Document:

exv4w17

 

Exhibit 4.17

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Deferral Election Agreement for Deferred Share Units

 

     DEFERRAL AGREEMENT (the “Deferral Agreement”), made this                      day of                     ,                     , by and
between                                                              (the “Participant”), and Commerce Energy Group, Inc. (the “Company”).

     WHEREAS, the Company has established the Commerce Energy Group, Inc. 2006 Stock Incentive Plan
(the “Plan”), and the Participant is eligible to participate in said Plan;

     WHEREAS, Section 9(a) of the Plan permits the Committee to authorize deferral compensation
elections with any deferred compensation being credited to Deferred Share Units (“DSUs”) in
accordance with Section 9 of the Plan;

     NOW, THEREFORE, it is mutually agreed as follows:

1. Term of Election. This Deferral Agreement and the provisions of the Plan constitute the
entire agreement between the parties, and will continue in full force and effect until the
Participant executes a superseding Deferral Agreement, or until revoked by the Participant in a
writing sent to and approved by the Committee, or until the Participant ceases service with the
Company, or until the Plan is terminated by appropriate corporate action, whichever shall first
occur. This Deferral Agreement will become effective:

	 	a.	 	on the January 1st following the execution of this Deferral Agreement; or
	 
	 	b.	 	on the first day of the next calendar month following the execution of this Deferral
Agreement, but only if this Deferral Agreement is executed within the 30-day period after the
Participant first becomes eligible for Plan participation.

2. Compensation being Deferred. The Participant makes the following election (which shall
supersede any prior election only to the extent of an election made affirmatively herein) to defer
the following amount of fees/compensation for as long as this Deferral Agreement is in effect:

	 	a.	 	                                         percent ( ___%) of the amount otherwise payable in cash.
	 
	 	b.	 	___ percent ( ___%) of the amount otherwise payable in shares of the
Company’s common stock.
	 
	 	c.	 	___ percent ( ___%) of any Restricted Share Units (“RSUs”) in which the
Participant earns a vested interest (but only if the underlying Award Agreement
specifically authorizes deferral elections).

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Deferred Share Units Deferral Agreement

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

3. Crediting, Vesting, and Distribution of Deferred Compensation. The Company agrees to
make DSU credits in accordance with Section 9 of the Plan and the elections that the Participant
makes in the Distribution Election Agreement that is attached hereto as Exhibit A.

4. Taxes. The Participant, by the execution hereof, agrees to be solely responsible for
the satisfaction of any taxes that may arise (including taxes arising under Sections 409A or 4999
of the Code), and further agrees that neither the Company nor the Committee shall have any
obligation whatsoever to pay such taxes. The Committee shall nevertheless have the discretion –

	 	(a)	 	to condition any issuance of Shares on the Participant’s satisfaction of
applicable employment and withholding taxes; and
	 
	 	(b)	 	to unilaterally modify this Deferral Agreement in any manner that (i) conforms
with the requirements of Section 409A of the Code, (ii) that voids any election of the
Participant to the extent it would violate Section 409A of the Code, and (iii) for any
distribution election that would violate Section 409A of the Code, that defers
distributions pursuant to the Award until the earliest to occur of a distribution event
that is allowable under Section 409A of the Code or any distribution event that is both
allowable under Section 409A of the Code and is elected by the Participant, subject to
any valid second election to defer, that the Committee permits second elections to
defer in accordance with Section 409A(a)(4)(C).

The Committee shall have the sole discretion to interpret the requirements of the Code, including
Section 409A, for purposes of the Plan and this Deferral Agreement.

5. Designation of Beneficiary. Notwithstanding anything to the contrary contained herein
or in the Plan, following the execution of this Deferral Agreement, you may expressly designate a
beneficiary (the “Beneficiary”) to your rights and interest under this Deferral Agreement.
You shall designate the Beneficiary by completing and executing a designation of beneficiary
agreement substantially in the form attached hereto as Attachment 1 to Exhibit A
“Designation of Beneficiary”) and delivering an executed copy of the Designation of
Beneficiary to the Company.

6. Restrictions on Transfer. This Deferral Agreement may not be sold, pledged, or otherwise
transferred without the prior written consent of the Committee. Notwithstanding the foregoing, you
may transfer your rights under this Deferral Agreement, on such terms and conditions as the
Committee deems appropriate, either (i) by instrument to your “Immediate Family” (as defined
below), (ii) by instrument to an inter vivos or testamentary trust (or other entity) in which the
Award is to be passed to the your designated beneficiaries, or (iii) by gift to charitable
institutions. “Immediate Family” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive
relationships. Any transferee of your rights shall succeed and be subject to all of the terms of
this Award Agreement and the Plan.

