EXHIBIT 10.1
THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
     This Third Amended and Restated Employment Agreement (this “Agreement”) is
made and entered into as of the 17th day of May, 2005, by and between CytRx
Corporation, a Delaware corporation (“Employer”), and Steven A. Kriegsman, an
individual and resident of the State of California (“Employee”), with reference
to the following facts:
     A. Employer and Employee previously entered into a Second Amended and
Restated Employment Agreement, dated June 10, 2003 (the “2003 Employment
Agreement”), under which Employee is serving as President and Chief Executive
Officer of Employer in accordance with the terms of that agreement which such
term of employment will expire on July 15, 2006.
     B. Under the terms of the 2003 Employment Agreement, Employee is permitted
to continue to serve as the President and Chairman of the Board of the Kriegsman
Capital Group and its affiliates (collectively, “The Kriegsman Group”) and to
devote certain time and attention to the operations of The Kriegsman Group.
     C. Employer believes that Employee has been and will continue to be an
integral part of its management and is and will continue to be responsible for
developing its business.
     D. Employee possesses extensive knowledge regarding Employer’s business,
including confidential and proprietary information concerning marketing plans
and strategy, business plans, projections, and the formulae and models
pertaining thereto, customer needs and peculiarities, finances, operations,
billing methods, customer lists and trade secrets.
     F. Employer and Employee desire to amend and restate the 2003 Employment
Agreement under which Employee shall serve on a full-time basis as Employer’s
President and Chief Executive Officer on the terms set forth in this Agreement,
with the term of this new employment agreement to commence on July 1, 2005 (the
“Effective Date”).
     NOW, THEREFORE, upon the above premises, and in consideration of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows.
     1. Continuation and Expiration of 2003 Employment Agreement. Employer and
Employee agree that Employee shall continue to be employed as Employer’s
President and Chief Executive Officer under the terms of the 2003 Employment
Agreement through June 30, 2005 (at the rate of $400,000 per year, which became
effective on January 1, 2005). Employer and Employee agree that with the
exception of

-1-

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

 

Employee’s remaining scheduled salary payments from May 17, 2005 through
June 30, 2005, the bonus compensation to be determined and paid to Employee for
the one-year period ending July 15, 2005 pursuant to Section 6.2 of the 2003
Employment Agreement (which shall be paid on July 14, 2005), and the
reimbursement of any expenses incurred by Employee through June 30, 2005 in
accordance with Employer’s expense reimbursement policy, Employer will owe no
further compensation or other amounts to Employee on July 15, 2003 under the
2003 Employment Agreement, including without limitation salary, bonus or
vacation pay.
     2. New Employment Agreement. Effective as of the Effective Date, Employer
hereby hires Employee as Employer’s President and Chief Executive Officer, and
Employee hereby accepts such employment and position with Employer, on the terms
and conditions set forth herein. Employer understands that his duties as
President and Chief Executive Officer may change from time to time over the term
of this Agreement in the discretion of Employer’s Board of Directors, but such
duties shall in all events be consistent with the duties customarily assigned to
the Chief Executive Officer of a company such as Employer.
     3. Duties. Employee shall perform all duties assigned to him by the
Employer’s Board of Directors faithfully, diligently and to the best of his
ability. Such duties include, without limitation, the overseeing and
implementation of the business plan adopted by the Board of Directors (as may be
revised from time to time by the Board of Directors). Employee shall perform the
services contemplated under this Agreement in accordance with the policies
established by and under the direction of the Board of Directors. Employee shall
have such corporate power and authority as shall reasonably be required to
enable him to discharge his duties under this Agreement.
     4. Time and Efforts. Subject to the exceptions set forth in this Section 4,
Employee shall devote 100% of his business time, efforts, attention, and
energies to Employer’s business in order to implement Employer’s business plan
and discharge his duties under this Agreement.
          4.1. Directorship Exception. Notwithstanding any other provision of
this Section 4, while this Agreement is in effect, Employee may serve on the
board of directors of up to three companies other than Employer, but in no event
shall Employee serve on the board of directors of any company that is directly
competitive with Employer or serve as the chairman of any audit committee or
other committee of any other board of directors that requires substantial
additional time on the part of Employee beyond that customarily required to
serve as a member of the board of directors unless such service is approved by
the Board of Directors. Employee may make and manage personal business
investments of his choice and serve in any capacity with any civic, educational
or charitable organization, or any governmental entity or trade association,
without seeking or obtaining approval by the Board of Directors, provided such
activities and services do not materially interfere or conflict with the
performance of his duties hereunder.

