# ASSIGNMENT

THIS
ASSIGNMENT (the Assignment) is made this the 7th day of April, 2004,
by and between SDS Merchant Fund, L.P. (Assignor), as assignor,
and Alliance Pharmaceutical Corp., a New York corporation (Assignee),
as assignee, with reference to the following recitals:

RECITALS

A.                 In
June of 2003, Assignor and Assignee entered that certain Participation
          Agreement (Participation Agreement) which, among other
          things, granted Assignor an ownership interest in the Oxygent Business (as
          defined in the Participation Agreement). .

B.                 Assignee
has agreed to issue Assignor a warrant, in the form attached hereto as Exhibit A,
to purchase 540,000 shares of Assignees common stock           (the Warrant).

C.                 In
exchange for the issuance of the Warrant, Assignor has agreed to assign all           of
its rights under the Participation Agreement to Assignee.

NOW,
THEREFORE, in consideration of the delivery by Assignee of the Warrant, and other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignor hereby sells, assigns, transfers and conveys to Alliance all of Assignees
rights under the Participation Agreement.

Assignee
agrees to include the shares of common stock issuable upon exercise of the Warrant in a
resale registration statement to be filed under the Securities Act of 1933, as amended,
on or before June 30, 2004.

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This
Assignment shall be governed by and construed in accordance with the laws of the State of
New York applicable to an instrument of assignment delivered, and a contract to be
performed wholly in such state, without regard to principles of conflicts of law that may
provide for the application hereto of the laws of some other state.

This
Assignment constitutes the entire agreement between the parties regarding the subject
matter set forth herein. This Assignment may be executed in one or more counterparts,
each of which shall be deemed an original, and may be signed and transmitted via
facsimile with the same validity as if it were an ink-signed document. The parties agree
to execute such further documents and instruments and to take such further actions as may
be reasonably necessary to carry out the purposes and intent of this Assignment.

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

| | SDS MERCHANT FUND, L.P.
| | -----------------------
| | By:                    
| |                        
| |                        

|ACCEPTED:
ALLIANCE PHARMACEUTICAL CORP. |                                             
|--------------------------------------- | --------------------------------------------
|By:                                     | /s/  Duane J. Roth                          
|                                        | Print Name:  Duane J. Roth                  
|                                        | Title:  Chairman and Chief Executive Officer

2

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# EXHIBIT A



THIS WARRANT HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS.

SUBJECT TO THE PROVISIONS OF SECTION
10 HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON DECEMBER 31, 2006
(the EXPIRATION DATE).

No. PAR.  1

# ALLIANCE
PHARMACEUTICAL CORP.

# WARRANT TO PURCHASE
540,000 SHARES OFCOMMON STOCK, $.01 PAR
VALUE PER SHARE

For
VALUE RECEIVED, SDS Merchant Fund, L.P. (Warrantholder) is entitled to
purchase, subject to the provisions of this Warrant, from Alliance Pharmaceutical Corp.,
a New York corporation (Company), at any time not later than 5:00 P.M.,
Eastern time, on the Expiration Date, at an exercise price per share equal to $0.35 (the
exercise price in effect being herein called the Warrant Price), 540,000
shares (Warrant Shares) of the Companys Common Stock, par value $.01
per share (Common Stock). The number of Warrant Shares purchasable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment from time
to time as described herein.

Section
1.    Registration.    The Company shall maintain books for the transfer and
registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall
issue and register the Warrant in the name of the Warrantholder.

Section
2.    Transfers.    As provided herein, this Warrant may be transferred only pursuant to
a registration statement filed under the Securities Act of 1933, as amended (Securities
Act), or an exemption from such registration. Subject to such restrictions, the
Company shall transfer this Warrant from time to time upon the books to be maintained by
the Company for that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as may be
reasonably required by the Company, including, if required by the Company, an opinion of
its counsel to the effect that such transfer is exempt from the registration requirements
of the Securities Act of 1933, to establish that such transfer is being made in
accordance with the terms hereof, and a new Warrant shall be issued to the transferee and
the surrendered Warrant shall be canceled by the Company.

