Exhibit 10.1


 


GOING FORWARD AGREEMENT


 


This GOING FORWARD AGREEMENT is entered into this 2nd day of
May, 2003, by and among Xmark Fund, L.P. and Xmark Fund, Ltd. (collectively, “Xmark”),
and Photogen Technologies, Inc., a Nevada corporation (“Photogen”).


 


WHEREAS, Xmark has entered into a Secured Note Purchase Agreement,
dated July 23, 2002, with Alliance Pharmaceutical Corp., a New York corporation
(“Alliance”) (as amended, modified, supplemented or restated from time
to time, the “Loan Agreement”) pursuant to which, Xmark has purchased
Secured Promissory Notes from Alliance in an outstanding stated value of
$3,750,000 (the “Notes”);


 


WHEREAS, the obligations of Alliance under the Notes and the Loan
Agreement are secured by perfected, first priority security interests in
certain assets of Alliance (the “Collateral”) pursuant to the terms of a
Security Agreement, dated July 23, 2002 (the “Security Agreement”);


 


WHEREAS, Alliance is in default on the Notes and, as of the date
hereof, $5,287,501.53 in outstanding stated value and accrued interest is due
and owing under the Notes;


 


WHEREAS, Xmark has the right under the Notes, the Loan Agreement and
the Security Agreement (collectively, the “Loan Documents”) to foreclose
on the Collateral;


 


WHEREAS, Photogen is contemplating a purchase (the “Asset Purchase”)
of substantially all of Alliance’s imaging modalities assets used in connection
with Alliance’s imaging and diagnostic imaging business, including without
limitation with respect to development, manufacture, marketing and sale of the
Imagent® products;


 


WHEREAS, Xmark, Alliance and Photogen have previously entered into a
Standstill and Make-Whole Agreement, dated as of December 30, 2002 (the “Standstill
Agreement”), pursuant to which, among other things, Photogen issued to
Xmark 750,000 shares (the “Standstill Shares”) of its Common Stock, par
value $0.01 per share (“Photogen Common Stock”);


 


WHEREAS, pursuant to the terms of the Standstill Agreement Photogen was
obligated to have registered the Standstill Shares for resale by Xmark under
the Securities Act of 1933, as amended (the “Securities Act”), and
applicable state securities law on or before April 29, 2003;


 


WHEREAS, as of the date hereof Photogen has not effected the
registration of the Standstill Shares as required by the Standstill Agreement;


 


WHEREAS, Photogen wishes to induce Xmark to forbear from exercising its
remedies under the Loan Documents to allow Photogen to complete the Asset
Purchase;


 


WHEREAS, pursuant to a Participation Agreement, dated of even date
herewith (the “Participation Agreement”), Photogen has purchased a
one-third participation interest in the Notes (the “Participation”);


 

















 


WHEREAS, the parties hereto wish to set forth herein the terms and
conditions pursuant to which, at the closing of the Asset Purchase (i) Photogen
will pay Xmark the amounts set forth herein, (ii) Xmark will cancel the Notes,
(iii) Xmark will consent to the Asset Purchase, and (iv) Xmark, Alliance and
Photogen will release each other from certain claims.


 


NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows.


 


1.                                       Asset
Purchase.  Attached hereto as Exhibit
A is a true and complete summary of the terms and conditions on which
Photogen intends to effect the Asset Purchase (the “Term Sheet”).  Photogen shall use its commercially
reasonable efforts to effect the Asset Purchase on substantially the terms set
forth in the Term Sheet as soon as practicable after the date hereof and in no
event after July 15, 2003 (the “Termination Date”).  No amendment, supplement or modification to
the Term Sheet shall be made that would (i) increase the total consideration to
be paid in connection with the Asset Purchase, (ii) increase the cash to be
paid in connection with the Asset Purchase or (iii) have a material adverse
effect on the New Collateral (as hereinafter defined) without the prior written
consent of Xmark, which shall not be unreasonably withheld or delayed.  In the event that a closing of the Asset
Purchase on substantially the terms set forth on the Term Sheet, with such
changes therein as are permitted or approved hereunder (the “Closing”),
does not occur for any reason on or prior to 5:00 p.m., New York time, on the
Termination Date, this Agreement shall immediately terminate and be of no
further force and effect, provided, however, that the provisions of Sections 6,
7, 8 and 11 shall survive such termination. 
The date on which the Closing occurs is hereinafter referred to as the “Closing
Date”.


