**Exhibit 10.4**

** **

[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

** **

**AMENDMENT AND ASSIGNMENT AGREEMENT**

 

ThisAMENDMENT AND ASSIGNMENT AGREEMENT (this “Amendment”) is made as ofJune 11, 2003, by and among Photogen Technologies, Inc. (“Photogen”), aNevada corporation with its principal place of business at 140 Union SquareDrive, New Hope, PA 18938, Cardinal Health 411, Inc. (f/k/a RedKey, Inc., anOhio corporation doing business as Cardinal Health Sales and MarketingServices) (“Cardinal Health”), with a place of business at 7000 Cardinal Place,Dublin, Ohio 43017, Cardinal Health 105, Inc. (f/k/a CORD Logistics, Inc.)(“CORD”), an Ohio corporation with its principal place of business at 15 IngramBoulevard, LaVergne, TN 37086, and Alliance Pharmaceutical Corp. (“Alliance”),a New York corporation with its principal place of business at 6175 Lusk Boulevard, San Diego, CA92121. Cardinal Health and CORD are collectively referred to herein as the“Cardinal Companies.”

 

Background

 

A.                                   CardinalHealth and Affiance are parties to that certain agreement datedFebruary 28, 2002 (the “Service Agreement”) whereby Cardinal Healthprovides a contract sales force consisting of Representatives, Managers andClinical Science Liaisons (as defined in the Service Agreement) to Detailcertain pharmaceutical products for Alliance in exchange for the payment ofService Fees as defined therein. Capitalized terms which are not otherwisedefined herein shall have the respective meanings given such terms in theService Agreement.

 

B.                                     CORDand Alliance are parties to that certain Exclusive Distribution Agreement datedApril 1, 2002 (the “Distribution Agreement”) whereby CORD acts asAlliance’s exclusive distribution agent to customers in the United States,District of Columbia and Puerto Rico.

 

C.                                     TheService Agreement allows Alliance to defer payment of a portion of the ServiceFees (the “Deferred Fees”) in the form of a loan by Cardinal Health toAlliance, subject to the terms of the Service Agreement.

 

D.                                    Thecurrent balance of the Deferred Fees due and owing under the Service Agreementis in excess of [****].

 

E.                                      Allianceintends to sell its *Imagent®*Ultrasound Contrast Agent(“Imagent”) to Photogen (“Imagent Sale”) and to help facilitate such sale,Alliance and Photogen have asked the Cardinal Companies to consent to theamendment and assignment of the Service Agreement and the DistributionAgreement from Alliance to Photogen effective as of the date of the closing ofthe Imagent Sale (the “Closing Date”).

 

F.                                      TheCardinal Companies hereby consent to the amendment and assignment of theService Agreement and the Distribution Agreement to Photogen and agree to continueto provide the services, including without limitation the Detailing Services,provided in the Service Agreement and the Distribution Agreement from the datehereof, subject to the terms and conditions of those agreements as amended bythis Amendment.

 

NOW,THEREFORE, in consideration of and reliance on the respective representations,warranties and covenants contained herein and other good and valuableconsideration, the sufficiency of which are hereby acknowledged and intendingto be legally bound hereby, the parties hereto agree as follows:

 

I.                                         ServiceAgreement.

 

1.                                       CurrentService Fees. Cardinal Health will continue to provide services to Alliancein connection with the Imagent product under the Service Agreement, andPhotogen will be responsible for 

 

1

----

 

[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

andpay the Service Fees (the “Current Service Fees”) along with the sales force,training and all other expenses accruing thereunder (the “Current Expenses”),effective from and after April 14, 2003, and continuing until the ClosingDate. Cardinal Health will invoice Photogen for the Current Service Fees andthe Current Expenses on a monthly basis, and Photogen shall pay each invoicewithin thirty (30) days of the invoice date.

 

2.                                       Assumptionand Assignment of Service Agreement. As of the Closing Date, Allianceassigns, and Cardinal Health hereby consents to such assignment, all of itsrights and obligations under the Service Agreement to Photogen, and as of theClosing Date, Photogen accepts such assignment and assumes all of Alliance’srights and obligations under the Service Agreement.