1

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Section
3.    Exercise of Warrant.    Subject to the provisions hereof, the Warrantholder may
exercise this Warrant in whole or in part at any time upon surrender of the Warrant,
together with delivery of the duly executed Warrant exercise form attached hereto as
Appendix A (the Exercise Agreement) and payment by cash, certified check or
wire transfer of funds for the aggregate Warrant Price for that number of Warrant Shares
then being purchased, to the Company during normal business hours on any business day at
the Companys principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof). The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or such holders
designee, as the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered (or evidence of loss, theft or destruction
thereof and security or indemnity satisfactory to the Company), the Warrant Price shall
have been paid and the completed Exercise Agreement or Net Issue Election Notice, as the
case may be, shall have been delivered. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding three (3) business
days, after this Warrant shall have been so exercised. The certificates so delivered
shall be in such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated by such
holder. If this Warrant shall have been exercised only in part, then, unless this Warrant
has expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the holder a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised. As used herein, business
day means a day, other than a Saturday or Sunday, on which banks in New York City
are open for the general transaction of business.

Section
4.    Compliance with the Securities Act of 1933.    The Company may cause the legend
set forth on the first page of this Warrant to be set forth on each Warrant or similar
legend on any security issued or issuable upon exercise of this Warrant, unless counsel
for the Company is of the opinion as to any such security that such legend is unnecessary
or, with respect to any security issued or issuable upon exercise of this Warrant, such
security is subject to an effective registration statement filed with the Securities and
Exchange Commission (SEC).

Section
5.    Payment of Taxes.    The Company will pay any documentary stamp taxes attributable
to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issuance or delivery of any
certificates for Warrant Shares in a name other than that of the registered holder of
this Warrant in respect of which such shares are issued, and in such case, the Company
shall not be required to issue or deliver any certificate for Warrant Shares or any
Warrant until the person requesting the same has paid to the Company the amount of such
tax or has established to the Companys reasonable satisfaction that such tax has
been paid. The holder shall be responsible for income and gift taxes due under federal,
state or other law, if any such tax is due.

Section
6.    Mutilated or Missing Warrants.    In case this Warrant shall be mutilated, lost,
stolen, or destroyed, the Company shall issue in exchange and substitution of and upon
cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant
lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like
number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction of the Warrant, and with respect to a
lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.

2

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Section
7.    Reservation of Common Stock.    The Company hereby represents and warrants that
there have been reserved, and the Company shall at all applicable times keep reserved
until issued (if necessary) as contemplated by this Section 7, out of the authorized and
unissued Common Stock, sufficient shares to provide for the exercise of the rights of
purchase represented by this Warrant. The Company agrees that all Warrant Shares issued
upon exercise of the Warrant shall be, at the time of delivery of the certificates for
such Warrant Shares upon the due exercise of this Warrant, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company.

Section
8.    Adjustments.    Subject and pursuant to the provisions of this Section 8, the
Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to
adjustment from time to time as set forth hereinafter.