7. Notices. Any notice or communication required or permitted by any provision of this
Deferral Agreement to be given to you shall be in writing and shall be delivered personally or sent
by certified mail, return receipt requested, addressed to you at the last address that the Company
had

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Deferred Share Units Deferral Agreement

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

for you on its records. Each party may, from time to time, by notice to the other party hereto,
specify a new address for delivery of notices relating to this Deferral Agreement. Any such notice
shall be deemed to be given as of the date such notice is personally delivered or properly mailed.

8. Binding Effect. Except as otherwise provided in this Deferral Agreement or in the Plan,
every covenant, term, and provision of this Deferral Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, legatees, legal representatives,
successors, transferees, and assigns.

9. Modifications. This Deferral Agreement may be modified or amended at any time, in
accordance with Section 15 of the Plan and provided that you must consent in writing to any
modification that adversely alters or impairs any rights or obligations under this Deferral
Agreement.

10. Headings. Section and other headings contained in this Deferral Agreement are for
reference purposes only and are not intended to describe, interpret, define or limit the scope or
intent of this Deferral Agreement or any provision hereof.

11. Severability. Every provision of this Deferral Agreement and of the Plan is intended
to be severable. If any term hereof is illegal or invalid for any reason, such illegality or
invalidity shall not affect the validity or legality of the remaining terms of this Deferral
Agreement.

12. Counterparts. This Deferral Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an original, but all
such counterparts shall together constitute one and the same instrument.

13. Plan Governs. By signing this Deferral Agreement, you acknowledge that you have
received a copy of the Plan and that your Deferral Agreement is subject to all the provisions
contained in the Plan, the provisions of which are made a part of this Deferral Agreement is
subject to all interpretations, amendments, rules and regulations which from time to time may be
promulgated and adopted pursuant to the Plan. In the event of a conflict between the provisions of
this Deferral Agreement and those of the Plan, the provisions of the Plan shall control.

14. Governing Law. The laws of the State of Delaware shall govern the validity of this
Deferral Agreement, the construction of its terms, and the interpretation of the rights and duties
of the parties hereto.

15. Not a Contract of Employment. [THIS PARAGRAPH IS NOT APPLICABLE TO NON-EMPLOYEE
DIRECTORS.] By executing this Deferral Agreement you acknowledge and agree that nothing in this
Deferral Agreement or the Plan confers on you any right to continue an employment, service or
consulting relationship with the Company, nor shall it affect in any way your
right or the Company’s right to terminate your employment, service, or consulting relationship at
any time, with or without Cause; and the Company would not have executed this Deferral Agreement
but for these acknowledgements and agreements.

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Deferred Share Units Deferral Agreement

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and year first
above-written.

	 	 	 	 	 	 	 
	 	 	PARTICIPANT
	 
	 	 	 	 	 	 
	 	 	   
	 
	 	 	 	 	 	 
	 	 	Printed Name:
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	COMMERCE ENERGY GROUP, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	A duly authorized executive officer

-4-

 

EXHIBIT A

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Distribution Election Agreement regarding Deferred Share Units

 

     DISTRIBUTION AGREEMENT, made this                      day of                     ,                     , by and between
                                                             (the “Participant”), and Commerce Energy Group, Inc. (the “Company”), with
respect
to compensation that the Participant defers pursuant to the terms and conditions of the
Deferral Agreement (the “Deferral Agreement”) dated                                                                                  ,                      between the Participant
and the Company.

     WHEREAS, the Company has established the Commerce Energy Group, Inc. 2006 Stock Incentive Plan
(the “Plan”), and the Participant has elected to defer compensation and thereby to participate in
said Plan and to accrue Deferred Share Units (“DSUs”) in accordance with Section 9 of the Plan;

     NOW, THEREFORE, it is mutually agreed as follows:

1. This Distribution Agreement and the provisions of the Plan constitute the entire agreement
between the parties with respect to the Company’s distribution to any and all benefits to which the
Participant becomes entitled pursuant to Section 9 of the Plan. The elections made in sections 1
and 2 above shall be irrevocable. The Participant’s beneficiary designation shall remain in full
force and effect until revoked or changed by the Participant in a writing sent to the Committee.

