**EXCLUSIVE
DISTRIBUTION AGREEMENT**




This
Exclusive Distribution Agreement (“Agreement”) is made as of April 1, 2002 (the
“Effective Date”), between Alliance Pharmaceutical Corp., a New York
corporation, having its principal place of business at 3040 Science Park Road,
San Diego, California 92121 (“Client”), and CORD Logistics, Inc., an Ohio
corporation, having its principal place of business at 15 Ingram Boulevard,
LaVergne, Tennessee 37086 (“CORD”).




A.  Client
is, among other things, in the business of developing and marketing
pharmaceutical products in the United States, the District of Columbia and
Puerto Rico (the “Territory”).




B.  CORD is,
among other things, in the business of distributing pharmaceutical products to
wholesalers, specialty distributors, physicians, clinics, hospitals, pharmacies,
and other health care providers in the Territory, and of providing Information
Systems and other services that support its customers’ use of its distribution
capabilities.




C.  Client
desires to engage CORD as its exclusive distribution agent for commercial sales
of lmagentTM in all formulations (collectively, the “Product”), and such other
pharmaceutical products agreed to by the parties in the Territory and to perform
certain other services described in this Agreement, all upon the terms and
conditions set forth in this Agreement.




THEREFORE,
in consideration of the mutual conditions and covenants set forth herein, CORD
and Client (collectively referred to as “Party” or “Parties”) agree as
follows:




1.  **Appointment/Authorization** .




1.1  Upon the
terms and conditions set forth in this Agreement, Client appoints CORD as its
exclusive distribution agent of Product in the Territory to Client’s customers,
including, but not limited to, wholesalers, specialty distributors, physicians,
clinics, hospitals, pharmacies and other health care providers in the Territory
(collectively, “Customers”).




1.2  Subject
to the terms and conditions set forth in this Agreement, CORD accepts the
appointment to represent Client as its authorized exclusive distribution agent
of Product to Customers in the Territory.




1.3  Client
shall provide CORD with a right of first negotiation with respect to the
distribution of new imaging agents or other pharmaceutical products acquired or
promoted by Client in the Territory after the Effective Date. Client shall grant
CORD an exclusive right of negotiation with respect to the distribution of such
new product for a period of sixty (60) days after Client’s notice to CORD that
such new product will be available for distribution. If the parties have not
reached an agreement with respect to the distribution of the new product within
sixty (60) days from the date of Client ’ s notice,
and entered into a definitive agreement within sixty (60) days thereafter, or if
Cord notifies Client in writing at any point during such negotiation period that
it is not interested or unable to distribute such new product(s), then Client
shall have no further obligation with respect to that new product under this
Section 1.3.











[****] Represents material which has been redacted
pursuant to a request for confidential treatment pursuant to Rule 24B-2 under
the Securities Exchange Act of 1934, as amended.





2.  **Services** .





2.1  CORD
shall provide the services set forth in the Operating Guidelines, which include,
without limitation, storage, distribution, returns, customer support, financial
support, EDI and system access support (“Services”). A copy of the Operating
Guidelines is attached hereto as Exhibit A and incorporated by
reference.




2.2  The
Operating Guidelines may be amended from time to time upon the mutual written
agreement of the Parties; provided, however, that any change, modification or
amendment to the Operating Guidelines may result in an increase in the fees
charged by CORD in Section 5.




2.3  CORD’s
services shall comply with the Operating Guidelines, provided Client’s shipment
of Products to CORD are within **[****]** of its
Forecast (as hereinafter defined).




2.4  All
Product Returns shall be processed and handled by CORD in accordance with the
Operating Guidelines; and, any customization or additional return services
requested by Client shall be performed at an additional fee as agreed by the
Parties.




2.5  Client is
solely responsible for all Product recalls. In the event Product is subject to
recall, or Client, on its own initiative, recalls any Product, CORD shall
provide assistance to Client as set forth in the Operating Guidelines, provided
that Client shall pay to CORD an amount equal to CORD’s actual costs incurred
with any, such recall services. Such cost shall be in addition to the Service
Fees described in Section 5 below.




3.  **Product
Supply/Client Responsibilities.**




3.1  Client
shall deliver Product to CORD at CORD’s facility located at 15 Ingram Boulevard,
Suite 100, La Vergne, TN 37086, or to such other distribution facility as may be
designated by CORD to Client in writing (“Facility”).




3.2  Client
shall be responsible for delivery of Product to the Facility, including all
costs, expenses and risk of loss associated with such delivery. Title to Product
shall remain with Client at all times, even when Product is stored or warehoused
at the Facility. Client shall at all times insure the Product for damage, loss,
destruction, theft or any such other property damage (“Loss”) as further set
forth in Section 17 below. Except for Loss resulting solely from the gross
negligence or willful misconduct of CORD, Client shall bear all risk of loss or
damage with respect to the Product stored or warehoused at the
Facility.




3.3  Client
shall provide CORD with a forecast of the volume of Product to be handled by
CORD under this Agreement, not less often than **[****]** (“Forecast”). Upon execution of this Agreement, Client shall deliver to CORD a
customer list, which sets forth the Product prices (the “Customer Price List”).
Client shall notify CORD of any change in the Customer Price List not less than **[****]** prior to
the effective date of any such change. CORD shall use commercially reasonably
efforts to implement such price change in accordance with Client’s
instruction.




3.4  CORD
shall visually inspect each shipment of Product for external damage or loss in
transit and notify Client of any such damage or loss within a commercially
reasonable period of time following discovery.





2


[****] Represents material which has been redacted
pursuant to a request for confidential treatment pursuant to Rule 24B-2 under
the Securities Exchange Act of 1934, as amended.


4.  **Information
System Access.**




4.1  CORD
shall provide Client access to an Operating System Base, which consists of the
software used by CORD to support the services provided to Client, including the
server and other components needed to execute the software and certain support
services associated therewith, as further set forth in the Operating Guidelines
(collectively, the “System”), upon the terms and conditions set forth in the
System Access Agreement. A copy of the System Access Agreement is attached as
Exhibit C and incorporated herein by reference. The software releases are (i) EliteSeries 6.1.2, as modified by CORD, supplied by Tecsys, Inc., a Montreal,
Quebec, Canadian company, and any upgrades, maintenance releases or
modifications implemented by CORD to support distribution services provided by
CORD; (ii) BACCS
3.0 as modified by CORD and any upgrades implemented by CORD to support
financial services provided by CORD; and (iii) Impromptu 6.0, supplied by Cognos Inc., a Canadian company, and any upgrades,
maintenance releases or modifications implemented by CORD to support reporting
services provided by CORD.




4.2  The
System shall be made available to Client at the fees set forth in the Fee
Schedule, except that any custom enhancements requested by Client shall be
billed separately based on an hourly rate set forth in the Fee Schedule (as
defined in Section 5).




4.3  In
addition to the terms set forth in the System Access Agreement, Client shall
maintain (i) a local
area network sufficient to support Client’s terminals and personal computers
that have access to the System, all such personal computers shall meet the
minimum specifications necessary to support software needed to access the
system; (ii) a
centralized server sufficient for data storage, if data export requirements
exist; and (iii) a
connection to the internet sufficient to support system access. Client shall
also assign knowledgeable and qualified employees or representatives to
facilitate access to the System.




5.  **Fees.**




5.1  As
compensation for the Services, Client shall pay to CORD the fees (the “Fees”)
set forth on Exhibit B (the “Fee Schedule”).




5.2  CORD
shall issue an invoice to Client for the Services rendered under this Agreement
or for any other amounts due on a **[****]** basis.
Payment is due within **[****]** days of
the invoice date. If the Invoice is not paid within such **[****]** day
period, a service charge on the unpaid amount calculated at the rate of **[****]** per
month (or the maximum rate permitted by law if such rate is less than **[****]** per
month) shall be imposed until such amount is paid in full.