| | (a)    (i)    If
the Company shall, at any time or from time to time while this Warrant is
               outstanding, pay a dividend or make a distribution on its Common Stock in
shares                of Common Stock, subdivide its outstanding shares of Common Stock
into a greater                number of shares or combine its outstanding shares of
Common Stock into a                smaller number of shares or issue by reclassification
of its outstanding shares                of Common Stock any shares of its capital stock
(including any such                reclassification in connection with a consolidation or
merger in which the                Company is the continuing corporation), then the
number of Warrant Shares                purchasable upon exercise of the Warrant and the
Warrant Price in effect                immediately prior to the date upon which such
change shall become effective,                shall be adjusted by the Company so that
the Warrantholder thereafter exercising                the Warrant shall be entitled to
receive the number of shares of Common Stock or                other capital stock which
the Warrantholder would have received if the Warrant                had been exercised
immediately prior to such event with an inversely                proportional adjustment
in the Warrant Price. Such adjustments shall be made                successively whenever
any event listed above shall occur.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (ii)   If the Company shall, at any time or from time
to time while this Warrant is                     outstanding, issue by reclassification
of its outstanding shares of Common Stock                     any shares of its capital
stock (including any such reclassification in                     connection with a
consolidation or merger in which the Company is the continuing
                    corporation), then, as a condition of such reclassification, lawful
and adequate                     provision shall be made whereby each Warrantholder shall
thereafter have the                     right to purchase and receive upon the basis and
upon the terms and conditions                     herein specified and in lieu of the
Warrant Shares immediately theretofore                     issuable upon exercise of the
Warrant, such shares of stock, securities or                     assets as would have
been issuable or payable with respect to or in exchange for                     a number
of Warrant Shares equal to the number of Warrant Shares immediately
                    theretofore issuable upon exercise of the Warrant, had such
reclassification not                     taken place, and in any such case appropriate
provision shall be made with                     respect to the rights and interests of
each Warrantholder to the end that the                     provisions hereof (including,
without limitation, provision for adjustment of                     the Warrant Price)
shall thereafter be applicable, as nearly equivalent as may                     be
practicable in relation to any shares of stock, securities or properties
                    thereafter deliverable upon the exercise thereof. The provisions of
this                     sub-paragraph (ii) shall similarly apply to successive
reclassifications.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

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| | (b)    
If any capital reorganization, reclassification of the
capital stock of the           Company, consolidation or merger of the Company with
another corporation in           which the Company is not the survivor, or sale, transfer
or other disposition of           all or substantially all of the Companys assets
to another corporation           shall be effected, then, as a condition of such
reorganization,           reclassification, consolidation, merger, sale, transfer or
other disposition,           lawful and adequate provision shall be made whereby each
Warrantholder shall           thereafter have the right to purchase and receive upon the
basis and upon the           terms and conditions herein specified and in lieu of the
Warrant Shares           immediately theretofore issuable upon exercise of the Warrant,
such shares of           stock, securities or assets as would have been issuable or
payable with respect           to or in exchange for a number of Warrant Shares equal to
the number of Warrant           Shares immediately theretofore issuable upon exercise of
the Warrant, had such           reorganization, reclassification, consolidation, merger,
sale, transfer or other           disposition not taken place, and in any such case
appropriate provision shall be           made with respect to the rights and interests of
each Warrantholder to the end           that the provisions hereof (including, without
limitation, provision for           adjustment of the Warrant Price) shall thereafter be
applicable, as nearly           equivalent as may be practicable in relation to any
shares of stock, securities           or properties thereafter deliverable upon the
exercise thereof. The Company           shall not effect any such consolidation, merger,
sale, transfer or other           disposition unless prior to or simultaneously with the
consummation thereof the           successor corporation (if other than the Company)
resulting from such           consolidation or merger, or the corporation purchasing or
otherwise acquiring           such assets or other appropriate corporation or entity
shall assume the           obligation to deliver to the holder of the Warrant such shares
of stock,           securities or assets as, in accordance with the foregoing provisions,
such           holder may be entitled to purchase, and the other obligations under this
          Warrant. The provisions of this paragraph (b) shall similarly apply to
          successive reorganizations, reclassifications, consolidations, mergers, sales,
          transfers or other dispositions.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)
              In case the Company shall fix a payment date for the
making of a distribution to           all holders of Common Stock (including any such
distribution made in connection           with a consolidation or merger in which the
Company is the continuing           corporation) of evidences of indebtedness or assets
(other than dividends or           distributions referred to in Section 8(a)), or
subscription rights or warrants,           the Warrant Price to be in effect after such
payment date shall be determined by           multiplying the Warrant Price in effect
immediately prior to such payment date           by a fraction, the numerator of which
shall be the total number of shares of           Common Stock outstanding multiplied by
the Market Price per share of Common           Stock immediately prior to such payment
date, less the fair market value (as           determined by the Companys Board of
Directors in good faith) of said           assets or evidences of indebtedness so
distributed, or of such subscription           rights or warrants, and the denominator of
which shall be the total number of           shares of Common Stock outstanding
multiplied by such Market Price per share of           Common Stock immediately prior to
such payment date. Market Price as           of a particular date (the Valuation
Date) shall mean the following:           (a) if the Common Stock is then
listed on a national stock exchange, the           closing sale price of one share of
Common Stock on such exchange on the last           trading day prior to the Valuation
Date; (b) if the Common Stock is then           quoted on the NASDAQ Stock Market,
Inc. National Market System           (Nasdaq), the closing sale price of one
share of Common Stock on           Nasdaq on the last trading day prior to the Valuation
Date or, if no such           closing sale price is available, the average of the high
bid and the low asked           price quoted on Nasdaq on the last trading day prior to
the Valuation Date; or           (c) if the Common Stock is not then listed on a
national stock exchange or           quoted on Nasdaq, the Fair Market Price of one share
of Common Stock as of the           Valuation Date, shall be determined in good faith by
the Board of Directors of           the Company and the Warrantholder. The Board of
Directors of the Company shall           respond promptly, in writing, to an inquiry by
the Warrantholder prior to the           exercise hereunder as to the Market Price of a
share of Common Stock as           determined by the Board of Directors of the Company.
In the event that the Board           of Directors of the Company and the Warrantholder
are unable to agree upon the           Market Price in respect of subpart (c) hereof, the
Company and the Warrantholder           shall jointly select an appraiser, who is
experienced in such matters. The           decision of such appraiser shall be final and
conclusive, and the cost of such           appraiser shall be borne by the Company. Such
adjustment shall be made           successively whenever such a payment date is fixed.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4