-2-

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

 

          4.2. The Kriegsman Group Exception. Notwithstanding any other
provision of this Section 4, Employee may continue to serve as the President and
Chairman of the Board of and to operate The Kriegsman Group while this Agreement
is in effect, so long as his involvement with The Kriegsman Group is strictly
limited to completing that company’s current assignments for SuperGen, Inc.
Employee agrees that immediately following completion of the SuperGen, Inc.
assignments, Employee will either (i) terminate the operations of The Kriegsman
Group or (ii) retain a new President for The Kriegsman Group and thereafter
cease all personal activities on behalf of The Kriegsman Group. Nothing
contained in this Section 4 shall limit Employee’s right to engage in activities
or receive benefits from The Kriegsman Group solely in his capacity as an equity
owner of that firm.
     5. Term. Employee’s employment under this Agreement shall commence on the
Effective Date and shall continue until July 1, 2008 (the “Expiration Date”),
unless sooner terminated by Employer or Employee in accordance with Section 7
(the “Term”); provided, however, that unless Employer or Employee gives written
notice to the other party to the contrary at least 180 days prior to the
Expiration Date, this Agreement shall automatically be extended for an
additional term of one (1) year following the Expiration Date; and, provided
further, that this Agreement shall continue to renew automatically for an
additional term of one (1) year on each anniversary of the Expiration Date
unless Employer or Employee gives written notice to the other party to the
contrary at least 90 days prior to such anniversary date. References herein to
the “Term” shall include any automatic extensions pursuant to the preceding
sentence. Provision of a notice that this Agreement will not be extended shall
not constitute a breach of this Agreement.
     6. Compensation. As the total consideration for Employee’s services
rendered under this Agreement, Employer shall pay Employee the following
compensation:
          6.1. Salary. Commencing as of the Effective Date, Employer shall pay
Employee an annual salary of $400,000 per year, in 24 equal semi-monthly
installments, on the 15th and last day of each month during the Term. Employee’s
annual salary shall be subject to review annually by the Board of Directors of
Employer and may be increased (but not decreased) in the sole discretion of the
Board of Directors or the Compensation Committee of the Board.
          6.2. Bonus Compensation. Employee shall receive an annual cash bonus
on the business day immediately preceding each anniversary of the Effective Date
while this Agreement is in effect. The amount of each such bonus payment shall
be determined by Employer’s Board of Directors or Compensation Committee, in its
sole discretion, but in no event shall any such bonus be less than $150,000 for
each year (prorated for any period of less than a full year) during the Term.
          6.3. Stock Options. As has been approved by the Employer’s Board of
Directors, Employer shall grant to Employee as of May 17, 2005 a nonqualified
stock option under the Plan to purchase 300,000 shares of Employer’s common
stock at a price

-3-

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

 

