SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CYTRX CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[CYTRX CORPORATION LETTERHEAD] PRELIMINARY COPY
December 7, 1995
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
CytRx Corporation to be held on February 5, 1996 at 8:00 a.m. local time, at the
Hilton Hotel at Peachtree Corners, 5993 Peachtree Industrial Boulevard,
Norcross, Georgia 30092.
The only item of business to be addressed at the Special Meeting is to
consider and act upon a proposal to amend CytRx's Certificate of Incorporation
to effect a recapitalization through a one-for-four reverse stock split. On
the effective date of the amendment every four shares of CytRx's Common Stock
outstanding will become and be exchanged for one new share of Common Stock.
The amendment also reduces the number of authorized shares of Common Stock from
75,000,000 to 18,750,000 in order to effect the reverse stock split and to
prevent an increase in the company's franchise tax expense. Please note that
the reverse stock split will not change your proportionate equity interests in
CytRx, except as may result from the elimination of fractional shares.
The Board of Directors believes that the recent per share price has had a
negative effect on the marketability of CytRx's Common Stock. It has been
suggested by both stockholders and analysts that a reverse split will position
CytRx more attractively with institutional investors and retail stock brokers
who generally have restrictions on investing in low-priced stocks. A higher
stock price also increases broker/dealer interest in maintaining markets in
CytRx's stock. Individual stockholders benefit as transaction costs relative
to the total value of stock trades may be reduced. Additionally, the reverse
split will improve CytRx's ability to carry out its subsidiary financing
strategy. As CytRx's subsidiaries make solid progress, the Company plans to
offer shares in each to the public; a higher CytRx share price will better
position these new shares with investors vis-a-vis CytRx stock. Finally, this
is an opportune time to effect a reverse split as CytRx's Common Stock is
currently trading near book value levels. Thus, investors have a tangible
reference point in evaluating the price of the stock before and after the
reverse split.
The Board of Directors unanimously recommends that CytRx's stockholders
approve the amendment to the Certificate of Incorporation to effect the reverse
stock split. The enclosed Proxy Statement sets forth more detailed information
regarding the amendment and the reverse stock split. Please carefully review
the information contained in the Proxy Statement.
Whether or not you plan to attend the Special Meeting, it is important that
you sign, date and return the enclosed proxy card as soon as possible. Please
use the enclosed postage pre-paid envelope to return the executed proxy card.
If you attend the meeting, you may revoke your proxy at any time by requesting
the right to vote in person. By immediately signing, dating and returning the
enclosed proxy card, you will save the Company the cost of further
solicitations.
Sincerely,
Jack J. Luchese
President & Chief Executive Officer
<PAGE>
CYTRX CORPORATION PRELIMINARY COPY
154 Technology Parkway
Norcross, Georgia 30092
-----------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
to be held on Monday, February 5, 1996
-----------------------
To the Stockholders of CytRx Corporation:
Notice is hereby given to the holders of the $.001 par value per share
Common Stock (the "Common Stock") of CytRx Corporation (the "Company") that a
Special Meeting of Stockholders (the "Meeting") of the Company will be held at
the Hilton Hotel at Peachtree Corners, 5993 Peachtree Industrial Boulevard,
Norcross, Georgia 30092, on Monday, February 5, 1996, at 8:00 a.m. local time.
The sole purpose of the Meeting is to consider and vote upon a proposal to amend
the Company's Certificate of Incorporation (the "Amendment") to effect a
recapitalization through a one-for-four reverse stock split (the "Reverse Stock
Split") pursuant to which every four shares of Common Stock outstanding on the
effective date of the Amendment will become and be exchanged for one new share
of Common Stock ("New Common Stock"). The Amendment also reduces the number of
authorized shares of Common Stock from 75,000,000 to 18,750,000 in order to
reduce the Company's franchise tax expense. To avoid the existence of
fractional shares of New Common Stock, stockholders who would otherwise be
entitled to receive fractional shares of New Common Stock shall receive cash in
lieu thereof.
