ALLIANCE PHARMACEUTICAL CORP
EXHIBIT 10.4
<DOCUMENT>
<TYPE>EX-10.4
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<FILENAME>ex-10_4.txt
<DESCRIPTION>EXHIBIT 10.4
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                                                               Exhibit 10(ss)

                   BAXTER MANUFACTURING AND SUPPLIER AGREEMENT

      This Manufacturing and Supplier Agreement (this "Agreement") is made and
entered into as of May 19, 2000 (the "Effective Date") by and between Baxter
Healthcare Corporation, a Delaware corporation ("Baxter") and PFC Therapeutics,
LLC , a Delaware limited liability company ("PFC").

                                    RECITALS

      WHEREAS, Baxter and PFC are entering into a Marketing and Distribution
Agreement, dated as of May 19, 2000 (the "Marketing Agreement"), whereby Baxter
will engage in the distribution and commercialization of products capable of
transporting oxygen in therapeutic effective amounts in the bloodstream for all
medical uses, including perflubron-based emulsion (the "Product");

      WHEREAS, in conjunction with the Marketing Agreement, Baxter intends to
manufacture the Product directly or through a subcontractor;

      WHEREAS, PFC desires to purchase on a continuing basis, and Baxter desires
to manufacture and sell on a continuing basis, the Product; and

      WHEREAS, to avoid repetitive negotiations, PFC and Baxter desire to enter
into this Agreement establishing the terms and conditions which will be
applicable to each and every purchase and sale of the Product.

                                    ARTICLE I
                                   DEFINITIONS

      Affiliate shall mean any entity controlling, controlled by, or under
common control with a person or other entity. For purposes of this definition,
the terms "controlling," "controlled by" or "under common control with" shall
mean the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person or entity or through the
ownership of at least 40% of the voting securities of a person or entity.

      Alliance means Alliance Pharmaceutical Corp. and its Affiliates.

      Alliance Manufacturing Agreement shall mean the Alliance Manufacturing and
Supplier Agreement dated as of May 19, 2000, between PFC and Alliance, whereby
Alliance will manufacture and supply the Product for distribution within the
Territory.

      Baxter means Baxter Healthcare Corporation and its Affiliates.

      Components shall mean all containers and closures as well as all packaging
Components, labels and labeling necessary for the manufacture of the Product as
finished goods, as agreed upon by the parties.


* Indicates confidential information which has been omitted and filed separately
with The Securities and Exchange Commission.

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      FDA shall mean the United States Food & Drug Administration and, when
appropriate herein, shall also mean any corresponding regulatory agency in any
country.

      First Commercial Sale shall mean the first sale to a third party of the
Product anywhere in the world under the approval of appropriate governmental
agencies (if any) for distribution and sale of such Product.

      Materials shall mean all raw materials used in the formulation of the
Product necessary for the manufacture of the Product as finished goods.

      NDA shall mean a New Drug Application and all supplements submitted to the
FDA by Alliance, including all documents, data and other information concerning
the Product which are necessary for or included in FDA approval to market the
Product as more fully defined in 21 C.F.R. ss.ss.314.5 et seq., as well as
equivalent submissions to the appropriate health authorities in other countries,
provided further that with respect to the European Union, such application is to
be under the E. U. Centralized Procedure.

      Operating Agreement shall mean the Limited Liability Operating Agreement
of PFC Therapeutics, LLC dated May 17, 2000, between Alliance and Baxter.

      Product shall mean all injectable perfluorochemical emulsions capable of
transporting oxygen in therapeutic effective amounts in the bloodstream for all
medical uses, including therapeutic and diagnostic, which have been evaluated,
developed and/or acquired prior to this Agreement or will be evaluated,
developed and/or acquired during this Agreement, and all Product Know-How,
Product Inventions, Product Patents and Product trademarks related thereto,
together with all enhancements, modifications, revisions, developments,
improvements and Subsequent Applications thereto, to the extent owned by,
licensed to or controlled by PFC.

      Product Invention shall mean a patentable invention or discovery related
to the Product that is solely owned by PFC, or which PFC has the right to
control the use of through a license or otherwise.

      Product Know-How shall mean designs, plans, specifications, methods,
systems, clinical data, processes, compositions, techniques and other technical
information or documentation, whether patentable or not, that is solely owned by
PFC, or which PFC has the right to control the use of through a license or
otherwise, relating to the Product.

