**Exhibit 10.26**

 

AMENDMENT TO THE8% CONVERTIBLE SECURED NOTE PURCHASE AGREEMENT,8% CONVERTIBLE SECURED NOTES ANDRELATED SECURITY AGREEMENTS

 

Reference is made to:

 

(i) the 8%Convertible Secured Notes (the “Notes”) issued by Alliance Pharmaceutical Corp.(the “Company”) pursuant to that certain 8% Convertible Secured Note PurchaseAgreement (the “Agreement”) among the Company and the purchasers signatorythereto, dated as of October 4, 2002;

 

(ii) theImagent Security Agreement (the “Imagent Security Agreement”), dated as ofOctober 4, 2002, made by the Company to SDS Merchant Fund, L.P (the“Collateral Agent”) for the benefit of the holders of the Notes;

 

(iii) theGeneral Collateral Security Agreement (the “General Collateral SecurityAgreement”), dated as of October 4, 2002, made by the Company to theCollateral Agent for the benefit of the holders of the Notes; and

 

(iv) theImagent and Oxygent Patent and Trademark Security Agreement (the “Imagent andOxygent Patent and Trademark Security Agreement”), dated as of October 4, 2002,made by the Company to the Collateral Agent for the benefit of the holders ofthe Notes;

 

(v) theDebenture Imagent Security Agreement (the “Debenture Imagent SecurityAgreement”), dated as of October 4, 2002, made by the Company to the partiessignatory thereto;

 

(vi) theDebenture General Collateral Security Agreement (the “Debenture GeneralCollateral Security Agreement”) dated as of October 4, 2002, made by theCompany to the parties signatory thereto;

 

(vii) theDebenture Imagent and Oxygent Patent and Trademark Security Agreement (the“Debenture Imagent and Oxygen Patent and Trademark Security Agreement,” and,collectively with the Imagent Security Agreement, the General CollateralSecurity Agreement, the Imagent and Oxygen Patent and Trademark SecurityAgreement, the Debenture Imagent Security Agreement and the Debenture GeneralCollateral Security Agreement, the “Security Agreements”), dated as of October4, 2002, made by the Company to the parties signatory thereto;

 

(viii) theIntercreditor Agreement (the “Intercreditor Agreement”) dated as of October 4,2002, among the Collateral Agent, for itself and the holders of the Notes, SDSMerchant Fund, L.P., Brown Simpson Partners I, L.P., Castle Creek HealthcareInvestors, LLC, CC Life Science, Ltd., and CCL Fund LLC (collectively, the“Subordinated Debenture Holders”) and the Company; and

 

(ix) theIntercreditor Agreement (the “Xmark Intercreditor Agreement,” and together withthe Intercreditor Agreement, the “Intercreditor Agreements”), dated as ofOctober 4,

 

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2002, amongthe Collateral Agent, for itself and the holders of the Notes, the Company, theSubordinated Debenture Holders and Xmark Fund, L.P. and Xmark Fund, Ltd. (the“Senior Leaders”).

 

Capitalized terms used hereinbut not otherwise defined shall have the meanings ascribed to them in theAgreement.

 

In accordance with Section11(b) of the Agreement, the undersigned, constituting the holders of a majorityof the currently outstanding aggregate principal amounts of the Notes, herebyagree to amend as of the date hereof, Section 1(b) of the Agreement, and anyreference to the aggregate principal amount of the Notes, to provide that theaggregate principal amount of the Notes shall not exceed $5,000,000.

 

In accordance with Section 11of each of the Imagent and Oxygent Patent and Trademark Security Agreement andthe Debenture Imagent and Oxygent Patent and Trademark Security Agreement,Section 12 of each of the Imagent Security Agreement and the Debenture GeneralCollateral Security Agreement and Section 13 of each of the General CollateralSecurity Agreement and the Debenture Imagent Security Agreement, theundersigned, constituting the holders a majority of the currently outstandingaggregate principal amounts of the Notes, hereby agree to amend the secondrecital of each of the security Agreements, and any reference to the aggregateprincipal amount of the Notes, to provide that the aggregate principal amountof the Notes shall not exceed $5,000,000.

