<PAGE>


                                                                Exhibit 10(uu)

                       PREFERRED STOCK PURCHASE AGREEMENT

         This PREFERRED STOCK PURCHASE AGREEMENT (this "Purchase Agreement" or
the "Agreement") is made as of this 11th day of May, 2000 by and between
Alliance Pharmaceutical Corp., a New York corporation (the "Company"), and
Baxter Healthcare Corporation, a Delaware corporation ("Baxter").

THE PARTIES AGREE AS FOLLOWS:

      1. Authorization of Purchase and Sale of Preferred Stock.

      1.1 Authorization of Preferred Stock. The Company has authorized the
issuance and sale of up to 500,000 shares of its Series F Preferred Stock, $.01
par value (such Series F Preferred Stock being hereinafter referred to as the "F
Stock") to be issued under this Purchase Agreement. The rights, privileges, and
preferences of the F Stock are as set forth in the Company's Certificate of
Amendment of Certificate of Incorporation (the "Certificate of Amendment") in
the form attached to this Purchase Agreement as Exhibit A.

      1.2 Purchase and Sale of the Preferred Stock. Subject to the terms and
conditions of this Purchase Agreement and on the basis of the representations
and warranties set forth herein, the Company agrees to sell to Baxter, and
Baxter agrees to purchase from the Company, 500,000 shares of F Stock (the "F
Shares") at a purchase price of $40.00 per share or an aggregate purchase price
of $20,000,000.

      1.3 The Closing. The purchase and sale of the F Shares will take place at
the offices of Gibson, Dunn & Crutcher LLP, 4 Park Plaza, Irvine, California
92614-8557 at 10:00 a.m. local time on May 19, 2000 or at such other time and
place as the parties shall mutually agree (the "Closing"). At the Closing, the
Company will deliver to Baxter a certificate, registered in Baxter's name,
representing the F Shares to be purchased by Baxter against payment of the
purchase price thereof in lawful money of the United States of America by wire
transfer or check payable to the Company.

      2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Baxter that:

      2.1 Organization and Corporate Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and is qualified to do business as a foreign corporation in each
jurisdiction where failure to qualify would have a Materially Adverse Effect (as
defined in Section 2.13) on the business or properties of the Company. The
Company has full power and authority to own its property, to carry on its
business as presently conducted and to carry out the transactions contemplated
hereby. The copies of the Certificate of Incorporation, Certificate of Amendment
and Bylaws of the Company, as amended to date, which have been furnished to
Baxter by the Company, are correct and complete.
<PAGE>

      2.2 Authorization. The Company has full power to execute, deliver and
perform this Purchase Agreement, the License Agreement between the Company and
PFC Therapeutics, LLC ("PFC") attached hereto as Exhibit B (the "License
Agreement"), the Deferred Stock Purchase Agreement attached hereto as Exhibit C
(the "Deferred Stock Purchase Agreement"), the Limited Liability Company
Agreement of PFC Therapeutics, LLC between the Company and Baxter attached
hereto as Exhibit D (the "Operating Agreement"), the Marketing and Distribution
Agreement between the Company, Baxter and PFC attached hereto as Exhibit E (the
"Marketing and Distribution Agreement"), the Alliance Manufacturing and Supplier
Agreement between the Company and PFC attached hereto as Exhibit F (the
"Alliance Manufacturing and Supplier Agreement") and the Baxter Manufacturing
and Supplier Agreement between Baxter and PFC attached hereto as Exhibit G (the
"Baxter Manufacturing and Supplier Agreement") (collectively, the "Transaction
Agreements"), and each such agreement has been duly executed and delivered by
the Company and is the legal, valid and, assuming due execution by the other
parties hereto and thereto, binding obligation of the Company, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights
generally, and to general equitable principles. The execution, delivery and
performance of this Purchase Agreement, including the sale, issuance and
delivery of the F Shares, and the License Agreement, and each other agreement
entered into by the Company in connection with this Purchase Agreement, has been
duly authorized by all necessary corporate action of the Company.

      2.3 Capitalization. The entire authorized capital stock of the Company
consists of 75,000,000 shares of common stock, $0.01 par value per share (the
"Common Stock"), of which 47,167,083 shares are issued and outstanding on May 5,
2000, and 5,000,000 shares of preferred stock, $.01 par value, of which (i)
500,000 have been designated as Series F Preferred Stock, all of which are to be
issued at the Closing, (ii) 1,500,000 have been designated Series A Preferred
Stock and are not issued or outstanding; (iii) 13,637 have been designated
Series G Preferred Stock and are not issued or outstanding and (iv) 13,636 have
been designated Series H Preferred Stock and are not issued or outstanding. None
of the remaining 2,972,727 shares of such preferred stock are issued or
outstanding. The shares of Common Stock outstanding are duly authorized, validly
issued, fully paid and nonassessable. No shares of Common Stock or preferred
stock are held in the Company's treasury. The Company has authorized and
reserved 500,000 shares of F Stock for issuance hereunder. When issued in
accordance with the terms of this Purchase Agreement, the F Shares will be duly
authorized, validly issued and outstanding, fully paid and nonassessable, and
the


                                       2
<PAGE>

certificates representing the same will be duly and validly authorized, executed
and delivered by the Company. The Company has authorized and reserved for
issuance upon conversion of the F Shares shares of its Common Stock or such
other number as may be necessary to be issued upon such conversion (such shares,
until sold to the public generally pursuant to a registration statement or Rule
144(k) promulgated under the Securities Act of 1933, as amended (the "1933
Act"), are referred to herein as "Conversion Shares"). The Conversion Shares and
any shares of Common Stock issued upon the exercise of an Option (as hereinafter
defined) (such shares being referred to herein as the "Option Shares") will,
upon such issuance in accordance with the terms of the Company's Certificate of
Incorporation, as amended, be duly authorized, validly issued and outstanding,
fully paid and nonassessable, and the certificates representing the same will be
duly and validly authorized, executed and delivered by the Company. There are no
outstanding warrants, rights of first refusal, options or other rights to
purchase or acquire, or exchangeable for or convertible into, any shares of
Common Stock or preferred stock, except as disclosed on Schedule 2.3 or as
otherwise disclosed in writing. The Company has reserved Common Stock for
issuance upon exercise of outstanding options and warrants as set forth in
Section 2.3 of the disclosure schedule to this Purchase Agreement. Except as
provided herein, there are no preemptive rights with respect to the issuance or
sale by the Company of any of its securities. Except as provided in this
Purchase Agreement or as imposed by applicable securities laws, there are no
restrictions on the transfer or voting of any shares of the Common Stock or F
Stock. There are no existing rights with respect to registration under the 1933
Act of any of the Company's securities except as set forth herein or as
disclosed on Schedule 2.3. Upon consummation of the transactions contemplated
hereby, good and valid title to the F Shares will pass to Baxter, free and clear
of any encumbrances, liens, claims, charges or assessments of any nature
whatsoever. Upon their issuance in accordance with the Company's Certificate of
Incorporation, as amended, and, with respect to the Option Shares, this
Agreement, good and valid title to the Conversion Shares and the Option Shares
will pass to Baxter, free and clear of any encumbrances, liens, claims, charges
or assessments of any nature whatsoever.