 

3.                                       Paymentof Excess Deferred Fees. If Photogen completes an equity and/or debt cashfinancing in a series of one or more related transactions in an aggregateamount of not less than [****] subsequent to the execution of this Amendment(“Financing Transaction”), then within five (5) days of closing the FinancingTransaction, Photogen will pay Cardinal Health all outstanding balances owed toCardinal Health through April 13, 2003 (including, without limitation, thebalance of Deferred Fees) in excess of [****]. The parties agree andacknowledge that as of April 13, 2003, the total amount of Deferred Feesowed to Cardinal Health is [****].

 

4.                                       Amendmentof Service Agreement. As of the Closing Date, Photogen and Cardinal Healthagree to amend the Service Agreement as follows:

 

(i)                                     Section 1.1(g)of the Service Agreement is hereby deleted in its entirety and replaced withthe following:

 

(g) “Gross Sales” means all sales of the Product foruses in the cardiology area by Vendor and/or the Company, its agents,Affiliates, distributors, assignees, licensees or any other third party, less reasonable****and customary reductions forcredits, returns and chargebacks as any of the foregoing are actually granted,allowed or incurred in the ordinary course of business.

 

(ii)                                  Thefirst sentence of Section 2.6 of the Service Agreement is hereby deletedin its entirety and replaced with the following:

 

In the event of a Representative vacancy due toresignation, reassignment, or termination of a Representative, or becauseCompany has hired a Representative in accordance with Section 3.3, Vendorshall use its best efforts to fill any such vacancy within a six (6) weekperiod.

 

(iii)                               Section 2.10of the Service Agreement is hereby deleted in its entirety. In the event Photogenelects to use the medical education services or any other services provided byother Cardinal Health affiliates, Photogen and Cardinal Health may mutuallyagree to such terms separately.

 

(iv)                              Section 3.1(a)of the Service Agreement is hereby deleted in its entirety and replaced withthe following:

 

(a)                                  CurrentPayments and Deferred Fees.

 

(i)                                     BeginningApril 14, 2003 and continuing until such time as the Financing Transactionis closed, Company will be required to pay the Service 

 

2

----

 

[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

Fees and Territory Operating Expenses and all otheramounts due to Vendor following receipt of an invoice from Vendor. Vendor willprovide weekly invoices to Company and payment of each such invoice shall bedue as provided in Section 3.1(b).

 

(ii)                                  Subjectto the requirement in Section 3.1(a)(i) that all Service Fees andTerritory Operating Expenses be paid in full each month until the FinancingTransaction is closed, Vendor will defer the Service Fees, Territory OperatingExpenses and other amounts due to Vendor in accordance with the terms of theAgreement and this Amendment, provided however that Cardinal Health will notdefer any Service Fees, Territory Operating Expenses or other amounts due toVendor (a) after the eighteenth month of the New Term (defined below), and (b)in an amount exceeding $3,000,000 of principal plus unpaid Interest. Forpurposes of this Agreement, the Service Fees and Territory Operating Expensesand other amounts deferred pursuant to the terms and conditions of thisSection 3.1 (a) shall be defined as the “Deferred Fees.”

 

(iii)                               Beginningon the first day of the nineteenth (19th) Month of the New Term, orwhen the principal of the Deferred Fees plus any accrued but unpaid Interest(as hereinafter defined) equal [****], whichever is sooner, Company shall nolonger be entitled to defer any portion of the Service Fees, TerritoryOperating Expenses or other fees and shall pay such Service Fees and expensesin full as they become due pursuant to the terms of this Agreement. In no eventshall the Deferred Fees plus accrued but unpaid Interest exceed [****].

 

(iv)                              Beginningon the first day of the nineteenth (19**th**) month of the New Term, Companyshall pay the Deferred Fees in eighteen (18) monthly installments, in themanner described below, unless this Agreement has been terminated pursuant toArticle XIV, in which case the entire balance of the Deferred Fees plusaccrued Interest shall be immediately due and payable. In addition, Companyshall pay such invoices in accordance with Section 3.1(b) below. Theeighteen (18) monthly installments shall consist of the following:

 

(A)                              Thefirst seventeen (17) monthly installments shall be paid in equal amountscalculated as if the Deferred Fees were being paid in twenty four (24) equalmonthly installments of principal of the Deferred Fees plus accrued Interest asset forth**on Vendor’s invoice; and

 

(B)                                Theeighteenth (18**th**) monthly installment shall be inan amount equal to the balance of the then outstanding principal of theDeferred Fees plus accrued Interest.