5.3  The Fees
shall be held firm for the **[****]** .
Thereafter, CORD shall adjust the price not more often than once per contract
year by the increase in the Producer Price Index - All Commodities published by
the United States Department of Labor, Bureau of Statistics, as amended from
time to time. In the case of a decrease in the Producer Price Index — All
Commodities referenced above, Client’s pricing shall remain unchanged from the
immediately preceding contract year. For purposes of sub-Section (i), the base
point shall be the index level on the first day of the contract
year.




5.4  Notwithstanding
the terms set forth above in Section 5.3, if CORD can reasonably demonstrate
that the costs for providing the Services have materially increased, or are
likely to materially increase in the coming year due to the adoption of any
applicable law or regulation (or any material change in the interpretation or
administration thereof), or due to unforeseen circumstances beyond CORD’s
reasonable control, then upon notice from CORD, the Parties agree to meet in
good faith and negotiate a mutually acceptable adjustment to the
Fees.






3


[****] Represents material which has been redacted
pursuant to a request for confidential treatment pursuant to Rule 24B-2 under
the Securities Exchange Act of 1934, as amended.


6.  **Term
and Termination.**




6.1  The
initial term of this Agreement shall begin on the Effective Date and shall
continue for a period of **[****]** **** years
(the “Initial Term”), unless terminated earlier pursuant to this Agreement.
Thereafter, this Agreement shall automatically renew for additional terms of **[****]** each,
unless written notice of termination is given by either Party at least ninety
(90) days prior to the end of the Initial Term, or such other term, in which
case this Agreement shall terminate at the end of the then current
term.




6.2  Either
Party shall have the right to terminate this Agreement:




(a)  upon one
hundred eighty (180) days prior written notice to the other Party, provided that
in the event Client terminates this Agreement, without cause, prior to the end
of the Initial Term, such termination shall be effective only upon payment to
CORD of six (6) months of the System Access Fees set forth on the Fee
Schedule;




(b)  upon the
breach by the other Party of a material provision of this Agreement and that
Party’s failure to cure such breach within thirty (30) days following written
notice thereof from the non-breaching Party, provided that, with respect to any
failure to make any payment when due under this Agreement, such period to cure
shall be reduced to ten (10) days; or




(c)  immediately
upon notice to the other Party following the commencement of any bankruptcy or
insolvency proceeding (whether voluntary or involuntary) with respect to such
other Party or its assets, which in the event of an involuntary proceeding, is
not dismissed within sixty (60) days, the general assignment for the benefit of
creditors by such other Party, or the appointment of a receiver, trustee or
liquidator by or for such other Party.




6.3  Termination
or expiration of this Agreement shall not relieve either Party from any
liability or obligation that accrued prior to such termination or expiration.
Upon termination or expiration of this Agreement, all Product shall be returned
to Client or a designee of Client, at Client’s sole cost and expense. Sections
13 and 14 shall survive termination or expiration of this
Agreement.




7.  **Audits** . No more
than twice per calendar year, Client or its designee shall have the right during
normal business hours (i.e., 8:00 a.m. to 5:00 p.m. local time), upon fifteen
(15) business days prior written notice to CORD, to: (a) conduct
a physical audit of such parties of the Facility that relate solely to Product
stored and warehoused at the Facility under this Agreement; and (b) review
and audit records that relate solely to the storage and distribution of the
Product. Notwithstanding the foregoing, Client or its designee may, from time to
time and subject to CORD’s prior consent, perform additional physical audits of
the Product located at the Facility in the event of a reasonable, documented
concern related to the state of such Product. Such additional audits shall be
conducted during normal business hours (i.e., 8:00 a.m. to 5:00 p.m. local
time).






4







8.  **Compliance
With Laws** . Each
Party shall conduct its activities in connection with this Agreement in
compliance with all applicable laws, rules, regulations, and orders of
governmental entities.




9.  **Representations
and Warranties** .




9.1  Each
Party represents and warrants to the other that:




(a)  it has
full power and authority to enter into this Agreement and perform all
obligations and conditions to be performed by it under this Agreement without
any restriction by any other Agreement or otherwise;




(b)  the
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate action of that Party; and




(c)  this
Agreement constitutes the legal, valid and binding obligation of that
Party.




9.2  Client
further represents and warrants to CORD that the Product:




(a)  is and
shall be manufactured in conformity with the Food, Drug and Cosmetic Act, as
amended from time to time, and all other applicable laws, rules, regulations and
orders of governmental entities relating to the manufacture, promotion, sale or
distribution of the Product;




(b)  does not
violate or infringe any patent, trademark, tradename or other interest of any
person or entity.




10.  **Taxes** . Client
shall pay when due all sales, use, gross receipts, excise, personal property
taxes associated with the Product (excluding any personal property tax
associated with CORD’s equipment used in connection with the Services), and
other taxes now or hereafter imposed as a result of the transactions
contemplated by this Agreement (other than taxes based on CORD’s net income),
none of which have been included in the fees payable to CORD under this
Agreement; provided that the amounts payable by Client under this section shall
not include taxes based on the net income of CORD.




11.  **Trademarks** . Neither
Party shall have the right to use the name of the other Party or any Affiliate
of the other Party, or the other Party’s or such Affiliates’ trademarks, service
marks, logos, or other similar marks in any manner except with the prior written
approval of that Party; provided that the foregoing shall not prohibit CORD’s
use of Client names or marks in connection with the performance of the Services
in a manner consistent with this Agreement. “Affiliate,” as used in this
Agreement, means any legal entity which, during the Term hereof, controls, is
controlled by, or is under common control with, such Party. For purposes of this
definition, an entity shall be deemed to control another entity if it owns or
controls, directly or indirectly, at least fifty percent (50%) of the voting
interest of all equity interests of the other entity (or other such comparable
ownership interest for an entity other than a corporation).




**12.**  **Confidentiality.**






5




12.1  Each
Party acknowledges that as a result of this Agreement it may learn and have
access to trade secrets and other confidential and proprietary information of
the other Party through employees, representatives and/or agents acting on
behalf of or subcontracted to either Party (collectively the “Representatives”),
including without limitation, financial information, information regarding
business practices and techniques, customer lists and systems and technology
information, or any information identified as confidential in writing by either
Party (the “Confidential Information”). For purposes of this Agreement,
Confidential Information shall not include information disclosed by one Party to
the other Party to the extent that such information can be proven by written
evidence: (a) to be in
the public domain or generally available in the industry in which the disclosing
Party engages in business without any violation of this Agreement by the other
Party; (b) is
already legally known to the other Party or any of its Affiliates at the time of
its disclosure by the disclosing Party; (c) becomes
known to the other Party or any of its Affiliates from a third party without any
obligation of confidentiality or limitation on use; or (d) is
independently developed by the other Party or any of its Affiliates prior to the
date of its disclosure. The specific material terms of this Agreement shall be
deemed to be the Confidential Information of each Party. Confidential
Information shall not be deemed to be in the public domain or publicly known or
in the receiving Party’s possession because it is embraced by more general
information in the receiving Party’s possession or because it is embraced in
general terms in publications.




12.2  Neither
Party shall, directly or indirectly, at any time: (a) disclose
to any third person or entity any Confidential Information of the other Party
(whether learned before or after the date of this Agreement), or (b) use, or
permit or assist any third person or entity to use, any such Confidential
Information, excepting only: (i) disclosures required by law, rule, regulation or order, as reasonably determined
by the disclosing Party or its legal counsel, and (ii) disclosures on a confidential basis to directors, officers, employees, and
agents of that Party or its Affiliates who have a reasonable need to know such
Confidential Information in the normal course of business of that Party or any
of that Party’s Affiliates.




12.3  The
obligations of confidentiality hereunder shall survive the termination of this
Agreement for a period of three (3) years. Upon termination of this Agreement
(for any reason) each Party shall promptly: (i) return
to the other Party all documentation and other materials (including copies of
original documentation or other materials) containing any Confidential
Information of the other Party; or (ii) with the
other Party’s consent, which consent will not be unreasonably withheld, certify
to the other Party, pursuant to a certificate in form and substance reasonably
satisfactory to the other Party, as to the destruction of all such documentation
and other materials.