2. The Participant, by the execution hereof, agrees to participate in the Plan upon the terms and
conditions set forth therein, and, in accordance therewith, makes the following elections, subject
to the requirement that the Participant must collect all Plan benefits not later than December 31st
of the tenth year after the year in which the Participant ceases service with the Company:

	 	a.	 	The Company shall commence issuing shares in satisfaction of DSU credits
deferred and any related accumulated income on the first to occur of —

(___) January 1st of the calendar year immediately following the year in
which the Participant ceases service with the Company.

(___) January 1st of the year that is ___years after the Participant
ceases service with the Company.

	 	 	 	Notwithstanding the foregoing, the Participant hereby elects to collect ___% of
his or her account balance as soon as practicable after a Change in Control (as
defined in the Plan), subject to any applicable provisions of the Plan and the
Participant’s Deferral Agreement.
	 
	 	b.	 	The Participant hereby elects to have the Company distribute the DSUs and
any related accumulated earnings as follows:

 

 

Distribution Election Agreement

Commerce Energy Group, Inc.

2006 Stock Incentive Plan

(___) in substantially equal installments over a period of ___
years (must be less than 10 years).

(___) in a lump sum.

	 	c.	 	All distributions made pursuant to the Plan and this Agreement will be made
in whole shares of the Company’s common stock, with cash paid in lieu of fractional
shares.
	 
	 	d.	 	Notwithstanding the foregoing, all distributions made to Directors shall be
made pursuant to Section 9 of the Plan and shall be settled in cash only (or, subject
to Applicable Laws, in newly issued Shares or Shares obtained through open market
purchase).

3. The Participant hereby designates  See Attachment 1  to be his or her beneficiary or
beneficiaries and to receive the balance of any unpaid deferred compensation and related earnings.

4. The Company agrees to issue shares in satisfaction of DSU credits in accordance with the terms
of the Plan and the elections by the Participant made herein and subject to the specific terms for
deferrals by Directors as set forth in Section 9 of the Plan.

5. The terms of Sections 7 through 14 of the Deferral Agreement are incorporated herein by
reference, and shall apply to this Distribution Agreement based on the understanding that
references in such Sections to the Deferral Agreement shall refer to this Distribution Agreement
for purposes hereof.

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and year first
above-written.

	 	 	 	 	 	 	 
	 	 	PARTICIPANT
	 
	 	 	 	 	 	 
	 	 	   
	 
	 	 	 	 	 	 
	 	 	Printed Name:
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	COMMERCE ENERGY GROUP, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	A duly authorized executive officer

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Attachment
1

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

DESIGNATION OF BENEFICIARY

 

     In connection with Award Agreements between Commerce Energy Group, Inc. (the
“Company”) and                                                             , an individual residing at                                                              (the
“Recipient”), the Recipient hereby designates the person specified below as the beneficiary
of the Recipient’s interest in Awards as defined in the Company’s 2006 Stock Incentive Plan (the
“Plan”). This designation shall remain in effect until revoked in writing by the
Recipient.

	 	 	 	 	 	 	 
	 

	 	Name of Beneficiary:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Social Security No.:	 	 	 	 
	 

	 	 	 	 	 	 

     This beneficiary designation relates to any and all of Recipient’s rights under the following
Award or Awards:

	 	 	 	 	 
	 

	 	o
	 	any Award that Recipient has received under the Plan.
	 
	 

	 	o
	 	the                                                              Award that Recipient received pursuant to an award
agreement dated
                                                              ,                      between Recipient and the Company.

     The Recipient understands that this designation operates to entitle the above-named
beneficiary to the rights conferred by an Award from the date this form is delivered to the Company
until such date as this designation is revoked in writing by the Recipient, including by delivery
to the Company of a written designation of beneficiary executed by the Recipient on a later date.

	 	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	[Recipient Name]

Sworn to before me this

                    day of                                         , 200     

                                                                                                    

Notary Public

County of                                                                                 

State of                                                                                 

 

 

EXHIBIT B

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Plan Document

 

 

 

EXHIBIT C

COMMERCE ENERGY GROUP, INC.

2006 STOCK INCENTIVE PLAN

 

Plan ProspectusCONFIDENTIAL TREATMENT REQUESTED	EXHIBIT 10.83 

CONFIDENTIAL TREATMENT
REQUESTED UNDER RULE 24(B)(2) OF THE SECURITIES AND EXCHANGE ACT OF 1934.  CONFIDENTIAL
TREATMENT IS REQUESTED AND IS NOTED WITH “[CONFIDENTIAL TREATMENT REQUESTED].”  AN
UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN PREVIOUSLY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION. 