      2.4 Financial Statements. The Company has delivered to Baxter a copy of
the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1999
(the "1999 10-K"), containing audited consolidated balance sheets and statements
of operations and cash flow for the fiscal years ended June 30, 1997, June 30,
1998 and June 30, 1999 and a copy of the Company's Quarterly Report on Form 10-Q
for the quarters ended September 30, 1999 and December 31, 1999 and the
Company's draft 10-Q for the quarter ended March 31, 2000 (the Forms 10-Q, the
draft 10-Q and the financial statements therein and in the 1999 10-K,
collectively, are referred to as the "Financial Statements"). The Financial
Statements are in accordance with the books and records of the Company, have
been prepared in accordance with generally accepted accounting principles,
consistently applied, and fairly present, in all material respects, the
financial position, results of operations and cash flows of the Company as of
each such date and for each of the periods covered thereby, except that such
interim statements are subject to normal year-end adjustments.

      2.5 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or stated in the Financial Statements, neither the Company nor its
subsidiaries has any debts, liabilities or obligations of any nature, whether
accrued, absolute, assigned or otherwise, whether due or to become due, other
than those incurred in the ordinary course of business.

      2.6 Absence of Certain Developments. Since June 30, 1999, except as
disclosed in the Financial Statements or the disclosure schedules to this
Purchase Agreement or as otherwise expressly contemplated therein or by the
transaction Agreements to which it is a party, and except for continuing
operating losses, the Company has not:

            (a) changed or amended its Articles of Incorporation or By-Laws (or
similar governing documents);


                                       3
<PAGE>

            (b) incurred any obligation or liability (fixed or contingent),
except normal trade or business obligations incurred in the ordinary course of
business and consistent with past practice, none of which individually or in the
aggregate would cause a Material Adverse Effect;

            (c) discharged or satisfied any material lien, security interest,
charge or other encumbrance or paid any material obligation or liability (fixed
or contingent), other than in the ordinary course of business and consistent
with past practice;

            (d) mortgaged, pledged or subjected to any lien, security interest,
charge or other encumbrance any of its material assets or properties (other than
liens permitted pursuant to Section 2.7 below);

            (e) transferred, leased or otherwise disposed of any of its material
assets or properties, except for fair consideration in the ordinary course of
business and consistent with past practice, or acquired any material assets or
properties, except in the ordinary course of business and consistent with past
practice;

            (f) declared, set aside or paid any distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock or
redeemed or otherwise acquired any of its capital stock or split, combined or
otherwise similarly changed its capital stock or authorized the creation or
issuance of or issued or sold any capital stock or any securities or obligations
convertible into or exchangeable therefor, or gave any person any right to
acquire any capital stock from the Company, or agreed to take any such action
(other than upon the exercise of outstanding warrants or stock options, and the
issuance and exercise of stock options issued under the Company's existing stock
option plans);

            (g) made any investment of a capital nature, whether by purchase of
stock or securities, contributions to capital, property transfers or otherwise,
in any other partnership, corporation or any other entity, or purchase any
material property or assets;

            (h) canceled or compromised any debt or claim other than in the
ordinary course of business;

            (i) waived or released any rights of material value, including,
without limitation, any material patents, trademarks and trade names, trademark
and trade name registrations, logos, servicemark registrations, copyright
registrations, applications pending the date hereof for patent or for trademark,
trade name, servicemark or copyright registrations, and other material
proprietary intellectual property rights (including, but not limited to,
know-how, information, proprietary rights and information) ("Intangible
Rights");

            (j) transferred or granted any material rights under or with respect
to any Intangible Rights other than on reasonable business terms, or permitted
any license, permit or other form of authorization relating to a material
Intangible Right to lapse;


                                       4
<PAGE>

            (k) suffered any casualty loss or damage (whether or not such loss
or damage shall have been covered by insurance) which affects in any material
respect its ability to conduct business;

            (l) made or granted any wage or salary increase applicable to any
group or classification of employees generally, entered into any employment
contract with or made any loan to, or entered into any material transaction of
any other nature with, any officer, or employee of Company, except in the
ordinary course of business; or

            (m) suffered a Material Adverse Effect.

      2.7 Title to Properties. Except as stated in the 1999 10-K, each of the
Company and its subsidiaries has good and marketable title to all material
properties and assets (excluding intellectual property which is covered by
Section 2.10 hereof) necessary to its business as presently conducted and as
proposed to be conducted, and to all of its properties and assets, free and
clear of all mortgages, security interests, liens, restrictions or encumbrances
other than (i) those disclosed on Schedule 2.7, (ii) the lien of current taxes
not yet due and payable and (iii) possible minor liens and encumbrances which do
not in any case, individually or in the aggregate, materially detract from the
value of the property subject thereto or materially impair the operations of the
Company or its subsidiaries, and would not result in the occurrence of a
Material Adverse Effect, and which have not arisen otherwise than in the
ordinary course of business.

      2.8 Tax Matters. All taxes, including, without limitation, income, excise,
property, sales, transfer, use, franchise, payroll, employees' income
withholding and social security taxes imposed or assessed by the United States
or by any foreign country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country, or by any other
taxing authority, which are due or payable by the Company, and all interest,
penalties and additions thereon, whether disputed or not, have been paid in
full, and all tax returns or other documents required to be filed in connection
therewith have been accurately prepared and duly and timely filed. The Company
has not been delinquent in the payment of any foreign or domestic tax,
assessment or governmental charge or deposit and has no tax deficiency or claim
outstanding, assessed or, to the best of its knowledge, proposed against it. The
provisions for taxes in the Financial Statements are sufficient for the payment
of all accrued and unpaid federal, state, county and local taxes of the Company.

      2.9 No Defaults. The Company is not in violation, nor will the execution
of this Agreement or any of the Transaction Agreements to which it is a party
cause a violation, of any term or provision of (a) its Certificate of
Incorporation or Bylaws or any material note, indenture, mortgage, lease,
agreement, contract, purchase order or other material instrument, document or
agreement to which the Company is a party or by which it or any of its
properties or assets is bound or affected or (b) any order, writ, injunction or
decree of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign.


                                       5
<PAGE>

      2.10 Intellectual Property. To the best of the Company's knowledge;

            (a) The Company has good title to and ownership of or licensed
rights to, free and clear of all liens, claims and encumbrances of any nature,
Intangible Rights licensed by the Company to PFC under the License Agreement,
and the conduct by the Company of its business in connection with the Intangible
Rights neither conflicts with or constitutes, or is expected to conflict with or
constitute, an infringement of the rights of others.

            (b) The Company has sufficient title to and ownership of, or license
rights to, or has applied for, all Intangible Rights necessary to the proper
conduct of its business as described in the Financial Statements. The
consummation of the transactions contemplated hereby will not alter or impair
any such Intangible Rights.