13.  **Indemnification** . Each
Party shall indemnify and hold harmless the other Party and its parent and
Affiliates, and each of their directors, officers, employees, agents, and
representatives from and against all claims, liabilities, losses, damages,
costs, and expenses, including, without limitation, reasonable attorneys’ fees
(“Liability”) to a third party or property arising directly or indirectly out of
any failure of that Party to perform fully all obligations and conditions to be
performed by that Party pursuant to this Agreement or any breach of any warranty
made by that Party in this Agreement. Client further agrees to indemnify and
hold harmless CORD, its parent and Affiliates and each of their directors,
officers, employees, agents and representatives from any and all Liability
arising directly or indirectly out of injury or death to person or property
alleged to have been caused by Client’s Product.






6




14.  **Limitation
of Liability.** NOTWITHSTANDING THE FOREGOING PROVISIONS OF SECTION 13, OR ANY OTHER PROVISION
OF THIS AGREEMENT TO THE CONTRARY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER
PARTY FOR ANY CONSEQUENTIAL (SPECIFICALLY EXCEPTING THOSE CONSEQUENTIAL DAMAGES
ARISING FROM EACH PARTY’S OBLIGATION TO INDEMNIFY THE OTHER FOR LIABILITY
ARISING OUT OF OR RELATING TO THIRD PARTY CLAIMS IN ACCORDANCE WITH SECTION 13
ABOVE), INCIDENTAL, INDIRECT, SPECIAL, OR OTHER SIMILAR DAMAGES ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT.




15.  **Insurance** . During
the term of this Agreement and for as long thereafter as necessary to cover
claims resulting from this Agreement, Client shall maintain: (i) product
liability and commercial general liability insurance having a limit of not less
than $5 million; and (ii) property
damage insurance at replacement value for the Product located at the CORD
Facility or in transit to or from the CORD Facility, pursuant to one or more
insurance policies with reputable insurance carriers. Cardinal Health, Inc. and
its subsidiaries shall be designated as “additional insureds” under the product
liability and commercial general liability insurance policy(ies) and under the
property damage insurance policy(ies). Prior to the Commencement Date, Client
shall deliver to CORD certificates evidencing such insurance. Client shall not
cause or permit such insurance to be canceled or modified to materially reduce
its scope or limits of coverage during the term of this Agreement or thereafter
as provided above. Except for any losses resulting solely from the gross
negligence or intentional misconduct of CORD, Client shall bear all risk of loss
or damage with respect to the Product, whether located at the Facility or
otherwise.




16.  **Dispute
Resolution** . The
Parties agree to use good faith efforts to resolve all disputes within ninety
(90) days of written notice that such a dispute exists. If dispute under this
Agreement cannot be resolved by the Parties within such sixty (60) day period,
the Parties agree to refer the matter to one executive from each Party not
directly involved in the dispute for review and resolution. A copy of the terms
of this Agreement, agreed upon facts and areas of disagreement, and a concise
summary of the basis for each side’s contentions will be provided to both
executives who shall review the same, confer, and attempt to reach a mutual
resolution of the issue within forty-five (45) days after receipt of the
materials referenced above. If the matter has not been resolved within such
forty-five (45) day period, either or both Parties may pursue resolution of the
matter through litigation or other process available under law or
equity.




17.  **Miscellaneous** .




17.1  Relationship
of the Parties. The
relationship among the Parties is that of independent contractors, and this
Agreement does not establish or create a partnership, joint venture, or other
agency relationship among the Parties.




17.2  Notices. Any
notice or other communication required or desired to be given to any Party under
this Agreement shall be in writing and shall be deemed given: (a) three
business days after such notice is deposited in the United States mail,
first-class postage prepaid, and addressed to that Party at the address for such
Party set forth at the end of this Agreement; (b) one
business day after delivered to Federal Express, Airborne, or any other similar
express delivery service for delivery to that Party at that address; or (c) when
sent by facsimile transmission, with electronic confirmation, to that Party at
its facsimile number set forth at the end of this Agreement. Any notice
delivered by facsimile transmission will be deemed delivered upon electronic
confirmation provided the notice is also deposited in the U.S. mail, first-class
postage prepaid. Any Party may change its address or facsimile number for
notices under this Agreement by giving the other Parties notice of such
change.






7





17.3  Governing
Law. This
Agreement shall be construed under the laws of the State of Tennessee, without
regard to its conflicts of laws provisions.




17.4  Severability. If any
term of this Agreement is declared invalid or unenforceable by a court or other
body of competent jurisdiction, the remaining terms of this Agreement will
continue in full force and effect.




17.5  Non-Waiver. No
failure by either Party to insist upon strict compliance with any term of this
Agreement, to enforce any right, or to seek any remedy upon any default of the
other Party shall affect, or constitute a waiver of, the first Party’s right to
insist upon strict compliance, to exercise that option, to enforce that right,
or to seek that remedy with respect to that default or any prior,
contemporaneous, or subsequent default. No custom or practice of the Parties at
variance with any provision of this Agreement shall affect, or constitute a
waiver of, that Party’s right to demand strict compliance with all provisions of
this Agreement.




17.6  Force
Majeure. If the
performance of any part of this Agreement by either Party shall be prevented,
restricted, interfered with or affected for any length of time by fire or other
casualty, government restrictions, war, riots, strikes or labor disputes, lock
out, transportation delays, acts of God, or any other causes which are beyond
the reasonable control of such Party, such Party shall not be responsible for
delay or failure of performance of this Agreement for such length of time,
provided, however, that the obligation of one Party to pay amounts due to the
other Party shall not be subject to the provisions of this Section.




17.7  Complete
Agreement. This
Agreement constitutes the entire understanding between the Parties and
supersedes any contracts, agreements or understanding (oral or written) of the
Parties with respect to the subject matter hereof. No term of this Agreement may
be amended except upon written agreement of both Parties, unless provided
otherwise in this Agreement.




17.8  Assignment. Except
as set forth herein, neither Party shall have the right to assign this
Agreement, or any of such Party’s rights or obligations under this Agreement,
without the prior written consent of the other Party, provided, however, that
CORD may assign its rights under this Agreement to any parent, subsidiary or
affiliate without obtaining such consent. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by and against the respective
successors and assigns of the Parties.




17.9  Independent
Contractor. The
relationship of the Parties is that of independent contractors, and neither
Party shall incur any debts or make any commitments for the other Party except
to the extent expressly provided in this Agreement. Nothing in this Agreement is
intended to create or shall be construed as creating between the Parties the
relationship of joint ventures, co-partners, employer, employee or principal and
agent.






8







IN
WITNESS WHEREOF, the undersigned acknowledge and accept the terms of this
Agreement and have duly executed this Agreement.





CORD LOGISTICS, INC.
    
    
    ALLIANCE PHARMACEUTICAL
  CORP.By: /s/  Frank C.
      Wegerson
    
    
    By: /s/  Jack
      DeFrancoFrank C. Wegerson
    
    
    B. Jack DeFrancoVice President and
      General Manager15 Ingram BoulevardLaVergne, TN
      37086 Facsimile No. (615) 793-4783
    
    
    Vice President,
      Marketing & Business Development3040 Science Park RoadSan
      Diego, CA 92121Facsimile No.: (858) 410-5201






9


****


****


**Exhibits**





Exhibit A
    Operating GuidelinesExhibit B
    Fee ScheduleExhibit C
    System Access
Agreement
















**Alliance
Pharmaceuticals / CORD Logistics, Inc.** **Exhibit
A** **Operating
Guidelines**




In
performing its obligations under the Distribution Services Agreement
(“Agreement”), CORD Logistics, Inc. (“CORD”) will follow the Operating
Guidelines as developed jointly with Alliance Pharmaceuticals Corp Inc.
(“Client”). These Operating Guidelines are in addition to CORD Standard
Operating Procedures (“SOPs”). Copies of these documents are maintained by both
parties and will be reviewed, and updated if necessary, from time to time as
mutually agreed, but not less than once per calendar year.




**1.0       
 WAREHOUSING,**




1.1
    CORD
      will maintain its warehouse facility in accordance and comply with all
      federal, state and local laws, rules and regulations, including the
      Prescription Drug Marketing Act and current Good Manufacturing Practices
      (“cGMP”) as promulgated under the FDA.