of $0.79 per share (the “New Option”), which shall have a term of ten years,
shall vest commencing May 17, 2005 in monthly installments of 1/36th each on the
17th day of each month thereafter, so that the New Option shall be fully vested
as to all of the shares covered thereby on May 17, 2008, provided that Employee
shall remain in the continuous employ of Employer through each such vesting
date, and shall have such other terms and conditions as are set forth in
Employer’s Nonqualified Option Agreement evidencing the New Option. Employee
also shall be eligible for future grants of stock options and other equity
awards based on Employer stock in accordance with Employer’s practices and
policies with respect to its senior executives.
          6.4. Expense Reimbursement. Employer shall promptly reimburse Employee
for reasonable and necessary business and entertainment expenses incurred by
Employee in connection with the performance of Employee’s duties in accordance
with Employer’s usual reimbursement policies and procedures in effect from time
to time.
          6.5. Vacation. Employee shall be entitled to four weeks vacation time
for each 12-month period during the Term without loss of compensation.
Employee’s vacation shall be governed by Employer’s usual policies applicable to
all employees.
          6.6. Employee Benefit Plans and Fringe Benefits. Employee shall be
eligible to participate in all employee benefit plans and programs, fringe
benefits and perquisites as in effect generally with respect to other senior
officers of Employer; provided, however, that unless and until Employer shall
adopt a group medical benefit plan providing health care coverage for its
employees, including Employee, Employer shall continue during the Term to pay on
Employee’s behalf the annual premiums for the medical insurance coverage
currently maintained by Employee for himself and his family. During the Term,
Employer shall also continue to make fixed annual premium payments of $5,000 on
the Transamerica Occidental Life Insurance Company policy insuring Employee
under which Employee or his designee is the beneficiary.
          6.7. Tax Withholding. Employer shall have the right to deduct from the
compensation 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 of Employee.
     7. Termination.
          7.1. Termination by Employer for Cause. Employer may terminate
Employee’s employment hereunder for “Cause” (as defined below), provided that
Employer has complied with the provisions of this Section 7.1. Employee shall be
given written notice by Employer’s Board of Directors of the intention to
terminate him for Cause. Such notice shall state in reasonable detail the
particular circumstances that constitute Cause for termination. Employee shall
have 15 days after receiving such notice in which to cure such circumstances, to
the extent such cure is possible. If cure is not possible, or if he fails to
cure such circumstances, Employee shall then be entitled to a hearing before the
Board. Such hearing shall be held within 20 days of his receiving

-4-

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

 

such notice, provided that he requests such hearing within 15 days of receiving
such notice. If, within five days following such hearing, the Board gives
written notice to Employee confirming that, in the judgment a majority of the
members of the Board (excluding Employee), Cause for terminating his employment
on the basis set forth in the original notice exists, the Term and Employee’s
employment hereunder shall be terminated for Cause. The term “Cause” for
purposes of this New Employment Agreement shall mean any of the following:
               (a) Employee has materially breached any material term of this
Agreement;
               (b) Employee is (i) convicted of, or has entered a plea of guilty
or nolo contendere to, any felony that in the reasonable judgment of Employer’s
Board of Directors is materially injurious to Employer or its reputation or
(ii) is convicted of, or has entered a plea of guilty or nolo contendere to, any
misdemeanor, felony or other crime of moral turpitude that in the reasonable
judgment of the Board of Directors of Employer is materially injurious to
Employer or its reputation; provided, however, that in the event Employee is
indicted for, or charged with, the commission of any felony that in the judgment
of the Board of Directors could reasonably be expected to result in substantial
lasting harm to Employer or its reputation, Employer shall be entitled summarily
to suspend Employee’s services to Employer hereunder, without a loss to Employee
of his compensation and other benefits hereunder, during the pendency of such
indictment or charge;
               (c) Employee has willfully committed (i) any act of fraud or
gross misconduct against Employer or (ii) any act of fraud or gross misconduct
not directly involving Employer that in the reasonable judgment of the Board of
Directors of Employer is materially injurious to Employer or its reputation; or
               (d) Employee has willfully failed or refused or is legally unable
(other than due to his death or total disability as defined in Section 19), to
perform his duties as required under this Agreement.
          If Employer terminates Employee’s employment for Cause, the
termination shall take effect on the effective date (determined under
Section 16) of the final written notice to Employee pursuant to this
Section 7.1, and Employee shall be entitled to (i) a lump sum cash payment,
payable within ten (10) business days after the date of termination of
Employee’s employment, equal to the sum of (A) any accrued but unpaid salary as
of the date of such termination, (B) any accrued but unpaid bonus due under
Section 6.2 for any annual period ended prior to the date of such termination
and (C) the minimum bonus under Section 6.2 for the annual period in which such
termination occurs, prorated through the date of such termination, and (ii) 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 6.6. In the event of the termination of Employee’s employment for Cause,
Employee’s stock options and any other equity awards based on Employer’s
securities, such as restricted stock, restricted stock units, stock appreciation
rights, performance units, etc. shall, to the