            (c) The Company has not received any communications alleging that,
and has no knowledge that the Company has violated or, by conducting its
business, would violate any of the Intangible Rights of any other person or
entity.

      2.11 Effect of Transactions. The execution, delivery and performance of
this Purchase Agreement and the transactions contemplated hereby, and compliance
with the provisions hereof by the Company, do not and will not, with or without
the passage of time or the giving of notice or both, (i) violate any current
law, statute, rule, regulation, ruling, writ, injunction, order, judgment or
decree of any court, administrative agency or other governmental body or (ii)
conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company under the Certificate of Incorporation or Bylaws of the
Company or any material note, indenture, mortgage, lease, agreement, contract,
purchase order or other instrument, document or agreement to which the Company
is a party or by which it or any of its properties or assets is bound or
affected.

      2.12 No Governmental Consent or Approval Required. Based in part on the
representations made by Baxter in Section 3 of this Purchase Agreement, and
except as contemplated herein, no authorization, consent, approval or other
order of, declaration to, or registration, qualification, designation or (other
than the Certificate of Amendment) filing with any federal, state or local
governmental agency or body is required for or in connection with the valid and
lawful authorization, execution and delivery by the Company of this Purchase
Agreement or any other Transaction Agreement to which it is a party, and
consummation of the transactions contemplated hereby or thereby, or for or in
connection with the valid and lawful authorization, issuance, delivery of the F
Shares or for or in connection with the valid and lawful authorization,
reservation, issuance and delivery of the Conversion Shares other than (a) the
qualification (or taking of such action as may be necessary to secure an
exemption from qualification if available) of the offer and sale of the F Shares
under the California Corporate Securities Law of 1968, as amended, and other
applicable state securities laws, which filings and qualifications, if required,
will be accomplished in a timely manner so as to comply with such qualification
or exemption from qualification requirements, or (b) compliance with the
applicable


                                       6
<PAGE>

requirements of the HSR Act and stockholder approval pursuant to Nasdaq
requirements, in each case if required in connection with the issuance of the
Conversion Shares.

      2.13 Litigation. There is no claim, arbitration, action, suit, proceeding
or investigation pending, or to the best knowledge of the Company, threatened
against the Company or any of its subsidiaries, which questions the validity of
this Purchase Agreement or any other Transaction Agreement to which it is a
party or the right of the Company or any of its subsidiaries to enter into any
such agreements or to consummate the transactions contemplated hereby or
thereby, or which might result, either individually or in the aggregate, in any
material adverse effect on the condition of the Company or its assets,
liabilities, properties, business, operations, or insofar as they may be
reasonably be foreseen, prospects generally (a "Material Adverse Effect"), or
any change in the current equity ownership of the Company. Neither the Company
nor any of its subsidiaries is a party to, or subject to the provisions of, any
order, writ, injunction, judgment or decree of any court or governmental agency
or instrumentality which would have a Material Adverse Effect.

      2.14 Securities Laws. Assuming that Baxter's representations and
warranties contained in Section 3 of this Purchase Agreement are and continue to
be true and correct, the offer, issuance and sale to Baxter of the F Shares, the
Conversion Shares and the Option Shares are and will be exempt from the
registration and prospectus delivery requirements of the 1933 Act, and have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws. No person authorized by the Company as agent, broker,
dealer or otherwise in connection with the offering or sale of the F Shares, the
Conversion Shares or the Option Shares, or any similar securities, has taken or
will take any action (including, without limitation, any offer or sale of any
securities) under circumstances which would require the integration of such
securities with the F Shares being sold hereunder under the 1933 Act or the
rules and regulations of the Securities and Exchange Commission which would
subject such offer and sale to the registration provisions of the 1933 Act.

      2.15 Brokerage. There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Purchase Agreement based on any arrangement made by or on behalf of the
Company other than the fee being paid by the Company to Burrill & Company. The
Company agrees to indemnify and hold Baxter harmless against any damages
incurred as a result of any such claim.

      2.16 Insurance. The Company maintains in full force such types and amounts
of insurance issued by issuers of recognized responsibility insuring the
Company, with respect to its liability, workers' compensation, business and
properties, in such amounts and against such losses and risks as are sufficient
for compliance with all requirements of law and are deemed appropriate by the
Company under its present circumstances.

      2.17 Compliance With Laws. Each of the Company and its subsidiaries are in
compliance in all material respects with every statute, law or regulation
applicable to the Company's business or operations, including (without
limitation) statutes, laws and regulations


                                       7
<PAGE>

relating to the environment or occupational health and safety, laboratory and
manufacturing practices (including current Good Manufacturing Practices
prescribed by the U.S. Food and Drug Administration), the experimental use of
animals and the use and disposal of hazardous or potentially hazardous
substances (including, with limitation, radioactive compounds and solvents),
and, to the best of the Company's knowledge and its subsidiaries' knowledge, no
material expenditures are required or currently anticipated in order to comply
with any such existing statute, law or regulation. Neither the Company nor its
subsidiaries has received any notice from any third party of any alleged
material violation of any of the foregoing.

      2.18 Retirement Obligations, etc. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974,
other than as disclosed in the 1999 10-K. The Company does not have any
employees that are represented by a union. The Company is not a party to any
collective bargaining agreement and, to the best of the Company's knowledge, no
organizational efforts are presently being made with respect to any of its
employees. Baxter will not incur through consummation of any of the transactions
contemplated by the Purchase Agreement any liability in respect of employees of
the Company or any of its employee benefit plans.

      2.19 Investment Company. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and will not, as
a result of the transactions contemplated hereby, become an "investment
company."

      2.20 Disclosure. The Company has fully provided Baxter with all the
information that Baxter has requested for deciding whether to purchase the F
Shares. The 1999 10-K, the Forms 10-Q, this Purchase Agreement, and the other
exhibits or schedules delivered in connection herewith or therewith, taken
together, do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements herein or therein in
light of the circumstances under which they were made not misleading.

      3. Representations and Warranties and Other Agreements of Baxter.

      3.1 Representations and Warranties. Baxter hereby represents and warrants
that:

            (a) Authorization. Baxter is a Delaware corporation and has full
power and authority to execute, deliver and perform this Purchase Agreement and
each Transaction Agreement to which it is a party and to purchase the F Shares.
Assuming due execution by the Company hereof and thereof, this Purchase
Agreement and each other Transaction Agreement to which Baxter is a party
constitute the valid and legally binding obligation of Baxter, enforceable
against Baxter in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally, and to general equitable principles.

            (b) Purchase Entirely for Own Account. It is Baxter's intention to
acquire the F Shares, the Conversion Shares and the Option Shares (collectively,
the "Securities") for investment for Baxter's own account, not as a nominee or
agent and not with a view to the sale or


                                       8
<PAGE>

other disposition of any part thereof in violation of the 1933 Act. Baxter has
no present intention of selling, granting any participation in, or otherwise
disposing of the same in violation of the 1933 Act. Baxter does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer, or grant participation to such person or to any third person, with
respect to any of the Securities.