Omnibus Amendment
                                               
to Senior Convertible
                                             
Promissory Note Purchase
                                            
Agreement and Registration
                                                 
Rights Agreement 

CONFIDENTIAL TREATMENT
REQUESTED 

OMNIBUS AMENDMENT
TO SENIOR CONVERTIBLE
PROMISSORY NOTE PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT 

        THIS
OMNIBUS AMENDMENT TO SENIOR CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT AND
REGISTRATION RIGHTS AGREEMENT (this “Amendment”) is entered into as of April 20,
2006 by and between Alliance Pharmaceutical Corp., a New York corporation (the
“Company”), and each individual or entity that has entered into this Amendment
by executing a counterpart signature page hereto as a “Lender” (collectively,
the “Lenders”). Capitalized terms used in this Amendment but not defined herein
shall have their respective meanings set forth in the Note Purchase Agreement or
Registration Rights Agreement, as the case may be. 

Recitals: 

        WHEREAS,
the Company and the Lenders have previously entered into that certain Senior Convertible
Promissory Note Purchase Agreement dated September 21, 2004 (the “Note Purchase
Agreement”) and that certain Registration Rights Agreement dated September 21, 2004
(the “Registration Rights Agreement”); 

        WHEREAS,
pursuant to the Note Purchase Agreement, the Company issued and sold Notes to the Lenders
in the aggregate principal amount of $11,500,000; 

        WHEREAS,
the Notes become due and payable on March 24, 2006; and 

        WHEREAS, the
Lenders and the Company now desire to amend the Note Purchase Agreement and the
Registration Rights Agreement and to amend and restate the Notes to: (i) extend the
maturity date of such Notes from March 24, 2006 to April 1, 2007, (ii) increase the rate
of interest to be paid on the principal amount under such Notes from and after March 25,
2006 from 6% to 10%, and (iii) to provide for certain additional terms and agreements, all
as more fully set forth in this Amendment. 

Agreement: 

        NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Amendment, and for
other good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and the Lenders hereby agree as follows: 

1.    Amendments to Note
Purchase Agreement. 

        1.1    Amended
and Restated Notes. At the Closing (defined in Section 5 below), the Notes
shall be amended and restated in the form attached hereto as Exhibit A to this Amendment
(the “Amended and Restated Note”). At the Closing, each original Note will be
cancelled, and the Company shall issue to each Lender an Amended and Restated Note in the
principal amount indicated next to each such Lender’s name on Exhibit B hereto.  

CONFIDENTIAL TREATMENT
REQUESTED 

        1.2    Section
1.1 of the Note Purchase Agreement. The definition of each of “Conversion
Price” and “Notes” set forth in Section 1.1 of the Note Purchase Agreement
is hereby amended and restated to read as follows:  

            “‘Conversion
Price’ equals $0.17 (as adjusted for stock splits, combinations,
recapitalizations and the like)"; and 

            “‘Notes’
means the Amended and Restated Notes in the form attached to this Amendment as Exhibit A,
which are issuable to the Lenders pursuant to this Amendment.” 

        1.3    Section
4.12(l). The parties hereto acknowledge and agree that the covenant set forth in
Section 4.12(l) of the Note Purchase Agreement related to a restriction on the amount of
the Company’s cash on hand is no longer of any force or effect as a result of that
certain Development, License and Supply Agreement dated May 13, 2005 (the “Double-Crane
Agreement”) by and between PFC Therapeutics, LLC and Beijing Double-Crane
Pharmaceutical Co., Ltd. (“Double-Crane”).  

2.    Registration Rights. 

        2.1    Amendment
to Registration Rights Agreement. Notwithstanding anything to the contrary
set forth in this Amendment, the Note Purchase Agreement or the Registration Rights
Agreement, the shares of common stock of the Company that may become issuable to each
Lender as a result of the reduction in the Conversion Price and/or the accrual of
interest on each applicable Amended and Restated Note shall not be deemed Registrable
Securities under the Registration Rights Agreement, nor shall the Company be required to
amend the Registration Statement or file a new registration statement to cover any such
shares of common stock, except as set forth in Sections 2.2 and 2.3 of this Amendment. To
the extent the Lender Committee exercises its demand registration rights as set forth in
Section 2.2 of this Amendment, then such Additional Shares so registered shall be deemed
Registrable Securities and such Additional Registration Statement shall be deemed a
Registration Statement for purposes of the Registration Rights Agreement, including,
without limitation, Sections 4, 5, 6 and 7 of the Registration Rights Agreement.  