1.2
    CORD
      will maintain Standard Operating Procedures appropriate for a
      pharmaceutical distribution center operating
  environment.




1.3
    CORD
      will maintain documented training programs.




1.4
    CORD
      will comply with storage, handling and shipping conditions designated by
      Client for the “Products”.




1.5
    Products
      with specific storage requirements must be identified by Client and the
      storage requirements must be expressly communicated by Client to CORD. The
      specific requirements must be identified on the package label in
      accordance with NWDA bar coding standards. Product so identified by Client
      will be stored in areas designed, continuously monitored and periodically
      validated for the temperature range specified for each product. CORD will
      maintain daily temperature recordings. CORD will provide such records to
      Client upon written request.




1.5.1
    Frozen
      — minus 20 degrees Celsius




1.5.2
    Refrigerated
      — 2 degrees to 8 degrees Celsius




1.5.3
    Controlled
      ambient — 15 degrees to 25 degrees Celsius




1.5.4
    Controlled
      ambient — 15 degrees to 30 degrees Celsius




1.6
    CORD
      will report temperature excursions to Client within two (2) business days
      of occurrence.




1.7
    Products
      will be stored in an area with secured access, accessible only to
      authorized CORD personnel as agreed to by Client and
  CORD.




**2.0** **RECEIVING**




2.1
    Client
      or Client’s contract manufacturing agent will arrange transportation
      services to transfer the product to CORD. Client will notify CORD of the
      specific delivery schedule.






Page
1




2.2
    Client’s
      carrier will contact CORD to arrange a delivery
    appointment.




2.3
    Client
      retains title to the goods at all times. CORD signature on the carrier’s
      bill of lading is an acknowledgement only of CORD’s receipt of
      product.




2.4
    Client
      will provide CORD with Material Safety Data Sheets for each product stored
      at CORD.




2.5
    Client’s
      product must meet the following standards for carton identification,
      documentation, palletization, and
uniformity:




2.5.1
    Each
      shipping carton and inner packaging of Client’s product must be labeled to
      meet NWDA standards for bar coding and human readable
      markings.




2.5.2
    Client
      will provide the bill of lading, certificate of analysis and other
      documentation necessary. CORD and Client will mutually agree upon the
      receiving process.




2.5.3
    Pallets
      will meet GMA standards for 40” x 48” dimensions with four-way entry; will
      be free of broken boards, treated for pests, and
clean.




2.5.4
    Receipt
      of product on non-standard pallets may require restacking onto conforming
      pallets at Client’s expense.




2.5.5
    Palletized
      product must be uniform and consistent with specifications set up in the
      product master for the number of cartons and
eaches.




2.6
    CORD
      will receive each shipment into a secure Receiving
area.




2.7
    CORD
      will count and inspect the exterior packaging of the product, noting any
      shortages, overages or damage on the carrier bill of lading. CORD will
      obtain the carrier’s signature on the bill of lading acknowledging the
      condition of the product upon receipt by
CORD.




2.8
    CORD
      will compare the Client documentation to CORD’s receiving report.
      Discrepancies will be noted. CORD Quality Assurance will investigate and
      report all discrepancies to Client within 24 hours of receipt. Client and
      CORD will determine corrective actions, if
any.




2.9
    CORD
      will post receipts in the computer inventory system within one business
      day of delivery unless count discrepancies, missing paperwork, damage
      investigation, and other receiving anomalies interfere with efficient
      receiving and documentation. CORD will use commercially reasonable efforts
      to receive product accurately and
efficiently.




2.10
    CORD
      reserves the right to assess a fee for services required to hold
      non-conforming product in receiving, and to investigate, reconcile and
      report discrepancies to Client. Fees for receiving services are listed in
      the Fee Schedule, Exhibit C.




2.11
    CORD
      will return partial case quantities -- defined as less than a saleable
      quantity - to Client at Client’s expense.




2.12
    Client
      product in unapproved or quarantine status will be physically segregated
      and CORD’s computer system will be flagged accordingly to prevent
      unapproved product from entering approved picking areas of the warehouse.
      Client will provide written documentation to CORD to change quarantine
      product to approved status.






Page
2




[****]
Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 24B-2 under the Securities Exchange Act
of 1934, as amended.


2.13
    CORD
      will move product from the Receiving area to bulk storage following CORD
      SOPs.




**3.0** **INVENTORY**






3.1
    Inventory
      will be received, tracked and controlled on CORD’s computerized inventory
      system by item number, lot number, expiration date, quantity, and status.
      CORD’s system will meet all cGMP requirements for lot traceability and
      accountability, from receipt of product at CORD to shipment of product to
      Client’s customer.




3.2
    Quarantined
      product will be physically segregated and appropriately labeled.
      Quarantined Product will be released from quarantine status in CORD’s
      inventory system upon written authorization by
Client.




3.3
    CORD
      will assign unique locations for each product and lot in
      storage.




3.4
    Inventory
      will be routinely verified by CORD through periodic cycle counts. CORD
      will use its best efforts to maintain accurate and timely inventory
      records.




3.5
    Inventory
      deviations will be investigated by CORD and reported to Client. Corrective
      actions will be determined jointly by CORD and
Client.




3.6
    Client
      may conduct a complete physical inventory once per calendar year, upon at
      least thirty-(30) days advance written notice prior to the start of a
      physical inventory.




3.7
    CORD
      will notify Client of all expired or short dated Product (as specified by
      Client to be “X” number of months prior to expiry
date).




3.8
    Disposition
      of returned, rejected or expired Product will be handled according to
      Client’s specific written direction.




**4.0** **DISTRIBUTION**




4.0
    Orders
      approved and available for processing (pick & pack) by 2:00 p.m.
      Central Time will be shipped before the close of business the same day,
      Monday through Friday. Orders received by EDI and approved for inventory
      allocation by 12:00 noon will be shipped by close of business the same
      day. Orders received and processed after the cutoff times will be shipped
      the following business day.




4.1
    Recognizing
      that order volume may fluctuate from time to time, CORD will staff to meet**[****]**of
      the rolling average number of Client orders processed over the previous**[****]**calendar months. CORD will use commercially reasonable efforts to meet the
      shipping schedule outlined herein when order or unit volume exceeds**[****]**of
      the rolling average number of orders or units; provided, however, that
      CORD cannot guarantee daily on-time shipping standards will be achieved
      during such increased activity periods.




4.2
    CORD
      will measure the timeliness of shipments and will report this attribute
      periodically according to Section 19 of the Operating
      Guidelines.




4.3
    Emergency
      shipments and other exceptions will be authorized in writing by Client.
      CORD will separately invoice Client for emergency shipments, which are
      defined as shipments occurring on weekends, holidays, and non-standard
      hours, as defined in the Fee Schedule, Exhibit
C.






Page
3






4.4
    CORD’s
      inventory system will comply with First-to-Expire, First-Out (FEFO)
      inventory allocation. Any exceptions from FEFO must be approved by Client
      in writing prior to shipment.




4.5
    CORD
      will provide the system, equipment and procedures, along with trained
      personnel and supervision to services related to picking product for
      Client’s customer orders.




4.6
    CORD
      will perform quality verification on all Client shipments by an individual
      other than the employee who picked the order. CORD will use commercially
      reasonable efforts to pick, check and ship accurately all Client customer
      orders.




4.7
    CORD
      and Client will mutually determine and agree in writing on the packaging
      requirements for shipping Client’s finished product(s). CORD’s Quality
      Assurance will assist Client and CORD will issue appropriate guidelines
      and training to the Distribution department to assure compliance with
      Client specifications.




4.8
    Client
      and CORD will mutually determine and agree on special shipping conditions,
      such as for refrigerated product, which may be limited to Monday through
      Thursday shipping, or as otherwise instructed by the
    Client.




4.9
    CORD
      will provide shipment confirmation information to Client through CORD’s
      information system on the same business day on which the shipment
      occurs.