 

In accordance with Section 4.3of the Intercreditor Agreement, the undersigned, constituting the SubordinatedDebenture Holders, the Collateral Agent and the Company hereby:

 

(i)     acknowledge that any reference to theaggregate principal amount of the Notes in the Intercreditor Agreement shall beamended as of the date hereof to provide that the aggregate principal amount ofthe Notes shall not exceed $5,000,000; and

 

(ii)     amend as of the date hereof Section 3.6of the Intercreditor Agreement, clause (i) to read as follows: “(i) anyincrease in the principal amount of the Senior Obligations in excess of$5,000,000 resulting from the issuance and sale for cash of Notes or SubsequentDebt (as such term is defined in the Waiver and Consent); and.”

 

In accordance with Section 4.3of the Xmark Intercreditor Agreement, the undersigned, constituting theSubordinated Debenture Holders, the Collateral Agent, the Company and theSenior Lenders hereby:

 

(i)     acknowledge that any reference to theaggregate principal amount of the Notes in the Xmark Intercreditor Agreementshall be amended as of the date hereof to provide that the aggregate principalamount of the Notes shall not exceed $5,000,000; and

 

(ii)     amend as of  the date hereof Section 4.9 of the Xmark Intercreditor Agreementto read as follows: “Subsequent Debt shall mean, in the event that theaggregate gross proceeds from the sale of the Notes pursuant to the ConvertibleSecured Note Purchase Agreement is less than $5,000,000, the issuance by theBorrower, in one or a series of transactions, on or prior to January 31, 2003,of additional securities having substantially the same economic terms as thoseset forth in the Notes and the Convertible Secured Note Purchase

 

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Agreement, which transactions,together with the Notes, results in total gross proceeds of not more than$5,000,000 to the Borrower.”

 

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IN WITNESS WHEREOF, theundersigned have caused this Amendment to the 8% Convertible Secured NotePurchase Agreement, 8% Convertible Secured Notes and Related SecurityAgreements to be duly executed by their respective officers duly authorized asof the day hereof.

 
| Dated:  February 26, 2003 |                     |
|---------------------------|--------------------------|
|                      |                     |
|                      |                     |
|                      | SDS MERCHANT  FUND, L.P. |
|                      |                     |
|                      | By:                      | /s/ Steve  Derby |
|                      |                     | Name: Steve  Derby |
|                      |                     | Title:  Managing Member |

 

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|   | PHOTOGEN  TECHNOLOGIES, INC. |
|--------|------------------------------|
|   |                         |
|   |                         |
|   | By:                          | /s/ Taffy  Williams |
|   |                         | Name: Taffy  Williams |
|   |                         | Title:  President & CEO |

 

 

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|   | BROWN  SIMPSON PARTNERS I, L.P. |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             | /s/ Mitchell  D. Kaye |
|   |                            | Name  :Mitchell D. Kaye |
|   |                            | Title:  Managing Principal |

 

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|   | CASTLE CREEK  HEALTHCARE  INVESTORS, LLC |
|--------|------------------------------------------|
|   |                                     |
|   |                                     |
|   | By:                                      | /s/ Thomas  A. Frei |
|   |                                     | Name: Thomas  A. Frei |
|   |                                     | Title:  Managing Director |
|   |                                     |
|   |                                     |
|   | CC LIFE  SCIENCE, LTD.                   |
|   |                                     |
|   |                                     |
|   | By:                                      | /s/ Thomas  A. Frei |
|   |                                     | Name: Thomas  A. Frei |
|   |                                     | Title:  Managing Director |
|   |                                     |
|   |                                     |
|   | CCL FUND LLC                             |
|   |                                     |
|   |                                     |
|   | By:                                      | /s/ Thomas  A. Frei |
|   |                                     | Name: Thomas  A. Frei |
|   |                                     | Title:  Managing Director |

 

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|   | XMARK FUND,  L.P. |
|--------|-------------------|
|   |              |
|   |              |
|   | By:               | /s/ Mitchell  D. Kaye |
|   |              | Name:  Mitchell D. Kaye |
|   |              | Title: Chief  Investment Officer |
|   |              |
|   |              |
|   | XMARK FUND,  L.P. |
|   |              |
|   |              |
|   | By:               | /s/ Mitchell  D. Kaye |
|   |              | Name:  Mitchell D. Kaye |
|   |              | Title: Chief  Investment Officer |

 

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| Acknowledged:                  |
|--------------------------------|
|                           |
|                           |
| ALLIANCE  PHARMACEUTICAL CORP. |
|                           |
|                           |
| By:                            | /s/ Duane J.  Roth |   |
|                           | Name: Duane  J. Roth |
|                           | Title:  Chairman, Chief Executive Officer and  Chief Financial Officer |

 

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