 


2.                                       Transactions
to Occur at the Closing.  (a)  Photogen shall notify Xmark at least 48
hours in advance of the scheduled Closing Date.  Photogen shall provide Xmark with written evidence, reasonably
satisfactory to Xmark, that the Closing has occurred or will occur
simultaneously with the transactions set forth in this Section 2.


 


(b)                                 As
of the Closing, Photogen shall become unconditionally obligated to make the
following payments to Xmark:


 


(i)                                     a
total of $2,500,000, in cash, paid as follows: (A) $1,250,000, to be paid no
later than the earlier to occur of (x) the 90th day after the
Closing Date and (y) August 5, 2003, and (B) $1,250,000, to be paid no later
than the earlier to occur of (1) the 180th day after the Closing
Date and (2) November 3, 2003; provided, however, that Photogen shall pay such
installments immediately in the event that Photogen completes after the Closing
Date and prior to either August 5, 2003 or November 3, 2003, as the case may
be, one or more institutional financings resulting in aggregate gross proceeds
to Photogen of at least $18 million; and


 


(ii)                                  interest
on the installment payments set forth in clause (i) above, payable monthly on
the first business day of every month, commencing on the first business day of
the month immediately following the month in which the Closing occurs, at a
rate per annum equal


 


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to the Prime Rate (as defined herein) plus 3% (the “New Interest
Rate”) until such installments have been paid in full.  Such interest shall be paid in shares of
Photogen Common Stock (the “Interest Shares”) valued for this purpose at
the Share Value (as defined herein).  As
used herein, “Prime Rate” shall mean the Prime Rate published in the Wall Street
Journal, Eastern Edition, under the heading “Money Rates” on the
Closing Date.


 


(iii)                               The
obligations of Photogen hereunder shall be secured by a first priority security
interest in the assets acquired by Photogen pursuant to the Asset Purchase (the
“New Collateral”).


 


(c)                                  At
the Closing, Photogen shall deliver to Xmark (i) a number of newly issued,
fully paid and non-assessable shares of Photogen Common Stock (the “Accrued
Interest Shares”) having a value (for this purpose each share of Photogen
Common Stock shall be deemed to have a value equal to $1.00, subject to
adjustment in the event of any stock split, stock dividend, reverse stock
split, recapitalization or reclassification of the Photogen Common Stock occurring
on or after the date hereof (the “Share Value”)) equal to the Interest
Factor (as such term is defined below) less the number of Standstill Shares,
(ii) a number of newly issued, fully paid and non-assessable shares of Photogen
Common Stock (the “Default Shares”) in payment of the registration
penalties accrued from and including April 30, 2003 through and including the
Closing Date pursuant to Section 7(b) hereof, valued for this purpose at the
Share Value, (iii) a fully executed security agreement (the “Security
Agreement”) creating a first priority security interest in the New
Collateral in favor of Xmark, (iv) acknowledgment copies of UCC-1s evidencing
such security interest and filed in such jurisdictions as Xmark may request,
(v) an opinion of counsel to Photogen in form and effect satisfactory to Xmark
covering such matters (including the enforceability of this Agreement and the
perfection (but not priority) of the security interests created by the Security
Agreement) as Xmark may reasonably request, and (vi) such other documents
(including a secretary’s certificate) as Xmark may reasonably request.  The Security Agreement shall provide that
the security interest created therein shall terminate upon the indefeasible
payment in full of all amounts payable hereunder and the full performance by
Photogen of its obligations hereunder. 
As used herein, the term “Interest Factor” shall mean
$1,537,501.53 plus $5,556.22 for each day in the period commencing on the day
after the date of this Agreement and ending on and including the Closing Date.


 


(d)                                 Also
at the Closing, Xmark shall deliver to Photogen (i) the Notes marked “canceled”
or otherwise properly endorsed for transfer, (ii) a release in the form of Exhibit
B attached hereto (in exchange for executed counterparts thereof from
Alliance and Photogen)and (iii) such other documents as Photogen may reasonably
request.


 


(e)                                  Section
5 hereof shall terminate and be of no further force and effect.


 


(f)                                    The
Participation Agreement shall terminate and be of no further force and effect.