4.10
    CORD
      will manage shipping supplies - including vendor selection, ordering,
      inventory record keeping, and storage. CORD will invoice Client for all
      shipping materials — corrugated cartons, insulated coolers (if specified),
      address labels, inner packing — as may be required by Client’s packing
      specifications, per CORD’s proposal.




4.11
    All
      Products will be shipped utilizing packaging and shipping carton(s) as per
      Client’s packaging instructions, or as deemed appropriate by CORD in the
      absence of Client specifications. Unless instructed otherwise by Client,
      shipping will occur based on the shipping procedures provided by
      Client.




4.12
    CORD
      personnel will be available for emergency product shipments, via phone
      request, 24 hours per day, 365 days per year. For emergency shipments
      called in after the carrier’s cutoff time (approximately 8:00 p.m. for
      overnight airfreight), CORD will ship the product the following day,
      except Sunday, unless otherwise directed by the Client. CORD’s fees for
      emergency shipments are set forth in the Fee Schedule, Exhibit
      C.




**5.0** **TRANSPORTATION**




5.1
    CORD
      and Client will mutually agree upon a common carrier (s) based on shipment
      size, destination, freight rates, availability of standard and special
      services, reliability of delivery, and claim history among other
      requirements.




5.2
    CORD
      shall provide, if Client agrees, carriers under contract with
      Cardinal-Allegiance for discounted rates. Client and CORD will share the
      savings according to a formula acceptable to both parties, or , if Client
      so chooses and CORD agrees, CORD shall charge a freight management fee
      according to the Fee Schedule, Exhibit C.






Page
4




5.3
    Shipping
      charges, including all special charges for insurance, proof of delivery,
      hazardous materials, service upgrades, and so forth, will be billed
      directly to CORD’s account with the carrier and passed through to Client
      per terms of the Distribution Agreement, inclusive of CORD’s
      transportation management fees as defined in the Fee Schedule, Exhibit
      C.




5.4
    Freight
      terms will be F.O.B. Origin, Freight Prepaid where title passes to the
      customer when the shipment is tendered to the common
    carrier.




5.5
    CORD,
      at the request of the Client, will provide proof of delivery for specific
      customer shipments. Fees charged by carriers for proofs of delivery, if
      any, will be passed directly to Client.




5.6
    Client
      will approve payment of all credits to Client customers for overage,
      shortage and damage claims related to transportation. CORD, if handling
      Accounts Receivable for Client, will issue a credit to Client’s customer
      accordingly, or CORD will provide freight claim documentation to Client
      when Client is responsible for the Accounts
Receivable.




**6.0** **CUSTOMER
SERVICE**




6.1
    CORD
      will provide a dedicated inbound phone line (or lines) for Client’s
      customers to phone in purchase orders, for inquiries, and for general
      information.




6.2
    CORD
      will staff the Client Customer Service inbound phone line from 7:00 a.m.-
      6:00 p.m. central standard time, Monday through Friday, except for the
      following holidays: Christmas Day, New Year’s Day, Memorial Day,
      Independence Day, Labor Day, Thanksgiving
Day.




6.3
    CORD
      will be responsible for the training of the customer service
      representative and backup representative(s). Client will provide company
      and product specific information for training of the customer service
      representatives assigned to Client.




6.4
    CORD
      will be responsible for initial set up and on-going maintenance of
      customer master files. The initial customer master file will be approved
      and signed by Client. Client may add customers by completing the customer
      profile form and forwarding to CORD for system
entry.




6.5
    CORD
      will accept customer orders by electronic data interchange (EDI), phone,
      mail or fax.




6.6
    CORD
      will use commercially reasonable efforts to answer inbound phone calls
      within the first thirty (30) seconds, and enter orders
      accurately.




6.7
    Orders
      received by phone, mail or fax that are entered and approved for shipment
      by 2:00 p.m. Central Time will be shipped the same day. Orders received by
      EDI and approved for inventory allocation by 12:00 noon will be shipped
      the same day. Orders received and processed after the cutoff times will be
      shipped the following business day.




6.8
    As
      a backup to the customer service representatives, a voice mail system will
      be maintained to accept telephone orders and to collect messages from
      customers.






Page
5




[****]
Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 24B-2 under the Securities Exchange Act
of 1934, as amended.


6.9
    CORD’s
      dedicated customer service line for Client will incorporate programming to
      forward calls to a Client designated clinical service phone number if
      calls of a clinical nature are received outside of regular customer
      service hours.




**7.0** **ORDER
ENTRY**




7.1
    Client
      will determine minimum order and order line quantity and CORD will enter
      orders accordingly.




7.2
    Client
      will instruct its customers and trading partners to place orders based on
      the Client’s Distribution Agreement.




7.3
    Client
      will determine when customers shall pay for premium freight, special
      handling, and emergency order processing.




7.4
    Client
      reserves the right to limit quantities, to hold or to refuse orders. These
      decisions will be executed by CORD.




7.5
    CORD
      will use commercially reasonable effort to enter orders accurately. CORD
      measures the accuracy of orders entered and will report this attribute
      periodically according to the conditions set forth in Section 19 of the
      Operating Guidelines.




**8.0** **CUSTOMER
CREDIT**




8.1
    Client
      will determine the customers to whom it will sell on a direct basis and
      will assign each to a customer class, sales territory, and other sort
      classifications, as applicable, based on definitions mutually acceptable
      to Client and CORD.




8.2
    Client
      will establish credit limits for each customer or groups of
      customers.




8.3
    CORD’s
      system will monitor orders and outstanding account receivable against the
      customer’s credit limit and hold orders where credit limits are
      exceeded.




8.4
    Client
      may elect to place a customer’s account on credit hold so that all orders
      are reviewed prior to shipment.




8.5
    Client
      will review and approve all customer orders held for credit limits prior
      to shipment.




**9.0** **PRICING
AND TERMS**




9.1
    Client
      will publish terms and conditions of sale to wholesalers and warehouse
      chains. Standard terms are**[****]**days, net**[****]**days. Contracted customers may have non-standard
terms.




9.2
    Client
      will publish list prices for wholesalers and warehouses chains and are
      subject to change from time to time at the sole discretion of
      Client.




9.3
    Client
      will determine contract prices on a contract by contract basis. Client
      will notify CORD of such price changes with seven-(7) days notice for
      update of the CORD system files. Client will develop and forward customer
      notifications to CORD and CORD will provide printing and mailing services
      on behalf of Client.






Page
6




9.4
    CORD
      will perform system maintenance of pricing and terms. Client will provide
      to CORD in writing any changes to prices or terms. CORD will be
      responsible for updating the CORD system within 48 hours of receipt of
      such notice or as Client may otherwise
instruct.




9.5
    CORD
      employees are bound by the confidentiality provisions of the Agreement
      between CORD and Client and as such, shall not disclose Client sales data
      or pricing information outside the specific CORD employees who have a need
      to know of this information in the course of performing their routine job
      responsibilities.




9.6
    CORD
      will provide the necessary reports within stipulated time frames to ensure
      Client can comply with the reporting requirements of Medicaid (OBRA),
      Veterans HealthCare Act, PHS Covered Entities, and state rebate programs.
      Client will define reporting requirements against which CORD will produce
      the required reports.




**10.0** **INVOICING**




10.1
    CORD
      Customer Service will use commercially reasonable efforts to mail invoices
      the morning following shipment of product, or transmit by electronic data
      interchange (EDT), where installed, the same say of shipment of product,
      to customer’s billing address.




10.2
    For
      any order shipped after the close of business, the invoice will be
      prepared and mailed the following business
day.




10.3
    CORD
      will make its best effort to process invoices as timely and accurately as
      possible. CORD measures invoice accuracy and processing timeliness and
      will report this attribute periodically according to the conditions set
      forth in Section 19 of the Operating
Guidelines.




**11.0** **CHARGEBACKS**




11.1
    Client
      may enter into prime vendor arrangements for select contract or government
      mandated pricing arrangements.




11.2
    Client
      will select a wholesaler with full EDI capabilities, including but not
      limited to purchase orders chargeback submission, chargeback
      reconciliation and credit, invoicing and bid award
      notification.