In addition, the purpose of the Meeting shall be to transact such other
business incidental to the conduct of the Meeting as may properly come before
the Meeting or any adjournments or postponements of the Meeting. Stockholders
of record at the close of business on December 7, 1995 are entitled to receive
notice of and to vote at the Meeting and at any and all adjournments or
postponements thereof. All stockholders, whether or not they expect to attend
the Meeting in person, are requested to complete, date, sign and return the
enclosed form of proxy in the accompanying postage-paid envelope. The proxy
may be revoked by the person executing the proxy by filing with the Secretary
of the Company an instrument of revocation or duly executed proxy bearing a
later date, or by electing to vote in person at the Meeting.
Information relating to the Reverse Stock Split is set forth in the
accompanying Proxy Statement dated December 7, 1995. Please carefully review
the information contained in the Proxy Statement, which is incorporated into
this Notice.
The regular Annual Meeting of Stockholders, which will include a management
presentation, will be held later in the year. This Special Meeting is
scheduled as a requirement for the Reverse Stock Split.
By Order of the Board of Directors,
James M. Yahres
Secretary
December 7, 1995
<PAGE>
CYTRX CORPORATION PRELIMINARY COPY
154 Technology Parkway
Norcross, Georgia 30092
January 5, 1996
-------------------------
PROXY STATEMENT
FOR A SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 5, 1996
-------------------------
This Proxy Statement is furnished to the holders of common stock, par value
$.001 per share (the "Common Stock"), of CytRx Corporation, a Delaware
corporation (the "Company"), in connection with the solicitation of proxies by
the Board of Directors to be used at a Special Meeting of Stockholders of the
Company, and at any and all adjournments or postponements thereof (the
"Meeting"). The Meeting will be held on Monday, February 5, 1996 at 8:00 a.m.,
local time, at the Hilton Hotel at Peachtree Corners, 5993 Peachtree Industrial
Boulevard, Norcross, Georgia, to consider and vote upon a proposed amendment
(the "Amendment") to the Company's Certificate of Incorporation (the
"Certificate"), as specified in the accompanying Notice of Special Meeting of
Stockholders. The Amendment will effect a recapitalization of the Company
through a one-for-four reverse stock split (the "Reverse Stock Split") pursuant
to which every four shares of Common Stock outstanding on the effective date of
the Amendment (the "Effective Date") will become and be exchanged for one new
share of Common Stock ("New Common Stock"). The Amendment also reduces the
number of authorized shares of Common Stock from 75,000,000 to 18,750,000 in
order to reduce the Company's franchise tax expense. The text of the Amendment
is set forth in Exhibit A to this Proxy Statement.
The Company's mailing address and the location of its principal executive
offices are 154 Technology Parkway, Norcross, Georgia 30092.
VOTING
General
The securities that may be voted at the Meeting consist of the Common
Stock, with each share entitling its owner to one vote on the proposal to
approve the Amendment. The record date for determining the holders of Common
Stock who are entitled to notice of and to vote at the Meeting is December 7,
1995 (the "Record Date"). On the Record Date, 31,426,231 shares of Common
Stock were outstanding and eligible to be voted at the meeting.
Notwithstanding the Record Date specified above, the Company's stock transfer
books will not be closed and shares may be transferred subsequent to the Record
Date. However, all votes must be cast in the names of stockholders of record
on the Record Date.
Quorum and Vote Required
The presence, in person or by proxy, of a majority of the shares of Common
Stock outstanding on the Record Date is necessary to constitute a quorum at the
Meeting. The affirmative vote of the holders on the Record Date of a majority
of the issued and outstanding shares of Common Stock is required to approve the
Amendment.
<PAGE>
Abstentions will be considered present and entitled to vote at the Meeting.
However, abstentions will not be counted as votes cast in the affirmative and
therefore will have the effect of a vote against the proposal.
If fewer shares are voted in favor of the proposed Amendment than required
for its approval, the Meeting may be adjourned for the purpose of allowing
additional time for obtaining additional proxies or votes with respect to the
Reverse Stock Split. At any subsequent reconvening of the Meeting, all proxies
will be voted on the matter(s) to be considered at the reconvened Meeting in the
same manner as such proxies would have been voted on the matter(s) at the
original convening of the Meeting (except for any proxies which have theretofore
effectively been revoked or changed), notwithstanding that they may have been
effectively voted on the same or any other matter at a previous meeting. Any
such adjournment will require the affirmative vote of a majority of the shares
present at the session of the Meeting to be adjourned. A proxy granting
authority to vote upon such other business incidental to the conduct of the
Meeting as may properly come before the Special Meeting will constitute
authority to vote in favor of one or more adjournments of the Meeting.