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| | (d)
              An adjustment to the Warrant Price shall become
effective immediately after the           payment date in the case of each dividend or
distribution and immediately after           the effective date of each other event which
requires an adjustment.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (e)
              In the event that, as a result of an adjustment made
pursuant to this Section 8,           the holder of this Warrant shall become entitled to
receive any shares of           capital stock of the Company other than shares of Common
Stock, the number of           such other shares so receivable upon exercise of this
Warrant shall be subject           thereafter to adjustment from time to time in a manner
and on terms as nearly           equivalent as practicable to the provisions with respect
to the Warrant Shares           contained in this Warrant.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Section
9.    Fractional Interest.    The Company shall not be required to issue fractions of
Warrant Shares upon the exercise of the Warrant. If any fractional share of Common Stock
would, except for the provisions of the first sentence of this Section 9, be delivered
upon such exercise, the Company, in lieu of delivering such fractional share, shall pay
to the exercising holder of this Warrant an amount in cash equal to the Fair Market Value
of such fractional share of Common Stock on the date of exercise. As used in this
Warrant, Fair Market Value of a share of Common Stock as of a Valuation Date
shall mean the following: (a) if the Common Stock is then listed on a national stock
exchange, the closing sale price of one share of Common Stock on such exchange on the
last trading day prior to the Valuation Date; (b) if the Common Stock is then quoted
on Nasdaq, the closing sale price of one share of Common Stock on Nasdaq on the last
trading day prior to the Valuation Date or, if no such closing sale price is available,
the average of the high bid and the low sales price quoted on Nasdaq on the last trading
day prior to the Valuation Date; or (c) if the Common Stock is not then listed on a
national stock exchange or quoted on Nasdaq, the Fair Market Value of one share of Common
Stock as of the Valuation Date, shall be determined in good faith by the Board of
Directors of the Company.

5

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Section
10.    No Ten Percent Holders.    In no event shall a Warrantholder of this Warrant be
entitled to receive shares of Common Stock upon exercise of this Warrant to the extent
that the sum of (a) the number of shares of Common Stock beneficially owned by the
Warrantholder and its affiliates (exclusive of shares of Common Stock issuable upon
exercise of the unexercised portion of the Warrant or the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on conversion or
exercise analogous to the limitations contained herein) and (b) the number of shares
of Common Stock issuable upon the exercise of this Warrant, would result in beneficial
ownership by the Warrantholder and its affiliates of more than 9.99% of the outstanding
shares of Common Stock. For purposes of this subparagraph, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13 D-G thereunder, except as otherwise provided in clause (a)
above. The Warrantholder may waive the limitations set forth in this Section 10 upon
sixty-one (61) days written notice to the Company.