        2.2    Demand
Registration. The Registration Rights Agreement is hereby amended to add a
new Section 2.1(a)(ii) immediately following existing Section 2(a), such new Section
2(a)(ii) to read as follows:  

2 

CONFIDENTIAL TREATMENT
REQUESTED 

	 	
“2(a)(ii)
    Additional Shares. Upon
the written demand of a majority                     of the members of the Lender
Committee, the Company shall prepare and file with                     the Commission one
or more registration statements on Form SB-2 (or, if Form                     SB-2 is not
then available to the Company, on such form of registration                     statement
as is then available) (each, an “Additional Registration
                    Statement”) to effect a registration for resale of the
additional shares of                     Common Stock that shall become issuable as a
result of the reduction in the                     conversion price of the Notes from
$0.25 to $0.17 as well as the interest that                     shall accrue on the Notes
from March 25, 2006 until the date of maturity of such                     Notes (the
“Additional Shares”)), covering the resale of the
                    Additional Shares, but only to the extent the Additional Shares are
not at the                     time covered by an effective Registration Statement. Each
such Additional                     Registration Statement also shall cover, to the
extent allowable under the                     Securities Act and the rules promulgated
thereunder (including Rule 416), such                     indeterminate number of
additional shares of Common Stock resulting from stock                     splits, stock
dividends or similar transactions with respect to the Additional
                    Shares. Each Additional Registration Statement (and each amendment or
supplement                     thereto, and each request for acceleration of
effectiveness thereof) shall be                     provided in accordance with Section
3(a) to the Lenders and their counsel prior                     to its filing or other
submission. If an Additional Registration Statement                     covering the
Additional Shares is required to be filed under this Section                     2(a)(ii)
and is not filed with the Commission within 30 Business Days after the
                    request of the Lender Committee is received by the Company, the
Company will                     make pro rata payments to each Investor, as liquidated
damages and not as a                     penalty, in an amount equal to 1% of the
aggregate principal amount invested by                     the Lenders that is
attributable to such Additional Shares for each 30-day                     period or pro
rata for any portion thereof following the date by which such
                    Additional Registration Statement should have been filed for which no
Additional                     Registration Statement is filed with respect to the
Additional Shares. Such                     payments shall be in partial compensation to
the Lenders, and shall not                     constitute the Lenders’ exclusive
remedy for such events. Such payments                     shall be made to each Investor
in cash. The amounts payable as liquidated                     damages pursuant to this
paragraph shall be payable in lawful money of the                     United States, and
amounts payable as liquidated damages shall be paid within                     three (3)
Business Days of the last day of each such 30-day period during which
                    the Additional Registration Statement should have been filed for
which no                     Additional Registration Statement was filed with respect to
the Additional                     Shares. The Lender Committee shall no longer have the
right to demand such                     registration pursuant to this Section 2(a)(ii)
after it has made four (4) such                     demands.  

        2.3    Effectiveness.
The Registration Rights Agreement is hereby amended to add a new Section 3(a)(ii)
immediately following existing Section 3(a), such new Section 3.1(a)(ii) to read as
follows:  

3 

CONFIDENTIAL TREATMENT
REQUESTED 

	 	
“3(a)(ii)
    Effectiveness. The Company
shall use commercially                     reasonable efforts to have each Additional
Registration Statement declared                     effective as soon as practicable. The
Company shall notify the Lenders by                     facsimile or e-mail as promptly
as practicable, and in any event, within                     twenty-four (24) hours,
after any Additional Registration Statement is declared                     effective and
shall simultaneously provide the Lenders with copies of any                     related
Prospectus to be used in connection with the sale or other disposition
                    of the securities covered thereby. If an Additional Registration
Statement                     covering the Additional Shares is not declared effective by
the Commission                     within ninety (90) days following the time such
Additional Registration                     Statement was required to be filed pursuant
to Section 2(a)(ii) (or one hundred                     twenty days if reviewed by the
SEC), or (B) after an Additional Registration                     Statement has been
declared effective by the Commission, sales cannot be                     made pursuant
to such Additional Registration  Statement for any reason
                    (including without limitation by reason of a stop order, or the
Company’s  failure to update the Additional Registration Statement), but
excluding                     the inability of any Investor to  sell the Additional
Shares covered                     thereby due to market conditions and except as excused
pursuant to  subparagraph 3.1(a)(iii) below,  then the Company will make pro
rata                     payments to each Investor, as liquidated damages and not as a
penalty, in an                     amount equal to 1% of the aggregate principal amount
invested by the Lenders                     that is attributable to such Additional
Shares for each 30- day period or pro                     rata for any portion thereof
following the date by which such Additional                     Registration Statement
should have been effective (the “Additional                     Registration
Blackout Period”). Such payments shall be in partial
                    compensation to the Lenders, and shall not constitute the Lenders’                    exclusive
remedy for such events. The amounts payable as liquidated damages
                    pursuant to this paragraph shall be paid monthly within three (3)
Business Days                     of the last day of each month following the
commencement of the Additional                     Registration Blackout Period until the
termination of the Additional                     Registration Blackout Period. Such
payments shall be made to each Investor in                     cash.  