Proxies
In voting their Common Stock, stockholders may vote in favor of or against
the proposal to approve the Amendment or may abstain from voting. Stockholders
should specify their choice on the accompanying proxy card. All properly
executed proxy cards delivered pursuant to this solicitation and not revoked
will be voted at the Meeting in accordance with the directions given. IF NO
SPECIFIC INSTRUCTIONS ARE GIVEN WITH REGARD TO THE MATTER TO BE VOTED UPON, THEN
THE SHARES REPRESENTED BY A SIGNED PROXY CARD WILL BE VOTED "FOR" THE APPROVAL
OF THE AMENDMENT AND IN THE DISCRETION OF SUCH PROXIES TO ANY OTHER PROCEDURAL
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
All proxies delivered pursuant to this solicitation are revocable at any time
before they are voted at the option of the persons executing them by (i) giving
written notice to the Secretary of the Company, (ii) by delivering a later dated
proxy card or (iii) by voting in person at the Meeting. All written notices of
revocation and other communications with respect to revocations of proxies
should be addressed to James M. Yahres, Secretary, CytRx Corporation, 154
Technology Parkway, Norcross, Georgia 30092.
HOLDERS OF COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO THE COMPANY IN THE
ACCOMPANYING POSTAGE-PAID ENVELOPE.
In addition to the solicitation of proxies by mail, the Company, through
its directors, officers and employees, may solicit proxies from stockholders
personally or by telephone or other forms of communication. In addition, Beacon
Hill Partners will assist in the solicitation of proxies from the Company's
stockholders for a fee of $2,000. The Company will reimburse Beacon Hill
Partners for reasonable out-of-pocket costs and expenses incurred in the
solicitation of proxies. The Company also will request brokerage houses,
nominees, fiduciaries and other custodians to forward soliciting materials to
beneficial owners, and the Company will reimburse such persons for their
reasonable expenses incurred in doing so. All expenses incurred in connection
with the solicitation of proxies will be borne by the Company.
<PAGE>
Stockholder Proposals
Any proposal which a Company Stockholder intends to present at the next
annual meeting of stockholders to be held in 1996 must have been received by the
Company on or before December 25, 1995. Only those proper proposals which are
received in a timely manner will be included in the Proxy Statement and Proxy.
Security Ownership of Certain Beneficial Owners and Management
Based solely upon information made available to the Company, the following
table sets forth certain information with respect to the beneficial ownership of
Common Stock as of December 7, 1995 by (i) each person who is known by the
Company to beneficially own more than five percent of Common Stock; (ii) each
director of the Company; (iii) each of the Named Executive Officers; and (iv)
all executive officers and directors as a group. Except as otherwise indicated,
the holders listed below have sole voting and investment power with respect to
all shares of Common Stock beneficially owned by them.
Shares of Common Stock
Name and Address of Beneficial Owner Number Percentage (1)
Named Executive Officers and Directors (2):
Lucine Beauchard (3) 101,563 *
Jack L. Bowman (4) 9,56 *
Raymond C. Carnahan, Jr. (5) 38,500 *
Francis J. Casieri (6) 30,824 *
R. Martin Emanuele (7) 269,290 *
Jack J. Luchese (8 2,493,087 7.4%
Herbert H. McDade (9) 49,167 *
Selvi Vescovi (10) 57,500 *
James M. Yahres (11) 114,366 *
All executive officers and directors
as a group (10 persons) (12) 3,212,051 9.3%
Other 5% Stockholders:
Robert L. Hunter, Jr. (13) 2,061,715 6.5%
3640 Churchwell Court
Tucker, Georgia 30084
J. Morton Davis 1,833,125 5.8%
D.H. Blair Investment Banking Corp.
44 Wall Street
New York, NY 10005
___________________________
* Less than 1%
(1) Based on 31,426,231 shares of Common Stock outstanding on December 7, 1995.
(2) The business address of all such persons is: c/o CytRx Corporation, 154
Technology Parkway, Norcross, Georgia 30092.
