenses of any comfort letters or costs associated
with the delivery by independent public accountants of a comfort letter or
comfort letters). In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. The Company shall not be responsible
for the payment of any commissions or other expenses incurred by the Holder in
connection with their sales of Registrable Securities or for the fees of any
Special Counsel.

 

6. Indemnification

 

(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Purchaser, its
permitted assignees, officers, directors, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees, each Person who controls any such Purchaser or permitted assignee
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each such
controlling Person, and the respective successors, assigns, estate and personal
representatives of each of the foregoing, to the fullest extent permitted by
applicable law, from and against any and all claims, losses, damages,
liabilities, penalties, judgments, costs (including, without limitation, costs
of investigation) and expenses (including, without limitation, reasonable
attorneys’ fees and expenses) (collectively, “Losses”), as incurred, arising out
of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus, as supplemented or
amended, if applicable, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except (i) to the extent, but only to the extent, that
such untrue statements or omissions are based solely upon information regarding
the Holder furnished in writing to the Company by the Holder expressly for use
in the Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto, or (ii) as a result of the failure of the
Holder to deliver a Prospectus, as amended or supplemented, to a purchaser in
connection with an offer or sale (provided that copies of the Prospectus, as
amended or supplemented, have been provided to the Holder by the Company for
delivery to such purchaser). The Company shall notify the Holder promptly of the
institution, threat or assertion of any Proceeding of which the Company is aware
in connection with the transactions contemplated by this Agreement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of an

 

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Indemnified Party (as defined in Section 6(c) hereof) and shall survive the
transfer of the Registrable Securities by the Holder.

 

(b) Indemnification by Purchaser. Each Purchaser and its permitted assignees
shall, severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, and the respective successors, assigns, estate and personal
representatives of each of the foregoing, to the fullest extent permitted by
applicable law, from and against any and all Losses, as incurred, arising out of
or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus, as supplemented or
amended, if applicable, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the extent, that (i) such
untrue statement or omission is contained in or omitted from any information so
furnished in writing by the Holder or the Special Counsel to the Company
specifically for inclusion in the Registration Statement or such Prospectus, and
(ii) such information was reasonably relied upon by the Company for use in the
Registration Statement, such Prospectus or such form of prospectus or, to the
extent that such information relates to the Holder or the Holder’s proposed
method of distribution of Registrable Securities, was reviewed and expressly
approved in writing by the Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus Supplement.
Notwithstanding anything to the contrary contained herein, the Holder shall be
liable under this Section 6(b) for only that amount as does not exceed the net
proceeds to the Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement.

 

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity pursuant to Section 6(a) or
6(b) hereunder (an “Indemnified Party”), such Indemnified Party promptly shall
notify the Person from whom indemnity is sought (the “Indemnifying Party) in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have materially
and adversely prejudiced the Indemnifying Party.

 

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed promptly to assume
the defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (iii) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a

 

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conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, which consent shall not unreasonably
be withheld, conditioned or delayed, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

 

All reasonable fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder or pursuant to applicable law).

 

(d) Contribution. If a claim for indemnification under Section 6(a) or 6(b) is
unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 6(c), any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for under
Section 6(a) or 6(b) was available to such party in accordance with its terms.
Notwithstanding anything to the contrary contained herein, the Holder shall be
liable or required to contribute under this Section 6(d) for only that amount as
does not exceed the net proceeds to the Holder as a result of the sale of
Registrable Securities pursuant to the Registration Statement.

 

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The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

 

The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

 

7. Rule 144.

 

As long as the Holder owns Registrable Securities, the Company covenants to
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act and to
promptly furnish the Holder with true and complete copies of all such filings.
As long as the Holder owns Registrable Securities, if the Company is not
required to file reports pursuant to Section 13(a) or 15(d) of the Exchange Act,
it will prepare and furnish to the Holder and make publicly available in
accordance with Rule 144(c) promulgated under the Securities Act annual and
quarterly financial statements, together with a discussion and analysis of such
financial statements in form and substance substantially similar to those that
would otherwise be required to be included in reports required by Section 13(a)
or 15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as the Holder may reasonably request, all to the extent required
from time to time to enable the Holder to sell Warrants, Common Shares and
Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including providing any legal opinions of counsel to the Company
referred to in the Purchase Agreement. Upon the request of any Holder, the
Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such requirements.