      Product Patent(s) shall mean all United States and foreign patent
applications and patents that relate to the Product, owned by PFC or licensed to
PFC, including any continuations, divisions, reissues, re-examinations and all
foreign counterparts thereof.

      Specifications shall mean each of the specifications for each of the
Products as agreed to in writing by the parties.

      Subsequent Applications has the definition given to it in the Operating
Agreement.

      Territory shall have the meaning ascribed to it in Section 1.18 of the
License Agreement dated May 19, 2000, between Alliance and PFC.


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                                   ARTICLE II
                               MANUFACTURING RIGHT

      2.1 Co-Exclusive Right to Manufacture. Subject to Section 2.2 below, PFC
hereby grants to Baxter a co-exclusive license (co-exclusive with the license
granted to Alliance under the Alliance Manufacturing Agreement) to manufacture
the Product for distribution within the Territory. No rights or licenses with
respect to the Product, Product Patents, Product Know-How or Product Inventions
are granted or deemed granted hereunder or in connection herewith, other than
those rights or licenses expressly granted in this Agreement.

      2.2 Exclusive Right to Manufacture. Baxter shall have the right to elect
to manufacture the Product by providing written notice to PFC of its intention
to do so. Should Baxter exercise its right to manufacture the Product for
distribution within the Territory pursuant to this Section, PFC shall terminate
the license granted to Alliance under the Alliance Manufacturing Agreement, and
Baxter will hold the exclusive license to manufacture the Product for
distribution within the Territory. Within thirty (30) days of receiving such
notice, PFC shall deliver to Baxter, if PFC has not done so already, all
documents and instructions, including all Product Know-How, Product Inventions,
Product Patents and Product trademarks related thereto, reasonably necessary to
manufacture the Product. In addition, PFC shall use its best efforts to cause
Alliance to provide Baxter reasonable access to Alliance's manufacturing
personnel for training and instructional purposes. If any improvements to the
Product alter, supplement, supersede or in any way modify such documents and
instructions, PFC shall promptly update the Materials provided to Baxter to
reflect such change.

      2.3 Right to Sublicense. Baxter has the right to grant sublicenses under
this Agreement to a third party to manufacture the Product for distribution
within the Territory. Any sublicenses granted hereunder shall terminate in the
event this Agreement is terminated.

      2.4 Protection of License. The rights set forth in this Article II shall
be secured by a security interest in favor of Baxter on all Product Patents,
Product Know-How and Product Inventions. To perfect such security interest,
Baxter and PFC agree, upon the exercise of Baxter's rights under Section 2.2, to
enter in a security agreement and to take all appropriate action to have such
security agreement filed with the United States Patent and Trademark Office
and/or other governmental entity. In conjunction with such security agreement,
PFC shall execute a power of attorney providing Baxter with the authority to
update or supplement, on PFC's behalf, applications, claims, and filings with
the United States Patent and Trademark Office and/or other governmental entity.

                                   ARTICLE III
                                 SUPPLY SERVICES

      3.1 Supply of Product. If Baxter exercises its right under Section 2.2
above to manufacture the Product, Baxter shall supply and sell to PFC the
Product under a label supplied by Baxter. Baxter shall supply all printed labels
and labeling necessary for the manufacture of the Product unless otherwise
mutually agreed. Baxter shall retain title and ownership of all labels and
labeling supplied by it.


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      3.2 Forecasts and Orders. PFC, either directly or through its designee,
agrees to forecast demand and issue purchase orders for Product in accordance
with the procedures set forth under Section 3.3. For the first two (2) months
following Baxter's exercise of the option provided in Section 2.2 of this
Agreement, Baxter shall deliver the Product on the delivery date requested by
PFC. Thereafter, Baxter shall deliver the Product in accordance with the demand
schedule submitted by PFC as set forth in Section 3.3.