<PAGE>
(3) Includes options to purchase 87,800 shares of Common Stock exercisable
within 60 days.
(4) Includes options to purchase 6,666 shares of Common Stock exercisable
within 60 days.
(5) Includes options to purchase 37,500 shares of Common Stock exercisable
within 60 days.
(6) Includes options to purchase 19,179 shares of Common Stock exercisable
within 60 days.
(7) Includes options to purchase 265,424 shares of Common Stock exercisable
within 60 days.
(8) Includes warrants to purchase 2,454,706 shares of Common Stock exercisable
within 60 days.
(9) Includes options to purchase 49,167 shares of Common Stock exercisable
within 60 days.
(10) Includes options to purchase 52,500 shares of Common Stock exercisable
within 60 days.
(11) Includes options to purchase 95,570 shares of Common Stock exercisable
within 60 days.
(12) Includes options to purchase 3,111,273 shares of Common Stock exercisable
within 60 days.
(13) Includes options to purchase 73,365 shares of Common Stock exercisable
within 60 days.
PROPOSED AMENDMENT TO THE
CERTIFICATE TO EFFECT THE REVERSE STOCK SPLIT
General
The Company proposes to effect a recapitalization through the adoption of
the Amendment which provides for the Reverse Stock Split. If the Amendment is
approved by the stockholders, each FOUR shares of Common Stock outstanding on
the Effective Date will be converted automatically into ONE share of New Common
Stock and the number of authorized shares of Common Stock will be reduced from
75,000,000 to 18,750,000. To avoid the existence of fractional shares of New
Common Stock, stockholders who would otherwise be entitled to receive fractional
shares of New Common Stock shall receive a cash distribution in lieu thereof.
The Effective Date of the Reverse Stock Split will be the date on which the
Amendment is filed with the Secretary of State of Delaware, which is anticipated
to be as soon as practicable following the date of the Meeting.
Background of and Reasons for the Reverse Stock Split
On December 7, 1995 the Board of Directors adopted resolutions approving
the Amendment, calling the Meeting and directing that the Amendment be placed on
the agenda for the consideration of the stockholders at the Meeting.
The Board of Directors believes that the recent per share price of the
Common Stock has had a negative effect on the marketability of the existing
shares, the amount and percentage of transaction costs paid by individual
stockholders and the potential ability of the Company to raise capital by
issuing new shares. The Company believes there are several reasons for these
effects, as summarized below.
Most brokerage houses do not permit lower-priced stocks to be used as
collateral for margin accounts or to be purchased on margin. Further, the Board
of Directors believes that the current per share price of the Common Stock may
limit the effective marketability of the Common Stock because of the reluctance
of many brokerage firms and institutional investors to recommend lower-priced
stocks to their clients or to hold them in their own portfolios. Certain
policies and practices of the securities industry may tend to discourage
individual brokers within those firms from dealing in lower-priced stocks. Some
of those policies and practices involve time-consuming procedures that make the
handling of lower-priced stocks economically unattractive. The brokerage
commission on the purchase or sale of a lower-priced stock may also represent a
higher percentage of the price than the brokerage commission on a higher-priced
issue.
<PAGE>
The Board of Directors is optimistic that the decrease in the number of
shares of Common Stock outstanding as a consequence of the proposed Reverse
Stock Split and the resulting anticipated increased price level will encourage
greater interest in the Common Stock by the financial community and the
investment public.
There can be no assurances, however, that the foregoing effects will occur
or that the market price of the CytRx Common Stock immediately after
implementation of the proposed Reverse Stock Split will rise, and if it rises,
no assurance that such rise can be maintained for any period of time, or that
such market price will approximate four times the market price before the
proposed Reverse Stock Split.
Dissenting stockholders have no appraisal rights under Delaware law or under
the Company's Certificate and Bylaws in connection with the Reverse Stock Split.
The Company's Common Stock is traded on The Nasdaq Stock Market's National
Market System ("Nasdaq") under the trading symbol CYTR. The following table
sets forth the quarterly high and low closing sale prices per share for the
Common Stock as reported by Nasdaq for the Company's past two fiscal years.