            (c) Restrictions on Disposition. Baxter covenants that in no event
will it dispose of any of the Securities (other than pursuant to Rule 144
promulgated under the 1933 Act ("Rule 144") or pursuant to a registration
statement filed with the Securities and Exchange Commission (the "SEC") pursuant
to the 1933 Act) unless and until (i) Baxter shall have notified the Company of
the proposed disposition and shall have furnished the Company with a statement
of the circumstances setting forth the number of shares and price it proposes to
sell at, excluding the name of the transferee and other information unless
otherwise required in the written opinion of Company counsel to comply with the
1933 Act; and (ii) Baxter shall have furnished the Company with an opinion of
Baxter's counsel reasonably satisfactory in form and substance to the Company
and the Company's counsel to the effect that (A) such disposition will not
require registration under the 1933 Act or compliance with any applicable state,
local or foreign law, or (B) appropriate action necessary for compliance with
the 1933 Act and any applicable state, local or foreign law has been taken. The
restrictions on transfer imposed by this Section 3.1(c) shall cease and
terminate as to the Securities when: (i) such securities shall have been
effectively registered under the 1933 Act and sold by the owner thereof in
accordance with such registration; or (ii) an opinion of the kind described in
the preceding sentence states that all future transfers of such securities by
the holder thereof would be exempt from registration under the 1933 Act and
compliance with any applicable state, local or foreign law. Each certificate
evidencing the Securities shall bear an appropriate restrictive legend as set
forth in Section 3.3 below, except that such certificate shall not be required
to bear such legend after a transfer thereof if the transfer was made in
compliance with Rule 144 or pursuant to a registration statement or if the
opinion of counsel referred to above is issued and provides that such legend is
not required in order to establish compliance with any provisions of the 1933
Act.

            (d) Receipt of Information. Baxter has been furnished access to such
information and documents as Baxter has requested and has been afforded an
opportunity to ask questions of and receive answers from representatives of the
Company concerning the terms and conditions of this Purchase Agreement, the
other Transaction Agreements and the purchase of the F Shares.

            (e) Brokerage. There are no claims for brokerage commissions or
finder's fees or similar compensation in connection with the transactions
contemplated by this Purchase Agreement based on any arrangement or agreement
made by or on behalf of Baxter, and Baxter agrees to indemnify and hold the
Company harmless against any damages incurred as a result of any such claims.


                                       9
<PAGE>

      3.2 Further Provisions Regarding Disposition.

            (a) Transfer to Affiliates. Notwithstanding the provisions of
Section 3.1(c) above, no registration statement or opinion of counsel shall be
necessary for a transfer of the Securities by Baxter to a subsidiary or
affiliate (as defined pursuant to the 1933 Act) of Baxter which is an accredited
investor, if the transferee makes the warranties set forth in Sections 3.1 (b)
and (c) and agrees in writing to be subject to the terms hereof regarding the
transfer of the Securities, to the same extent as if such transferee were Baxter
hereunder.

            (b) New Certificates. Whenever the restrictions imposed by Section
3.1(c) above shall terminate as herein provided, the holder of the securities as
to which such restrictions have terminated shall be entitled to receive from the
Company, without expense, one or more new certificates not bearing restrictive
legends and not containing any reference to the restrictions imposed by this
Purchase Agreement.

      3.3 Legends. It is understood that, subject to Sections 3.1(c) and 3.2(b),
the certificates evidencing the F Shares, the Option Shares and the Conversion
Shares shall bear the following legend:

            (a) THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.

            (b) Any legend required by the laws of any other applicable
jurisdiction.

      3.4 Notice of Certain Events. Baxter hereby covenants and agrees that
during the term of the License Agreement (including any extension thereof),
unless notice has been provided in accordance with Section 3.1 (c), it will
provide written notice to the Company of any sale or disposition, on the open
market or in private transactions, by Baxter or any of its affiliates (including
subsidiaries or other entities controlled by Baxter) of any shares of the Common
Stock or other equity securities of the Company (or if Baxter or such affiliates
shall direct any third party to take any such actions on behalf of Baxter or
such affiliates), provided that no such notice need be given if the relevant
transaction related to 1% or less of the outstanding common stock (on an as
converted basis) of the Company. Such notice shall be transmitted to the Company
by facsimile (with telephonic notice) within ten (10) days after any such
transaction, and shall specify the person or entity effecting the transaction,
the date of such transaction, and the number of securities with respect to such
transaction.

      3.5 Limitation on Notice of Certain Events. Baxter shall not be required
to comply with the provisions of Section 3.4 if, in connection with any
transaction referred to in Section 3.4, Baxter or its affiliate files with the
SEC and sends to the Company a statement on Schedule


                                       10
<PAGE>

13D or Schedule 13G in connection with such transaction and in compliance with
Rule 13d-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").

      4. Conditions to Baxter's Obligations at Closing. The obligations of
Baxter under Section 1.2 of this Purchase Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:

      4.1 Representations and Warranties. The representations and warranties of
the Company contained in Section 2 shall be true in all material respects on and
as of the date of such Closing with the same effect as though such
representations and warranties had been made on and as of the date of such
Closing.

      4.2 Performance. The Company shall have performed and complied in all
material respects with all agreements, obligations, and conditions contained in
this Purchase Agreement and each other Transaction Agreement to which it is a
party that are required to be performed or complied with by it on or before the
Closing.

      4.3 Compliance Certificate. The Chief Executive Officer of the Company
shall deliver to Baxter at the Closing a certificate certifying that the
conditions specified in Sections 4.1, 4.2, 4.4, 4.5, 4.6 and 4.7 have been
fulfilled and stating that there has been no Material Adverse Effect since March
31, 2000, except for continuing operating losses in the ordinary course of
business.

      4.4 Certificate of Amendment. The Company shall have filed with the
Secretary of State of New York the Certificate of Amendment in substantially the
form attached hereto as Exhibit A and the Secretary of State shall have accepted
such form for filing.

      4.5 Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or of any other country that are required in connection with the lawful
issuance and sale of the F Shares to Baxter pursuant to this Purchase Agreement
shall have been duly obtained and shall be effective on and as of the Closing.

      4.6 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Baxter and Baxter's counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.

      4.7 Transaction Agreements. The License Agreement, in substantially the
form attached hereto as Exhibit B, the Deferred Stock Purchase Agreement, in
substantially the form attached hereto as Exhibit C, the Operating Agreement, in
substantially the form attached hereto as Exhibit D, the Marketing and
Distribution Agreement, in substantially the form attached hereto as Exhibit E,
the Alliance Manufacturing and Supplier Agreement, in substantially the form
attached hereto as Exhibit F, and the Baxter Manufacturing and Supplier
Agreement, in


                                       11
<PAGE>

 substantially the form
attached hereto as Exhibit G shall have been executed and delivered by the
Company.