      3.3 Demand Schedule. Commencing on a date to be agreed by the parties, PFC
or its designee shall provide Baxter monthly with a twelve (12) month rolling
forecast ("Demand Schedule") for each presentation of the Product. The first
three (3) months of the first two Demand Schedules shall constitute firm PFC
purchase orders. Commencing with the third Demand Schedule, the first two (2)
months of the Demand Schedule shall reflect PFC's firm purchase orders
communicated by previous Demand Schedules and a firm PFC purchase order for the
next succeeding (third) month. PFC shall be obligated to purchase 100% of each
issued purchase order. The remainder of the Demand Schedule shall be for
planning purposes only. Except for orders appearing in month one (1) of a Demand
Schedule, Baxter will make reasonable efforts to reschedule firm orders to
accommodate changing demand patterns within the market place.

      3.4 Orders in Excess of Forecast. Baxter shall make commercially
reasonable efforts to deliver quantities of the Product that are ordered by PFC
and that are in excess of PFC's firm orders made pursuant to Section 3.3.

      3.5 Delivery Terms. Baxter agrees to deliver the Product to PFC F.O.B.
destination as designated by PFC. Baxter and PFC will cooperate in selecting
appropriate carriers. The Product shall be stored and shipped in accordance with
label and FDA approved storage conditions.

                                   ARTICLE IV
                        WARRANTY, MANUFACTURING STANDARDS
                             AND QUALITY ASSISTANCE

      4.1 Product Warranty. Baxter warrants that the Product delivered to PFC
under this Agreement shall, at the time of delivery, (i) conform to the
Specifications, (ii) conform to all additional product specifications mutually
agreed upon for product attributes and possible cross contaminants resultant
from common equipment and facilities utilized in the manufacturing of the
Product and other products manufactured by Baxter, and (iii) Baxter's production
of the Product shall be conducted in accordance with current U.S. Good
Manufacturing Practices as listed in 21 CFR 211. Baxter further warrants and
guarantees that, as of the date of each delivery hereunder to PFC, and until its
date of expiration, the Product, whether for intended sale in the United States
or elsewhere, shall comply with the provisions of the United States Food, Drug
and Cosmetic Act, and such Product shall not, when delivered, be adulterated or
misbranded within the meaning of the United States Food, Drug and Cosmetic Act.
To the extent that the regulatory


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provisions of a country in the Territory are different from those of the United
States, PFC shall be responsible for identifying those differences and the
parties shall discuss an equitable modification to the foregoing warranties with
respect to the Product to be sold in any such country. PFC shall promptly amend
the Specifications necessary to comply with the regulatory provisions in such
country. Baxter agrees that no more than three (3) months of the total approved
shelf life for each dosage form of the Product shall have expired upon delivery
of such Product to PFC, except with respect to batches of Product as to which
investigative testing or re-testing is required in accordance with Section 4.3
below. Products shall not be misbranded provided they are labeled in accordance
with PFC's instructions. Baxter does not warrant any Product not stored or
shipped by PFC in accordance with the Specifications.

      4.2 Product Inspection. Baxter will test and inspect each lot of Product
for compliance with Specifications prior to release and shipment to PFC or its
designee. After receipt PFC or its designee shall test and inspect, as PFC or
its designee deems appropriate, each lot of Product for compliance to
Specifications. If within forty-five (45) days after receipt of a lot of Product
PFC or its designee notifies Baxter in writing that such lot does not meet the
Specifications as determined by PFC's or its designee's testing and inspection
of the Product, Baxter shall replace the Product (subject to Section 4.3 below)
at Baxter's expense (such expense to include the cost of Components and
Materials) within forty-five (45) days of such notice. Baxter shall pay for
shipping charges to deliver such replacement Product to PFC or its designee. A
non-conforming Product shall, upon mutual agreement by Baxter and PFC, either
(1) be returned to Baxter within a reasonable period of time or (2) be destroyed
by PFC at Baxter's expense.

      4.3 Disputes with Respect to Rejection. If Baxter disputes PFC's right to
reject all or part of any shipment of the Product as set forth in Section 4.2
hereof, and such dispute is not resolved by mutual agreement between the parties
within sixty (60) days of PFC's notice of rejection, such dispute shall be
resolved by an independent FDA approved testing organization or consultant of
recognized repute within the U.S. pharmaceutical industry mutually agreed upon
by the parties, the appointment of which shall not be unreasonably withheld or
delayed by either party. The determination of such testing entity with respect
to all or part of any shipment of the Product shall be final and binding upon
the parties, but only as to the reasons given by PFC in rejecting the shipment
or portion thereof and shall have no effect on any matter for which said entity
did not render a determination. The fees and expenses of the third party making
the determination shall be paid by the party against which the determination is
made.