 

(v)                                 TheDeferred Fees shall accrue interest at the rate of [****] annually, compoundedquarterly (“Interest”).

 

(vi)                              Companyshall have the right to prepay the Deferred Fees, in whole or in part, at anytime without penalty. No prepayment of the principal balance of the Deferred Feesshall extend or modify the timing of the next installment of Interest orprincipal and Interest due under this Agreement, and any partial prepaymentshall be applied to the last payments to become due under this Agreement (in 

 

3

----

 

[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

reverse order of maturity). Each payment made by Companyto Vendor shall be applied, to the extent of such payment, in the followingmanner: (a) first, to the amount of accrued but unpaid Interest as of the dateof such payment; and (b) second, against the unpaid principal balance of theDeferred Fees.

 

(vii)                           If atany time Photogen shall have cash on hand less than the outstanding principalof the Deferred Fees and accrued but unpaid Interest plus [****], then CardinalHealth shall have the right to immediately cease the deferral of the ServicesFees and related expenses under the Service Agreement. This evaluation byVendor will occur at each [****] increment of the Deferred Fee balance.Photogen will supply Vendor with the reasonable and necessary financialinformation in order for Vendor to conduct this evaluation.

 

(viii)                        If anypayment of Deferred Fees and/or Interest is not paid when due, then a latecharge in an amount equal [****] of such payment shall become immediately dueto Vendor as liquidated damages for failure to make prompt payment. Such chargeshall be payable in any event not later than the due date of the nextsubsequent installment of Interest or principal and Interest.

 

(v)                                 Section 3.3(a)of the Service Agreement is hereby deleted in its entirety and replaced withthe following:

 

(a)                                  Forso long as the Company is not in default under the Agreement, Company has theoption to hire Representatives as its own employees upon payment of a fee toVendor equal to [****] of the Representatives’ annual base salary (“BuyoutFee”). Such Buyout Fee will be reduced proportionally on a month to month basisuntil no Buyout Fee is due upon expiration of the New Term

 

(vi)                              Thesecond sentence of Section 3.6 of the Service Agreement is hereby deletedin its entirety and replaced with the following:

 

The Gross Sales Thresholdis as follows:

 
| **Year** |   | **Gross  Sales Threshold** |   |
|----------|--------|----------------------------|--------|
|     |   |                       |   |
| 2002     |   | [****]                     |   |
| 2003     |   |                       | [****] |   |
|          |        |                            |        |  |

 

(vii)                           Theparties agree that they will negotiate in good faith commercially reasonablegross sales threshold percentages applicable to the Royalty (as definedtherein) and the actual gross sales threshold set forth in Section 3.6 forthe years after 2003 based on reasonable and attainable sales forecasts.

 

(viii)                        Pursuantto Section 14.1 of the Service Agreement, Cardinal Health and Photogenhereby agree to extend the term of the Service Agreement to a date three (3)years from the Closing Date (the “New Term”); provided,however,that the term of the Service Agreement shall be automatically extended for anadditional year unless either party gives the other party at least thirty (30)days prior written notice of its intention not to extend the term; and provided,furtherr that the term of the Service Agreement shall not beautomatically extended for a total of more than two additional years.

 

4

----

 

[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

(ix)                                Section 17.12is hereby deleted in its entirety and replaced with the following:

Without limiting Vendor’s rights under law or inequity, Vendor and its affiliates, parent or related entities, collectively orindividually, may exercise a right of set-off against any and all amounts due toVendor from Company. For purposes of this Section 7.6, Vendor, itsaffiliates, parent or related entities shall be deemed to be a single creditor.

 

5.                                       Paymentof Deferred Fees and Unpaid Fees. As soon as practicable after the ClosingDate, Photogen shall seek stockholder approval for the issuance of additionalshares of Photogen’s common stock (“Common Stock”) in connection with theImagent Sale. Upon stockholder approval, Photogen shall issue to CardinalHealth (or its designated affiliate), as full satisfaction of [****] ofDeferred Fees then owed to Cardinal Health by Photogen as successor to Allianceunder the Service Agreement that number of shares of Common Stock (the “PaymentShares”) determined by dividing (i) [****]. Photogen shall use its reasonablebest efforts to register the Payment Shares for resale by Cardinal Health (orits respective designated affiliates), respectively, under the Securities Actof 1933, as amended.