      4.8 Opinion of Company Counsel. Baxter shall have received from counsel
for the Company an opinion, dated as of the Closing and addressed to Baxter,
covering the matters set forth in Sections 2.1, 2.2, 2.3 (as to the due
authorization, valid issuance, full payment and non-assessability of the F
Shares, Conversion Shares and Option Shares), 2.11, 2.12 and 2.14.

      5. Conditions of the Company's Obligations at Closing. The obligations of
the Company under Section 1.2 of this Purchase Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:

      5.1 Representations and Warranties. The representations and warranties of
Baxter contained in Section 3 shall be true in all material respects on and as
of the date of such Closing with the same effect as though such representations
and warranties had been made on and as of the date of such Closing.

      5.2 Performance. Baxter shall have performed and complied in all material
respects with all agreements, obligations and conditions contained in this
Purchase Agreement and each other Transaction Agreement to which it is a party
that are required to be performed or complied with by it on or before such
Closing.

      5.3 Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state or of any other country that are required in connection with the lawful
issuance and sale of the F Shares to Baxter pursuant to this Purchase Agreement
shall have been duly obtained and shall be effective on and as of the Closing.

      5.4 Transaction Agreements. The License Agreement, in substantially the
form attached hereto as Exhibit B, the Deferred Stock Purchase Agreement, in
substantially the form attached hereto as Exhibit C, the Operating Agreement, in
substantially the form attached hereto as Exhibit D, the Marketing and
Distribution Agreement, in substantially the form attached hereto as Exhibit E,
the Alliance Manufacturing and Supplier Agreement, in substantially the form
attached hereto as Exhibit F, and the Baxter Manufacturing and Supplier
Agreement, in substantially the form attached hereto as Exhibit G shall have
been executed and delivered by Baxter.

      6. Affirmative Covenants of the Company.

      6.1 Board Rights. So long as (i) Baxter owns at least 500,000 F Shares, or
(ii) Baxter owns all of the shares of Common Stock in which the F Shares are
converted into or (iii) until December 31, 2007, at Baxter's election the
Company shall give Baxter or its designated representative notice of each
meeting of its Board of Directors at the same time and in the same manner as
notice is given to the members of the Board of Directors, and the Company shall
permit such representative to attend and observe all meetings of the Company's
Board of Directors and to listen to all such meetings held telephonically. The
Company shall provide


                                       12
<PAGE>

Baxter's representative with copies of written materials and other information
given to directors in connection with such meetings at the same time and in the
same manner such materials and information are given to the directors. If the
Company takes any action by written consent in lieu of a meeting of its Board of
Directors, the Company shall give notice thereof to Baxter's representative at
the same time and in the same manner in which such consent is requested of
directors. Baxter's representative must be reasonably acceptable to the Company
and shall be knowledgeable and experienced in the operations of the healthcare
industry. Baxter's representative shall not be entitled to written materials or
other information and shall agree to excuse himself or herself from meetings or
portions thereof at the request of the Company or the Chairman of the Board of
Directors where such information or his or her attendance or continued presence,
at the discretion of the Company, might jeopardize the confidentiality of
proprietary information of the Company or of any competitor of Baxter or
otherwise create a conflict of interest. Baxter's representative will execute a
confidentiality agreement in form and substance similar to the Company's
standard form of confidentiality agreement with consultants and other third
parties.

      6.2 Reports under the Exchange Act. With a view to making available to
Baxter the benefits of Rule 144 promulgated under the 1933 Act and any other
rule or regulation of the SEC that may at any time permit a permitted holder of
Securities to sell securities of the Company to the public without registration,
and with a view to making it possible for any such holder to have the Securities
registered on Form S-3, the Company agrees to (subject to Section 8 in the case
of Section 6.2(b)):

            (a) make available adequate current public information as
contemplated by Rule 144 (c)(1) or (2);

            (b) take such action as is necessary to enable a holder to utilize
Form S-3 for the sale of Securities;

            (c) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the Exchange Act; and

            (d) furnish to a holder owning any Securities upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the Exchange Act, or that it
qualifies as a registrant whose Securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably required to
permit any holder of Securities to avail itself of any rule or regulation of the
SEC which permits the selling of any such Securities without registration or
pursuant to such form.

      7. Anti-Dilution Provisions.

      7.1 Option. If, on or before the date of conversion of all of the F
Shares, the Company shall issue additional shares of its Common Stock in any
private placement or public offering (excluding issuance or sale as a result of
exercise or conversion of (i) outstanding


                                       13
<PAGE>

options, warrants or other convertible or exchangeable securities on the date
hereof, or (ii) stock options or warrants, granted to employees, directors or
consultants whenever granted under the Company's stock option programs,
incentive stock option plan or 401(k) program) (an "Issuance"), the Company
hereby grants to Baxter the right (an "Option") following any such Issuance, to
purchase a number of shares of Common Stock as set forth below. The
consideration for shares issued pursuant to an Issuance (the "Consideration")
shall be deemed to be the per share amount of cash and any other form of
consideration received by the Company, meaning, in the case of a public
offering, the public offering price. The amount of any non-cash Consideration
shall be deemed to be the fair value of such non-cash Consideration determined
in good faith by the Company's Board of Directors.

      Pursuant to the Option, Baxter shall have the right to purchase the number
of additional shares of Common Stock (the "Option Number") determined by the
following formula:

      NO = N(I) (.032)

      where NO is the Option Number and NI is the number of shares issued in the
Issuance. If the Option Number would include a fractional share, it shall be
rounded to the nearest whole share.

      7.2 Notice of Issuance. Within ten (10) days after any Issuance, the
Company shall give written notice thereof to Baxter of the terms thereof,
including the Issuance Number, the Consideration and the Option Number of shares
related to such Issuance.

      7.3 Purchase Price. The price for each share purchased pursuant to the
Option shall be an amount (payable in cash) equal to the Consideration for a
share purchased under the Issuance.

      7.4 Exercise of Option. The Option shall be exercised by written notice to
the Company, given within thirty (30) days following receipt of written notice
of an Issuance pursuant to Section 7.2 above stating that it is Baxter's intent
to exercise the Option. The notice shall specify the number of shares for which
the Option is being exercised (up to the Option Number) and shall be accompanied
by payment in full of the exercise price for such shares.

      7.5 Delivery of Certificates: Registration. Promptly after each exercise
of the Option, the Company shall cause to be delivered to Baxter a certificate
or certificates evidencing the shares purchased pursuant to the exercise of the
Option; provided, however, that Baxter shall be deemed to be the holder of
record of such shares as of the date of exercise of the Option with respect to
such shares. The Company may postpone the issuance and delivery of such shares
upon any exercise of the Option until (a) the admission of such shares to
listing on any stock exchange on which shares of the same class are then listed
and (b) the completion of such registration or other qualification of such
shares under any state or federal law, rule or regulation as the Company, in the
reasonable opinion of its counsel, shall determine to be necessary or advisable.
Nothing in this Section 7.5 shall be deemed to require that the Company file or
amend a registration statement under the 1933 Act.