      4.4 Master Formula. The composition of the Product will be as stated in
the applicable approved Product NDA or the applicable regulatory approval for
such Product.

      4.5 Manufacturing and Packaging Instruction and Procedures. The Product
will be manufactured and packaged as stated in the applicable approved Product
NDA or the applicable regulatory approval for Product. Original Product master
manufacturing and packaging procedures to be set forth in the Product master
batch records shall be mutually approved by the parties.

      4.6 Change Control. Baxter will notify PFC or its designee in writing of
any proposed change to Materials or Components of the Product, process
specifications and/or controls, as well as third party contractors, equipment or
facilities or analytical methodology utilized for the manufacturing, packaging
and/or analytical evaluation of the Product. Any such change must be agreed upon
and approved in writing by PFC prior to implementation or


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submission to regulatory authorities for approval. Changes in the prescribing
information (package insert) and labeling shall be the responsibility of PFC or
its designee.

      4.7 Batch Records. Records which include the information relating to the
manufacturing, packaging and quality operation for each lot of the Product shall
be prepared by Baxter at the time at which such operations occur. The records
shall include, but are not limited to, the following documentation:
manufacturing, Materials and Components charge-in records; mixing and fillings
records; packaging component charge-in records; packaging records; container and
component traceability records; equipment usage records; in-process and final
laboratory testing results; in-process and final product physical inspection
results; yield reconciliation for bulk and finished product; label samples;
labeling control records; as well as documentation listing any deviations and/or
excursions from approved procedure (as well as the Baxter investigation and
corrective actions) incurred during the processing and packaging of the lot. The
original documents for each lot may be reviewed by PFC at its request when
auditing the Baxter site of manufacture of the Product.

      4.8 Batch Document to be Included With Each Shipment of Product to PFC.
The minimum batch documentation required to be included with each lot of Product
shipped to PFC or its designee is a packaging bill of material and copies of
certificate of analysis for each lot. The certificate of analysis, signed by the
responsible quality official, must include the numerical results, if applicable,
for each test (chemical, microbiological and bacteriological) performed to
assure results are in compliance with Product Specifications, as well as a
statement that subject lot was produced in accordance to the applicable NDA and
in compliance with all applicable Good Manufacturing Practice requirements.

      4.9 Chemical and Packaging Component Inspection and Release. Baxter shall
test, inspect and release Materials and Components used in the manufacture of
the Product. Baxter shall supply approved masters for labels, package inserts
and labeling to be utilized for the Product supplied hereunder. Baxter shall
inspect and release all labels, package inserts, and labeling utilized for the
Product for conformance with such approved masters. Baxter shall test, inspect
and release all other packaging Components for compliance with Specifications.

      4.10 Retention Sample. Baxter is responsible for storing and maintaining
retention samples of finished Product from each lot to meet regulatory
requirements. Baxter is responsible for storing and maintaining retention
samples of each lot of Material utilized in the manufacture of the Product in
accordance with all regulatory and FDA Good Manufacturing Practices ("GMP").

      4.11 Product Complaints. If Baxter holds the NDA, Baxter or its designated
distributors shall correspond with complainants on all product complaints
associated with the Product and shall file any Drug Adverse Reaction Experience
Reports associated with the Product as required under 21 CFR 314.80 or by
equivalent foreign regulations in countries outside the United States. If Baxter
holds the NDA, complaints received associated with the Product which may require
an NDA Field Alert Report as specified under 21 CFR 214.81 shall be handled by
Baxter or its designated distributors. Copies of any Drug Adverse Reaction
Experience Reports and NDA Field Alert Reports or foreign equivalents shall be
promptly forwarded to PFC by Baxter, except that when PFC in its capacity as a
licensor of the Product


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under this arrangement with Baxter receives such reports in the first instance,
it shall forward the same promptly to Baxter. If Baxter holds the NDA, PFC or
its designee shall assist Baxter in investigating Product complaints by
analyzing Product and Components to determine the cause, if any, of an alleged
Product manufacturing defect or failure. PFC or its designee shall also assist
Baxter in the investigation of any adverse drug events when such adverse events
are believed to be attributable to the Product. If Baxter holds the NDA, Baxter
shall diligently work to provide a written report of its determination within
thirty (30) days from receipt of a written request and samples of the involved
Product. PFC shall be responsible to ensure that Baxter receives samples of the
Product to be investigated. In the event that Baxter determines that any
reasonable additional physical, chemical, biological, or other evaluation should
be conducted in relation to an adverse drug event or Product complaint, Baxter
shall so advise PFC. Baxter shall conduct the necessary evaluations and advise
PFC of the results. Additional evaluations requested by PFC or its designee and
not otherwise required by regulation or not otherwise carried out by Baxter in
the usual course of its investigation under its applicable standard operating
procedures (SOPs) for complaints will be at the expense of PFC.