Fiscal Quarter Ended High Low
1995
December 31 (through December 7) 3 5/32 29/32
September 30 3 3/8 1 5/8
June 30 2 11/16 1 7/16
March 31 2 19/32 1 5/16
1994
December 31 2 11/16 1 1/4
September 30 4 5/8 2 1/8
June 30 6 5/8 4
March 31 8 1/4 5 5/8
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT ALL STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE AMENDMENT.
The Reverse Stock Split may be abandoned by the Board of Directors pursuant
to Section 242(a) of the Delaware General Corporation Code at any time before,
during or after the Meeting and prior to the filing of the Certificate of
Amendment to the Company's Certificate of Incorporation with the Secretary of
State of the State of Delaware giving effect to the Reverse Stock Split if, for
any reason, the Board of Directors deems it advisable to do so.
<PAGE>
Effects of the Reverse Stock Split
General Effects. If the Amendment is approved by the stockholders, the
principal effect of the Reverse Stock Split will be to decrease the number of
outstanding shares from 31,426,231 shares to approximately 7,856,558 shares,
based on share information as of December 7, 1995, and reduce the number of
authorized shares of Common Stock from 75,000,000 to 18,750,000.
In order that the Company may avoid the expense and inconvenience of
issuing and transferring fractional shares of New Common Stock, stockholders who
would otherwise be entitled to receive a fractional share of New Common Stock
("Fractional Stockholders") shall receive payment in cash in lieu of receiving a
fractional share of New Common Stock. The Board of Directors has authorized the
Company's officers to combine all fractional shares of New Common Stock that
would otherwise be issued and to direct the Company's transfer agent to sell
such combined fractional shares of New Common Stock on the open market on behalf
of and as agent for the Fractional Stockholders. The sales proceeds will then
be distributed to the Fractional Stockholders as a cash payment in lieu of
fractional shares of New Common Stock. See "Exchange of Shares and Payment in
Lieu of Issuance of Fractional Shares."
The Reverse Stock Split may leave certain stockholders with one or more
"odd-lots" of New Common Stock, i.e. stock in amounts of less than 100 shares.
These odd-lots may be more difficult to sell or require greater transaction cost
per share to sell, than shares in even multiples of 100.
Effect on Market for Common Stock. On December 7, 1995, the closing sale
price of the Common Stock on Nasdaq was $1.00 per share. By decreasing the
number of shares of Common Stock outstanding without altering the aggregate
economic interest in the Company represented by such shares, the Board of
Directors believes that the trading price will be increased to a price more
appropriate for an exchange listed security; however, there can be no assurance
that this will occur. The New Common Stock will continue to be traded on Nasdaq
under the symbol CYTR.
Effect on Outstanding Options, Warrants and Convertible Securities of the
Company. As of December 7, 1995, the Company had outstanding options and
warrants to purchase 4,191,071 shares of Common Stock with exercise prices per
share that ranged from $.69 to $7.75. Upon the effectiveness of the Reverse
Stock Split, the Compensation Committee of the Board of Directors shall make a
proportional downward adjustment to the number of shares subject to outstanding
options and a corresponding upward adjustment in the per share exercise prices
to reflect the Reverse Stock Split.
Changes in Stockholders' Equity. As an additional result of the Reverse
Stock Split, the Company's stated capital, which consists of the par value per
share of Common Stock multiplied by the number of shares of Common Stock issued,
will be reduced by approximately $23,746 to $7,915 on the Effective Date.
Although the par value of the Common Stock will remain at $.001 per share
following the Reverse Stock Split, stated capital will be decreased because the
number of shares issued and outstanding will be reduced. Correspondingly, the
Company's capital in excess of par value, which consists of the difference
between the Company's stated capital and the aggregate amount paid to the
Company upon the issuance by the Company of all currently outstanding Common
Stock, will be increased by approximately $23,746.
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the federal income tax consequences of the Reverse
Stock Split is based on current law, including the Internal Revenue Code of
1986, as amended (the "Code"), and is for general information only. The tax
treatment of a stockholder may vary depending upon the particular facts and
circumstances of such stockholder. Certain stockholders, including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
non-resident aliens, foreign corporations and persons who do not hold the Common
Stock as a capital asset, may be subject to special rules not discussed below.