 


3.                                       [Intentionally
Omitted]


 


4.                                       Put
Right.  (a)  From and after the Closing, Xmark shall have
the transferable right (the “Put Right”) at its option, exercisable as
specified herein, to require Photogen to


 


3

















 


repurchase any or all of the Standstill Shares, the Accrued Interest
Shares, the Default Shares, the Interest Shares, any Late Payment Shares (as
defined below) and any Late Registration Shares (as defined below)
(collectively, the “Redeemable Shares”) at a repurchase price of $1.00
per share (subject to adjustment in the event of any stock split, stock
dividend, reverse stock split, recapitalization or reclassification of the
Photogen Common Stock occurring on or after the date hereof).  The Put Right shall expire on 5:00 p.m., New
York time, on the second anniversary of the Closing Date (the “Expiration
Date”).


 


(b)                                 Prior
to the Expiration Date, the Put Right shall be fully exercisable at any time
from and after the earlier to occur of (i) the 13 month anniversary of the
Closing Date and (ii) the completion by Photogen after the date hereof of one
or more institutional financings resulting in aggregate gross proceeds to
Photogen of at least $20 million (the earlier of such dates, the “Full
Exercise Date”).


 


(c)                                  If
the Closing occurs, prior to the Full Exercise Date, the Put Right will be
exercisable in four (4) equal quarterly installments commencing on the 90th
day after the Closing Date (the “Initial Exercise Date”); provided,
however, that Photogen shall not be obligated (i) to repurchase more than an
aggregate of one-quarter of the Redeemable Shares in any consecutive 90-day
period, subject to adjustment as provided below (the “Quarterly Amount”),
and (ii) have the right not to comply with any Put Right (and accordingly not
to repurchase the Shares covered by such Put Right) by notifying Xmark in
writing (the “Shortfall Notice”) that Photogen, by action of its Board
of Directors, has determined in good faith that the Financing Condition (as
defined below) is not satisfied. 
Photogen shall use its commercially reasonable efforts to cause the
Financing Condition to be met as soon as practicable after the date hereof.  As used herein, the term “Financing
Condition” means that Photogen has sufficient cash, based on its current
Board approved operating plan, to satisfy its operating and working capital
requirements for the immediately succeeding 18-month period.


 


(d)                                 Prior
to the Full Exercise Date, Photogen shall provide Xmark with written notice on
the first day of each quarterly period, commencing on the Initial Exercise
Date, specifying the maximum number of Shares, if any, for which the Put Right
may be exercised without violating the Financing Condition (the “Maximum
Quarterly Amount”).  The excess of
the Quarterly Amount over the Maximum Quarterly Amount is hereinafter referred
to as the “Shortfall Amount”. 
The Quarterly Amount for any quarterly period shall be increased by the
Shortfall Amount, if any, in respect of the immediately preceding quarterly
period.


 


(e)                                  The
Put Right may be exercised by providing written notice thereof to Photogen
prior to the Expiration Date, which notice shall specify the amount of
Redeemable Shares to be repurchased (the “Repurchase Amount”), which,
prior to the Full Exercise Date shall not exceed the Maximum Quarterly Amount,
and the date on which such repurchase is to occur (the “Repurchase Date”),
which shall be not less than three business days after the date of the
notice.  On the Repurchase Date, Xmark
shall deliver to Photogen a certificate or certificates for the Redeemable
Shares being repurchased on the Repurchase Date, accompanied by appropriately
executed stock powers or otherwise in proper form for transfer, and Photogen
shall pay the Repurchase Amount to Xmark by wire transfer of immediately
available funds to an account previously specified by Xmark.


 


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(f)                                    In
the event that the Company fails to purchase Redeemable Shares on any Repurchase
Date, Xmark shall be entitled to payment in an amount equal to 1.5% of the
value of the Redeemable Shares not so purchased at the Share Value for any
30-day period or pro rata for any portion thereof during which such failure is
continuing.  Also, Xmark shall be
entitled to payment in an amount equal to 1.5% of the Shortfall Amount (valued
at the Share Value) in effect from time to time, for any 30-day period or pro
rata for any portion thereof during which such Shortfall Amount exists;
provided, however, that such payment shall not commence to accrue until the 90th
day after the date on which the first Shortfall Notice is delivered to
Xmark.  Such payments may be made, at
Photogen’s election, in cash or Photogen Common Stock (valued at the Share
Value).  Such payments shall be in
partial compensation to Xmark, and shall not constitute Xmark’s exclusive
remedy for such events.  Any shares of
Photogen Common Stock so issued pursuant to this Section 4(f) are referred to
herein as “Late Payment Shares”.