 

6.                                       Services.Upon full execution of this Amendment, Cardinal Health will begin the processof recruiting and hiring Representatives and Managers in such numbers as aremutually agreed to by the parties. The parties further agree promptly tonegotiate in good faith an increase in the Service Fees to pay the highersalaries necessary due to Company’s more stringent hiring criteria. As of theClosing Date, Cardinal Health will promote Mark Rowen to the position of ZoneManager, and will assign or recruit and hire a new National Sales Manager.

 

II.                                     DistributionAgreement.

 

7.                                       CORDService Fees. CORD will continue to provide services to Alliance inconnection with the Imagent product under the Distribution Agreement, andPhotogen will be responsible for and pay the fees thereunder (the “CORD ServiceFees”), effective from and after April 14, 2003, and continuing until theClosing Date. CORD will invoice Photogen for the CORD Service Fees on a monthlybasis, and Photogen shall pay each invoice within ten (10) days of the invoicedate. Upon execution of this Amendment, Photogen will pay [****] of alloutstanding amounts due and payable to CORD as of the Closing Date, and CORDwill send to Photogen a current list of accounts. On the 90th dayafter the execution of this Amendment, Photogen will pay the remaining [****]of all outstanding amounts due and payable to CORD as of the Closing Date.

 

8.                                       Assumptionand Assignment of Distribution Agreement. As of the Closing Date, Allianceassigns, and CORD herebyconsents to such assignment, all of its rights and obligations under theDistribution Agreement to Photogen, and as of the Closing Date, Photogenaccepts such assignment and assumes all of Alliance’s rights and obligationsunder the Distribution Agreement.

 

9.                                       Amendmentof Distribution Agreement. As of the Closing Date, Photogen and CORD agreeto amend the Distribution Agreement as follows:

 

(i)                                     Section 6.1of the Distribution Agreement is hereby amended to provide that Initial Tenn(as defined therein) shall be one year.

 

(ii)                                  Section 6.2(a)of the Distribution Agreement is hereby amended to provide that either partymay terminate the Distribution Agreement upon thirty days written notice to theother party.

 

5

----

 

[****]    Representsmaterial which has been redacted pursuant to a request for confidentialtreatment pursuant to Rule 24B-2 under the Securities Exchange act of1934, as amended.

 

(iii)                               ExhibitA of the Distribution Agreement, Operating Guidelines, is hereby amended bydeleting Sections 1.0, Warehousing, 2.0, Receiving, 3.0, Inventory, 4.0,Distribution, 5.0, Transportation, and 11.0, Chargebacks, thereof.

 

(iv)                              Theparties agree and acknowledge that as of the date hereof the total amount ofunpaid fees under the Distribution Agreement is [****] (the “Unpaid Fees”).

 

III.                                 GeneralProvisions

 

10.                                 Termination.Cardinal Health shall have the right to terminate this Amendment for itself andon behalf of CORD upon written notice to Photogen (i) if Photogen notifiesCardinal Health that it does not intend to consummate the Imagent Sale or (ii),if the Closing Date has not occurred by July 31, 2003, on July 31,2003. Upon the termination of this Amendment in accordance with the precedingsentence, this Amendment shall be of no further force and effect; provided,however, that the obligations in Sections 1 and 7 shall survivetermination until all of the Current Service Fees, Current Expenses, and CORDService Fees are paid in full. Except with respect to the full payment of theCurrent Service Fees, Current Expenses, and CORD Service Fees described in****the preceding sentence, ifthis Amendment is terminated prior to consummation of the Imagent Sale, thenPhotogen shall have no further obligations to the Cardinal Companies hereunderor under the Service Agreement or Distribution Agreement.

 

11.                                 Miscellaneous.

 

(i)                                     EntireAgreement. This Amendment, the Service Agreement and the DistributionAgreement (collectively, the “Cardinal Agreements”) set forth the entire understandingof the parties hereto with respect to the transactions contemplated hereby. Anyand all previous negotiations, agreements and understandings between or amongthe parties regarding the subject matter hereof, whether written or oral, aresuperseded by the Cardinal Agreements. Each of the Cardinal Companies, on theone hand, and Photogen, on the other hand, agrees and acknowledges that, exceptas specifically set forth herein, none of them shall have any liability orobligation to the other for any past or current liability or obligation ofPhotogen to the Cardinal Companies or the Cardinal Companies to Photogen,respectively, or for any past, current or future liability or obligation ofAlliance to the Cardinal Companies.