-5-

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

 

extent then vested and exercisable, remain vested and exercisable in accordance
with their terms
          7.2. Termination by Employer without Cause. Employer may terminate
Employee’s employment without Cause, which termination shall take effect on the
effective date (determined under Section 16 of this Agreement) of written notice
of such termination to Employee. A termination by Employer in accordance with
this Section 7.2 shall not be deemed a breach of this Agreement. Upon any
termination of Employee’s employment by Employer without Cause pursuant to this
Section 7.2, Employee shall be entitled to (i) a lump sum cash payment, payable
within ten (10) business days after the date of termination of Employee’s
employment, equal to the sum of (A) any accrued but unpaid salary as of the date
of such termination, (B) any accrued but unpaid bonus due under Section 6.2 for
any annual period ended prior to the date of such termination and (C) the
minimum bonus under Section 6.2 for the annual period in which such termination
occurs, prorated through the date of such termination; (ii) such benefits, if
any, to which Employee and his dependents or beneficiaries may then be entitled
as a participant under the employee benefit plans referred to in Section 6.6;
(iii) immediate vesting of all of Employee’s stock options and any other equity
awards based on Employer securities, such as restricted stock, restricted stock
units, stock appreciation rights, performance units, etc, all of which shall
remain exercisable for their full term; (iv) continuation of the life insurance
premium payments and medical insurance premium payments described in Section 6.6
(unless such medical insurance premium payments have been replaced by
participation in an Employer-sponsored medical benefit plan as provided herein)
through the expiration of the then current Term, but in no event for a period of
less than 24 months; (vi) continued participation, through the expiration of the
then current Term, but in no event for a period of less than 24 months, of
Employee and each of his dependents in any Employer-sponsored health plan at the
benefit level in effect from time to time and with COBRA benefits commencing
thereafter. In addition to the foregoing payments and continuation of benefits,
Employer shall pay Employee in a lump-sum within 10 days following the date of
termination of Employee’s employment an amount equal to the sum of
(x) Employee’s salary as provided in Section 6.1 and (y) the minimum bonus under
Section 6.2 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 later of (1) the expiration of the Term and (2) the second
anniversary of such termination date.
          7.3. 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 Executive 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; or (iii) Employer’s requiring Employee to be based at any office or
location other than in Los Angeles, California or within ten

-6-

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

 