 


(g)                                 Photogen
shall not create, assume or suffer to exist any limitation or restriction on
its ability to repurchase Redeemable Shares pursuant to the Put Right.


 


5.                                       Standstill.


 


(a)                                  Xmark
shall not exercise any rights against Alliance as a creditor, whether secured
or unsecured, or otherwise for a period (the “Standstill Period”)
commencing on the date hereof, and ending on the earliest to occur of (i) the
Termination Date, (ii) the determination by Photogen not to pursue the Asset
Purchase, (iii) the written termination of negotiations between Photogen and
Alliance with respect to the Asset Purchase, (iv) the exercise of any remedies
against the assets of Alliance by any creditor other than Xmark or its
affiliates, (v) Alliance’s filing of a petition under any bankruptcy,
insolvency or debtor’s relief law or making an assignment for the benefit of
its creditors, (vi) a court of competent jurisdiction entering an order or
decree under any federal or state bankruptcy law and (X) is for relief against
Alliance in an involuntary case, (Y) appoints a custodian, receiver or other
similar official for all or substantially all of Alliance’s property, or (Z)
orders the liquidation of Alliance (each of the events specified in clauses (v)
and (vi) of this Section 5(a) are referred to as, a “Bankruptcy Proceeding”),
or (vii) the date specified in a notice by Photogen on one day’s written notice
to Xmark.  Photogen shall notify Xmark
in writing within one day following the occurrence of any event specified in
clauses (ii) or (iii) above.


 


(b)                                 During
the Standstill Period, Xmark shall not pursue, institute, encourage or join in
any proceeding against Alliance at law or equity to realize upon any collateral
or otherwise.  Xmark agrees that until
the end of the Standstill Period, Xmark will not, directly or indirectly ask,
demand for, accelerate, accept or receive any payments of, or other amounts or
consideration on account of, the Notes (including by way of subrogation) or any
other debt from Alliance or commence, or join with any creditor in commencing,
any suit, action or judicial proceeding or bankruptcy, reorganization,
insolvency or similar proceedings with respect to Alliance or the Notes or any
other Alliance debt or assets; nor shall Xmark and Alliance agree to or effect any
amendment or change to the terms of the Loan Documents except as contemplated
in this Agreement or to preserve the perfection and priority of Xmark’s
security interest; provided, however, Xmark may transfer the Notes and its
interest in the Loan Documents to a


 


5

















 


third party upon the prior written consent of Photogen, which shall not
be unreasonably withheld or delayed, and provided that such third party
purchaser agrees in writing to be bound by the terms of this Agreement.  Xmark shall execute and deliver to Photogen
instruments confirming this Agreement if and to the extent necessary to enforce
the provisions of this Agreement.  The
terms of this Agreement, the standstill effected hereby, and the rights of
Photogen which are created hereunder, shall not be affected by (i) any
amendment, addition, modification, extension, increase, restatement or
supplement of or to any of the Notes or the Loan Documents or any instrument,
document or agreement relating thereto, (ii) any exercise or non-exercise of
any right, power or remedy under or in respect of the Notes or the Loan
Documents or any instrument, document or agreement relating thereto, (iii) any
claim or defense as to the validity or enforceability of any instruments,
documents or agreements relating to the proposed Asset Purchase, or (iv) any
other circumstance which might otherwise constitute a defense available to, or
a discharge of Alliance, Xmark or any other party.


 


6.                                       Termination
of the Standstill Agreement.  The
Standstill Agreement is hereby terminated and of no further force and effect.


 


7.                                       Registration
Requirements.


 


(a)                                  Photogen
shall use its reasonable best efforts to register (i) the Standstill Shares and
(ii) the Accrued Interest Shares, the Default Shares, the Interest Shares, any
Late Payment Shares and any Late Registration Shares (collectively, the “Registrable
Securities”), for resale by Xmark or its transferees under the Securities
Act within 60 days from the date hereof (the 60th day following the
date hereof is referred to as, the “Registration Date”).


 


(b)                                 Xmark
shall be entitled to payment in an amount equal to 1.5% of the Standstill
Shares, valued at the Share Value, for each 30-day period or pro rata for any
portion thereof from and including April 30, 2003 through the Registration
Date.


 


(c)                                  Xmark
shall be entitled to payment in an amount equal to 1.5% of the Registrable
Securities, valued at the Share Value, for any 30-day period or pro rata for
any portion thereof following the Registration Date until such time as a
registration statement is made effective with respect to the Registrable
Securities.


