**Exhibit 10.18**

 
|                        | Photogen Technologies, Inc |
|------------------------|----------------------------|
| 140 Union Square Drive |
| New Hope, PA ?8938     |
| Phone                  | (215) 862-6860             |
| Fax                    | (215) 862-7139             |
|                   |                       |
|                   |                       |
| B. Jack DeFranco       | June 6, 2003          |
| 7323 Vista Del Mar     |                       |
| La Jolla, CA 92037     |                       |
|                        |                            |  |  |

 

Dear Jack:

 

I am pleased to extend to you our offer of employment to join PhotogenTechnologies, Inc. (“Photogen” or “Company”) as Senior Vice President.  This offer is being made to you contingentupon Photogen’s acquisition of the *Imagent*®business from Alliance Pharmaceutical Corp.

 

We are very excited by the prospect of acquiring the *Imagent* business.  You represent an important part of thebusiness, and your future employment with us will be a significant step inensuring our collective success.  Afterthe acquisition of the *Imagent*business,Alliance will continue as a going concern. You agree and acknowledge that we are a separate company and are not thesuccessor employer to Alliance.

 

Your initial salary for this position will be $186,472.00 per year(less applicable withholding and deductions). Payments will be made on a bi-weekly basis in accordance with Companypolicy.  Merit increases and bonuses, ifany, will be at the sole discretion of the Board of Directors.  Your primary employment location will be atour office located in San Diego, California. The Company will reimburse you for approved travel and related expenses,subject to proper documentation.

 

The Company will provide you with the following benefits.  Please note that we operate on a calendaryear basis and thus, where appropriate, benefits accruing for the remainder of2003 will be on a “pro-rata” basis;

 

•                                          Asyou currently are an employee of Alliance Pharmaceutical Corp receiving anoffer to join Photogen, we are offering you a retention bonus payable asfollows:

 

•                                          Ifyou remain an employee of Photogen for one month following Photogen’sacquisition of the *Imagent*business, a payment equal to five percent of your initial base salary.

 

•                                          Ifyou remain an employee of Photogen for a further five months followingPhotogen’s acquisition of the *Imagent*business (total of six months), a second payment equal to five percent of yourinitial base salary.

 

•                                          Vacationhours will be earned at your current rate of accrual.  All unused accrued vacation will be transitioned from Alliance toPhotogen; should your unused vacation accrual exceed our maximum levels, noadditional vacation hours will accrue until vacation hours are taken andreduced to the new maximum accruals listed below.  This will be effective on the date of acquisition.  Maximum accruals for current employees will“cap” at the same level as those for new employees (below).  Increases in vacation accrual based on yearsof service will occur at the beginning of the 6th and 11thyears of employment including your years of service while at Alliance.

 

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•                                          Thenew-hire vacation earnings schedule:

 

•                                          Bands1 -3 Non-Exempt Employees

2 weeks annually — Maximum accrual: 2 x annual (4 weeks)

•                                          Bands1 -4 Exempt Employees

3 weeks annually — Maximum accrual: 1.5 X annual (4.5 weeks)

•                                          Band5 Exempt Employees

4 weeks annually — Maximum accrual: 1.25 x annual (5 weeks)

 

•                                          NineCompany holidays plus two discretionary “floating” days, i.e., Alliancesoriginal vacation schedule, including President’s Day and a SpringHoliday.  The Company will remain openbetween the Christmas and New Year’s Day holidays.

 

•                                          Companysponsored medical and dental coverage for you and eligible dependents; premiumswill be shared between the Company and the employee.

 

•                                          SickLeave will accrue per pay period, to a maximum of 8 days annually, and can beaccumulated for a period of two years (or 16 days).  Because sick time may only be used for an actual illness of youor, pursuant to applicable law, of your child, parent, spouse or domesticpartner, accrued, unused sick leave will not be paid out on termination.

 

•                                          Salarydeferral under our 401(k) Plan (currently, the Company does not make anycontribution to the 401(k) Plan).

 

•                                          Otherbenefits at the discretion of the Company.

 

In addition, upon your acceptance of this offer, you will be awardedstock options to purchase 170,000 shares of Photogen Technologies, Inc.’scommon stock at an exercise price equal to the closing price per share on thedate of our acquisition of the *Imagent*business, under a four-year ratable vesting schedule.  These options are subject to an Option Award Agreement, which youwill be required to sign after joining the Company.

 

You acknowledge and agree that your employment with Photogen is basedon the mutual consent of the Company and yourself.  Therefore, either the Company or you are free to terminate theemployment at will.  This means that youare free to quit at any time and that the Company is free to terminate youremployment for any reason, with or without cause, and with or without notice,at any time.  You also acknowledge andagree that the Company has the right to change your compensation, duties,assignments, responsibilities or geographical location of your job at any time,with or without cause.  Norepresentative of the Company has the authority to make any contrary oralagreement and the at-will nature of the employment relationship with theCompany may only be altered by a writing executed by the Company’s President.

 

If the Company terminates you for any reason other than for cause, theCompany will pay you severance according to its policy in effect at thattime.  All severance payments will bepaid on a bi-weekly basis in accordance with the Company’s regular payrollschedule.  Notwithstanding theforegoing, the Company reserves its right to amend or terminate its severancepolicy at any time and from time to

 

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time.  If the Company doesterminate its severance policy, you will be notified of such termination.  If you terminate your employment or areterminated for cause, the Company will not make any severance payments.  “Cause” means:

 

•                                          Willfulfailure or refusal to perform your duties hereafter where such duties are notperformed to the Company’s reasonable satisfaction within thirty (30) daysafter written notice to you (and termination shall be effective as of the endof such 30-day period); or

 

•                                          Convictionof, or pleading of guilty or nolo contendre to, any criminal offense or thecommission by the Employee of any act involving dishonesty, embezzlement,fraud, breach of trust or moral turpitude (and termination shall be effectiveupon written notice to you).

 

As a condition of your employment, you are also required to sign theenclosed Employee Confidentiality, Inventions and Non-competition Agreement(“Confidentiality Agreement”).  You mustalso provide proof of citizenship or of your ability to be employed in theUnited States.

 

Please signify your acceptance of our offer by signing and dating thisletter and the Confidentiality Agreement and returning the originals to me bythe date of the closing of the acquisition, after which time, this offerexpires.  The other copies are for yourrecords.

 

We look forward to you joining the Photogen team.

 

 
|   | Sincerely,                            |
|--------|---------------------------------------|
|   |                                  |
|   |                                  |
|   | /s/ Taffy Williams                    |   |
|   | Taffy Williams, Ph.D.                 |
|   | President and Chief Executive Officer |

 
| ACCEPTED BY:      |
|-------------------|
|              |
|              |
| /s/ Jack DeFranco |   |
|              |
| Printed name:     | JACK DeFRANCO |   |
|              |
| Dated:            | 06/09/03 |   |
|                   |  |  |  |

 

 

Encl.:   Employee Confidentiality, Inventions andNon-Competition Agreement

 

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