miles of the current location of the Company’s headquarters. 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 16) of the written notice to Employer, and Employee
shall be entitled to the same payments and benefits, at the same times,
described in Section 7.2 for a termination by Employer without Cause.
          7.4. Termination by Employee without Good Reason. Employee shall have
the right to voluntarily terminate his employment hereunder at any time without
Good Reason upon 30 days’ written notice to Employer. A voluntary termination by
Employee in accordance with this Section 7.4 shall not be deemed a breach of
this Agreement. Upon any voluntary termination of employment by Employee without
Good Reason pursuant to this Section 7.4, Employee shall be entitled only to
such payments and benefits as those described in Section 7.1 for a termination
by Employer for Cause.
          7.5. Termination in Connection with a Change in Control. For purposes
of this Section 7.5, a “Change in Control” shall have the meaning described to
such term in Employer’s 2000 Long-Term Incentive Plan. If a Change in Control
occurs during the Term, and if, during the Term and within two years after the
date on which the Change in Control occurs, Employee’s employment is terminated
by Employer without Cause or by Employee for Good Reason, then Employee will be
entitled to the payments and benefits, at the same times, described in
Section 7.2 for a termination by Employer without Cause. In addition, to the
extent that any payment or distribution of any type to or for Employee by
Employer (which for purposes of this Section 7.5 includes any parent, subsidiary
or affiliate of Employer), whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (including,
without limitation, any accelerated vesting of stock options or other equity
awards based on Employer stock granted pursuant to this Agreement or otherwise)
(collectively, the “Total Payments”) is or will be subject to the excise tax
(“Excise Tax”) imposed under Section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”) (or any successor to such Section), Employer shall pay
to Employee, prior to the time any Excise Tax is payable with respect to any of
such Total Payments (through withholding or otherwise), an additional amount (a
“Gross-Up Payment”) 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 Total Payments plus (ii) any penalty and interest assessments
associated with such Excise Tax. The determination of whether any portion of the
Total Payments is subject to an Excise Tax and, if so, the amount and time of
any Gross-Up Payment pursuant to this Section 7.5, shall be made by an
independent auditor (the “Auditor”) jointly selected by Employee and Employer
and paid by Employer. If Employee and Employer cannot agree on the firm to serve
as the Auditor, then they shall each select an accounting firm and those two
firms shall jointly select the accounting firm to serve as the Auditor. Unless
Employee agrees otherwise in writing, the Auditor shall be a nationally
recognized United States public accounting firm that has not during the two
years preceding the date of its selection, acted in any way on behalf of
Employer. Employee and Employer shall cooperate with

-7-

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

 

each other in connection with any proceeding or claim relating to the existence
or amount of any liability for Excise Tax. All expenses relating to any such
proceeding or claim (including attorneys’ fees and other expenses incurred by
Employee in connection therewith) shall be paid by Employer promptly upon demand
by Employee, and any such payment shall be subject to a Gross-Up Payment under
this Section 7.5 in the event that Employee is subject to Excise Tax on it.
     8. 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.
     9. First Offer. Employee acknowledges and agrees that a material inducement
to Employer to enter into this Agreement is the Employee’s expertise in,
knowledge of and ability to identify acquisition candidates within, the biotech,
pharmaceutical and health care industries. Accordingly, Employee agrees that
Employee will provide, and will cause The Kriegsman Group for so long as
Employee is the principal owner of The Kriegsman Group to provide, Employer’s
Board of Directors with the first opportunity to conduct or take action with
respect to any acquisition opportunity or any other potential transaction
identified by Employee or The Kriegsman Group within the biotech, pharmaceutical
or health care industries and that is within the scope of the business plan
adopted by the Employer’s Board of Directors. Employee’s obligations under this
Section 9 shall commence on the Effective Date and shall continue while this
Agreement is in effect.
     10. Confidentiality. While this Agreement is in effect and for a period of
five years thereafter, and except as otherwise required by law or legal process
and after reasonable notice to Employer and opportunity for Employer to
intervene, Employee shall hold and keep secret and confidential all Trade
Secrets and other confidential or proprietary information of Employer and shall
use such information only in the course of performing Employee’s duties
hereunder; provided, however, that with respect to “trade secrets” (as defined
under applicable law), Employee’s confidentiality obligations shall continue for
so long as they remain “trade secrets” under applicable law. Employee shall
maintain in trust all such “trade secret” or other confidential or proprietary
information, as Employer’s property, including, but not limited to, all
documents concerning Employer’s business, including Employee’s work papers,
telephone directories, customer information and notes, and any and all copies
thereof in Employee’s possession or under Employee’s control. Upon expiration or
earlier termination of Employee’s employment with Employer, for any reason, or
upon request by Employer, Employee shall deliver to Employer all such documents
belonging to Employer, including any and all copies in Employee’s possession or
under Employee’s control.

