Technology Development Agreement

TECHNOLOGY DEVELOPMENT AGREEMENT


THIS TECHNOLOGY DEVELOPMENT AGREEMENT (this "Agreement") dated as of December 6, 1996 by and among VAXCEL, INC., a Delaware corporation ("Vaxcel"), and ZYNAXIS VACCINE TECHNOLOGIES, INC., a Pennsylvania corporation ("Zynaxis").


W I T N E S S E T H:


WHEREAS, pursuant to that certain License Agreement dated July 1, 1987 by and between Southern Research Institute ("Southern") and Molecular Engineering Associates, Ltd., as amended, supplemented, restated, or otherwise modified from time to time (the "Original License Agreement"), Zynaxis has an exclusive right and license to certain oral vaccine microencapsulation technology (the "PLG Technology");


WHEREAS, Zynaxis also owns certain oral vaccine delivery technology related to compounds which bind to mucosal tissues (the "Mucoadhesive Technology"); and


WHEREAS, Vaxcel and Zynaxis plan to enter into a business combination transaction that will take several months to consummate, and Vaxcel wishes to develop the PLG Technology and the Mucoadhesive Technology (collectively referred to herein as the "Technology") during the time period between execution of this Agreement and the consummation of the planned business combination transaction;


NOW, THEREFORE, in consideration of the foregoing and the other mutual promises, covenants and agreements set forth in the other agreements being executed by Vaxcel and Zynaxis on the date of this Agreement, the parties hereto, intending to be legally bound, agree as follows;


ARTICLE I
CONDITION PRECEDENT


The parties acknowledge and agree this Agreement shall not take effect unless and until, and only in conjunction with, the execution of that certain Agreement and Plan of Merger and Contribution by and among Cytrx Corporation, Vaxcel Merger Subsidiary, Inc., Zynaxis, Inc., and Vaxcel (the "Merger Agreement").


ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ZYNAXIS


2.1 LICENSE TO TECHNOLOGY, ETC. Zynaxis represents and warrants that, pursuant to the Original License Agreement, Zynaxis has an exclusive right and license to make, have made for it, use and sell throughout the world the PLG Technology, to grant sublicenses to make, have made for it, use and sell throughout the world the PLG Technology, and to sell, transfer, or assign any or all of its rights and obligations under the Original License Agreement with the written consent of SRI, which consent shall not be unreasonably withheld. Zynaxis further represents and warrants that it is the owner of all rights in the Mucoadhesive Technology and possesses full right and authority to grant to Vaxcel the rights set forth in this Agreement. In addition, Zynaxis represents and warrants that it has the right to enter into and fully perform this Agreement, and Zynaxis' performance of this Agreement will in no way infringe upon or violate any applicable law, rule or regulation, any contract with any third party or any rights of any third person, including, without limitation, rights of patent, trade secret, trademark or copyright. 2


2.2 RELEVANT INFORMATION. Zynaxis represents and warrants that it will make available to Vaxcel on or prior to the Effective Date of this Agreement, or as soon thereafter as practicable, all documents available to Zynaxis which are relevant to the Technology. Zynaxis further represents and warrants that it will continue to make available to Vaxcel during the term of this Agreement all documents and information available to it which are relevant to the Technology.


2.3 NO OTHER UNDERTAKINGS. Zynaxis represents and warrants that the Technology is not subject to any agreement, joint venture, undertaking, commitment or understanding of any kind or nature between Zynaxis and any other person, firm, corporation, joint venture, partnership or other entity with respect to or relating in any way to the contemplated activities of Vaxcel which would materially interfere with the contemplated activities of Vaxcel, except for this Agreement and except for that certain Development and License Agreement by and between Zynaxis, Inc. and ALK A/S dated September 21, 1995 (the "Development and License Agreement").


2.4 FURTHER ASSURANCES. Zynaxis represents and warrants that it will promptly execute and deliver to Vaxcel such further documents and take such further action as may be reasonably requested by Vaxcel in order to more effectively carry out the intent and purpose of this Agreement.


2.5 CORPORATE EXISTENCE AND APPROVALS. Zynaxis represents and warrants that it is a corporation validly existing under the laws of the Commonwealth of Pennsylvania, that no authorization, consent, approval, or license is or will be necessary to the taking by Zynaxis of any action contemplated by this Agreement, and that this Agreement, when executed, constitutes a legal, valid, binding obligation of Zynaxis.


ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF VAXCEL


3.1 ACTIVITIES CONSISTENT WITH ORIGINAL LICENSE AGREEMENT. Vaxcel agrees that all Development Activities (as defined herein) relating to the PLG Technology shall be consistent with and subject to any limitations set forth in the Original License Agreement.


3.2 RELEVANT INFORMATION. Vaxcel represents and warrants that it will make available to Zynaxis upon termination of this Agreement all material documents available to Vaxcel which are relevant to the Technology.


3.3 NO OTHER UNDERTAKINGS. Vaxcel represents and warrants that it is not subject to any agreement, joint venture, undertaking, commitment or understanding of any kind or nature with any other person, firm, corporation, joint venture, partnership or other entity with respect to or relating in any way to the contemplated activities of Vaxcel which would materially interfere with the contemplated activities of Vaxcel.


3.4 CORPORATE EXISTENCE AND APPROVALS. Vaxcel represents and warrants that it is a corporation validly existing under the laws of the State of Delaware, that no authorization, consent, approval, or license is or will be necessary to the taking by Vaxcel of any action contemplated by this Agreement, and that this Agreement, when executed, constitutes a legal, valid, binding obligation of Vaxcel.


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ARTICLE IV
AGREEMENTS AMONG VAXCEL AND ZYNAXIS


4.1 VAXCEL RIGHT TO DEVELOP. It is the intent of the parties that there be no interruption in the development of the Technology during the course of the planned business combination between Zynaxis and Vaxcel. In furtherance of this desire, Vaxcel is hereby granted during the term of this Agreement the exclusive right to continue to develop the Technology at its own cost and expense, subject to the rights granted to ALK A/S in the Development and License Agreement (the "Development Activities"). By way of explanation and not in limitation of the foregoing, Vaxcel may, at its option and its sole discretion, elect to undertake the following activities:


(a) Perform preclinical experiments using the Technology at Vaxcel
facilities or with other third parties and potential sublicensees;


(b) Negotiate and execute agreements for the Technology, including,
but not limited to, materials transfer agreements, research
agreements, option agreements, sublicense agreements, or other similar
agreements, subject to Zynaxis' right of approval as provided for in
Section 4.4;


(c) Conduct research activities involving the Technology and receive
compensation from potential sublicensees reg ...