      4.12 Process Validation. Baxter shall validate all processes, equipment,
utilities facilities and computers utilized in the manufacture packaging,
storage, testing and release of the Product for regulatory submissions and
commercial sale in conformance with all current FDA and other applicable
regulatory authority guidelines and regulations. Baxter shall be responsible for
and shall ensure that all validated systems are maintained according to FDA
guidelines and that all required periodic revalidation's are performed according
to FDA guidelines. PFC shall reserve the right to review and approve all
process, utility, equipment and computer validation master validation plans
and/or the corresponding protocols prior to execution of such validation. PFC
reserves the right to review the results of all related validation studies.

      4.13 Regulatory Visits.

            (a) Baxter shall notify PFC within 24 hours in the event of any FDA
or other regulatory authority inspection or query regarding the Product. In the
event of an inspection by the FDA or any applicable regulatory authority which
results in a concern by the FDA or applicable regulatory authority specifically
related to the Product, then PFC through its designee will be notified
immediately of such concern. Baxter and PFC shall cooperate in resolving the
matter with the FDA or the applicable regulatory authority.

            (b) PFC shall notify Baxter within 24 hours in the event of any FDA
or other regulatory authority inspection or query regarding the Product. In the
event of an inspection by the FDA or any applicable regulatory authority which
results in a concern by the FDA or applicable regulatory authority specifically
related to the Product, then Baxter through its designee, the Baxter Vice
President of Quality, will be notified immediately of such concern. PFC and
Baxter shall cooperate in resolving the matter with the FDA or the applicable
regulatory authority.

      4.14 Compilation and Maintenance of Books and Records. Baxter shall make
available to PFC all reasonably requested records and information compiled or
generated in connection with Baxter's manufacturing of the Product under this
Agreement, including, but not limited to, batch records prepared under Section
4.7, Component inspections performed under


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Section 4.9, retention samples kept under Section 4.10, process validation
reports prepared under Section 4.12, inventory and production reports indicating
quantities of the Materials, work in process and finished goods of the Product
on hand at the beginning of each PFC accounting period, quantities of finished
goods of Product produced during such PFC accounting period, and quantities of
Materials, work in process, and finished goods of Product on hand at the end of
such accounting period.

      4.15 Audits. PFC has the right to inspect the facilities of Baxter or a
third party manufacturer and to audit the books and records pertaining to the
manufacture and supply of the Product under this Agreement.

      4.16 Regulatory Submissions and Approval; Product Recall. The respective
responsibilities of the parties concerning the submission of the Product to
appropriate regulatory authorities and product recall are set forth in the PFC
Operating Agreement.

      4.17 Third-Party Manufacturers. To the extent that Baxter uses a third
party manufacturer for the Product, then Baxter shall monitor such third party
manufacturer and use reasonable efforts to ensure that it is in compliance with
the manufacturing standards set forth in this Agreement. Subsequent to the
execution of this Agreement, Baxter shall comply with the provisions of Section
4.6 prior to any additional use of a third party manufacturer for the Product.
Baxter shall use reasonable efforts to ensure that any third party manufacturer
complies with the inspection, monitoring and audit rights with respect to such
third party's manufacturing facilities and provides to PFC all records that
relate to the Product.

                                    ARTICLE V
                                PRICE AND PAYMENT

      5.1 Price. All purchases by PFC of the Product under this Agreement shall
be at the prices determined pursuant to Exhibit BB to this Agreement.