11.3
    CORD,
      on behalf of Client, will process chargebacks daily with reconciliation of
      chargeback discrepancies within 5 working days. CORD’s chargeback SOP will
      define the parameters available to CORD to resolve discrepancies between
      Client’ contract terms and conditions and the chargeback submitted by the
      wholesaler.




11.4
    All
      chargebacks will be processed according to the chargeback policy for
      Client.




11.5
    All
      validated chargeback submissions will be settled via credit invoice.
      Client will not make advance payments or authorize advance deductions of
      chargebacks.




11.6
    Prime
      vendors will be instructed to report all returns from Client’s contract
      customers as a reverse chargeback.






Page
7




11.7
    CORD
      will make its best effort to process chargebacks as timely and accurately
      as possible. CORD measures the chargeback discrepancy rate and timeliness
      of chargebacks processed and will report this attribute periodically
      according to the conditions set forth in Section 19 of the Operating
      Guidelines.




**12.0** **ACCOUNTS
RECEIVABLE** **.**




12.1
    Client
      will open and maintain a bank lockbox. The bank will receive customer
      remittances invoice information on behalf of
Client.




12.2
    Client’
      bank will forward information about lockbox deposits along with the
      customer’s remittance information to CORD.




12.3
    CORD
      will reconcile and apply the cash receipt to the outstanding account
      receivable within 24 hours of receipt from the
bank.




12.4
    To
      aid the cash application process, Client will authorize accounts
      receivable payment terms of one day past published terms. This grace
      period will not be communicated to
customers.




12.5
    CORD
      will disallow discounts for payments received beyond the payment terms
      grace period, as indicated by the postmark. CORD will handle the amount of
      the discount as a balance due on the Accounts Receivable
      account.




12.6
    CORD’s
      standard for past due payment collection
activity:




12.6.1
    Notify
      by phone all customers with payments that have reached 10 days past due.




12.6.2
    Initiate
      second collection call at 17 to 20 days past
due.




12.6.3
    Send
      letter to customer at ten (10) days past due with Client’s approval.




12.6.4
    Forward
      to an outside agency for collection with approval of
    Client.




12.7
    CORD
      will maintain notes related to collection activities in a Accounts
      Receivable system file that will be accessible to Client’ authorized
      personnel.




12.8
    CORD
      will use commercially reasonable effort to process accounts receivable as
      timely and accurately as possible. CORD, at Client’s option, may measure
      accounts receivable and collections activity report these attribute
      periodically according to the conditions to be defined and mutually agreed
      upon by CORD and Client.




**13.0** **GOVERNMENT
REPORTING**




13.1
    CORD
      personnel will provide the following Government reports to Client by the
      fifth business day following the close of a business
    quarter.




13.1.1
    IFF
      Direct Sales Report




13.1.2
    IFF
      Indirect Sales Report




13.1.3
    AMP
      Report




13.1.4
    Non
      FAMP Report






Page
8




13.1.5
    Best
      Price Report




13.1.6
    Most
      Favored Price Report




13.2
    CORD
      will also provide supporting schedules and source documents to be used by
      Client to perform verification of the Government
  reports.




**14.0** **MONTH-END
CLOSE**




14.1
    CORD
      will comply with month-end reporting requirements as specified by
      Client.




14.2
    Client
      will complete its close by the 5thworking day after the last day of the month being
  closed.




**15.0** **RETURN
GOODS**




15.1
    Returns
      will be processed according to the Return Procedures defined by
      Client.




15.2
    CORD
      will complete the processing of all returns and issue credits within 5
      business days of receipt of the return.




15.3
    CORD
      will use commercially reasonable efforts to process return goods as timely
      and accurately as possible.




**16.0** **RECALL
ASSISTANCE**




16.1
    Client
      is responsible for management of a recall event, including but not limited
      to preparation of the letter of notification to customers, coordination
      and reporting with FDA, tracking of recalled product by customer, follow
      up letters to customers, and final disposition of
  product.




16.2
    CORD
      will provide the necessary recall reports within two hours of notification
      by Client. Reports will contain, but not be limited to, the following
      information for each recalled product and lot number: all customer
      shipments by date, item number, quantity, lot number, and ship to
      address.




16.3
    CORD
      will provide a secure area for the receipt of recalled product. CORD will
      assist Client with inventory
reconciliation.




16.4
    CORD
      will provide destruction services for recalled product as may be required
      by Client.




**17.0** **SYSTEMS**




17.1
    Client
      retains ownership to all data in the CORD system related to Client’
      business.




17.2
    CORD
      will maintain security of the Client’s data in files segregated and
      inaccessible to other CORD Client, to CORD’s parent organization Cardinal
      Health, or to any other entity as determined by the
  Client.






Page
9






17.3
    CORD
      will provide Client with on-line access to sales information, inventory
      records, lot tracking, customer profiles, item maintenance, pricing and
      terms, and other business critical data as defined in CORD’s standard
      reports output.




17.4
    Reporting
      and interfaces will be defined by Client and jointly agreed upon with
      CORD.




17.5
    CORD
      will maintain all systems within the change control
  SOPs.




17.6
    CORD’s
      system will be accessible by Client 7:30 a.m. - 7:30 p.m. Central Time,
      Monday through Friday except for routine, scheduled
      maintenance.




17.7
    Unscheduled
      system downtime per calendar quarter shall not exceed 2% of the normally
      accessible access hours. CORD will immediately notify Client of any system
      problem that might affect services and an estimated time for restoration
      of system access.




17.8
    Full
      system backups will be generated on a nightly basis in conjunction with
      SOP IS-005 ‘Backup and Recovery’. These backup tapes will be sorted either
      off-site or ina
      fireproof cabinet as indicated by the SOP.




**18.0** **AUDITS
/ INVENTORIES**




18.1
    Upon
      not less than ten (10) days prior written notice, Client personnel and
      their representatives will have access to CORD facilities for review and
      audit of CORD’s facility and records to assure compliance with cGMP’s,
      standard operating procedures, guidelines, and Client specific
      agreements.




18.2
    Client
      may request one complete physical inventory of Client products every 12
      months.




18.3
    CORD
      will assist Client with inspections/audits ordered by the Federal Food
      & Drug Administration or other governmental or official
      agencies.




18.4
    CORD
      will notify Client immediately of any inspection activity by FDA, DEA or
      other government agency, as applicable to the Client or Client’s
      product.




**19.0** **QUALITY
COUNCIL REPORT**




19.1
    CORD
      will provide Client with a periodic report on measurable attributes, as
      identified in preceding sections, to be used to track and benchmark
      performance. The frequency of the report will be determined jointly by
      CORD and Client.




19.2
    Client
      and CORD will agree to meet periodically to review performance and to
      develop methods, policies, practices, and procedures that may improve the
      quality and efficiency of the CORD - Client
  relationship.




19.3
    CORD
      will use its best efforts to meet or exceed the Client’s expectation for
      performance based on the measured
attributes.




19.4
    Measured
      attributes and standards:






Page
10


[****]
Represents material which has been redacted pursuant to a request for
confidential treatment pursuant to Rule 24B-2 under the Securities Exchange Act
of 1934, as amended.




Section
    Performance
      Attribute
    Performance
      Standard
    Reporting
      Frequency1.0
    Temperature
      excursions
    **[****]**excursion -free
    Upon
      occurrence2.0
    On-time
      receipts and data entry
    **[****]**within**[****]**business hours for all conforming receipts
    Monthly3.0
    Cycle
      count accuracy
    **[****]**
    Monthly4.0
    On-time
      shipping
    **[****]**same day for orders receivedby the standard cut-off
    time
    Monthly4.0
    Picking
      / shipping accuracy
    **[****]****for
      all orders processed with carton markings meeting NWDA bar code
      standards
    Monthly6.0
    Answer
      inbound phone calls within thirty (30)
    **[****]**answered within**[****]******seconds
    Monthly7.0
    Order
      entry accuracy
    **[****]**
    Monthly10.0
    Invoicing
      accuracy and timeliness
    **[****]**
    Monthly11.0
    Chargeback
      processing time
    **[****]**processed in**[****]**days or less from receipt of chargeback from wholesaler
    Monthly11.0
    Chargeback
      discrepancy rate
    **[****]**or
      Less
    Monthly12.0
    Accounts
      receivable
    Based
      on Client specifications; standard TBD.
    TBD14.0
    Return
      goods processing cycle time
    **[****]**processed in**[****]**business daysor
      less
    Monthly17.0
    System
      availability
    >**[****]**of
      normal accessible hours
    Upon
      occurrence










Page
11





[****] Represents material which has been redacted
pursuant to a request for confidential treatment pursuant to Rule 24B-2 under
the Securities Exchange Act of 1934, as amended.