-8-

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

 

     11. Equitable Remedies; Injunctive Relief. Employee hereby acknowledges and
agrees that monetary damages are inadequate to fully compensate Employer for the
damages that would result from a breach or threatened breach of Sections 9 or 10
hereof and, accordingly, that Employer shall be entitled to equitable remedies,
including, without limitation, specific performance, temporary restraining
orders, and preliminary injunctions and permanent injunctions, to enforce such
Sections without the necessity of proving actual damages in connection
therewith. This provision shall not, however, diminish Employer’s right to claim
and recover damages or enforce any other of its legal or equitable rights or
defenses.
     12. Severable Provisions. The provisions of this Agreement are severable
and if any one or more provisions is determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions, and any partially
unenforceable provisions to the extent enforceable, shall nevertheless be
binding and enforceable.
     13. Binding Agreement. This Agreement shall inure to the benefit of and
shall be binding upon Employer, its successors and assigns and Employee and his
heirs and representatives. Neither party may assign this Agreement without the
prior written consent of the other party.
     14. Entire Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof, and the parties hereto have made
no agreements, representations or warranties relating to the subject matter of
this Agreement that are not set forth otherwise herein. This Agreement
supersedes any and all prior agreements, written or oral, between Employee and
Employer relating to the subject matter hereof. Any such prior agreements are
hereby terminated and of no further effect and Employee, by the execution
hereof, agrees that any compensation provided for under any such prior
agreements is specifically superseded and replaced by the provisions of this
Agreement. No modification of this Agreement shall be valid unless made in
writing and signed by the parties hereto and unless such writing is made by an
executive officer of Employer (other than Employee) after approval by Employer’s
Board of Directors. The parties hereto agree that in no event shall an oral
modification of this Agreement be enforceable or valid.
     15. Governing Law. This Agreement is and shall be governed and construed in
accordance with the laws of the State of California without giving effect to
California’s choice of law rules.
     16. Notice. All notices and other communications under this Agreement shall
be in writing and mailed, telecopied or delivered by hand or by a nationally
recognized courier service guaranteeing overnight delivery to a party at the
following address (or to such other address as such party may have specified by
notice given to the other party pursuant to this provision and shall be
effective when personally delivered or two (2) business days after being mailed:

-9-

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

 

If to Employer:

CytRx Corporation
11726 San Vicente Boulevard,
Suite 650
Los Angeles, California 90049
Facsimile: (310) 826-5529
Attention: General Counsel

With a copy to:

Sanford J. Hillsberg
Troy & Gould Professional Corporation
1801 Century Park Boulevard
Sixteenth Floor
Los Angeles, California 90067
Facsimile: (310) 201-4746

If to Employee:

Steven A. Kriegsman
The Kriegsman Group
11726 San Vicente Blvd., Suite 650
Los Angeles, CA 90049
Facsimile: (310) 826-5529

With a copy to:

Linda Griffey
O’Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071
Facsimile: (213) 430-6407
     17. Attorneys’ Fees. Employee acknowledges that he has been represented in
connection with this Agreement by O’Melveny & Myers LLP. Employer shall
reimburse Employee for up to $6,000 of Employee’s legal fees incurred in
connection with the preparation of this Agreement.
     18. Arbitration. The parties agree if any controversy or claim shall arise
out of this Agreement or the breach hereof (other than claims (a) for equitable
relief, including specific performance, injunctive relief or temporary
restraining orders or (b) enforcing this Section 18 or an arbitration award
granted in accordance herewith), and either party shall request that the matter
be settled by arbitration the matter shall be settled exclusively by final and
binding arbitration before JAMS (or its successor pursuant to the United States
Arbitration Act, 9 U.S.C. Section 1 et seq.) in accordance

-10-

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

 