 

8. Miscellaneous.

 

(a) Remedies. The remedies provided in this Agreement and the Purchase Agreement
are cumulative and not exclusive of any remedies provided by law. In the event
of a breach by the Company or by the Holder of any of their obligations under
this Agreement, the Holder or the Company, as the case may be, in addition to
being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and the Holder agree that monetary
damages would not provide adequate compensation for any losses incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would be
adequate.

 

(b) No Inconsistent Agreements. Neither the Company nor any of its Affiliates
has as of the date hereof entered into, nor shall the Company or any of its
Affiliates, on

 

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or after the date of this Agreement, enter into, any agreement with respect to
its securities that is inconsistent with the rights granted to the Holder in
this Agreement or otherwise conflicts with the provisions hereof. Without
limiting the generality of the foregoing, without the written consent of the
Holder, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company under the Securities Act if
the rights so granted are inconsistent with the rights granted to the Holder set
forth herein, or otherwise prevent the Company with complying with all of its
obligations hereunder.

 

(c) No Piggyback on Registrations. Neither the Company nor any of its security
holders (other than the Holder in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement; provided, however, that
securities held by other security holders the resale of which the Company is
contractually obligated to register under the Securities Act as of the date of
this Agreement may be included in the Registration Statement.

 

(d) Failure to File Registration Statement and Other Events. The Company and the
Holder agree that the Holder will suffer damages if the Registration Statement
is not filed on or prior to the Required Filing Date or is not declared
effective by the Commission on or prior to the Effectiveness Date and maintained
in the manner contemplated herein during the Effectiveness Period or if certain
other events occur. The Company and the Holder further agree that it would not
be feasible to ascertain the extent of such damages with precision. Accordingly,
if (i) the Registration Statement is not filed on or prior to the Required
Filing Date, or is not declared effective by the Commission on or prior to the
Effectiveness Date, or (ii) the Company fails to file with the Commission a
request for acceleration within five (5) Business Days of the date that the
Company is notified in writing by the Commission that a Registration Statement
will not be “reviewed,” or not subject to further review, or (iii) the
Registration Statement is filed with and declared effective by the Commission
but thereafter ceases to be effective or available as to all Registrable
Securities at any time during the Effectiveness Period, without being succeeded
within a reasonable period by a subsequent Registration Statement filed with and
declared effective by the Commission (any such failure or breach being referred
to as an “Event”), the Company shall pay as liquidated damages for such failure
or breach and not as a penalty (the “Liquidated Damages”) to the Holder an
amount equal to three percent (3%) of the purchase price of the Common Stock
paid by the Holder pursuant to the Purchase Agreement for each thirty (30) day
period during which any Event described in subsection (i) above occurs and is
continuing, and two percent (2%) of such purchase price for each thirty (30) day
period during which any Event described in subsection (ii) or (iii) above occurs
and is continuing, pro rated for any period less than thirty (30) days,
following the Event until the applicable Event has been cured; provided,
however, the Holder will waive any Liquidated Damages resulting from the
Registration Statement not being declared effective by the Commission on or
prior to the Effectiveness Date if the Company cures such failure or breach
prior to the end of the first thirty (30) day period thereafter. Notwithstanding
the foregoing, in no event shall the Company be required to pay aggregate
Liquidated Damages under this Section 8(d) in excess of eight percent (8%) of
the purchase price of the Common Stock paid by the Holder pursuant to the
Purchase Agreement. Payments to be made pursuant to this Section 8(d) shall be
due and payable immediately upon demand in cash. The parties agree that the
Liquidated Damages represent a reasonable estimate on the part of the parties,
as of the date of this Agreement, of the amount of damages that may be incurred
by the Holder if the Registration Statement is not filed on or prior to the
Required Filing Date or has not been declared effective by the Commission on or
prior to

 

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the Effectiveness Date and maintained in the manner contemplated herein during
the Effectiveness Period.