Alliance
      Pharmaceutical
      ESTIMATED
      SCHEDULE
      Exhibit
      BProgram
      implementationOne
      Time Start-up Fee(2)
    $**[****]**Distribution
      ServicesMonthly
      per pallet ambient storage(5)
    $**[****]**Ambient
      product pick/pack/stage - first full case picked(1)
    $**[****]**Ambient
      product pick/pack/stage-each add’l case picked(1)
    $**[****]**Surcharge
      for loose case pick orders less than shelf pack of less than
    5
    $**[****]**Per
      case sample product pick/pack/stage -(1)
    $**[****]**Monthly
      distribution system access and use(1)
    $**[****]**Monthly
      account management fee(6)
    $**[****]**Emergency/International
      Orders
    $**[****]**Packing
      /Shipping Supplies(3)
      (includes
      ordering, receiving, storage)
    Cost
      plus**[****]**handling feeShipping
      charges(4)
    Cost
      plus**[****]**handling feeCustomer
      ServiceMonthly
      fixed fee
    $**[****]**Per order fee
    $**[****]**Per
      credit memo
    $**[****]**Financial
      ServicesMonthly
      fixed fee Accounts Receivable Management
    $**[****]**Per
      order fee Accounts Receivable Management
    $**[****]**Monthly
      fixed fee Chargeback Management
    $**[****]**Per
      submission Chargeback Processing & Government
Reporting
    $**[****]**





Note
      (1):
    This
      proposal is based on the distribution services of Imavist for Alliance as
      outlined in the RFI received on August 21, 2001. This proposal assumes
      that there are four vials per case and a minimum of**[****]******case
      will be shipped. If the actual average units shipped exceeds**[****]******percent,
      additional charges may be assessed. Other products requiring distribution
      services, or modified distribution channels, will be quoted separately. If
      the assumptions change from those presented in the RFI, either partner
      will have the right to renegotiate the fees and the basis used for quoting
      these services.
 
 Note (2):
    System access fee includes licenses for two concurrent
      users. Additional licenses required by Alliance will increase the monthly
      fee by **[****]**per concurrent user.
 
 Note (3):
    The implementation fee is to be paid in **[****]******installments;
      the**[****]******after
      the implementation meeting and the**[****]******after
      the launch. Any additional procedures required for connectivity will be
      charged accordingly ®**[****]**(i.e. - Alliance must have a Registered IP address and Local Area Network
      (LAN)).
 
 Note (4):
    Supplies include boxes, tape, labels, bubble pack,
      etc (approx. **[****]******per
      shipment), pallets if necessary (**[****]******per
      pallet), and any other Alliance
requirements.
 
 Note (5):
    A one pound package shipped UPS ground five zones will
      cost approximately $2.25.
 
 Note (5):
    The pallet fee is based on a **[****]******month
      Inventory on hand. Pallet storage greater than**[****]******months
      on hand will be assessed an additional charge of twice the standard
      fee.
 
 Note (7):
    The account management fee covers the following services:
      logistics management, inventory management, regulatory affairs and quality
      assurance, receiving discrepancy resolution, standard operating
      procedures, validation management, supply control, process set-ups, and
      process scheduling.






Page
1





EXHIBIT C


****


**SYSTEM
ACCESS AGREEMENT**




This
System Access Agreement (“Agreement”) is made as of April 1, 2002 between CORD
Logistics, Inc., an Ohio corporation (“Licensor”), and Alliance Pharmaceutical
Corp., a New York corporation (“Licensee”), who hereby agree as
follows:




1.  Exclusive
Distribution Agreement. Licensor
and Licensee have entered into a Distribution Services Agreement (“Distribution
Agreement”) of even date with this Agreement, the terms of which are
incorporated by reference.




2.  System
Access: Maintenance Obligations. Licensor
hereby grants to Licensee a nonexclusive, nontransferable limited license (the
“License”) to utilize Licensor’s ** Operating
System Base Package, consisting of the computer hardware (as set forth below),
software, and other components described in the Distribution Agreement as well
as future upgrades and maintenance of the base package (collectively, the
“System”), for the information processing needs of Licensee in connection with
the Services to be provided by Licensor under the Distribution Agreement.
Licensee shall maintain during the term of this Agreement the local area network
(including without limitation centralized server) and desktop processing
requirements for the System as further described in the Distribution Agreement
or the Operating Guidelines, a copy of which are attached to the Distribution
Agreement as Exhibit A.




During
the term of this Agreement, Licensor shall employ reasonable security
measures ** and
policies designed to safeguard the integrity, accessibility, and confidentiality
of all of Licensee’s data resident on the System and establish and maintain
reasonable disaster and emergency recovery plans designed to minimize disruption
from System operation interruptions. Licensee shall have the right to review the
operation of the System from time to time during regular business hours, upon
reasonable prior notice and at a time mutually agreeable by the parties;
provided that such reviews shall be conducted in a manner to avoid disruption of
Licensor’s business operations.




3.  Lease
of Hardware. Licensee
shall have the right to lease a router (“Hardware”) from Licensor during the
term of this Agreement, at no additional cost to Licensee, other than the Fee
set forth in the Distribution Agreement. The Hardware shall be kept by Licensee
(a) subject to inspection by Licensor during regular business hours, upon
reasonable prior notice and at a time mutually agreeable by the parties; (b) at
Licensee’s address, as stated at the end of this Agreement, which Hardware shall
not be relocated without the prior written consent of Licensor, which consent
shall not be unreasonably withheld; (c) free of all security interests if any
kind whatsoever, liens, encumbrances and other claims; (d) marked with
Licensor’s identification marks or numbers and if requested by Licensor,
conspicuously labeled “supplied by Licensor”; and (e) maintained in good and
efficient working order, condition and repair, reasonable wear and tear
excepted.




Licensee
shall use the equipment with due care to prevent injury thereto, and to any
person or property and in conformity with all applicable laws, ordinances,
rules, regulations and other requirements of any insurer or governmental bonding
and with all requirements of the manufacturer with respect to use, maintenance
and operation of the Hardware. Licensee shall not modify any hardware without
the prior written consent of Licensor, which may be granted or withheld in its
sole discretion. It is the ** intention
and understanding of both Licensor and Licensee that the Hardware shall be, and
at all times remain, separately identifiable personal property of Licensor.
Licensee shall not permit any Hardware to be installed in or used, stored or
maintained with, any of Licensee’s personal property in such manner or under
such circumstances that such Hardware might be or become an accession to or
confused with such other personal property. Licensee shall not permit such
Hardware to be installed in or used, stored or maintained with, any real
property in such manner or under such circumstances that any person might
acquire any rights in such Hardware paramount to the rights of the Licensor by
reason of such Hardware being deemed to be real property or a fixture
thereon.













Licensee
shall at all times during the term of this Agreement and until the Hardware has
been returned to Licensor, at its own expense, maintain physical damage
insurance in the amount of not less than the replacement value of the Hardware.
All insurance so maintained shall provide for a thirty (30) day prior written
notice to Licensor or its assignees of any cancellation or reduction of
coverages; (ii) an option in Licensor or its assignees to prevent cancellation
by payment of premiums, (iii) cover the interest of the Licensor and (iv)
provide that all insurance proceeds shall be payable to the Licensee and
Licensor, as their respective interests may appear at the time of any such
payment. Licensor shall be named as an additional insured on any public
liability insurance policy so maintained. Upon the request of Licensor, Licensee
shall furnish to Licensor satisfactory evidence of any insurance so
maintained.