                                       14
<PAGE>

      7.6 Dividends and Reclassification. If, following an Issuance but prior to
the exercise of, or expiration of the right to exercise, the Option relating to
such Issuance, there shall be declared payable to holders of record of the
Common Stock on a date prior to such exercise or expiration, or paid, a stock
dividend upon the Common Stock of the Company or if such stock shall be
split-up, combined, converted, exchanged (including by way of merger),
reclassified, or in any way substituted for (collectively, a "Dividend or
Reclassification"), the Option shall entitle Baxter upon the future exercise of
the Option relating to such Issuance to such number and kind of securities or
other property, subject to the terms of the Option, to which Baxter would have
been entitled had Baxter actually owned the Common Stock as to which the Option
is then exercised at the time of such Dividend or Reclassification; and the
aggregate purchase price upon the exercise of the Option relating to such
Issuance shall be the same as if the shares of Common Stock originally optioned
were being purchased as provided herein; provided that no fractions of shares
shall be issued, the aggregate purchase price shall be appropriately reduced on
account of any fractions not so issued and the purchase price shall in no event
be less than the par value of the Common Stock.

      7.7 Reservation of Common Stock. The Company hereby represents and
covenants with Baxter that it shall at all times reserve for issuance to Baxter
such number of shares of its Common Stock as will be sufficient to satisfy the
requirements of any Option.

      7.8 Successors to Option. The Option and all rights hereunder shall be
non-assignable and nontransferable, are intended solely for the benefit of
Baxter, and shall in no way inure to the benefit of its assignees or
transferees. Notwithstanding the foregoing, Baxter may assign or transfer the
Option to any corporation with which Baxter is merged or combined or to any
corporation which is a successor to or an affiliate of Baxter. The Company shall
have the right to require, as a condition precedent to such assignment or
transfer, that the assignee or transferee furnish such information as may in the
opinion of counsel for the Company be appropriate to permit such assignment or
transfer in light of the then applicable federal or state securities laws. As
used in this Agreement, the term "affiliate" shall have the meaning set forth in
Rule 12b-2 under the Exchange Act, and the term "person" or "entity" shall mean
any individual, company, partnership, joint venture, association, corporation,
trust, government or agency thereof, or any other entity.

      7.9 Information from Baxter. The Company shall have the right to require,
as a condition precedent to the exercise of the Option, that Baxter furnish such
information (and representations comparable to those in Section 3.1) as may in
the reasonable opinion of counsel for the Company be appropriate to permit the
Company, in light of the then existence or non-existence of an effective
registration statement under the 1933 Act with respect to such shares, to issue
the shares in compliance with the provisions of that or any comparable act.

      7.10 Senior Ranked Preferred Stock. As long as any F Shares are issued and
outstanding, the Company shall not issue any shares of the Series A Preferred
Stock and shall not designate and issue any preferred stock which is ranked
senior to the Series F Preferred Stock.

      8. Registration of Common Stock.


                                       15
<PAGE>

      8.1 Registration. The Company will use its best efforts to cause to become
effective, on or prior to the date on which the F Shares shall first be
convertible, a registration statement under the 1933 Act on Form S-3 or such
other registration form as counsel to the Company deems appropriate, covering
the issuance by the Company of all of the Conversion Shares and Option Shares,
or any shares issued pursuant to stock dividends, stock splits or similar
distributions upon such Common Stock, Conversion Shares and Option Shares
("Registrable Stock").

      8.2 Registration Expenses. The Company shall pay all expenses incurred in
effecting the registration of Registrable Stock pursuant to Section 8.1
including, without limitation, all federal and state registration, qualification
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration, but not including underwriting
discounts, commissions and expenses and fees of counsel to the participating
Holders.

      8.3 Registration Procedures. If and whenever the Company is required by
the provisions of Section 8.1 to effect the registration of the Registrable
Stock under the 1933 Act, the Company will, as expeditiously as possible:

            (a) prepare and file with the SEC a registration statement which
includes the Registrable Stock and use its best efforts to cause such
registration statement to become and remain effective until the distribution
described in the registration statement has been completed or until the
participating Holders can sell all such Registrable Stock pursuant to Rule 144;

            (b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the 1933 Act with respect to the sale or other
disposition of Registrable Stock covered by such registration statement whenever
a Holder shall desire to sell or otherwise dispose of the same, but only to the
extent provided in this Section 8;

            (c) furnish to each participating Holder (and to each underwriter,
if any, of Registrable Stock) such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the 1933 Act, and
such other documents, as such Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Stock;

            (d) use its best efforts to register or qualify the Registrable
Stock covered by such registration statement under such state securities or blue
sky laws of such jurisdiction as each participating Holder shall reasonably
request and do any and all other acts and things which may be necessary under
such securities or blue sky laws to enable such Holder to consummate the public
sale or other disposition in such jurisdictions of the Registrable Stock, except
that the Company shall not for any purpose be required to consent generally to
service of process or qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;


                                       16
<PAGE>

            (e) before filing the registration statement prospectus or
amendments or supplements thereto, furnish to counsel selected by the
participating Holders copies of such documents proposed to be filed which shall
be subject to the reasonable approval of such counsel;

            (f) enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offer;

            (g) notify the participating Holders at any time when a prospectus
relating to any Registrable Stock covered by such registration statement is
required to be delivered under the 1933 Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing and promptly
file such amendments and supplements as may be necessary so that, as thereafter
delivered to such Holders, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing and use its best efforts to cause each such
amendment and supplement to become effective;

            (h) furnish at the request of the participating Holders on the date
that such Registrable Stock is delivered to the underwriters for sale in
connection with a registration pursuant to this Section 8 (i) an opinion, dated
such date, of the counsel representing the Company, for purposes of such
registration, in form and substance as is customarily given by company counsel
to the underwriters in an underwritten public offer addressed to the
underwriters, if any, and to such Holders, and (ii) a letter dated such date,
from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offer, addressed to the underwriters and
to such Holders;

            (i) notify the Holders of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement of the initiation of
any proceedings for that purpose. The Company will make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest time; and

            (j) use its best efforts to cause all such Registrable Stock to be
listed on the securities exchange or the Nasdaq National Market, if any, on
which the Company's Common Stock is then listed.

      Upon receipt of any notice from the Company of the happening of any event
of the kind described in paragraph (g), the Holder will forthwith discontinue
disposition of such Registrable Stock covered by such registration statement or
prospectus until receipt of the copies of the supplemented or amended
prospectus, or until it is advised in writing by the Company that the use of the
applicable prospectus may be resumed, and has received copies of an additional
or supplemental filings which are incorporated by reference in such prospectus,
and, if so directed


                                       17
<PAGE>

by the Company, the Holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in the Holder's
possession, of the prospectus covering such Registrable Stock current at the
time of receipt of such notice.