Section
11.    Extension of Expiration Date; Registration Rights; Late Registration
Penalties; Other Registration Issues.

| | (a)
              The Company shall use its best efforts to have a
registration statement covering           the Warrant Shares be declared effective as
soon as practicable, but in any           event on or before August 31, 2004 (the Effective
Date). The Company           acknowledges and agrees that the provisions set forth
in Sections 3 and 4 of           that certain Registration Rights Agreement, dated as of
August 22, 2000 (the           Existing Registration Rights Agreement), by
and among the Company,           the Warrantholder and the other parties thereto are
hereby incorporated by           reference herein, and the obligations of the Company set
forth in Sections 3 and           4 of the Existing Registration Rights Agreement shall
apply to the registration           of the Warrant Shares by the Company and be binding
upon the Company.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)
              If the Company fails to cause a registration statement
covering the Warrant           Shares to be declared effective on or before the Effective
Date, then the           Expiration Date of this Warrant shall be extended one (1) day
for each day that           elapses between the Effective Date and the date on which a
Registration           Statement covering the Warrant Shares is declared effective.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)
              The Company and, by accepting this Warrant, the
Warrantholder hereby acknowledge           and agree that the indemnification and
contribution provisions set forth in           Section 5 of the Existing
Registration Rights Agreement are hereby           incorporated by reference herein and
shall apply to the registration of the           Warrant Shares by the Company and the
sale by the Warrantholder of the Warrant           Shares pursuant to the registration
statement.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Section
12.    Benefits.    Nothing in this Warrant shall be construed to give any person, firm
or corporation (other than the Company and the Warrantholder) any legal or equitable
right, remedy or claim, it being agreed that this Warrant shall be for the sole and
exclusive benefit of the Company and the Warrantholder.

6

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Section
13.    Notices to Warrantholder.    Upon the happening of any event requiring an
adjustment of the Warrant Price, the Company shall promptly give written notice thereof
to the Warrantholder at the address appearing in the records of the Company, stating the
adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such
event and setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject adjustment.

Section
14.    Identity of Transfer Agent.    The Transfer Agent for the Common Stock is
American Stock Transfer and Trust Company. Upon the appointment of any subsequent
transfer agent for the Common Stock or other shares of the Companys capital stock
issuable upon the exercise of the rights of purchase represented by the Warrant, the
Company will mail to the Warrantholder a statement setting forth the name and address of
such transfer agent.

Section
15.    Notices.    Unless otherwise provided, any notice required or permitted under
this Warrant shall be given in writing and shall be deemed effectively given as
hereinafter described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be
deemed given upon receipt of confirmation of complete transmittal, (iii) if given by
mail, then such notice shall be deemed given upon the earlier of (A) receipt of such
notice by the recipient or (B) three days after such notice is deposited in first class
mail, postage prepaid, and (iv) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one day after delivery to such carrier.
All notices shall be addressed as follows: (i) if to the Warrantholder, at its address as
set forth in the Companys books and records and, if to the Company, at the address
as follows, or at such other address as the Warrantholder or the Company may designate by
ten days advance written notice to the other:

| | If
to the Company:
| | ------------------

| | Alliance
Pharmaceutical Corp.6175 Lusk BoulevardSan Diego, California 92121Attention:
PresidentFax:(858) 410-5306
| | -----------------------------------------------------------------------------------------------------------------

| | With
a copy to:
| | ---------------

| | Foley
& Larder LLP402 W. Broadway, 23rd FloorSan Diego, California
92101Attention: Kenneth D. PolinFax: (619) 234-3510
| | ----------------------------------------------------------------------------------------------------------------------

7

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Section
16.    Successors.    All the covenants and provisions hereof by or for the benefit of
the Warrantholder shall bind and inure to the benefit of its respective successors and
assigns hereunder.