 

(e) Consent to Jurisdiction. The Company and each Purchaser (i) hereby
irrevocably submit to the non-exclusive jurisdiction of the United States
District Court for the Southern District of New York and the courts of the State
of New York located in the Borough of Manhattan, The City of New York, for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement or the Purchase Agreement, and (ii) hereby waive, and agree not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. The Company and each Purchaser consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 8(e) shall affect
or limit any right to serve process in any other manner permitted by law.

 

(f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the
Purchasers.

 

(g) Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earlier of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice prior to 5:00 p.m., Pacific Time, on a Business Day,
(ii) the first Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified for notice later than 5:00 p.m., Pacific Time, on any date and earlier
than 11:59 p.m., Pacific Time, on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) actual receipt by the party to whom such notice is required to be given.

 

  (x)   if to the Company:

 

CytRx Corporation

11726 San Vicente Boulevard, Suite 650

Los Angeles, California 90049

Attention: Steven A. Kriegsman

Telecopier: (310) 826-5529

Telephone: (310) 826-5648

 

with a copy to:

 

Troy & Gould Professional Corporation

1801 Century Park East, 16th Floor

 

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Los Angeles, California 90067-2367

Attention: Sanford J. Hillsberg

Telecopier: (310) 201-4746

Telephone: (310) 553-4441

 

  (y)   if to any Purchaser:

 

At the address of such Purchaser set forth on Exhibit A to this Agreement.

 

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice.

 

(h) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns and shall
inure to the benefit of the Holder and its successors and assigns. The Company
may not assign this Agreement or any of its respective rights or obligations
hereunder without the prior written consent of the Purchasers. Each Purchaser
may assign its rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.

 

(i) Assignment of Registration Rights. The rights of the Holder hereunder,
including the right to have the Company register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be assignable
by each Holder to any transferee of the Holder of all or a portion of the shares
of Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (A) the name and address of such transferee or
assignee, and (B) the securities with respect to which such registration rights
are being transferred or assigned; (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws; (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement and shall be for no less than 10% of the Registrable
Securities. In addition, the Holder shall have the right to assign its rights
hereunder to any other Person with the prior written consent of the Company,
which consent shall not be unreasonably withheld, conditioned or delayed. The
rights to assignment shall apply to the Holder (and to subsequent) successors
and assigns. In the event of an assignment pursuant to this Section 8(i), the
Purchaser shall pay all incremental costs and expenses incurred by the Company
in connection with filing a Registration Statement (or an amendment to the
Registration Statement) to register the shares of Registrable Securities
assigned to any assignee or transferee of the Purchaser.

 

(j) Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the same Agreement. In the event
that any signature is

 

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delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.

 

(k) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law thereof. This Agreement shall not be interpreted or
construed with any presumption against the party causing this Agreement to be
drafted.

 

(l) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

 

(m) Termination. This Agreement shall terminate on the date on which all
remaining Registrable Securities may be sold without restriction pursuant to
Rule 144(k) of the Securities Act.

 

(n) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable in any respect,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

(o) Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

 

[Remainder of page intentionally left blank. Signature pages to follow.]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized persons as of the date first indicated
above.

 

CYTRX CORPORATION

By:

 

 

--------------------------------------------------------------------------------

Name:

 

Steven A. Kriegsman

Title:

 

Chief Executive Officer

 

[Signatures of Purchasers to follow on next pages.]

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                 PURCHASERS:

 

       

            By:__________________________________

     

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EXHIBIT A

PURCHASERS

 

 

A-1

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EXHIBIT B

PLAN OF DISTRIBUTION

 

We are registering the shares of common stock and the warrants on behalf of the
selling stockholders. The common stock and the warrants may be sold in one or
more transactions at fixed prices, at prevailing market prices at the time of
sale, at prices related to the prevailing market prices, at varying prices
determined at the time of sale, or at negotiated prices. These sales may be
effected at various times in one or more of the following transactions, or in
other kinds of transactions:

 

  •   transactions on the NASDAQ Stock Market or on any national securities
exchange or U.S. inter-dealer system of a registered national securities
association on which the common stock and the warrants may be listed or quoted
at the time of sale;

 

  •   in the over-the-counter market;

 

  •   in private transactions and transactions otherwise than on these exchanges
or systems or in the over-the-counter market;

 

  •   in connection with short sales of the shares;

 

  •   by pledge to secure or in payment of debt and other obligations;

 

  •   through the writing of options, whether the options are listed on an
options exchange or otherwise;

 

  •   in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options; or

 

  •   through a combination of any of the above transactions.