 


(d)                                 Any
payments pursuant to clauses (b) and (c) above may be made, at Photogen’s
election, in cash or Photogen Common Stock (valued at the Share Value).  Such payments shall be in partial
compensation to Xmark, and shall not constitute Xmark’s exclusive remedy for
such events.  Any shares of Photogen
Common Stock so issued pursuant to this Section 7 are referred to herein as “Late
Registration Shares”.


 


8.                                       Waiver
of Claims.  Photogen hereby
acknowledges that it has had an opportunity to review the Loan Documents.  Whether or not the Closing occurs, Photogen
hereby irrevocably acknowledges that the Loan Documents are valid and enforceable
and that Xmark has a valid, perfected and first priority security interest in
the Collateral prior to the claims of any other person, including, without
limitation, Photogen, and hereby irrevocably waives any claim, right, defense
or offset that Photogen may now have or may hereafter acquire that the Loan
Documents


 


6

















 


are not valid and enforceable or that such security interests are
invalid, unperfected, do not constitute first priority security interests in
the Collateral, constitute a fraudulent transfer or fraudulent conveyance or
should be subordinated (equitably or otherwise) to the claims or security
interests of any other person, including, without limitation, any interests of
Photogen in the Collateral.  Such waiver
is expressly intended to cover known as well as unknown claims, rights,
defenses and offsets.


 


9.                                       Indemnification.


 


(a)                                  From
and after the Closing, Photogen shall indemnify and hold harmless Xmark, its
partners and its and their officers, directors, managers, shareholders,
members, employees, agents and representatives from and against any loss,
liability, claim, damage or expense (including reasonable legal fees and
expenses) (“Losses”), as incurred (payable promptly upon written request),
to the extent arising from, in connection with or otherwise with respect to any
claim that the Asset Purchase or the transactions contemplated hereby
constitute a fraudulent transfer or fraudulent conveyance or violate the
provisions of the United States Bankruptcy Code or any applicable state
insolvency law or that the security interests of Xmark in Alliance’s assets
should be invalidated or subject to equitable subordination or otherwise
modified as a result of the Asset Purchase or the transactions contemplated
hereby, if and only if, such Losses are incremental to the Losses that Xmark
would have otherwise incurred as a result of it being a lender to, and secured
creditor of, Alliance, if the Asset Purchase and the other transactions
contemplated hereby (other than the waivers contained in Section 8) had not
been consummated and Xmark had realized on its Collateral directly as a secured
creditor of Alliance.


 


(b)                                 any
party entitled to indemnification hereunder (an “indemnified party”)
such indemnified party must notify Photogen in writing of a claim for which
such indemnified party seeks indemnification hereunder (a “Claim”)
promptly following receipt by such indemnified party of written notice of the
Claim; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent
Photogen shall have been actually and materially prejudiced as a result of such
failure.  Thereafter, the indemnified
party shall deliver to Photogen, promptly following the indemnified party’s
receipt thereof, copies of all notices and documents (including court papers)
received by the indemnified party relating to the Claim.


 


(c)                                  Photogen
shall be entitled to participate in the defense of any Claim as to which Photogen
has admitted indemnification and, if it so chooses, to assume the defense
thereof with counsel selected by Photogen; provided, however,
that such counsel is not reasonably objected to by the indemnified party.  Should Photogen so elect to assume the defense
of a Claim, Photogen shall not be liable to the indemnified party for any legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof.  If Photogen assumes
such defense, the indemnified party shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by Photogen, it being understood that Photogen shall control
such defense.  Photogen shall be liable
for the fees and expenses of counsel employed by the indemnified party for any
period during which Photogen has not assumed the defense thereof.  If Photogen chooses to defend or prosecute a
Claim, all the indemnified parties shall cooperate in the defense or
prosecution thereof.  Such cooperation
shall


 


7

















 


include the retention and (upon Photogen’s request) the provision to
Photogen of records and information that are reasonably relevant to such Claim,
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.  Whether or not Photogen assumes the defense
of a Claim, the indemnified party shall not admit any liability with respect
to, or settle, compromise or discharge, such Claim without Photogen’s prior
written consent, which consent shall not be unreasonably withheld or
delayed.  If Photogen assumes the
defense of a Claim, the indemnified party shall agree to any settlement,
compromise or discharge of a Claim that Photogen may recommend and that by its
terms (i) releases the indemnified party completely in connection with such
Claim, (ii) does not require the indemnified party to make any admission of
liability or to make or forego any payment to or from Photogen or any third
party and (iii) does not obligate the indemnified party to take or refrain from
taking any action.