ACCORDINGLY, EACH STOCKHOLDER SHOULD CONSULT HIS TAX ADVISOR TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO HIM OF THE REVERSE STOCK SPLIT, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL OR FOREIGN INCOME TAX AND OTHER
LAWS.
The receipt of shares of New Common Stock (excluding fractional shares of
New Common Stock) in the Reverse Stock Split should be a nontaxable transaction
under the Code for federal income tax purposes. Consequently, a stockholder
receiving shares of New Common Stock should not recognize either gain or loss,
or any other type of income, with respect to whole shares of New Common Stock
received as a result of the Reverse Stock Split. In addition, the tax basis of
such stockholder's shares of Common Stock prior to the Reverse Stock Split will
carry over as the tax basis of the stockholder's shares of New Common Stock.
Each Stockholder will be required to allocate his basis in his shares of Common
Stock ratably among the total number of shares of New Common Stock owned
following the Reverse Stock Split. The holding period of the shares of New
Common Stock will also include the holding period during which the stockholder
held the Common Stock, provided that such Common Stock was held by the
stockholder as a capital asset on the Effective Date.
The receipt by a Fractional Stockholder of cash in lieu of a fractional
share of New Common Stock pursuant to the Reverse Stock Split will be a taxable
transaction for federal income tax purposes. The receipt of cash in lieu of
fractional shares of New Common Stock will result in gain or loss (rather than
dividend income) to the Fractional Stockholders assuming, as the Company
believes, that such cash distribution is undertaken solely for the purpose of
saving the Company the expense and inconvenience of issuing and transferring
fractional shares of New Common Stock. Gain or loss will be recognized by each
Fractional Stockholder equal to the difference between the amount of cash
received by such Stockholder and the portion of the aggregate tax basis in his
Common Stock allocable to his fractional share interest in New Common Stock. If
a Fractional Stockholder's shares of Common Stock are held as a capital asset on
the Effective Date, then such Fractional Stockholder's gain or loss will be a
capital gain or loss. Such capital gain or loss will be long-term capital gain
or loss if on the Effective Date the shares of Common Stock have been held by
the Fractional Stockholder for longer than one year.
Based on certain exceptions contained in regulations issued by the Internal
Revenue Service, the Company does not believe that it or Fractional Stockholders
will be subject to backup withholding or informational reporting with respect to
the cash distributed to a Fractional Stockholder.
<PAGE>
EXCHANGE OF SHARES AND PAYMENT IN LIEU OF
ISSUANCE OF FRACTIONAL SHARES
On or after the Effective Date, the Company will mail to each stockholder a
letter of transmittal. A stockholder will be able to receive his shares of New
Common Stock and, if applicable, cash in lieu of a fractional share of New
Common Stock only by transmitting to the Transfer Agent such stockholder's stock
certificate(s) for shares of Common Stock outstanding prior to the Reverse Stock
Split, together with the properly executed and completed letter of transmittal
and such evidence of ownership of such shares as the Company may require.
Stockholders will not receive certificates for shares of New Common Stock unless
and until the certificates representing their shares of Common Stock outstanding
prior to the Reverse Stock Split are surrendered. Stockholders should not
forward their certificates to the Transfer Agent until the letter of transmittal
is received and should surrender their certificates only with such letter of
transmittal.
No scrip or fractional share certificates for New Common Stock will be
issued in connection with the Reverse Stock Split. The Board of Directors has
authorized the Company's officers to combine all fractional shares of New Common
Stock and to direct the Transfer Agent to sell such combined fractional shares
of New Common Stock on the open market on behalf of and as agent for the
Fractional Stockholders. Sales of fractional interests will be effected by the
Transfer Agent as soon as practicable on the basis of prevailing market prices
of the New Common Stock on Nasdaq at the time of sale. The sales proceeds will
then be distributed to the Fractional Stockholders as cash payment in lieu of
fractional shares of New Common Stock. A payment in lieu of a fractional share
of New Common Stock will be made to a Fractional Stockholder promptly after
receipt of a properly completed letter of transmittal and stock certificate(s)
for all of his shares of Common Stock outstanding prior to the Reverse Stock
Split.
There will be no service charges payable by the stockholders of the Company
in connection with the exchange of their certificates or in connection with the
payment of cash in lieu of the issuance of fractional shares of New Common
Stock. These costs will be borne by the Company.