with the provisions of JAMS’ Streamlined Arbitration Rules and Procedures in
effect at such time, by a single arbitrator, if the parties shall agree upon
one, or by one arbitrator appointee by each party and a third arbitrator
appointed by the other arbitrators. In case of any failure of a party to make an
appointment referred to above within two (2) weeks after written notice of
controversy, such appointment shall be made by JAMS. All arbitration proceedings
shall be held in the City of Los Angeles, and each party agrees to comply in all
respects with any award made in such proceeding and to the entry of a judgment
in any jurisdiction upon any award rendered in such proceeding. Each party will
pay the fees of their respective attorneys, the expenses of their respective
witnesses, costs of any record or transcript of the arbitration, and any other
expenses connected with the arbitration that such party might be expected to
incur had the dispute been subject to resolution in court, but all costs of the
arbitration that would not be incurred by the parties if the dispute was
litigated in court, including fees of the arbitrator and any arbitration
association administrative fees will be paid by Employer.
     19. 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 shall be entitled to the same payments and benefits, at the same times,
as described in Section 7.2 for a termination of employment by Employer without
Cause. Likewise, any stock options and other equity awards held by Employee at
the time of his death or Disability shall immediately vest in full upon such
termination and shall remain exercisable thereafter for the full term of such
options and equity rights. Notwithstanding the foregoing or any provision of
Section 7.2, Employer’s obligation to pay Employee the salary and bonus called
for in Section 7.2 during 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 6.6 or otherwise.
For purposes of this Agreement, the term “Disability” means the inability of
Employee to perform substantially all of his duties hereunder for any period of
at least 120 consecutive days by reason of any physical or mental incapacity.
     20. Survival. In the event this Agreement expires after its Term or is
terminated, the provisions of Sections 7, 10, 11, 12, 15, 16, 18, 19 and 22
shall survive.
     21. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall be
deemed to be one and the same agreement.
     22. Indemnification.
          22.1. Employer Indemnity. If Employee is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a “Proceeding”), by reason of the
fact that he is or was a director, officer or employee of Employer or any
affiliate of Employer or was serving at

-11-

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

 

the request of Employer or any affiliate of Employer as a director, officer,
member, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is Employee’s alleged action
in an official capacity while serving as a director, officer, member, employee
or agent, then Employer will indemnify Employee and hold him harmless to the
fullest extent legally permitted or authorized by Employer’s certificate of
incorporation or bylaws or resolution of the Board of Directors to the extent
not inconsistent with the laws of the State of Delaware, against all cost,
expense, liability and loss (including, without limitation, attorneys’ fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by Employee in connection
therewith, except to the extent attributable to Employee’s gross negligence or
fraud), and such indemnification shall continue as to Employee even if he has
ceased to be a director, member, officer, employee or agent of Employer or
affiliate and shall inure to the benefit of Employee’s heirs, executors and
administrators. Employer will advance to Employee all reasonable costs and
expenses to be incurred by him in connection with a Proceeding within 20 days
after receipt by Employer of a written request for such advance. Such request
shall include an undertaking by Employee to repay the amount of such advance if
it shall ultimately be determined that he is not entitled to be indemnified
against such costs and expenses. The provisions of this subsection 22.1 shall
not be deemed exclusive of any other rights of indemnification to which Employee
may be entitled or which may be granted to him and shall be in addition to any
rights of indemnification to which he may be entitled under any policy of
insurance.
          22.2. No Presumption Regarding Standard of Conduct. Neither the
failure of Employer (including its Board of Directors, independent legal counsel
or stockholders) to have made a determination prior to the commencement of any
proceeding concerning payment of amounts claimed by Employee under the preceding
subsection 22.1 of this Section 22 that indemnification of Employee is proper
because he has met the applicable standard of conduct, nor a determination by
Employer (including its Board of Directors, independent legal counsel or
stockholders) that Employee has not met such applicable standers of conduct,
shall create a presumption the Employer has not met the applicable standard of
conduct.
          22.3. Liability Insurance. Employer will continue and maintain a
directors and officers liability insurance policy covering Employee to the
extent Employer provides such coverage for its other senior executive officers.

-12-

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

 

     IN WITNESS WHEREOF, this Agreement is executed as of the day and year first
above written.

            “EMPLOYER”

CytRx Corporation,
a Delaware corporation
      By:   /s/ MAX LINK         Name:   Max Link, Ph.D.        Title:  
Chairman of the Board     

            “EMPLOYEE”
      /s/ STEVEN A. KRIEGSMAN       Steven A. Kriegsman           

-13-