      8.4 Indemnification. In the event Registrable Stock is registered pursuant
to this Section 8:

            (a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder of Registrable Stock which is included in a
registration statement filed pursuant to the provisions of this Agreement and
any underwriter (within the meaning of the 1933 Act) with respect to the
Registrable Stock, and each officer, director, employee and agent thereof and
each person, if any, who otherwise controls such Holder or underwriter (within
the meaning of the 1933 Act), against any losses or claims, damages, expenses or
liabilities, joint or several, to which they may become subject under the 1933
Act, the Exchange Act or other federal or state law, or otherwise, insofar as
such losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or allegedly untrue statement
of any material fact contained in the registration statement for the Registrable
Stock, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or any document incident to
the registration or qualification of any Registrable Stock, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or allegedly necessary to make the statements
therein not misleading or arise out of any violation or alleged violation by the
Company of the 1933 Act, the Exchange Act, any state securities law or any rule
or regulation promulgated under the 1933 Act, the Exchange Act or any state
securities law; and will reimburse such Holder, any underwriter, officer,
director, employee, agent or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 8.4(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, expense, liability or action
if such settlement is effected without the written consent of the Company, which
shall not be unreasonably withheld, nor shall the Company be liable under this
Section 8.4(a) to such Holder, such underwriter, officer, director, employee,
agent or controlling person for any such loss, claim, damage, expense, liability
or action to the extent that it arises out of, or is based upon, an untrue
statement or allegedly untrue statement or omission or alleged omission made in
connection with such registration statement, preliminary prospectus, final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished in writing expressly for use in connection
with such registration by such Holder, such underwriter, officer, director,
employee, agent or such controlling person.

            (b) To the extent permitted by law, each Holder of Registrable Stock
which is included in a registration statement filed pursuant to the provisions
of this Agreement will indemnify and hold harmless the Company, each of its
employees, agents, directors and officers, each person, if any, who controls the
Company within the meaning of the 1933 Act, and any underwriter (within the
meaning of the 1933 Act) against any losses, claims, damages, expenses or
liabilities to which the Company or any such person or underwriter may become
subject, under


                                       18
<PAGE>

the 1933 Act, the Exchange Act or other federal or state law or otherwise,
insofar as such losses, claims, damages, expenses or liabilities (or actions in
respect thereof) arise out of, or are based upon any untrue or allegedly untrue
statement of any material fact contained in a registration statement for the
Registrable Stock, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or any document
incident to the registration or qualification of any Registrable Stock, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or allegedly necessary to make the
statements therein not misleading; in each case to the extent that such untrue
statement or allegedly untrue statement or omission or alleged omission was made
in such registration statement, preliminary prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with information
furnished in writing by such Holder expressly for use in connection with such
registration; provided, however, that the indemnity agreement contained in this
Section 8.4(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, expense, liability or action if such settlement is effected
without the written consent of such Holder, which shall not be unreasonably
withheld; and such Holder will reimburse the Company or any such person or
underwriter for any legal or other expenses reasonably incurred by the Company
or any such person or underwriter in connection with investigating or defending
such loss, claim, damage, liability, expense or action.

            (c) Promptly after receipt by an indemnified party under this
Section 8.4 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 8.4, notify the indemnifying party in writing of the
commencement thereof and generally summarize such action. The indemnifying party
shall have the right to participate in and to assume the defense thereof with
counsel mutually satisfactory to the parties. An indemnifying party shall not
have the right to direct the defense of such an action on behalf of an
indemnified party if such indemnified party has reasonably concluded that there
may be defenses available to it that are different from or additional to those
available to the indemnifying party; provided, however, that in such event, the
indemnifying party shall bear the fees and expenses of only one (1) separate
counsel for all indemnified parties, such separate counsel to be reasonably
satisfactory to the indemnifying party. The failure to notify an indemnifying
party promptly of the commencement of any such action if prejudicial to the
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 8.4, but the omission so
to notify the indemnifying party will not relieve such party of any liability
that such party may have to any indemnified party otherwise than under this
Section.

            (d) To the extent permitted by law, the indemnification provided for
under this Section 8.4 will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling person (within the meaning of the 1933 Act) of such
indemnified party and will survive the transfer of securities.

            (e) If for any reason the foregoing indemnity is unavailable to, or
is insufficient to hold harmless an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits


                                       19
<PAGE>

received by the indemnifying party on the one hand and the indemnified party on
the other or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, in such proportion as is appropriate to
reflect not only the relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other but also the relative fault of
the indemnifying party and the indemnified party as well as any other relevant
equitable considerations. Notwithstanding the foregoing, no underwriter, if any,
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The obligation of any underwriters to
contribute pursuant to this Section 8.4(e) shall be several in proportion to
their respective underwriting commitments and not joint.

      8.5 Information from Baxter. Baxter shall furnish to the Company in
writing any information regarding Baxter which the Company may reasonably
request in writing in connection with registration pursuant to this Section 8.

      8.6 Transferability. The right to have the Company register Registrable
Stock granted by the Company to the Holders under this Agreement may be assigned
by a Holder to a permitted transferee or assignee of at least one-half of the
Registrable Stock (subject to appropriate adjustment for stock splits, stock
dividends, reclassification and consolidations), provided that the Company must
receive written notice prior to or at the time of said transfer, stating the
name and address of said transferee or assignee. The limitations set forth in
this Article 8 with respect to registration rights shall apply to all
transferees or assignees of Registrable Stock.

      9. Miscellaneous.

      9.1 Incorporation by Reference. All exhibits and schedules appended to
this Purchase Agreement are herein incorporated by reference and made a part
hereof.

      9.2 Parties in Interest. All terms, covenants, agreements,
representations, warranties and undertakings in this Purchase Agreement made by
and on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not.

      9.3 Amendments and Waivers. Changes in or additions to this Purchase
Agreement may be made or compliance with any term, covenant, agreement,
condition or provision set forth herein may be omitted or waived, only upon the
written consent of the Company and Baxter.

      9.4 Governing Law. This Purchase Agreement shall be deemed a contract made
under the laws of the State of New York and, together with the rights or
obligations of the parties


                                       20
<PAGE>

hereunder, shall be construed under and governed by the laws of such State
without giving effect to principles of conflicts of laws.

      9.5 Notices. All notices, requests, consents and demands shall be in
writing and shall be deemed given when (i) personally delivered, (ii) mailed in
a registered or certified envelope, postage prepaid (iii) sent by Federal
Express or another nationally recognized overnight delivery service (paid by
sender), or (iv) sent by telex, facsimile, or telecopier upon receipt of the
correct answerback.

To the Company at:

         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

To Baxter at:

         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, Illinois  60015
         Attention: General Counsel
         Facsimile: (847) 948-2450



                                       21
<PAGE>

with a copy to:

         Gibson, Dunn and Crutcher LLP
         4 Park Plaza, Suite 1800
         Irvine, California  92614
         Attention: Thomas Magill, Esq.
         Facsimile: (949) 451-4220

or such other address as may be furnished in writing to the other parties
hereto.

      9.6 Counterparts. This Purchase Agreement may be executed in counterparts,
all of which together shall constitute one and the same instrument.

      9.7 Effect of Headings. The section and paragraph headings herein are for
convenience only and shall not affect the construction hereof.