      5.2 Payment. Except to the extent otherwise agreed to by the parties,
payment of invoiced amounts shall be due within thirty (30) days of the date
Baxter's invoice is received by PFC. Payment shall be made by check or wire
transfer to an account designated by Baxter. All payments due under this Article
5 but not paid by PFC on the due date thereof shall bear interest at the monthly
rate which is the lesser of: (i) one and one half percent (1-1/2%) of the amount
due; and (ii) the maximum lawful interest rate permitted under applicable law.
Such interest shall accrue at such rate on a monthly basis on the balance of
unpaid amounts outstanding from the date on which portions of such amounts
become due and owing until payment thereof in full.

                                   ARTICLE VI
                              TERM AND TERMINATION

      6.1 Term. This Agreement shall take effect as of the date first written
above and shall continue in force until termination of the Operating Agreement.


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                                   ARTICLE VII
                                 INDEMNIFICATION

      7.1 Indemnification by Baxter. Baxter agrees to indemnify, defend and hold
harmless PFC, its affiliates and their respective employees against any and all
third party claims, including claims made against PFC by any of its
distributors, losses, damages and liabilities, including reasonable attorney's
fees, incurred by any of them arising out of any breach of any obligation by
Baxter hereunder or any misrepresentation by Baxter hereunder or any negligent
or intentionally wrongful act or omission by Baxter in connection with its
manufacturing and supply services hereunder. Baxter shall not be responsible for
indemnifying PFC against claims for lost profits, consequential or indirect
damages with respect to the Product.

      7.2 Indemnification by PFC. PFC agrees to indemnify, defend and hold
harmless Baxter, its affiliates and their employees against any and all
third-party claims, losses, damages and liabilities, including reasonable
attorney's fees, incurred by any of them arising out of any breach of any
obligation by PFC hereunder or any misrepresentation by PFC hereunder or any
negligent or intentionally wrongful act or omission of PFC in connection with
the Product.

      7.3 Procedure. If PFC, its affiliates or their respective employees, or
Baxter, its affiliates or their respective employees (in each case an
Indemnified Party) receive any written claim which such Indemnified Party
believes is the subject of indemnity hereunder by Baxter or PFC as the case may
be (in each case an "Indemnifying Party"), the Indemnified Party shall, as soon
as reasonably practicable after forming such belief, give notice thereof to the
Indemnifying Party; provided, that the failure to give timely notice to the
Indemnifying Party as contemplated hereby shall not release the Indemnifying
Party from any liability to the Indemnified Party unless the Indemnifying party
demonstrates that the defense of such claim is prejudiced by such failure. The
Indemnifying Party shall have the right, by prompt notice to the Indemnified
Party, to assume the defense of such claim, at its cost, with counsel reasonably
satisfactory to the Indemnified Party. If the Indemnifying Party does not so
assume the defense of such claim or, having done so, does not diligently pursue
such defense, the Indemnified Party may assume such defense, with counsel of its
choice, but at the cost of the Indemnifying Party. If the Indemnifying Party so
assumes such defense, it shall have absolute control of the conduct of the
litigation; the Indemnified Party may, nevertheless, participate therein through
counsel of its choice and at its cost. The party not assuming the defense of any
such claim shall render all reasonable assistance to the party assuming such
defense, and all out-of-pocket costs of such assistance shall be for the account
of the Indemnifying Party. No such claim shall be settled other than by the
party defending the same, and then only with the consent of the other party,
which shall not be unreasonably withheld; provided, that the Indemnified Party
shall have no obligation to consent to any settlement of any such claim which
imposes on the Indemnified Party any liability or obligation which cannot be
assumed and performed in full by the Indemnifying Party.

                                  ARTICLE VIII
                                    INSURANCE

      8.1 Insurance. Baxter is self-insured for matters of the type for which
indemnification is likely under Article VII.


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                                   ARTICLE IX
                            TRADENAMES AND TRADEMARKS

      9.1 Rights Regarding Product Trademark. Baxter shall have the exclusive
right, but no obligation, to use the name and mark it selects (or successor name
and mark) with respect to the Product for distribution within the Territory.
Baxter is under no obligation to obtain the approval of PFC prior to using such
name and mark.

      9.2 Baxter's Rights. PFC hereby acknowledges that it does not have, and
shall not acquire by virtue of this Agreement, any rights to or under any
goodwill, trademark, tradename, copyright, patent or other intellectual property
of Baxter, nor in any of Baxter's trademarks or tradenames appearing on the
label or packaging materials of the Product. PFC agrees to do nothing by act or
omission which would impair Baxter's or its Affiliates' rights, ownership and
title in the aforementioned.