By Order of the Board of Directors,
James M. Yahres,
Secretary
December 7, 1995
<PAGE>
Exhibit A
PROPOSED CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
CYTRX CORPORATION
Pursuant to the provisions of Section 242 of the General Corporation Law of
the State of Delaware, the undersigned, the President and Secretary of CytRx
Corporation (the "Corporation"), hereby certify that:
FIRST: The name of the corporation is CYTRX CORPORATION
SECOND: The Certificate of Incorporation of the Corporation was filed
with the Secretary of State, Wilmington, Delaware on February 28, 1985.
THIRD: Upon this Certificate of Amendment to the Certificate of
Incorporation becoming effective pursuant to the Delaware General Corporation
Law (the "Effective Time"), each FOUR outstanding shares of Common Stock, par
value $.001 per share ("Common Stock"), shall thereupon be reclassified and
changed into ONE share of Common Stock, par value $.001 per share ("New Common
Stock"). Upon such Effective Time, each holder of Common Stock shall thereupon
automatically be and become the holder of ONE share of New Common Stock for
every FOUR shares of Common Stock then held by such holder. Upon such Effective
Time, each certificate formerly representing a stated number of shares of Common
Stock shall thereupon be a deemed for all corporate purposes to evidence
ownership of New Common Stock in the appropriately reduced whole number of
shares. As soon as practicable after such Effective Time, stockholders as of
the date of the reclassification will be notified thereof and, upon their
delivery of their certificates of Common Stock to the Company, will be sent
stock certificates representing their shares of New Common Stock, rounded down
to the nearest whole number, together with cash representing the fair value of
such holder's fractional shares of Common Stock. No scrip or fractional share
certificates for Common Stock will be issued in connection with this reverse
stock split.
FOURTH: The first paragraph of Article Fourth of the Certificate of
Incorporation, relating to the capital stock of the Corporation, is hereby
amended to read in its entirety as follows:
"FOURTH: 1. The total number of shares of all classes of stock that the
corporation shall have the authority to issue is Twenty Million One Thousand
(18,751,000), of which Twenty Million (18,750,000) shall be common stock, par
value $.001 per share (the "Common Stock") and One Thousand (1,000) shall be
preferred stock, par value $.01 per share (the "Preferred Stock").
FIFTH: This amendment of the Certificate of Incorporation was authorized
by the affirmative vote of a majority of the Directors of the Corporation,
followed by the affirmative vote of the holders of a majority of the
Corporation's Common Stock.
<PAGE>
PRELIMINARY COPY
CytRx Corporation
Proxy for Special Meeting of Stockholders, Feburary 5, 1996
The undersigned hereby appoints Jack J. Luchese and James M. Yahres or
either of them acting singly in the absence of the other, with full power of
substitution, proxies to vote at a Special Meeting of Stockholders of CytRx
Corporation (the "Company") to be held at the Hilton Hotel at Peachtree Corners,
5993 Peachtree Industrial Boulevard, Norcross, Georgia, on February 5, 1995 at
8:00 a.m., local time, and at any adjournment or adjournments thereof, hereby
revoking any proxies heretofore given, to vote all shares of common stock of the
Company held or owned by the undersigned as directed below, and in their
discretion upon such other matters as may properly come before the meeting.
The shares represented by this Proxy, duly executed, will be voted as
directed by the Stockholder. WHERE NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THE SHARES WILL BE VOTED FOR PROPOSAL 1 AND, IF APPLICABLE,
IN THE DISCRETION OF SUCH PROXIES AS TO ANY OTHER PROCEDURAL MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
PLEASE MARK YOUR VOTE THIS WAY /X/
1. Proposal to amend the Certificate of Incorporation to effect a one-for-four
reverse stock split.
FOR AGAINST ABSTAIN
/ / / / / /
Shares Held: _____________
_________________________________
Signature
_________________________________
Signature (if held jointly)
DATE: ____________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
THIS PROXY IS SOLICITED ON BEHALF OF CYTRX CORPORATION'S BOARD OF DIRECTORS AND
MAY BE REVOKED BY THE STOCKHOLDER PRIOR TO ITS EXERCISE.