     3.    
          Covenant Regarding Strategic Transaction. After the date hereof, the
          Company will use its reasonable best efforts to identify a third party with
          which to enter into a transaction related to the sale, assignment, license or
          other transfer of the assets and/or intellectual property rights of the Company
          related to the technology known as “Oxygent” (the “Oxygent
          Assets”). Such a transaction may be in the form of a merger, sale of
          assets, licensing arrangement or other arrangement, in each case subject to the
          Lender Committee approval requirements set forth in Section 4.12 of the Note
          Purchase Agreement. Such reasonable best efforts shall include the retention of
          a reputable investment banking firm knowledgeable in the industry or industries
          relevant to the Oxygent Assets. 

4.    Payment Sharing
Arrangement. 

        4.1    Royalties.
The Company, or its successor, will pay the Lenders, on a pro rata basis calculated based
on the pro rata percentage set forth next to each Lender’s name on Exhibit B hereto,
fifty percent (50%) of all royalties actually received by the Company, or its successor,
(in each case net of any payments due any third party from royalties actually received by
the Company, or its successor, based on an agreement or agreements that are already in
existence on the date of this Amendment) from a third party based on sales of any product
incorporating the Oxygent Assets (an “Oxygent Product”) anywhere in the world
up to a total maximum aggregate of $11,419,113 (which represents the total outstanding
amount of principal and accrued interest under the Notes as of March 24, 2006). To the
extent the Company, or its successor, commercializes and sells any Oxygent Product
directly (i.e., there is no royalty due to the Company, or its successor, on such sale),
then the Company (or its successor) will pay to the Lenders (pro rata based on the pro
rata percentages set forth next to each Lender’s name on Exhibit B hereto) a CONFIDENTIAL TREATMENT REQUESTED royalty on Net Sales (defined below), which amount will also be applied to
the total maximum aggregate of $11,419,113 that could be paid to the Lenders pursuant to
this Section 4.1 and/or Section 4.2 below.  

4 

CONFIDENTIAL TREATMENT
REQUESTED 

        4.2    Milestones.
In addition to the payments required by Section 4.1, but subject to the limitation
set forth in 4.3 below, if the Oxygent Assets are not sold or otherwise transferred to a
third party in a transaction approved by the Lender Committee in accordance with Section
3 of this Amendment and Section 4.12 of the Note Purchase Agreement prior to December 31,
2006, then the Company, or its successor, will also pay the Lenders fifty percent (50%)
of each milestone payment actually received from a third party (in each case net of any
payments due any third party from milestone payments actually received by the Company, or
its successor, based on an agreement or agreements that are already in existence on the
date of this Amendment) in connection with the development of any Oxygent Product
anywhere in the world on or after the date of this Amendment, but excluding the milestone
payment to be paid to the Company by Double-Crane pursuant to the Section 7.2 of the
Double Crane Agreement. Notwithstanding the foregoing, the Lender Committee may waive the
milestone sharing obligation set forth in this Section 4.2 on behalf of all Lenders at
any time or with respect to any transaction entered into after December 31, 2006.  

        4.3    Payments. Any
payments due pursuant to this Section 4 shall be calculated and reported for each
calendar quarter. All payments due to the Lenders pursuant to this Section 4 shall
be paid (on a pro rata basis in accordance with Exhibit B hereto) within sixty (60) days
after the end of each calendar quarter. Each payment shall be accompanied by a report in
sufficient detail to permit confirmation of the accuracy of the payment made. For the
avoidance of doubt, the total maximum amount of payments to be made by the Company, or
its successor, pursuant to this Section 4 shall not in any event exceed $11,419,113. To
the extent the payments to be made pursuant to this Section 4 are deemed contingent
interest on the Amended and Restated Notes, it is the intent of the parties that such
payments be exempt from the California usury laws pursuant to Section 25118 of the
California Corporations Code.  