      9.8 Entire Purchase Agreement. This Purchase Agreement, the License
Agreement and the Exhibits and Schedules hereto and thereto constitute the
entire agreement among the Company and the Baxter with respect to the subject
matter hereof. There are no representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein. This Purchase Agreement supersedes all prior
agreements between the parties with respect to the shares purchased hereunder
and the subject matter hereof.

      9.9 Publicity. Neither party shall originate any publicity, news release,
or other announcement, written or oral, relating to this Purchase Agreement, or
to performance hereunder or the existence of an arrangement between the parties
without the prior written approval of the other, except as may be otherwise
required by law.

      9.10 Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.

      9.11 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of the parties hereto.

      9.12 Amendment and Waiver. Except as otherwise provided herein, any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or an a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), with the written consent of the Company and Baxter in the case of
an amendment or by the written waiver of the waiving party in the case of a
waiver. Any amendment or waiver effected in accordance with this Section 9.12
shall be binding upon any holder of any securities purchased under this
Agreement (including securities into which such securities have been converted),
each future holder of all such securities (so long as such securities are
restricted securities) and the Company.

      9.13 Fees and Expenses. The Company and Baxter shall bear their own
expenses and legal fees incurred on their behalf with respect to this Agreement
and the transactions


                                       22
<PAGE>

contemplated hereby, except for any expenses incurred in connection with the
registration of any of the securities sold pursuant to this Agreement which
shall be borne exclusively by Company; except as otherwise provided in this
Agreement.


                                       23
<PAGE>

         IN WITNESS WHEREOF, this Purchase Agreement has been executed as of the
date first above written, by the parties hereto.


                                 ALLIANCE PHARMACEUTICAL CORP.

                                 By:
                                    --------------------------------------------
                                    Name:
                                    Title:


                                 BAXTER HEALTHCARE CORPORATION

                                 By:
                                     -------------------------------------------
                                      Name:
                                      Title:


                                       24
<PAGE>

                                    Exhibit A

                            Certificate of Amendment
<PAGE>

                                    Exhibit B

                                License Agreement
<PAGE>

                                    Exhibit C
                        Deferred Stock Purchase Agreement
<PAGE>

                                    Exhibit D

     Limited Liability Company Operating Agreement of PFC Therapeutics, LLC
<PAGE>

                                    Exhibit E

                      Marketing and Distribution Agreement
<PAGE>

                                    Exhibit F

                  Alliance Manufacturing and Supplier Agreement
<PAGE>

                                    Exhibit G

                   Baxter Manufacturing and Supplier Agreement
<PAGE>

                                                                   Schedule 2.3

                       Preferred Stock Purchase Agreement

                                 CAPITALIZATION

A.   Authorized Capital Stock
     Authorized Common Stock, $.01 par value                       75,000,000
     Authorized Preferred Stock, $.01 par value
              1.5 million shares of Series A Preferred Stock        5,000,000
     Outstanding Securities as of May 5, 2000
              Common Stock                                         47,167,083
              Outstanding Options                                   6,770,390
              Outstanding Warrants                                  2,096,744
     Outstanding Convertible Debt                                 $15,000,000

B.   Other Rights to Acquire Capital Stock

      1.    Pursuant to Section 7.1 of a preferred stock purchase agreement, the
            holder of previously outstanding Series D Preferred Stock, Schering
            Berlin Venture Corp. ("SBVC"), has the right to acquire additional
            shares of Common Stock if the Company issues (an "Issuance")
            additional shares of Common Stock in a public or private offering
            (including upon the conversion of warrants of other convertible
            securities). The purchase price is to be equal to the price per
            share of Common Stock paid in such Issuance. The number of shares
            SBVC may purchase is equal to 1.59% of the Common Stock issued in
            the Issuance.

      2.    In November 1996, the Company acquired MDV Technologies, Inc.
            ("MDV") by a merger (the "MDV Merger") of a wholly owned subsidiary
            of the Company into MDV. The Company may pay up to $20 million to
            former shareholders of MDV if advanced clinical development or
            licensing milestones are achieved in connection with MDV's
            technology. The Company will also make certain royalty payments on
            the sales of products, if any, developed from such technology. The
            Company may buy out its royalty obligation for $10 million at any
            time prior to the first anniversary of the approval by U.S.
            regulatory authorities of any products based upon the MDV technology
            (the amount increasing thereafter over time). All of such payments
            to the former MDV shareholders may be made in cash or, at the
            Company's option, shares of the Company's common stock, except for
            the royalty obligations which will be payable only in cash. The
            Company has not determined whether subsequent payments (other than
            royalties) will be made in cash or in common stock.
<PAGE>

      3.    The holders of $15 million in principal amount of convertible
            debentures of the Company, convertible at $9.65 per share, subject
            to further adjustment, have the right to purchase an additional $15
            million in convertible debt, convertible at $12.06 per share,
            subject to further adjustment.

C. Registration Rights

      1.    The Company is in the process of registering 2,234,738 shares of
            outstanding common stock and 2,431,465 shares of common stock
            underlying certain convertible securities.

      2.    The holders of outstanding warrants for 2,096,744 shares of common
            stock issuable at prices ranging from $2.45 to $20 per share have
            demand and/or piggyback registration rights, of which warrants for
            877,061 shares are being registered pursuant to item C(1) above.

      3.    The Company has an obligation, if requested, to register the common
            stock received by SBVC upon conversion of the Series D Preferred
            Stock and other shares of Common Stock received by SBVC pursuant to
            a right to participate in Issuances (see item B(1) above).

      4.    In connection with the acquisition of a subsidiary, MDV
            Technologies, Inc., the Company registered the estimated number of
            shares to potentially be received by the former MDV shareholders.
            Under certain circumstances the Company could be required to issue
            and register additional shares of common stock.

<PAGE>

                                                                    Schedule 2.7

                       Preferred Stock Purchase Agreement

                                      TITLE

All California facilities are leased.

In connection with the purchase of the Otisville, New York facility in 1983, the
Company entered into a land use agreement with the New York City Development
Corporation, the provisions of which require the Company to care for retired
police horses. The provisions are "covenants running with the land" binding upon
the Company and subsequent owners.

The Company has a line of credit for up to $1.5 million with Wells Fargo Bank.
The loan is secured by certain cash and securities accounts.

In June 1998, Imperial Bank entered into a credit agreement providing for a loan
of up to $15 million to the Company. As security for the loan the Company
originally granted a security interest in all then existing or thereafter
acquired personal property of the Company, excluding certain specific equipment
and all intangible assets (including intellectual property, patents and patent
applications). On May 17, 1999, the Company granted the bank a security interest
on its trademarks, patents, trade secrets and license agreements and proceeds
thereof. A subsidiary has agreed to give similar security interest in its
assets. On March 31, 2000 the outstanding loan balance is approximately $9.9
million, $5 million of which is collateralized by cash. Oxygent related
trademarks, patents, patent applications and trade secrets will be released from
the lien to the bank prior to closing this preferred stock transaction.