 

(ii)                                  Assignmentand Binding Effect. This Amendment and the rights of the parties hereundermay not be assigned without the prior written consent of the other party(except by operation of law) and shallinure to the benefit of and be binding upon the parties hereto and theirrespective executors, heirs, personal representatives, successors and assigns.

 

(iii)                               Notices.Any notice, request, demand, waiver, consent, approval or other communicationwhich is required or permitted hereunder shall be in writing and shall bedeemed given on the day established by the sender as having been deliveredpersonally; on the day delivered by a private courier as established by thesender by evidence obtained from the courier; or on the third day after thedate mailed, by certified or registered mail, return receipt requested, postageprepaid. To constitute a valid written notice, such communications must beaddressed as set forth above or to such other address or to the attention ofperson or persons as the recipient party has specified by prior written noticeto the sending party (or in the case of counsel, to such other readily ascertainablebusiness address as such counsel may hereafter maintain). If more than onemethod for sending notice as set forth above is used, the earliest notice dateestablished as set forth above shall control.

 

(iv)                              GoverningLaw. This Amendment shall be construed and interpreted in accordance 

 

6

----

 

with the laws ofthe State of Ohio, without regard to its provisions concerning conflict of lawsthat would cause the laws of another jurisdiction to govern.

 

(v)                                 NoBenefit to Others. The representations, warranties, covenants andagreements contained in this Letter of Intent are for the sole benefit of theparties hereto and their affiliates, successors and assigns, and they shall notbe construed as conferring******any rights on any other persons.

 

(vi)                              Counterparts.This Amendment may be executed in two or more counterparts, each of which shallbe binding as of the date first written above, and all of which shallconstitute one and the same instrument. Each such copy shall be deemed anoriginal, and it shall not be necessary in making proof of this Letter ofIntent to produce or account for more than one such counterpart.

 

(vii) Severability.Any provision of this Amendment which is invalid or unenforceable in anyjurisdiction shall be ineffective to the extent of such invalidity orunenforceability without invalidating or rendering unenforceable the remainingprovisions hereof, and any such invalidity or unenforceability in anyjurisdiction shall not invalidate or render unenforceable such provision in anyother jurisdiction.

 

INWITNESS WHEREOF, this Amendment has been executed by the parties hereto on theday and year first written above and the undersigned hereby represent that theyare executive officers of their respective companies and have the authority tobind such company to the terms and conditions of this Amendment.

 
|   | PHOTOGEN TECHNOLOGIES, INC.                                                          |
|--------|--------------------------------------------------------------------------------------|
|   |                                                                                 |
|   | By:                                                                                  |    /s/ Brooks Boveroux |   |
|   | Name:  Brooks Boveroux                                                          |
|   | Title:  Chief Financial Officer                                                 |
|   |                                                                                 |
|   | CARDINAL HEALTH 411, INC.                                                            |
|   | (f/k/a REDKEY, INC. doing business as Cardinal  Health Sales and Marketing Services) |
|   |                                                                                 |
|   | By:                                                                                  |    /s/ Anthony J. Cherichella |   |
|   | Name:  Anthony J. Cherichella                                                   |
|   | Title:  CFO                                                                     |
|   |                                                                                 |
|   | CARDINAL HEALTH 105, INC.                                                            |
|   | (f/k/a CORD LOGISTICS, INC.)                                                         |
|   |                                                                                 |
|   | By:                                                                                  |    /s/ Anthony J. Cherichella |   |
|   | Name:  Anthony J. Cherichella                                                   |
|   | Title:  CFO                                                                     |
|   |                                                                                 |
|   | ALLIANCE PHARMACEUTICAL CORP.                                                        |
|   |                                                                                 |
|   | By:                                                                                  |    /s/ Duane Roth |   |
|   | Name:                                                                                |
|   | Title:                                                                               |
|        |                                                                                      |  |  |  |  |  |  |

 

7

----