        4.4    Inspection
Rights.  

            (a)              The
Lenders, upon reasonable written notice from holders of at least a majority           of
the principal amount of the Amended and Restated Notes as of the date hereof,
          shall have the right to appoint an independent certified public accountant to
          inspect the Company’s books and records and all other documents during
          normal business hours for the sole purpose of verifying the amounts payable as
          provided in this Section 4 for the three (3) years preceding such inspection;
          provided, however, that this right may not be exercised more than once in any
          calendar year, and said accountant shall disclose to the Lenders only
          information relating to the accuracy of the amount of the payments made in
          accordance with this Section 4.  

            (b)              In
the event that such inspection reveals an underpayment by the Company by at
          least five percent (5%) of the actual amounts owed to the Lenders, the Company
          shall pay the difference and shall also reimburse the Lenders for the cost of
          such inspection. Otherwise, the Lenders shall bear the cost of such inspection
          on a pro rata basis in accordance with Exhibit B.  

5 

CONFIDENTIAL TREATMENT
REQUESTED 

        4.5    Taxes. Any
income or other taxes which the Company is required to pay or withhold on behalf of any
Lender with respect to amounts payable to any Lender under this Amendment shall be
deducted from such amounts payable. The Company shall furnish each such Lender with proof
of such payments. Any such tax required to be paid or withheld shall be an expense of
each Lender and borne solely by each such Lender.  

        4.6    Continuing
Obligation.  

            (a)              The
Company’s, or its successor’s, obligation to make payments to each
          Lender pursuant to this Section 4 shall continue until the total maximum
          aggregate amount of $11,419,113 has been paid to the Lenders on a pro rata
basis           calculated as set forth in this Section 4, regardless of whether the
Amended and           Restated Notes are repaid in full or converted into common stock of
the Company           or its successor.  

            (b)              The
Company may sell, assign or otherwise transfer (by operation of law or           merger)
the Oxygent Assets (or rights therein) to a third party, only upon the
          condition that the purchaser, assignee or transferee expressly assumes the
          obligations to the Lenders set forth in this Section 4 of this Amendment.  

        4.7    Definition
of Net Sales. “Net Sales” shall mean the gross amount actually
received by Company, or its successor, from third parties from sales of Oxygent Products,
less the following items, as allocable to such Oxygent Product (if not previously
deducted from the amount invoiced): (i) trade discounts, credits or allowances, (ii) credits
or allowances additionally granted upon returns, rejections or recalls, (iii) freight,
shipping and insurance charges, (iv) taxes, duties or other governmental tariffs
(other than income taxes) and (v) government mandated rebates.  

5.    Closing. 

        5.1    Escrow
of Signatures and Notes. Prior to the execution of this Amendment, the
Company has circulated a package of documents to each Lender, which included this
Amendment and an Amended and Restated Note. In order for a Lender to amend and restate
its Note and become a party to this Amendment, each such Lender must execute the
signature page to this Amendment and deliver such signature page along with such Lender’s
original Note in trust to the Company with instructions that such Note be held for
release to the Company for cancellation only at the Closing. The delivery of such
signature page and original Note shall be irrevocable and such Lender shall be deemed to
have elected to become a party to this Agreement, subject only to Sections 5.2 and 5.3
hereof.  

        5.2    Closing
Date. The Closing shall take place on the date that the conditions to
Closing set forth in Section 5.3 hereof are satisfied or waived by the Company at which
time the Notes shall be released to the Company for cancellation and the Amended and
Restated Notes shall be executed by the Company and promptly delivered by the Company to
the Lenders (the “Closing”). The Closing of the amendment and restatement of
the Notes and the transactions contemplated by this Amendment shall take place at the
offices of Foley & Lardner LLP, 402 West Broadway, Suite 2300, San Diego, California
at 10:00 a.m. on the Closing Date.  

6 

CONFIDENTIAL TREATMENT
REQUESTED 

        5.3    Conditions
to Closing. The Company will hold all signatures to this Amendment and
original Notes delivered to the Company by the Lenders in escrow until the Closing. The
Company does not expect to conduct a Closing unless and until it has received a signature
page and an original Note from Lenders holding one hundred percent (100%) of the
principal amount of all outstanding Notes on or prior to April 15, 2006; provided,
however, that the Company may, in its sole discretion, extend the period during which it
may receive additional signatures and Notes. At such time as the Company has received the
requisite number of signature pages and Notes, it shall provide notice to each Lender of
the date of the Closing and promptly thereafter deliver to each Lender an Amended and
Restated Note. If the Company elects not to conduct a Closing, it shall return to each
applicable Lender such Lender’s signature page and original Note, and such original
Note, the Note Purchase Agreement and the Registration Rights Agreement will continue in
full force and effect, except that acceptance of such documents shall not constitute a
waiver by any Lender of any default then existing.  