Section
17.    Governing Law.    This Warrant shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without reference to the
choice of law provisions thereof.

Section
18.    No Rights as Stockholder.    Prior to the exercise of this Warrant, the
Warrantholder shall not have or exercise any rights as a stockholder of the Company by
virtue of its ownership of this Warrant.

Section
19.    Amendment; Waiver.    This Warrant is one of a series of Warrants of like tenor
issued by the Company pursuant to Assignments, dated as of the date hereof, among the
Company and the original holders of Warrants, and initially covering an aggregate of
5,715,000 shares of Common Stock (collectively, the Company Warrants). Any
term of this Warrant may be amended or waived (including the adjustment provisions
included in Section 8 of this Warrant) upon the written consent of the Company and the
holders of Company Warrants representing at least 50% of the number of shares of Common
Stock then subject to outstanding Company Warrants (the Majority Holders);
provided, that (x) any such amendment or waiver must apply to all Company Warrants; and
(y) the number of Warrant Shares subject to this Warrant, the Warrant Price and the
expiration date of this Warrant may not be amended, and the right to exercise this
Warrant may not be altered or waived, without the written consent of the Warrantholder.

Section
20.    Section Headings.    The section heading in this Warrant are for the convenience
of the Company and the Warrantholder and in no way alter, modify, amend, limit or
restrict the provisions hereof.

IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the 7th
day of April, 2004.

| | ALLIANCE PHARMACEUTICAL CORP.
| | -----------------------------
| | By:                          
| |                              

8

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# APPENDIX AALLIANCE PHARMACEUTICAL CORP.WARRANT EXERCISE FORM

To:   Alliance Pharmaceutical Corp.

The
undersigned hereby  irrevocably  elects to exercise the right of purchase  represented by
the within  Warrant  ("Warrant")  for, and to purchase  thereunder by the payment of the
Warrant Price and surrender of the Warrant,  _______________  shares of Common Stock
("Warrant  Shares")  provided for therein,  and requests that certificates for the
Warrant Shares be issued as follows:

|                                     
|-------------------------------------
|                                     
|Name                                 
|                                     
|Address                              
|                                     
|                                     
|Federal Tax ID or Social Security No.

| | and delivered by |    certified mail to the above address, or
   electronically (provide DWAC Instructions:_______________), or
   other (specify: ______________________________________).
| | ---------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

and,  if the  number of Warrant
 Shares  shall not be all the  Warrant  Shares  purchasable  upon  exercise  of the
Warrant,  that a new Warrant for the balance of the Warrant  Shares  purchasable  upon
 exercise of this Warrant be registered  in the name of the  undersigned  Warrantholder
 or the  undersigned's  Assignee as below  indicated and delivered to the address stated
below.

Dated: ___________________, ____

|                                                                                                                                                                                                                                                               |  |                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------
|Note:  The signature must  correspond  with the name of the
registered  holder  as  written  on the  first  page of the
Warrant  in  every   particular,   without   alteration  or
enlargement or any change whatever,  unless the Warrant has
been assigned. |  | Signature:                           
|                                                                                                                                                                                                                                                               |  |                                      
|                                                                                                                                                                                                                                                               |  |                                      
|                                                                                                                                                                                                                                                               |  | Name (please print)                  
|                                                                                                                                                                                                                                                               |  |                                      
|                                                                                                                                                                                                                                                               |  |                                      
|                                                                                                                                                                                                                                                               |  | Address                              
|                                                                                                                                                                                                                                                               |  |                                      
|                                                                                                                                                                                                                                                               |  | Federal Tax ID or Social Security No.
|                                                                                                                                                                                                                                                               |  | Assignee:                            
|                                                                                                                                                                                                                                                               |  |                                      
|                                                                                                                                                                                                                                                               |  |                                      
|                                                                                                                                                                                                                                                               |  |                                      

Appendix A - Page 1