4.  Proprietary
Rights. Licensee
shall have the right to use the System during the term of this Agreement as
expressly provided in paragraphs 1 and 2 of this Agreement, but not otherwise.
Licensee shall not assign or otherwise transfer, disclose, copy, modify,
re-engineer, sell, license, disassemble, or decompile the System or disclose or
permit access to the System or related documentation to any other person or
entity. The System and all parts thereof, in all of their tangible and
intangible manifestations, all existing or new enhancements, developments,
derivative works, and other adaptions or modifications to the System (or any
part thereof), and all related proprietary rights, are and shall remain the
exclusive property of Licensor. Except for the License and the lease provided by
Section 3, Licensee shall have no right, title, or interest in or to the System
or any part thereof. Upon termination of this Agreement, Licensee shall promptly
return to Licensor all portions of the System then in Licensee’s possession or
under its control in accordance with the term set forth in Section 6
below.




5.  Warranties. Licensee
acknowledges that it has had adequate opportunity to review the System and its
features and operation, and Licensee accepts the System “AS IS” for its use as
contemplated in the Distribution Agreement. **LICENSOR
MAKES NO REPRESENTATIONS OR WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, RELATING DIRECTLY OR
INDIRECTLY TO THE SYSTEM OR ANY PART THEREOF, INCLUDING WITHOUT LIMITATION ANY
WARRANTIES OF QUALITY, PERFORMANCE, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR
PURPOSE.**




6.  Limitation
On Liability.  **LICENSOR
SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT, SPECIAL, OR OTHER SIMILAR
DAMAGES ARISING DIRECTLY OR INDIRECTLY OUT OF THE USE OR INABILITY TO USE THE
SYSTEM OR ANY PART THEREOF, EVEN IF INFORMED OF THE POSSIBILITY OF SUCH DAMAGES,
WHETHER CLAIMED UNDER CONTRACT, TORT, OR ANY OTHER LEGAL
THEORY.**









****


****


**IF
ANY OF THE LIMITATIONS ON THE LIABILITY OF LICENSOR CONTAINED IN THIS AGREEMENT
ARE FOUND TO BE INVALID OR UNENFORCEABLE FOR ANY REASON, THEN LICENSOR AND
LICENSEE EXPRESSLY AGREE THAT THE MAXIMUM AGGREGATE LIABILITY OF LICENSOR FOR
ALL CLAIMS RELATING TO THE SYSTEM SHALL NOT EXCEED 100% OF THE AGGREGATE BASE
PACKAGE FEES PAID BY LICENSEE TO LICENSOR FOR LICENSEE’S USE OF THE SYSTEM UNDER
THE DISTRIBUTION AGREEMENT.**




7.  Taxes. Licensee
shall pay when due all sales, use, gross receipts, excise, property, and other
taxes (other than taxes based upon Licensee’s net income) now or hereafter
imposed as a result of the transactions contemplated by this
Agreement.




8.  System
Availability. The
System shall be available for access twenty-four (24) hours a day, seven (7)
days a week, except for scheduled maintenance periods.




9.  Term . The
term of this Agreement shall begin upon Licensee’s initial use of the System as
evidenced by the first entry of inventory into the System (which may be a date
earlier than the Commencement Date specified for the Distribution Agreement) and
shall end: (a) automatically upon the termination of the Distribution Agreement
(for any reason), or (b) on any earlier date specified by Licensee in notice to
Licensor given not less than ninety (90) days prior to the specified termination
date; provided that: (i) paragraphs 4 through 10 inclusive shall survive the
termination of this Agreement, and (ii) no termination of this Agreement shall
affect any liabilities arising from, or based upon, acts or omissions occurring
prior to such termination.




10.  Expiration/Termination. Licensee
shall continue to have access to the System for a reasonable period of time (not
be exceed ninety (90) days) following termination of this Agreement solely for
purposes of retrieving and transferring to a separate system Licensee’s data
relating to its pre-termination operations, and Licensor shall reasonably
cooperate with Licensee to preserve the integrity and accessibility of
Licensee’s data during such period; provided that, during such period, Licensee
shall continue to pay the full Base Package and other fees payable by Licensee
under the Distribution Agreement and comply with all other requirements imposed
upon Licensee under this Agreement.




Upon the
expiration of this Agreement, Licensee shall return the Hardware to Licensor in
the same condition and configuration as received, reasonable wear and tear
excepted.




11.  Notices. Any
notice or other communication required or desired to be given to either Party
under this Agreement shall be in writing and shall be deemed given: (a) five (5)
days after mailing, if deposited in the United States mail, first-class postage
prepaid, and addressed to that Party at its address set forth at the end of this
Agreement; (b) when received if delivered to Federal Express or any other
similar overnight delivery service for delivery to that Party at that address;
or (c) when sent by facsimile transmission, with electronic confirmation, to
that Party at its facsimile number set forth at the end of this Agreement.
Either Party may change its address or facsimile number for notices under this
Agreement by giving the other Party notice of such change.













12.  Remedies. Licensee
shall indemnify Licensor and its affiliates, directors, officers, employees,
agents, and representatives against all claims, liabilities, losses, damages,
costs, and expenses (including without limitation reasonable attorneys’ fees)
arising directly or indirectly out of any failure of Licensee to perform fully
all obligations and conditions to be performed by Licensee pursuant to this
Agreement. Licensee acknowledges that in the event of any violation by it of any
of the provisions of paragraph 2 (Proprietary Rights) of this Agreement,
Licensor would suffer irreparable harm and its remedies at law would be
inadequate. Accordingly, in the event of any violation or attempted violation of
any such provisions by Licensee, Licensor shall be entitled, in addition to any
other rights or remedies which may be available to Licensor, to a temporary
restraining order, temporary and/or permanent injunctions, specific performance,
and other equitable relief, without the showing of irreparable harm, injury,
damage or the inadequacy of damages, and without the necessity of the posting of
any bond.




13.  Force
Majeure. Notwithstanding any other provisions of this Agreement or the Distribution
Agreement to the contrary, each Party’s obligations under this Agreement
(exclusive of payment obligations) shall be excused if and to the extent that
any delay or failure to perform such obligations is due to fire or other
casualty, government restrictions, war, riot, strikes or labor disputes, acts of
God, or other causes beyond the reasonable control of that Party; provided,
however, that any party hindered by such condition beyond its reasonable control
must employ reasonable efforts to overcome such hindrance as promptly as
practicable.




14.  Successors. Licensee
shall not assign or otherwise transfer this Agreement or any of its rights or
obligations under this Agreement without the prior written consent of Licensor,
which consent shall not be unreasonably withheld. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the respective successors and assigns of each
Party.




15.  Interpretation. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio. If and to the extent that any court of competent jurisdiction
determines that it is impossible to construe any provision of this Agreement
consistently with any law or public policy and consequently holds that provision
to be invalid, such holding shall in no way affect ** the
validity of the other provisions of this Agreement, which shall remain in full
force and effect.




16.  Complete
Agreement. This
Agreement (together with the Distribution Agreement, which is hereby
incorporated herein by reference) constitutes the entire Agreement between the
Parties with respect to the subject matter of this Agreement and supersedes all
prior or contemporaneous discussions, negotiations, representations, warranties,
or Agreements relating to the subject matter of this Agreement. This Agreement
may not be amended or otherwise modified except by a written instrument signed
by each Party.













IN
WITNESS WHEREOF, the undersigned acknowledge and accept the terms of this
Agreement and have duly executed this Agreement.




CORD LOGISTICS,
      INC.
    
    
    ALLIANCE
      PHARMACEUTICAL CORP.By: /s/ 
      Frank C. Wegerson
    
    
    By:  /s/ 
      Jack DeFrancoFrank C. Wegerson
    
    
    Jack DeFrancoVice President and
      General Manager15 Ingram BoulevardLaVergne, TN 37086Facsimile
      No.: (615) 793-4783
    
    
    Vice
      President,Marketing & Business Development3040 Science Park
      RoadSan Diego, CA 92121Facsimile No.: (858)
410-5201