6.    Miscellaneous 

        6.1    Full
Force and Effect. The Note Purchase Agreement and the Registration Rights
Agreement, except as amended by this Amendment, shall remain in full force and effect in
accordance with the provisions thereof.  

        6.2    Entire
Agreement. This Amendment, together with the Exhibits hereto, and the
Transaction Documents, as amended by this Amendment, contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements, understandings, discussions and representations, oral or
written, with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.  

        6.3    Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of this Amendment shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof.  

        6.4    Execution.
This Amendment may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile signature page were an original
thereof.  

7 

CONFIDENTIAL TREATMENT
REQUESTED 

6.5    Severability. If any provision of this Amendment is held to be
invalid, illegal or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid, legal and enforceable
provision that is a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Amendment. 

[Remainder of Page
Intentionally Left Blank]  

8 

CONFIDENTIAL TREATMENT
REQUESTED 

        IN
WITNESS WHEREOF, the parties hereto have caused this Omnibus Amendment to Senior
Convertible Promissory Note Purchase Agreement and Registration Rights Agreement to be
duly executed by their respective authorized signatories as of the date first indicated
above. 

		ALLIANCE PHARMACEUTICAL CORP.
	

 	By:  /s/ Duane Roth
		       Name:     Duane Roth
		       Title:       Chief Executive Officer

CONFIDENTIAL TREATMENT
REQUESTED 

        IN
WITNESS WHEREOF, the parties hereto have caused this Omnibus Amendment to Senior
Convertible Promissory Note Purchase Agreement and Registration Rights Agreement to be
duly executed by their respective authorized signatories as of the date first indicated
above. 

		NAME OF LENDER
	
 	_________________________________________
	
 	AUTHORIZED SIGNATORY
	
 	By:______________________________________
		      Name:
		      Title:
	

 	DELIVERY INSTRUCTIONS
	
 	c/o:____________________________________
	
 	Street:__________________________________
	
 	City/State/Zip:___________________________
	
 	Attention:_______________________________
	
 	Tel:____________________________________

CONFIDENTIAL TREATMENT
REQUESTED 

EXHIBIT A 

AMENDED AND RESTATED
NOTE 

A-1 

CONFIDENTIAL TREATMENT
REQUESTED 

EXHIBIT B 

LIST OF LENDERS 

	Name of Lender
	Outstanding

Principal 
Amount
	Total 
Outstanding

Principal Plus 
all
Accrued 
Interest
at 
March 24, 2006
	Pro Rata

Percentage 
of
Debt

	
MicroCapital Fund LP	$1,200,000	$1,308,000	11.5%
	MicroCapital Fund Ltd	$700,000	$763,000	6.7%
	MicroCapital LLC	$100,000	$109,000	1.0%
	Biomedical Value Fund, L.P	$1,200,000	$1,308,000	11.5%
	Biomedical Offshore Value Fund, Ltd	$800,000	$872,000	7.6%
	MedCap Partners L.P.	$1,500,000	$1,635,000	14.3%
	XMARK FUND, L.P.	$650,000	$708,500	6.2%
	XMARK FUND, LTD	$650,000	$708,500	6.2%
	Special Situations Private Equity Fund	$997,500	$1,087,275	9.5%
	Potomac Capital Partners, LP	$307,000	$334,630	2.9%
	Potomac Capital International Ltd	$102,000	$111,180	1.0%
	Pleiades Investment Partners - R, LP	$191,000	$208,190	1.8%
	SB Venture Capital III,  LLC	$298,750	$325,638	2.9%
	SB Venture Capital LLC	$50,000	$54,500	0.5%
	SB Venture Capital II, LLC	$50,000	$54,500	0.5%
	SB Venture Capital IV, LLC	$100,000	$109,000	1.0%
	Osiris Investment Partners LP	$399,000	$434,910	3.8%
	Jan A. Dekker	$402,500	$438,725	3.8%
	Fountainhead Fund	$87,500	$95,375	0.8%
	Langley Partners, L.P.	$100,000	$109,000	1.0%
	C. Leonard Gordon	$56,000	$61,040	0.5%
	James B Anderson	$35,000	$38,150	0.3%
	Technology Gateway Partnership, L.P.	$500,000	$545,000	4.8%
		
	
	

	Totals:	$10,476,250	$11,419,113	100.0%

B-1

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