      9.3 Infringement. Each party shall immediately report in writing to the
other party upon being acquainted through any source whatsoever of any and all
infringements or threatened infringements of the tradenames or trademarks owned
by such other party appearing on the labels and packaging materials of the
Product, and any attempt on the part of anyone to register, copy, infringe upon
or imitate such trademarks or tradenames, and if required by such party, the
notifying party will, at the other party's sole expense, take such steps as the
other party may deem advisable against the infringement or otherwise for the
protection of the other party's rights.

                                    ARTICLE X
                                 CONFIDENTIALITY

      10.1 Nondisclosure. Baxter and PFC realize that some information received
by one party from the other pursuant to this Agreement will be confidential. It
is therefore agreed that any information received by one party from the other
which is in writing, or reduced to writing within thirty (30) days of the date
of disclosure, and designated as "Confidential," shall not during or for a
period of five (5) years after the term of this Agreement be (i) disclosed by
the receiving party to any third party, except to the extent that (A) such third
party is an employee, agent, representative or consultant for or to Baxter,
Alliance, PFC or their Affiliates or is contemplating investing in PFC or
Alliance, (B) such third party has agreed in writing to abide to these
confidentiality obligations and (C) such third party has a need to know such
information in order for the parties to perform their obligations under this
Agreement, or (ii) used by the receiving party for purposes other than those
contemplated by this Agreement.

      10.2 Permitted Disclosure. Nothing in this Agreement shall prevent the
receiving party from disclosing any such information: (i) which is or becomes
publicly known through no fault of the receiving party; (ii) which the receiving
party rightfully had in its possession prior to the disclosure to the receiving
party or is independently developed by the receiving party, in either case, as
evidenced by written documentation; (iii) which the receiving party lawfully
obtained without restriction from a third party with no secrecy or
confidentiality obligation to the disclosing party; (iv) which is approved in
writing by the disclosing party for disclosure by the receiving party; or (v)
which is disclosed pursuant to court order or as otherwise compelled by law.


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                                   ARTICLE XI
                               MISCELLANEOUS TERMS

      11.1 Compliance With Laws. Each party shall comply in all material
respects with, and shall not be in material violation of, any valid, applicable,
international, national, state or local statues, laws, ordinances, rules,
regulations, or other governmental orders ("Laws") of any country in which the
Product is either manufactured or sold which affect the manufacture, processing,
packaging, shipment, or storage of the Product; provided that Baxter shall only
be required to comply in all material respects with those Laws of countries
other than the United States upon specific written notice by PFC of such Laws
and inclusion in the Specifications, if applicable.

      11.2 Injunctive Relief. Both parties hereto acknowledge that a breach of
this Agreement may give rise to irreparable injury to the non-breaching party
and acknowledge that remedies other than injunctive relief may not be adequate.
Accordingly, both parties have the right to equitable and injunctive relief to
prevent or enjoin violations of this Agreement.

      11.3 Right of Set Off. Baxter shall be entitled at all times to set off
any amount owing from PFC or any of its Affiliates to Baxter against any amount
due or owing from PFC.

      11.4 Relationship of Parties. The relationship between Baxter and PFC is
that of vendor and vendee and under no circumstances shall either party, its
agents, employees or representatives, be deemed agents, employees or
representatives of the other party, or have the right to enter into any
contracts or commitments in the name of or on behalf of the other party in any
respect.

      11.5 Governing Law and Jurisdiction. All aspects this Agreement, and the
contract embodied herein, including, but not limited to, its validity,
formation, content, performance or nonperformance, breach, damages and
construction, shall be governed by the internal laws of the State of Illinois,
excluding its conflicts of law provisions.

      11.6 Entire Agreement; Parol Evidence; Amendment. This Agreement, the
Exhibits attached hereto and the other agreements referenced in this Agreement
constitute the entire Agreement between the parties and supersede all written
and oral agreements between the parties regarding the subject matter hereof, and
are intended as a complete and exclusive statement of the terms of their
agreement. This Agreement may not be released, discharged, charged, amended or
modified except by an instrument in writing signed by a duly authorized
representative of each of the parties.

