Item
1.01 Entry into a Material Definitive Agreement.
On
August 21, 2020 (the “Effective Date”), CytRx Corporation (the “Company”) reached an agreement to terminate a proxy contest undertaken
by Jerald A. Hammann and announced initiatives to strengthen its corporate governance, reduce costs and support its strategic
priorities. On the Effective Date, the Company entered into a Cooperation Agreement (the “Agreement”) with Mr. Hammann and his
affiliates (collectively, “Hammann”), the principal terms of which are described below.
Pursuant
to the Agreement, the Company has agreed to increase the size of the board of directors (the “Board”) to five members
and appoint an independent director to the Board no later than the one-year anniversary of the 2020 annual meeting of stockholders
(the “2020 Annual Meeting”) to serve as a Class I director with a term expiring at the 2022 annual meeting of stockholders.
The Company has also committed to capping the base salaries and basic bonuses of its directors and named executive officers at
current levels until the Termination Date (as defined below), retaining an independent compensation consultant prior to renewing
any compensation for its directors and named executive officers, and refraining from submitting any proposals to authorize additional
shares until the Termination Date.
Hammann
has agreed, among other things, to withdraw his notice of intent to nominate a director candidate for election at the 2020 Annual
Meeting and his requests for certain books and records materials. Within a year following
the Effective Date, Hammann has agreed to dispose of any of the Company’s securities entitling him to vote in the election
of directors.
With
respect to each annual or special meeting of the Company’s stockholders held during the time in which Hammann continues
to own certain voting securities of the Company, Hammann agreed to, among other things, vote in favor of the Company’s director
nominees and, vote in accordance with the Board’s recommendation on all other proposals.
Hammann
also agreed to certain customary standstill provisions prohibiting him from, among other things, (i) making certain announcements,
(ii) soliciting proxies, (iii) acquiring ownership of any of the securities of the Company, (iv) advising, encouraging or influencing
any person with respect to the voting or disposition of any securities of the Company, (v) selling securities of the Company resulting in any third party
owning more than 4.9% of the outstanding shares of the Company’s common stock, par value $0.001 per share, (vi) taking actions to change
or influence the Board, Company management or the direction of certain Company matters, and (vii) exercising certain stockholder
rights.
During
the term of the Agreement, the Company and Hammann have agreed that they will not disparage each other and that they will not
initiate any lawsuit, claim, or proceeding with respect to any claims against the Company or Hammann, as applicable, except for
any legal proceeding initiated solely to remedy a breach of or to enforce the Agreement.
The
Agreement will terminate on the second anniversary of the 2020 Annual Meeting, unless a quorum is not deemed present at the 2020
Annual Meeting, in which case the Agreement will terminate on September 3, 2022 (the “Termination Date”).
The
foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement,
a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.