 

The selling stockholders and their successors, including their transferees,
pledgees or donees or their successors, may sell the common stock and the
warrants directly to purchasers or through underwriters, broker-dealers or
agents, who may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders or the purchasers. These discounts,
concessions or commissions as to any particular underwriter, broker-dealer or
agent may be in excess of those customary in the types of transactions involved.

 

The selling stockholders also may engage in short sales against the box, puts
and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.

 

In addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 of the Securities Act may be sold under Rule 144 rather
than pursuant to this prospectus.

 

B-1

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The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock and warrants owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus after we have filed an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act amending the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.

 

The selling stockholders also may transfer the shares of common stock and
warrants in other circumstances, in which case the transferees, pledgees or
other successors in interest will be the selling beneficial owners for purposes
of this prospectus and may sell the shares of common stock and warrants from
time to time under this prospectus after we have filed an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act amending the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.

 

The selling stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock and warrants may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with such
sales. In such event, any commissions received by such broker-dealers or agents
and any profit on the resale of the shares of common stock or warrants purchased
by them may be deemed to be underwriting commissions or discounts under the
Securities Act.

 

We entered into a registration rights agreement for the benefit of the selling
stockholders to register the common stock and the warrants under applicable
federal and state securities laws. The registration rights agreement provides
for cross-indemnification of the selling stockholders and us and our respective
directors, officers and controlling persons against specific liabilities in
connection with the offer and sale of the common stock and the warrants,
including liabilities under the Securities Act. We will pay substantially all of
the expenses incurred by the selling stockholders incident to the registration
of the common stock and the warrants.

 

The selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock or warrants,
nor is there an underwriter or coordinating broker acting in connection with a
proposed sale of shares of common stock or warrants by any selling stockholder.
If we are notified by any selling stockholder that any material arrangement has
been entered into with a broker-dealer for the sale of shares of common stock or
warrants, if required, we will file a supplement to this prospectus. If the
selling stockholders use this prospectus for any sale of the shares of common
stock or warrants, they will be subject to the prospectus delivery requirements
of the Securities Act.

 

The anti-manipulation rules of Regulation M under the Securities Exchange Act
may apply to sales of our common stock and activities of the selling
stockholders.

 

 

B-2

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EXHIBIT C

 

FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT

 

[Name and address of Transfer Agent]                                       
            

 

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Attn:                                                             

 

  Re:   CytRx Corporation

 

Ladies and Gentlemen:

 

We are counsel to CytRx Corporation, a Delaware corporation (the “Company”), and
have represented the Company in connection with that certain Securities Purchase
Agreement (the “Purchase Agreement”), dated as of May 29, 2003, by and among the
Company and the purchasers (the “Purchasers” and the “Holders”) named therein
pursuant to which the Company issued to the Purchasers shares (the “Shares”) of
its Common Stock, $0.001 par value. Pursuant to the Purchase Agreement, the
Company has also entered into a Registration Rights Agreement with the
Purchasers (the “Registration Rights Agreement”), dated as of May 29, 2003,
pursuant to which the Company agreed, among other things, to register the
Registrable Securities (as defined in the Registration Rights Agreement),
including the Shares, under the Securities Act of 1933, as amended (the “1933
Act”). In connection with the Company’s obligations under the Registration
Rights Agreement, on                           , 2003, the Company filed a
Registration Statement on Form S-3 (File No. 333-            ) (the
“Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the resale of the Registrable Securities which names the
Holders as selling stockholders thereunder.

 

In connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and, accordingly, the
Registrable Securities are available for resale under the 1933 Act in the manner
specified in, and pursuant to the terms of, the Registration Statement.

 

Very truly yours,

By:

 

 

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cc: [PURCHASERS]

 

C-1