 


10.                                 Representations
and Warranties of the Parties.


 


10.1                           Xmark.  Xmark represents and warrants to Photogen as
follows.


 


(a)                                  The
execution, delivery and performance of each of this Agreement and the
Participation Agreement (i) have been duly authorized by all necessary
corporate or partnership action on behalf of Xmark, (ii) do not and will not
violate any provision of law, rules, regulations, or orders or any provision of
the charter, bylaws or other organizational documents of or binding on Xmark,
and (iii) do not and will not violate, result in the breach of, or constitute a
default or require any consent under, any contract, agreement, indenture or
instrument to which Xmark is a party or by which Xmark or Xmark’s property may
be bound or subject.  Each of this
Agreement and the Participation Agreement has been duly and validly executed
and delivered by Xmark and constitutes the legal, valid and binding obligation
of Xmark, enforceable against Xmark in accordance with the terms hereof,
subject as to enforceability (x) to applicable bankruptcy, insolvency,
reorganization or moratorium and other similar laws affecting creditors’ rights
generally and (y) to the application of general principles of equity.  No governmental or other approval is
required in connection with the execution and delivery by Xmark of, and the
performance of the obligations of Xmark under, this Agreement or the Participation
Agreement.


 


(b)                                 Xmark
has not sold, transferred, assigned, pledged or otherwise hypothecated or
disposed of any of its rights to the Notes, including, without limitation, any
participation interest in the Notes, or any other rights of Xmark as a secured
or unsecured creditor of Alliance.


 


(c)                                  Xmark
is an “accredited investor” as such term is defined in Regulation D under the
Securities Act.  The shares of Photogen
Common Stock to be received by Xmark hereunder will be acquired for Xmark’s own
account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the Securities Act, and Xmark
has no intention of selling, granting any participation in, or otherwise
distributing the same in violation of the Securities Act.  Xmark acknowledges that it can bear the
economic risk and complete loss of its investment in the shares of Photogen
Common Stock it may receive hereunder and has such knowledge and experience in
financial or business matters that it is


 


8

















 


capable of evaluating the merits and risks of the investment
contemplated hereby.  Xmark understands
that the shares of Photogen Common Stock are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from Photogen in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances, and the certificate(s) for the shares of Photogen Common Stock
will bear a legend to that effect. 
Xmark has had an opportunity to receive additional information related
to Photogen requested by it and to ask questions of and receive answers from
Photogen regarding Photogen, its business and the terms and conditions of the
offering of shares of Photogen Common Stock. 
Xmark acknowledges access to copies of Photogen’s most recent Annual Report
on Form 10-K for the fiscal year ended December 31, 2002, as amended (the “2002
10-K”), and all other reports and amendments thereto filed by Photogen
pursuant to the Securities Exchange Act of 1934, as amended (the “1934 Act”),
since the filing of the 2002 10-K and prior to the date hereof (collectively,
the “SEC Filings”) through EDGAR. 
Xmark did not learn of the investment in shares of Photogen Common Stock
as a result of any public advertising or general solicitation.


 


10.2                           Photogen.  Photogen represents and warrants to Xmark as
follows.


 


(a)                                  The
execution, delivery and performance of each of this Agreement and the
Participation Agreement, including the issuance of the shares of Photogen
Common Stock contemplated hereby, (i) have been duly authorized by all
necessary corporate action on behalf of Photogen, (ii) do not and will not
violate any provision of law, rules, regulations, or orders or any provision of
the charter, bylaws or other organizational documents of or binding on
Photogen, and (iii) do not and will not violate, result in the breach of, or
constitute a default or require any consent under, any contract, agreement,
indenture or instrument to which Photogen is a party or by which Photogen or
Photogen’s property may be bound or subject. 
Each of this Agreement and the Participation Agreement has been duly and
validly executed and delivered by Photogen and constitutes the legal, valid and
binding obligation of Photogen, enforceable against Photogen in accordance with
the terms hereof, subject as to enforceability (x) to applicable bankruptcy,
insolvency, reorganization or moratorium and other similar laws affecting
creditors’ rights generally and (y) to the application of general principles of
equity.  No governmental or other
approval is required in connection with the execution and delivery by Photogen
of, and the performance of the obligations of Photogen under, this Agreement or
the Participation Agreement.