      11.7 Titles and Headings. Titles and headings of sections of this
Agreement are for convenience of reference only and shall not affect the
construction or interpretation of any provision of this Agreement.

      11.8 Attorneys' Fees. Should any party institute any action or proceeding
to enforce this Agreement or any provision hereof, or for damages by reason of
any alleged breach of this Agreement or of any provision hereof, or for a
declaration of rights hereunder, the prevailing party in any such action or
proceeding shall be entitled to receive from the other party all costs


                                       11
<PAGE>

and expenses, including attorneys' fees, incurred by the prevailing party in
connection with such action or proceeding.

      11.9 No Third Party Beneficiaries. This Agreement is for the benefit of
the parties hereto and not for any other person, except as specifically provided
herein.

      11.10 Severability. In any provision or provisions of this Agreement is
found to be invalid by any court, the invalidity of such provision or provisions
shall not affect the validity of the remaining provisions hereof.

      11.11 Notices. Any notice, request, instruction or other document deemed
by PFC or Alliance to be necessary or desirable to be given to the other party
hereto shall be in writing and shall be telefaxed, delivered by messenger, air
courier (such as Federal Express, DHL or UPS), or mailed by certified mail,
postage prepaid, to the following addresses:

                  If to PFC:        Baxter Healthcare Corporation
                                    Route 120 & Wilson Road
                                    Round Lake, Illinois  60073
                                    Attention: General Manager, Global
                                               Anesthesia
                                    Facsimile: (847) 270-2016

                  with a copy to:   Alliance Pharmaceutical Corp.
                                    6175 Lusk Boulevard
                                    San Diego, CA 92121
                                    Attention: Theodore D. Roth
                                               President and Chief Operating
                                               Officer
                                               Lloyd A. Rowland
                                               Vice President and General
                                               Counsel
                                    Facsimile: (858) 410-5306

                  with a copy to:   Stroock & Stroock & Lavan LLP
                                    180 Maiden Lane
                                    New York, NY  10038
                                    Attention: Melvin Epstein, Esq.
                                    Facsimile: (212) 806-6006

                  If to Baxter:     Baxter Healthcare Corporation
                                    Route 120 & Wilson Road
                                    Round Lake, Illinois  60073
                                    Attention: General Manager, Global
                                               Anesthesia
                                    Facsimile: (847) 270-2016

                  with a copy to:   Baxter Healthcare Corporation
                                    One Baxter Parkway
                                    Deerfield, IL 60015
                                    Attention: General Counsel
                                    Facsimile: (847) 948-2450


                                       12
<PAGE>

                  with a copy to:   Gibson, Dunn & Crutcher LLP
                                    4 Park Plaza, Suite 1700
                                    Irvine, CA  92614-8557
                                    Attention: Thomas D. Magill, Esq.
                                    Facsimile: (949) 451-4220

      11.12 Assignment. Baxter may assign or delegate any of its rights,
obligations or interests under this Agreement with written notice to PFC. PFC
may assign or delegate any of its rights, obligations or interests under this
Agreement (except PFC's obligation for payment of the transfer price) to all
persons or entities which repurchase the Product directly from PFC.

      11.13 Force Majeure. No failure or omission by the parties hereto in the
performance of any obligation of this Agreement shall be deemed a breach of this
Agreement nor create any liability if the same shall arise from any cause or
causes beyond the control of the parties, including but not limited to the
following which, for the purposes of this Agreement, shall be regarded as beyond
the control of the party in question; act of God, acts or omissions of any
government or any rules, regulations or orders of any governmental authority or
any officer, department, agency or instrument thereof; fire, storm, flood,
earthquake, accident, acts of the public enemy, war, rebellion, insurrection,
riot, invasion, strikes, or lockouts.

      11.14 Survivability. Notwithstanding anything else in this Agreement to
the contrary, the parties agree that Article X shall survive the termination or
expiration of this Agreement, as the case may be.

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

                             [Signatures to follow.]


                                       13
<PAGE>

      IN WITNESS THEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.


Baxter Healthcare Corporation:          PFC Therapeutics, LLC:

By: _____________________________       By: ____________________________________

Name: ___________________________       Name:  _________________________________

Title: __________________________       Title:  ________________________________

<PAGE>

                                   EXHIBIT BB

      The price of Product *                        .

      *
</TEXT>
</DOCUMENT>