 


(b)                                 Photogen
is a corporation duly organized, validly existing and in corporate good
standing under the laws of the State of Nevada and is qualified to do business
as a foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to be so qualified would not have, either
individually or in the aggregate, a material adverse effect on the business,
operations, financial condition, assets, prospects, liabilities or contractual
rights of Photogen, whether individually or taken as a whole (a “Material
Adverse Effect”).  Photogen has duly
authorized the sale and issuance, pursuant to the terms of this Agreement an
adequate number shares of its common stock authorized and available for
issuance hereunder, having the rights, restrictions, privileges and preferences
set forth in the Amended and Restated Articles of Incorporation, as amended to
date.


 


9

















 


(c)                                  The
issuance, sale and delivery of shares of Photogen Common Stock in accordance
with this Agreement have been duly authorized by all necessary corporate action
on the part of Photogen.  The shares of
Photogen Common Stock issuable hereunder when so issued, sold and delivered
against payment therefor in accordance with the provisions of this Agreement
will be duly and validly issued, fully paid and non-assessable.


 


(d)                                 The
SEC Filings are the only filings required of Photogen pursuant to the 1934 Act
for such periods.  At the time of filing
thereof, the SEC Filings complied as to form in all material respects with the
requirements of the 1934 Act and did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, as amended and in the light of the circumstances under
which they were made, not misleading. 
During the preceding two years, except as set forth in the SEC
Filings:  Each registration statement
and any amendment thereto filed by Photogen pursuant to the Securities Act and
the rules and regulations thereunder, as of the date such statement or
amendment became effective, complied as to form in all material respects with
the Securities Act and did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and each prospectus filed pursuant
to Rule 424(b) under the Securities Act, as of its issue date and as of the
closing of any sale of securities pursuant thereto did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.  Photogen is engaged only in the business
described in the SEC Filings and the SEC Filings contain a complete and
accurate description in all material respects of the business of Photogen,
taken as a whole, as required to be disclosed.


 


(e)                                  The
financial statements included in each SEC Filing present fairly, in all
material respects, the consolidated financial position of Photogen as of the
dates shown and its consolidated results of operations and cash flows for the
periods shown, and such financial statements have been prepared in conformity
with United States generally accepted accounting principles applied on a
consistent basis (except as may be disclosed therein or in the notes thereto,
and, in the case of quarterly financial statements, as permitted by Form 10-Q
under the 1934 Act).  Except as set
forth in the financial statements of Photogen included in the SEC Filings filed
prior to the date hereof Photogen has not incurred any liabilities, contingent
or otherwise, except those incurred in the ordinary course of business,
consistent (as to amount and nature) with past practices since the date of such
financial statements, none of which, individually or in the aggregate, have had
or could reasonably be expected to have a Material Adverse Effect.


 


(f)                                    Except
as disclosed in the SEC Filings or on Schedule 9.2(f) hereto, there are no
pending actions, suits or proceedings against Photogen or its subsidiaries
which affect any of its or their properties; and to Photogen’s knowledge, no
such actions, suits or proceedings are threatened or contemplated.


 


10

















 


(g)                                 Photogen
is in compliance with all applicable Nasdaq SmallCap Market continued listing
requirements.  There are no proceedings
pending or to Photogen’s knowledge threatened against Photogen relating to the
continued listing of its common stock on the Nasdaq SmallCap Market and
Photogen has not received any notice of, nor to Photogen’s knowledge is there
any basis for, the delisting of its common stock from the Nasdaq SmallCap
Market.  The shares of Photogen Common
Stock issuable hereunder have been approved for listing on the Nasdaq SmallCap
Market and will be listed on the Nasdaq SmallCap Market upon official notice of
issuance.


 


(h)                                 Neither
Photogen nor any person or entity acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of any of the shares of
Photogen Common Stock issuable hereunder.


 


11.                                 General.


 


11.1                           Notices.  All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be delivered
by hand, by telecopier, by express overnight courier service or mailed by first
class mail, postage prepaid, to the respective addresses set forth on the
signature pages of this Agreement, as such addresses may be modified by notice
given pursuant to this Section 11.1, with copies provided simultaneously to
counsel as set forth on the signature pages of this Agreement.  Notices provided in accordance with this
Section 11.1 shall be deemed delivered upon personal delivery, receipt by
telecopy or overnight mail, or 48 hours after deposit in the mail in accordance
with the above.


 


11.2                           Entire
Agreement.  This Agreement, together
with the instruments and other documents hereby contemplated to be executed and
delivered in connection herewith, contains the entire agreement and
understanding of the parties hereto, and supersedes any prior agreements,
negotiations or understandings between or among them, with respect to the
subject matter hereof.  Except as
expressly set forth in this Agreement, no party makes any representation or
warranty, express or implied, with respect to the transactions contemplated by
this Agreement or any such other agreements. 
Except as expressly set forth in this Agreement, Photogen makes no
representation or warranty, express or implied, with respect to the business of
Photogen, Photogen, Photogen’s assets or its future prospects (including any of
the foregoing with respect to Alliance). 
No party is relying on any understandings, agreements or representations
other than those expressly contained in this Agreement or such other written
agreements.


 


11.3                           Amendments
and Waivers.  This Agreement may
only be amended or modified by a writing dated after the date hereof and signed
by the parties hereto.  No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.


 


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11.4                           Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


 


11.5                           Captions.  The captions of the sections, subsections
and paragraphs of this Agreement have been added for convenience only and shall
not be deemed to be a part of this Agreement.


 


11.6                           Severability.  Each provision of this Agreement shall be
interpreted in such manner as to validate and give effect thereto to the
fullest lawful extent, but if any provision of this Agreement is determined by
a court of competent jurisdiction to be invalid or unenforceable under
applicable law, such provision shall be ineffective only to the extent so
determined and such invalidity or unenforceability shall not affect the
remainder of such provision or the remaining provisions of this Agreement.


 


11.7                           Governing
Law.  This Agreement shall be
governed by and interpreted and construed in accordance with the laws of the
State of New York.  The parties
irrevocably submit to the exclusive jurisdiction of the state and federal
courts located in New York, New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. 
Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this Agreement.  The parties irrevocably consent to the
jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. The parties irrevocably waive any objection
to the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.


 


11.8                           Injunctive
Relief.  In the event of any breach
or threatened breach of the provisions of this Agreement by any party hereto or
its representatives, the other party shall be entitled to all legal and
equitable remedies available to it, and without limiting any other available
remedies, such party shall be entitled to equitable relief without the
necessity of posting a bond, including injunction and specific
performance.  No failure or delay by any
party in exercising any right, power or privilege hereunder will operate as a
waiver thereof, nor will any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any right, power or
privilege hereunder.  In any action to
enforce the provisions of this Agreement, the non-prevailing party shall pay
the reasonable attorneys fees and related reasonable costs and expenses
incurred by the prevailing party in connection therewith.


 


[Next Page is Signature Page.]


 


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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.


 


	
   

  	
  Xmark Fund, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitchell D. Kaye

  	
   

  
	
   

  	
  Name: Mitchell D. Kaye

  
	
   

  	
  Title: Chief Investment Officer

  
	
   

  	
  Address:

  	
  Carnegie Hall Tower

  
	
   

  	
   

  	
  152 West 57th Street, 21st Floor

  
	
   

  	
   

  	
  New York, New York 10019

  
	
   

  	
   

  	
  Fax:  (212) 247-1329

  
	
   

  	
   

  	
  Attention:  David Cavalier

  
	
   

  	
   

  
	
   

  	
  Xmark Fund, Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitchell D. Kaye

  	
   

  
	
   

  	
  Name: Mitchell D. Kaye

  
	
   

  	
  Title: Chief Investment Officer

  
	
   

  	
  Address:

  	
  Carnegie Hall Tower

  
	
   

  	
   

  	
  152 West 57th Street, 21st Floor

  
	
   

  	
   

  	
  New York, New York 10019

  
	
   

  	
   

  	
  Fax:  (212) 247-1329

  
	
   

  	
   

  	
  Attention:  David Cavalier

  
	
   

  	
   

  
	
   

  	
  Photogen Technologies, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brooks Boveroux

  	
   

  
	
   

  	
  Name: Brooks Boveroux

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
  Address:

  	
  140 Union Square Drive

  
	
   

  	
   

  	
  New Hope, Pennsylvania 18938

  
	
   

  	
   

  	
  Fax:  (215) 862-7139

  
	
   

  	
   

  	
  Attention:  Taffy J. Williams

  
									



 


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